Why have Japanese chosen Hai Phong Port?

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Why have Japanese chosen Hai Phong Port?

7/1/2016 5:04:00 PM

Japanese enterprises have been step by step closing their factories in the south of China and moving to Vietnam.

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Vietnam’s transportation industry has attracted more and more investors from Japan. 

All Nippon Airways has spent $100 million to acquire 8.77 percent of stakes of the nation’s flag air carrier Vietnam Airlines. Meanwhile, JX Nippon Oil & Energy spent $183 million to get 8 percent of Vietnam’s Petrolimex. 

More recently, Mitsui OSK Line, Japan's largest shipping firm, said in The Financial Times that it plans to invest in the $1.2 billion project to expand the Hai Phong container port. 

Once the project is completed, slated for 2018, the harbor capacity would be double. This is the first investment project in port infrastructure developed under the mode of PPP (private public partnership) with the participation of Japanese investors.

According to Junichiro Ikeda, president of Mitsui OSK, the investment project is developed in anticipation of the movement of Japanese investors closing their factories in the southern part of China and leaving for Vietnam. 

Japanese enterprises have been step by step closing their factories in the south of China and moving to Vietnam.
Vietnam is believed to become the center in South East Asia in upcoming years thanks to the advantageous geographical position and free trade agreements of which it is a member.

Rajiv Biswas from HIS Global Insight commented that Mitsui’s investment strategy might be defined based on the prediction about the dynamic ASEAN block with GDP expected to double from $2.6 trillion to $5.8 trillion by 2025.

Hai Phong City is a good destination for Mitsui to implement its business strategy. A report of the Rong Viet Securities Company found that the northern part of Vietnam, which comprises Bac Ninh, Hanoi, Hai Duong and Hai Phong, lured half of the total foreign direct investment (FDI) capital registered in Vietnam in 2015.

Of the cities and provinces, Hai Phong is an attractive destination for investors thanks to its advantageous position as the gateway for imports & exports in the north, which is near the East Asia market, and a good infrastructure system with Highway No 50, Highway No 10 and the Hanoi-Hai Phong Highway.

In 2011-2015, the total volume of goods going through the Hai Phong Port increased sharply by 9.6 percent, while the growth rate is expected to reach 16.2 percent this year, once the factories of LG Electronics Vietnam, Bridgestone and Shin Etsu become operational.

However, some analysts, recalling the story of the Cai Mep – Thi Vai Port in the south, have warned that Mitsui may face similar risks. Mitsui would have to compete with a series of Vietnamese investors who are also rushing to upgrade ports. 

VSC Vietnam, for example, is upgrading Cang Xanh VIP Port which would have capacity of 500,000 TEUs a year.
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