Over $2 bln to bolster Vietnam, Southeast Asia logistics

The logistics sectors in Vietnam and Southeast Asia are set to receive a significant boost following a new partnership between the World Bank’s private-sector arm IFC and two regional leading companies, with more than $2 billion to be invested over the next five years.

Over the next 12 months, IFC, the largest global development institution focused on the private sector in emerging markets, will help Singapore’s YCH Group and Vietnam’s T&T Group develop a bankable and sustainable project by providing technical expertise, helping the developers mitigate risk and strengthen environmental and social standards, the World Bank’s investment arm announced Thursday in Singapore.

The multimodal logistics hub project, called Vietnam SuperPort and located in Vinh Phuc province bordering Hanoi, is being developed by T&Y Superport Vinh Phuc Joint Stock Company, a joint venture between YCH and T&T.

"YCH Group intends to invest more than $2 billion in the next five years to enhance ASEAN connectivity to improve intra-ASEAN trade, as well as trade with the rest of the world," YCH Group chairman Dr. Robert Yap said in the announcement.

"The partnership with IFC ensures bankable financial solutions to keep pace with the development of the ASEAN Smart Logistics Network, or ASLN, and Smart Growth Connect. With the unwavering support of the key leaders and colleagues in ASEAN communities, we are confident that the establishment of the ASLN and many more innovative initiatives will drive positive economic and social impacts to the overall ASEAN economy so that communities will continue to thrive.

“This is the beginning of a sustainable partnership with IFC for infrastructure across ASEAN in developing smart logistics and beyond,” said Yap, who is also Singapore chair of ASEAN Business Advisory Council.

Do Quang Hien, chairman of Vietnam’s T&T Group, said: "We are confident that the Vietnam SuperPort, a multimodal logistics hub built with cutting-edge technologies, will reduce the cost of logistics and improve time to market, thereby improving trade connectivity to the world, boosting our economy, as well as contributing to the symbiotic and sustainable growth of Vietnam."

Vietnam SuperPort is strategically located near local ports, Noi Bai International Airport, and border posts with China and Laos.

The inland port is also situated within reach of 20 industrial parks, enabling it to become a supply-chain hub for local manufacturing operations. The facility is expected to capture roughly 10% of the total container traffic generated in northern Vietnam. It will help improve the efficiency of Vietnam's logistics sector and reduce the cost of logistics services, which remain high in Vietnam, accounting for 21% of its gross domestic product in 2019, compared to less than 10% in developed countries in the OECD (Organization for Economic Cooperation and Development), according to the IFC.

YCH and T&T broke ground on the project in late 2021. It will be one of Vietnam’s first ICDs with multimodal facilities, including an international distribution center and an inland port for rail connectivity and air transportation.

It is expected to significantly improve the processing of domestic and international trade, reducing logistics costs and improving the country's trade competitiveness as it aims to become a new regional supply-chain hub, the first in the ASEAN Smart Logistics Network.

Total investment capital for the project is expected to be around $300 million, according to the IFC.

The investment giant said it will support YCH and T&T in making the logistics hub's infrastructure green and sustainable, supporting Vietnam in its efforts to reach its net-zero carbon emissions target by 2050. IFC also has the right to act as lead arranger of long-term financing for Vietnam SuperPort.

"We are delighted to partner with YCH Group and T&T Group to support the development of the Vietnam SuperPort, leveraging our substantial knowledge of the global ports and logistics sectors and strong project structuring track record," said Alfonso Garcia Mora, the IFC's regional vice president for Asia and the Pacific.

“The project will not only help strengthen Vietnam's logistics and freight sector to support the growth of the country's manufacturing industry and bolster economic development. It could also serve as a model for YCH to replicate in other regional markets, which will eventually help improve logistics performance in the ASEAN region,” the IFC leader added.

Second in the ASEAN Smart Logistics Network is the “Cambodia SuperPort” that the IFC announced also Thursday as an IFC collaboration agreement with YCH and Cambodia’s largest logistics provider, WorldBridge Group. “The new partnership will deliver a major boost to infrastructure, trade, and connectivity in Southeast Asia,” IFC said.

Under the agreement signed in Singapore on Thursday, a joint venture between YCH and WorldBridge is developing a Phnom Penh Logistics Complex known as Cambodia SuperPort.

The IFC said the signing ceremony marked “another major milestone to develop logistics and supply chain connectivity across the Association of Southeast Asian Nations.”