mai hien


Vietnam Railways to dump its cargo
Friday, 31 August 2018 01:46

State-owned giant Vietnam Railways will surrender its long-established monopoly in cargo transport to meet new development demands, opening up plenty of opportunities for private investors.

The Ministry of Transport (MoT) is now in the final stages of assessing Vietnam Railways’ (VNR) restructuring and divestment plan for 2017-2020, before submitting its report to the government for approval next month.

An end to the cargo transport monopoly

One of the highlights of the plan, proposed by VNR itself, is the merger of Hanoi Railway Transport JSC and Saigon Railway Transport JSC into one joint stock company (JSC). This JSC will be then separated into two entities, with one specialising in passengers, in which VNR will hold a controlling stake, and the other focusing on cargo transport, with VNR to possibly divest the entire state stake.

Currently, Hanoi Railway Transport JSC and Saigon Railway Transport JSC are the biggest operators of cargo transport in the industry.

 

“If approved, we could call on private investors to join and promote the development of cargo transportation, thus enabling it to compete with other transport segments, including aviation and road,” VNR chairman Vu Anh Minh told VIR.

The move comes after years of low operational efficiency at the two railway transport units.

According to the Ministry of Finance’s Document No.9280/BTC-TCDN, recently sent to the MoT, both Hanoi Railway Transport JSC and Saigon Railway Transport JSC have showed poor performance, and their competiveness has plummetted compared to aviation, road, and waterway transport.

As shown in the document, in 2017, VNR’s total revenue rose by 15 per cent on-year to reach VND7.77 trillion ($343.8 million), but its profit declined by 16 per cent to VND145 billion ($6.4 million), mainly because of a loss of VND88 billion ($3.89 million) at Hanoi Railway Transport JSC. Saigon Railway Transport JSC performed better than its Hanoi peer, but results remained lower than expected.

“These two companies are offering the same products and services and compete with each other, increasing the employed labour force but decreasing their productivity, competitiveness, and operational efficiency,” Minh explained.

“For example, as the industry’s running capacity is 21 couples of trains, one company is able to handle this number. But with two units, they reduced prices to attract passengers and customers, resulting in losses,” he said.

The proposal is expected to result in a breakthrough in VNR’s future operations, as the company reported low yearly profits of around VND150 billion ($6.64 million) for the past three years, partly due to the burden of numerous non-business lines on 100-year downgraded infrastructure.

At present, VNR is tasked with managing and maintaining the railway infrastructure network, while also monitoring railway transport and leasing railway assets.

As stated by the World Bank, nations which have separated the passenger and cargo transport businesses in their railway networks have proved efficient.

The MoT is also supporting VNR’s proposal. “The merger is necessary and the stake divestment in the cargo transport unit is an indispensable choice for long-term development. We expect better performance with the involvement of private investors,” said MoT Deputy Minister Nguyen Ngoc Dong.

With this new move, the railway industry is expected to receive new life in its private investment on the back of new policies and legislation.

 

The Law on Railways 2017, which entered into force in July 2018, introduces unique preferential mechanisms on import duty, corporate income tax, land use, and concessional loans, while Decree No.63/2018/ND-CP dated June 19, 2018 supports railway projects in the form of public-private partnerships (PPP).

What is more, the recently issued Decree No.46/2018/ND-CP governing the management and use of railway infrastructure assets will give VNR the right to own, use, and develop the assets indirectly involved in train operation with state capital recorded in the business, enabling it to take the initiative in its investment plan and to call on more favourable private investments.

Who will benefit?

According to Vaibhav Saxena of Vietnam International Law Firm, in the past, since urban railway projects were merely aimed at serving the needs of locals and foreign investors concentrated on incentives and returns on their investment, projects in the urban railway industry could not attract foreign investment and were mainly invested by state-owned enterprises.

However, with increasing attention from the government, foreign investors are more keen to invest in the urban railway development sector.

“In fact, the natural and geographical conditions of Vietnam are a win-win factor for the development of the railway network. Furthermore, the urban railway business is expected to receive ample support from the government. As the government has relaxed the limitations, a new investment arena has emerged for investors to explore,” said Saxena.

