Infrastructure, Transportation, Shipping & Maritime

Introduction

Vietnam has emerged as one of the top destinations in the ASEAN region for economic opportunity and growth in a wide-variety of sectors, including manufacturing, technology, retail and consumer goods, health care and numerous others. Featuring abundant natural resources, a young digitally-fluent workforce, tax incentives, pre-pandemic GDP growth at between 6-7% yearly, and a stable government and legal system, it is no surprise that both FDI and domestic industrial growth has skyrocketed over the period. Geographically located at the junction of several major Pacific shipping routes and sharing a border with China, Laos, and Cambodia, Vietnam is well-positioned to become a dominant regional transport center.

On the other hand, the infrastructure, transportation and shipping structure of Vietnam has somewhat lagged behind its spectacular economic growth. The government is fully aware of this issue and has promulgated a number of long-term infrastructure plans (including a commitment to invest $119 billion in infrastructure development between 2021 and 2025) to keep pace with international and domestic demand. Currently, only approximately 20 per cent of the country’s national roads are paved, and an approved plan to build a 1,372km north-south highway by 2030 is estimated to cost $14bn (among numerous other projects). If Vietnam continues on this course, the country is predicted to meet 83% of its infrastructure goals by 2040. Needless to say, this will cost a significant amount of money and further foreign investment of over $600 billion is sought. As such, the government has been making efforts to introduce private-sector participation in the roads and rail sectors, and proactively seeking foreign direct investment to develop its infrastructure needs.

For shipping, between 2011 and 2020, about VND 202 trillion was invested in seaport infrastructure development, accounting for 20.6 percent of total investment in transport infrastructure. Of this amount, more than VND 173 trillion, or 86 percent, was private and foreign investment. Vietnam has 44 seaports with a total capacity of 470-500 million tons per year and major ports include Hai Phong, Da Nang, Qui Nhon, and Ho Chi Minh City. Many of the world’s leading maritime transport and seaport enterprises are present in the country, including APMT, DP World, and SSA Marine. Although there have been significant strides in seaport development, the infrastructure surrounding the ports (especially the smaller ports) require improvement and coordination. The government’s plan is to develop a modern seaport system between 2021 – 2030 which is able to handle 1.14 – 1.42 billion tons of cargo, including 38 – 47 million TEUs of container goods. This expansion is estimated to cost approximately VND 313 trillion which is expected primarily from non-State sources.

The Vietnam Ministry of Transport (MoT) is the main government body responsible for overseeing the road, rail, inland waterway, sea and air transport systems nationwide. Other entities include the Directorate for Roads of Vietnam, the Vietnam Inland Waterways Administration, the Vietnam Maritime Administration, the Civil Aviation Authority of Vietnam (CAAV) and the Vietnam Railway Authority.

About

Operators in the infrastructure, transportation, shipping and maritime field face a number of unique requirements and challenges when establishing a presence and expanding in Vietnam. Maintaining profitability in a fast-paced and competitive market is a continuous task for the transport industry. Further, the contractual regulations surrounding cargo transport are often complex and involve international rules and agreements, requiring careful consideration and expertise over several sectors. In Vietnam, there are also numerous state ministries involved (beginning with the Ministry of Transport or MoT), some with overlapping jurisdictions, as well as laws and regulations that are continuously being amended, updated and clarified. Whether establishing a presence in the supply chain or expanding operations in Vietnam, it is imperative that your business is partnered with an experienced law firm.

Corporate Counsels knows how the transportation industry functions in Vietnam. We know its documentation and transaction models. We are able to navigate the various ministries and are aware of the regulators’ thinking on compliance. Due to over a decade of experience in the transportation industry, Corporate Counsels responds quickly and effectively to our clients’ diverse needs and requests. Our team handles a wide range of transportation matters and related transactions, including antitrust advice, construction, real estate, corporate structure, regulatory compliance, labor and employment, insurance, taxation, and licensing issues. Corporate Counsels’ services cover everything from drafting port user terms of service, risk allocation agreements for supply chain participants, negotiating and drafting terminal services agreements to providing advice and guidance to freight forwarders, commodities traders, ship owners and charterers, brokers and financiers on a variety of issues.