A deal has been struck in principle that opens the way for shipping lines calling at ports in Vietnam to implement a terminal handling charge (THC) from as early as November 1. The charge, to be phased in gradually, eventually will see the lines recover the terminal costs they incur through government tariffs, which are set at US$57 per teu (20 ft equivalent unit) and US$80 per feu (40 ft equivalent unit). The deal was struck late last month between delegates from the Inter-Asia Discussion Agreement (Iada), government agencies, the government pricing committee and the Vietnamese Maritime Bureau - Vinamarine. When the deal wins final approval, it will leave China as the only country in Asia without a national THC. In agreeing to the levy, the Vietnamese Government asked that the Iada delegation make the same presentation to the Chamber of Commerce in Hanoi, to aid the manufacturing community's understanding of the deal, and get their approval. 'Since Vietnam has been without a THC for seven years, we are aiming for a gentle, soft landing when it is implemented,' said Iada chairman Kenichi Kuroya. 'This is why we have suggested a two-phase recovery plan, starting at about half the actual cost.' Initially, the Iada proposed that the charges be set at US$30 per teu and US$50 per feu. The timing of the roll-up to the full cost will be dictated by what the market can bear. In accepting that the charge should be implemented, Hanoi allowed the THC to be a commercial issue to be negotiated between carriers and shippers, Mr Kuroya said. With written confirmation that Hanoi will not intervene in any agreement that may be struck expected this week, one of the final hurdles is the meeting with the Chamber of Commerce, which represents the nation's shippers. 'I am optimistic that the shippers will see the benefits of this proposal,' Mr Kuroya said. 'When you compare these charges with the rest of Asia they are very competitive, so there appears to be no reason for them to be emotionally opposed. These costs will then be passed on to the buyer who will, in most cases, be a non-Vietnamese shipper. 'We intend to emphasise this point at the meeting.' The cost benefit, in relation to other regional ports, is shown by a comparison with THCs in Singapore. They are about US$105 per teu and US$156 per feu. In Vietnam at present, the cost of the government tariff is absorbed into the price of the goods from the seller. As a result, it means Vietnamese shippers' products appear more expensive than those from their competitors. As Vietnam's entry into the Association of Southeast Asian Nations draws nearer, Hanoi has grown increasingly aware that its traders should, in the eyes of overseas buyers, quote on a basis comparable with countries in which it is in competition. 'The seller ultimately recovers the cost from the buyer, but implementation of a THC at least puts everyone on an apples to apples comparison,' said another shipping executive involved in the negotiations. 'Vietnam's shore-side costs are lower than most ports in the region. This cost would become much more apparent to the buyer and the exporter,' he said. 'It is best for the exporter to clearly demonstrate that benefit and to assure that it is not a hidden cost rolled into the ship-freight rate.' Vietnam has become increasingly attractive as a place to source low-end goods such as textiles since the end of the 1990s, when the Government renewed emphasis on the manufacturing sector. The boost has also seen the value of its goods surge. From 1991-2000, its exports' share of gross domestic product jumped to 46 per cent from 25 per cent, according to the World Bank's Vietnam Development Report 2001. At the same time, its manufactured goods' share of exports leapt to 37 per cent from 14 per cent. 'We have proposed a November 1 implementation date but we reasonably expect that, with this short notice, they may request December 1 or January 1,' Mr Kuroya said. 'We would accept that. The cost of their ocean-freight goods would then be more subject to supply and demand, or international market fluctuations. 'It would also be one of the things that attracts more lines to call in Vietnam.'