Special incentives needed to make Soc Trang mega seaport project feasible

The Mekong Delta province should offer special incentives to make the Tran De mega seaport project more attractive to investors, said experts and corporate leaders.

Gateway to the sea

The Prime Minister has issued a decision approving plans, policies, solutions and resources to implement the master plan for the development of Vietnam's seaport system from 2021-2030, with a vision to 2050.

Under the plan, Tran De seaport in Soc Trang province has been identified as the gateway port of the Mekong Delta region, with an investment of VND51 trillion ($2.14 billion) for the first phase to be sourced from the private sector.

The provincial People's Committee and the Construction Consultation JSC for Maritime Building (TVH) – the consulting unit – are conducting a pre-feasibility study for the project.

Le Tan Dat, deputy CEO of TVH, said that Tran De seaport will gradually bring logistics costs in the Mekong Delta closer to key economic regions in the country and the region.

It is designed to be a gateway port for direct imports and exports of the Mekong Delta region and forwarding import and export goods to Cambodia and countries in the Mekong sub-region, he said.

The seaport will receive vessels of up to 160,000 deadweight tons (DWT) and handle 30-35 million tons of goods a year by 2030. By 2050 and beyond, the seaport will receive vessels of up to 200,000 DWT and handle 80-100 million tons of goods annually.

Tran De seaport will cover about 5,400 hectares, including 1,400 hectares for an offshore port area and 4,000 hectares for an onshore logistics service area and transshipment port. The project will feature an 8.3-kilometer breakwater, an 18-kilometer sea-crossing bridge; and 15 berths, each 5.5 kilometers long.

"The Tran De deep-water port project has a large investment capital, with slow capital recovery, and is being built in a particularly difficult area. Therefore, Soc Trang province should ask relevant ministries and agencies to assist in the development of a legal framework to create more attractive mechanisms to draw private resources," Dat said.

According to Le Quang Trung, deputy CEO of Vietnam Maritime Corporation, vice chairman of the Vietnam Logistics Business Association and chairman of Can Tho Port JSC, the total volume of goods in the Mekong Delta is forecast to reach over 50 million tons per year, with an import-export turnover of over $20 billion. However, the region’s transportation capacity is very limited, mainly by road with very high costs.

"A container shipped by sea can save 20-30% compared to by road. Therefore, investment in Tran De seaport is an urgent need to strengthen the Mekong Delta," he said.

Echoing Trung, Pham Thai Binh, CEO of Trung An Hi-Tech Farming JSC, said that the whole Mekong Delta region has over 40 million tons of import and export goods every year. If there is a seaport for direct exports and imports, businesses will save hundreds of millions of dollars each year.

Special incentives needed

Thi Ha, an expert at Japan’s Nippon Koei Co., Ltd (Japan), said that Tran De port will play an important role in the development of the Mekong Delta as it is closer to eight localities in the region than Cat Lai port in Ho Chi Minh City and Cai Mep-Thi Vai port in Ba Ria-Vung Tau province.

The distance from Cambodia via the Mekong River and the Chau Doc-Can Tho-Soc Trang Expressway to Tran De port is also shorter than from the HCMC port, he added.

However, the project will be built near the river mouth, where the sedimentation rate is high. The cost of building offshore ports, the breakwater and bridge connecting the onshore and offshore ports will also be high, along with a long construction period. Meanwhile, its cargo throughput will be less than other ports, making it difficult to lure private capital, said Thi Ha.

To increase its attractiveness, he proposed to increase the proportion of public investment capital in this project. The state budget should cover the bridge and breakwater construction, yard upgrades, channel dredging, and the building of roads, electricity and water supply systems.

Deputy CEO of T&T Group Nguyen Anh Tuan said that with the development potential of Tran De seaport, the group wishes to cooperate with Soc Trang province to invest in a 1,300-hectare industrial urban area in the port.

"To make the project more attractive to investors, we recommend the government allow special investment incentives in this project such as increasing the project lifespan to 70 years and applying the most preferential tax rates for investors," Tuan said.

Former Secretary of the provincial Party Committee and former Minister of Transport Nguyen Van The held that the sooner the investment in Tran De seaport is made, the sooner opportunities for breakthroughs in the Mekong Delta will materialize.

"With this potential, the government can increase the public investment ratio to 50-70% in the form of a public-private partnership (PPP) and lengthen the project's life cycle to 70 years to make it more attractive to investors," said The.

In October 2022, South Korea’s investment fund FG Corporate said that it was seeking investment opportunities in Vietnam's infrastructure sector, particularly the Tran De deep-water seaport in the Mekong Delta province of Soc Trang.

The seaport will improve maritime transport in the region, open up new domestic and international cargo routes for ships, and enhance the competitiveness of Vietnamese goods, said the company's representative at a meeting with local authorities.

Vietnam needs to invest $13 billion in seaport infrastructure by 2030 to improve the handling of container goods from the current 24 million twenty-foot equivalent units (TEU) a year to 30-40 million. About 90% of the capital should be mobilized from the private sector, Le Cong Minh, chairman of Vietnam Port Association (VPA), said at an event in September 2022.