Industries in the Vung Ang Port
Although the Vung Ang Port has been receiving increasing attentions from investors with the development of the Son Duong Port, until very recently, the main users of the Vung Ang Port were mostly limited to woodchip industries. About 5km from the Port, there are two woodchip storage yards, one owned by a Japanese trading company, and the other shared by a Korean company and a local company. However, this industrial landscape at the Port is about to change with the development of the Son Duong Port next to the Vung Ang Port, and the Vung Ang Economic Zone (EZ) in the vicinity. In order to secure a position of the woodchip industry’s transshipment throughout the Vung Ang Port, it is important to understand the trends of other industries’ investment.
5.3.1 The Vung Ang Economic Zone
The idea of developing the area as an economic zonewas long held, and approved by the Prime Minister in April, 2006. The total area mounts to 22,781ha, situating in 9 southern communes of Ky Anh district. The EZ is now eventful with 60 projects licensed, of which total investment capital registered becomes above US$ 10 billion (VND 180,000 billion). Some of the main projects include a steel mill project with US$ 8 billion investment by Taiwanese Formosa Group, Tau Voi lake tourism service center valued about US$ 70 million, Vung Ang I thermal electricity plant valued as US$ 1.2 billion, and a steel refining plant with US$ 100 million investment by Ha Tinh Iron and Steel Joint Stock Company. In addition, some other major projects which are to be licensed are US$ 12 billion petro-refining and chemistry mill project invested by the Formosa Group, US$ 5 billion steel complex project invested by TATA group, India, billet fining project invested by Thach Khe Steel JSC., industrial zone and vocational training school project invested by Dream City KVD Company of Korea. Because of the possession of an ideal deep sea port, the Ha Tinh Province, one of the poorest province in Vietnam, is about to become the center of foreign direct investment of Vietnam.
5.3.2 Woodchip Companies
Although many industrial development projects are going on in the Vung Ang EZ, until the completion of the factories, woodchips companies remained to be the main clients of the Vung Ang Port. As introduced above, there are mainly three woodchip companies in the area—Japanese, Korean, and Vietnamese. The Japanesecompany entered into the area first, and handles the largest amount. The company keeps about 70,000 tons of woodchips at the yard, but it says the supply cannot keep up with the demand. The main destination of shipping is either to Japan or China. The Korean company also ships a part of woodchips to Japan. In the future development plan of the Vung Ang Port planned by the Maritime Administration of Ha Tinh Province, Berth No.5 is planned to be constructed next to the woodchip yard currently owned by a Japanese tradingcompany. However, there is no specific time frame as to when to be built, thus until then,it needs to repeat unloading and reloading by trucks several times, rather than directly conveying woodchips to ships from the stock yard. The shipping cycle from Vietnam to Japan takes about 45 days, using 20 trucks per loading. The distance between the yard and the Port makes the Japanese company to bear extra transporting cost—once when collecting from individual timber suppliers, the next when transporting to the ship from the yard. Thus, if the agro-forestry companies in the central Laos were to make profitable transshipment, securing a closer woodchip storage yard to the operating berths is crucial.
5.3.3 Thermal Power Plant
In the northern side of the Vung Ang Port, the VungAng Thermal Power Plant No.1 was started to be implemented from the end of 2006, and is still under construction. Being invested by the Vietnam National Oil and Gas Group (Petro Vietnam), this is currently the largest coal power plant in Vietnam. It comprises of two turbines with a combined capacity of 1,200MW, which is expected to contribute 8 billion KWH of electricity to the national grid per year. Upon the completion, it will be the third power plant in Vietnam after those in Hanoi and Ho Chi Minh. This Power Plant is expected to save power and cost of providing electricity to central provinces rather than transmitting in a long distance either from Hanoi or Ho Chi Minh. The construction is processed by the Vietnam Machinery Erection Corporation (Lilama) and the Babcock & Wilcox Beijing Company, scheduled to be completed by 2013. It was also reported that Lilama and PACO were approved by the Vietnamese government to invest in the Vung Ang Thermal Power Plant No.2, and to create a Thermal Power Plant Center having a total capacity of 4,800MW with the capital of US$ 3 billion. However, according to the local source, this development plan has not yet solidified. In addition, according to the Ha Tinh Port Joint StockCompany, there is also a plan to develop two berths for the power plant at the west of the V ung Ang Port. If completed, the power plant will be an important electricity provider to industries expected to come into the Vung Ang Economic Zone in the future.
5.3.4 Industries in the Son Duong Port
Because of the deep sea port’s capacity of berthingabout 200,000-400,000 DWT size ships, multi-national corporations like Formosa and TATA decided to conduct large scale capital investment projects in the Vung Ang EZ. Although steel and oil industries are planning to use the Son Duong Port in the future, for agro-forestry companies in central Laos, a competition over available land for the woodchip storage yard is likely to happen between the following industries.
1) Steel Industry
In the west of the Vung Ang Economic Zone, a steel rolling plant of Van Loi Corporation is being under the completion stage that will provide products in the beginning of 2010. The Vung Ang EZ Authority is also currently under the process of finalizing and giving investment license to a steel project invested by TATA (India)having a capacity of 4.5 million tons/year, with a total capital of 5 billion USD. In addition,there is another steel rolling project invested by Thach Khe Iron Ore Joint Stock Company having a capacity of 2 million tons/year with a total capital of 2 billion USD. Considering that the Van Loi Corporation is producing 500 thousand tons per year, and Formosa producing 7.5 million tons per year, all together, the emersion of the large scale steel industry in Vung Ang will surely speed up the investment of many auxiliary enterprises.
2) Oil and Petroleum Industry
In between the Son Duong Port and the Vung Ang Port, the Vung Ang Oil and Petroleum Company is setting connected oil tanks and finishing off the construction of their oil center by putting operation buildings. Once completed, it is ready to supply gas and petroleum to industries coming in the Economic Zone, and addressing to the market in Laos and North Eastern Thailand as well. The Formosa group received a basic approval by the Vietnamese government on its 12.47 billion USD Petrochemical and Oil Refinery Project in the Vung Ang Economic Zone. The refinery will be constructed at the 1,600 ha site next to their steel plant, now under construction. The project was originally approved based on the condition that the group will invest in the development of the Son Duong Port, which has started from 2008 as explained in the chapter above. Once the project is completed, it is expected that the refinery will have a capacity of producing 300,000 barrels of oil per day and 16 million tons of petrochemicals. After coming into operation, the project will employ up to 9,000 workers and churn out a wide range of products such as benzene, gasoline, ethylene and propylene.
3) Tourism
Although a concrete plan is not yet in picture, the area has a potential to grow its tourism business. As in the chapter above, Tau Voi Lake Tourism Service Center was agreed to be constructed by the EZ Authority in the Economic Zone. In addition, the completion of Road No.12 connecting the Ha Tinh Province all the way to Thailand increased the possibility of growing trans-national tourism plan experiencing varieties of culture and cuisine. The nature around the area, if preserved along with industrial development, allows a growth of eco-tourism and beach resort. The beach resort in the south of Vung Ang Port, which is currently known only by locals, could be improved to attract tourists from wide areas.
4) Others
Other possible industries include the Metal Refining Industry using rich natural and material resources in the area, such as Thach Khe iron ore, Titanium, and Manganese, Industries of mechanics, motor producing, consumer goods production, electronics, construction materials, ship building and repairing, labor consuming industries and other export oriented industries that could also be competitors at the Vung Ang areafor the woodchip industry.
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