Hai Phong, one of the biggest port in Vietnam, is having its second life
Source: Frankfurter Allgemeine by Christoph Hein — 14/01/2015
Frank Wouters is not a man who is easily rattled. The Belgian has found a pragmatic solution for dealing with the Vietnamese army: “Once a year, we buy the soldiers a buffalo. They breed them right here on our doorstep. It costs us five-hundred dollars, we barbeque it together. There is no better way to maintain a friendship,” says the 43-year-old. The trick with the buffalo is a successful one. Ultimately, the annual bovine purchase secures the successful performance of Belgian company Rent-A-Port, which is among the big players in the North Vietnamese harbour town of Haiphong.
The Belgians have taken a leading role in the expansion of the Dinh Vu Industrial Zone, a concern of which, via financial vehicle Infra Asia Development, they retain 65.1 percent. 65 businesses have already relocated to the 600-hectare site, among them the world’s leading tyre manufacturer Bridgestone. Now, in the second stage of development, a giant, deep-water harbour will be built. It is intended to be the centrepiece of North Vietnam’s economic expansion. While development in the south of the country has been enormous, the north has lagged behind until now. The Belgians, from the diamond and harbour-city of Antwerp, intend to expand to cover a total of 1800 hectares. The opening of the deep-water harbour is set for 2017.
The bet on the future seems to be working. At the end of October, 2015, Japanese company Bridgestone inaugurated a factory, in which it has invested 1.2 billion Dollars, in Dinh Vu. 80,000 tyres will roll from the production line daily. German plasterboard enterprise Knauf has also moved its Vietnamese production base to Dinh Vu. “The government takes an enormous interest in Haiphong’s expansion. The authorisation for Bridgestone’s relocation took only ten days, and only four days for Knauf,” says Wouters in promotion of the area.
The investment in Dinh Vu totals more than three billion dollars. In 2013, a profit of 36 million dollars was posted. “The Vietnamese aren’t playing the Chinese game. We close our books at the end of the year, in April the profit is in the account in Belgium. Here there is no subsequent taxation, as there is in India,” says Wouters.
Bridgestone relocated their planned works expansion from India to North Vietnam, he reveals. Electronics manufacturers LG and Samsung are completing the world’s largest mobile phone factory in the region. In total, the government, investors and Japanese development aid are pumping more than 9 billion dollars into the expansion of Haiphong’s industrial zone and harbour. In the long term, the final bill for the whole infrastructure is expected to come to around 20 billion dollars. The city state of Singapore is developing its own industrial area on the other side of the harbour. All of this isn’t enough for Haiphong, however. The town wants to build a motorway to the capital city of Hanoi, 122 kilometres away. Currently, the journey takes three hours and is risky. “Twenty freight flights leave Hanoi for Europe every day, carrying mobile phones built here, for example,” says Wouters, “Our harbour will also profit from these factories.” A large airport is planned for the northern metropolis in 2016.
Pay in the Haiphong area remains around 50 percent lower than in the factories of South China. 700,000 people in the town are younger than 18; the average age is 27. People in Haiphong will be looking for attractive long-term jobs. Therefore, not only electronics companies, but also textile businesses are showing interest in the factories in this growing market. More than 500 overseas companies have already established themselves in this town of around 2 million inhabitants. Many of these companies are banking on the proximity of South China: the industry there could easily be connected to Haiphong over land or via shipping channels. This would give the new harbour in North Vietnam the role of relieving the strain on nearby harbours in China. This is not a small-scale operation: Dinh Vu’s harbour is planned to have quays stretching over a total length of 14 kilometres. As excavations are being carried out to a depth of 14 metres, large ships will be able to be unloaded here. There is no other harbour within a radius of 600 kilometres which will be able to offer such a clearance depth. The Belgians seem self-assured: “We have the ‘McDonalds formula’ to reproduce harbours around the world,” says Wouters
Duong Anh Dien knows all these figures by heart. The Chairman of the People’s Committee in Haiphong receives us in a large, wood-panelled assembly room in a giant, colonial building. “Our greatest challenge is securing work positions,” says the Chairman. “The free-trade treaty with Europe and the economic community in South-East Asia should give Haiphong a leading role in the industrialisation process.” The town is helping with tax credits over a period of years. For the first eight years, investors will not pay any profits tax whatsoever. Thereafter, tax rates will climb slowly to reach 20 percent in Year 15 of the settlement project.
Haiphong has earned money as owner of a 25 percent stake in the industrial zone of Dinh Vu. This is also the intention in the service of larger projects. “We want to overcome poverty and combine economic development with social equality. Otherwise there will be unrest,” warns Dien. “By 2025, three million people will live here and be really integrated in the wider world. Then, Haiphong will have grown into a Service and Logistics centre for Vietnam and Southern China,” says the party member with his un-dyed, grey hair. “You see: the French built our harbour here during the colonial times. Even then, it was conceived as an export point for the south-Chinese province of Yunnan. It’s 500 kilometres closer to the capital, Kunming, than the way to the West through Burma to the coast,” calculates Dien. And competition from the Burmese? “We must simply be the better service provider,” answers the communist. “You know, we’re really not doing anything today except carrying out old plans by new means.”
