Vietnam is mainland's only rival for cargo

PUBLISHED : Saturday, 23 October, 2010, 12:00am
UPDATED : Saturday, 23 October, 2010, 12:00am

Vietnam poses the only serious regional competition to the mainland when it comes to changing cargo patterns through shifts in foreign direct investment, according to shipping experts.

Pointing to the growing importance of Vietnam, Randy Chen, special assistant to the president of Taiwan's Wan Hai Lines, said 'cargo flows have shifted dramatically' as foreign firms had invested in the country.

This followed both an increase in intermediate manufacturing, as firms imported products for semi-finishing before re-exporting them, and the development of industries, such as toymaking, which used petrochemical resources.

Chen said these activities on the mainland could move inland from the coastal provinces and while this might reduce manufacturing costs, the shift could increase cargo transit times.

Similarly, shipping professional Kim Balling said foreign direct investment was focused on intermediate manufacturing processes in Vietnam and Thailand. This shift would boost cargo volumes, especially on intra-Asian trade. 'Vietnam is the only country that can take market share away from China,' said Balling, the managing partner at maritime consultancy firm Econships and a former senior executive at Orient Overseas Container Line and Malaysia's MISC.

He said overall foreign direct investment was 'now coming back' after a lull caused by the global economic downturn.

Figures from Vietnam's planning and investment ministry showed that the country attracted almost US$12.2 billion in foreign direct investment in the first nine months of this year. Even though this was down 12.7 per cent against the same period last year, the ministry said Ba Ria-Vung Tau province, where the Cai Mep port cluster is located, attracted the most, US$2.2 billion. By comparison, the mainland, attracted US$74 billion in foreign direct investment between January and September, a 16 per cent increase over last year, according to the Ministry of Commerce.

Chen said Vietnamese education standards were high while returning expatriates were building an entrepreneurial-type of economy.

Balling said the foreign direct investment flow would show where the growth in container shipping volumes would come from.