These moves are expected to back the expansion plans of Lotte Engineering and Construction Co., Ltd. (Lotte E&C), a subsidiary of Lotte Group, South Korea’s fifth largest corporation.

“We have come on board with construction projects in Vietnam in recent years. We will now expand operations in the country with a focus on railways, metro lines, and other transport infrastructure projects,” said Ha Suk Joo, president of Lotte E&C.

In a similar move, Siemens Group is also seeking opportunities to join several road and railway projects in Vietnam, while a number of foreign investors such as Russia’s EVRAZ–the world’s largest producer of rails–and Russia Export Centre Group have recently expressed interest in doing business with VNR.

Attracting foreign investment into the railway industry is a challenge not only in Vietnam, but worldwide.

The question is now whether VNR’s move and the country’s new policies and legislation are enough to help brighten the picture of private investment attraction in the industry.

 
Vinalines to list in Hanoi on September 5
Wednesday, 29 August 2018 02:52

Vietnam National Shipping Lines (Vinalines) will auction more than 488m shares in its initial public offering (IPO) at the starting price of VNĐ10,000 ($0.43) per share.

The IPO is scheduled to take place on September 5 on the Hanoi Stock Exchange. The offered shares are equivalent to 34.8% of Vinalines’ charter capital.

Period for application and deposit lasts from 8am on August 8 to 3pm on August 28. The deadline for the submission of auction tickets is 4pm on August 31.

South Korean-owned company SK Securities had registered to become Vinaline’s strategic investor. However, Vinalines refused as SK Securities does not meet Vinalines’ requests.

“Although they meet the requirement on financial capacity, SK Securities does not commit to supporting Vinalines in technology and human resources. Therefore, Vinalines will not select this investor and we have not yet found a suitable investor in this equitisation,” a Vinalines representative told local media.

Vinalines is a leading company in the field of maritime transportation and logistics, shipbuilding and seaport exploitation in Viet Nam. Some of its affiliates are the Haiphong Port, Saigon Port, the Viet Nam Ocean Shipping JSC, the Viet Nam Sea Transport and Chartering Company and Vinaship.

 
ZIM announces port calls on new Asia-USEC services with 2M
Monday, 27 August 2018 01:59

ZIM announced details of its new improved Asia-US East Coast (USEC) network following its recent tie-up with the 2M alliance.

 

ZIM Transpacific trade evp Nissim Yochai said: ”The new alignment will enable ZIM customers to enjoy the best of both worlds: ZIM’s highly reputed personalized service, along with the best-in-market infrastructure and product.”

As previously announced, the new network includes five services under the ZIM+2M cooperation, as detailed below:

§ ZIM Container Service Pacific (ZCP) - Excellent service from North & Central China, South Korea to US Gulf, Caribbean and South Atlantic, with Fast Transit Time from North Asia to South Atlantic, New calls in Xingang, Wilmington, Jacksonville and Pusan Westbound, and Connectivity to Halifax/ Caribbean/ US Gulf via Kingston

§ ZIM Big Apple (ZBA) - Best connection from South and Central China and South Korea to North Atlantic, Fast Transit Time to New York; Unique call in Baltimore; Import cargo to India Sub Continent and South East Asia

§ ZIM Seven Stars (Z7S) - Fast Transit Time from South China, Vietnam and South East Asia to US East Coast; New direct calls Miami, Charleston and Singapore

§ ZIM Sunny Atlantic Express (ZSA) - Express service from Taiwan, China and South Korea to South Atlantic; Fast Transit Time from Asia to Savannah; New direct calls in Xiamen and Miami

§ ZIM New Frontier (ZNF) - Express service from Thailand, South East Asia and India Sub-Continent to US East Coast; Fast Transit Time from South East Asia and India Sub Continent to New York; New direct call in Laem Chabang; New direct call in Singapore; Fast Transit Time from Thailand to US East Coast

The new schedules will kick off with the first sailing of the 8,648 teu Columbine Maersk on the ZIM Seven Stars service from Chiwan on September 12. This vessel is currently already running services to USEC for Maersk.

The partners had previously announced 2M would be operating four of the five loops with ZIM taking up the last one.

 
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