The Study for Tien Sa - Da Nang Port Improvement Project ...Tien Sa - Da Nang Port Improvement Project (Phase 2) Final Report December 2014 JAPAN INTERNATIONAL COOPERATION AGENCY (JICA)

THE SOCIALIST REPUBLIC OF VIETNAM MINISTRY OF TRANSPORT PROJECT MANAGEMENT UNIT 85

The Study for

Tien Sa - Da Nang Port Improvement Project (Phase 2)

Final Report

December 2014

JAPAN INTERNATIONAL COOPERATION AGENCY (JICA) JAPAN PORT CONSULTANTS, LTD. THE OVERSEAS COASTAL AREA

DEVELOPMENT INSTITUTE OF JAPAN

1R

JR

14-051

Breakwater

Tien Sa Terminal

Access Road

Pier No.1

Pier No.2

Birth-5

0 100 200 300 m

Satellite Image in Project Site (Tien Sa Port)

Birth-1

Birth-2 Birth-3

Birth-4

Pier No.3

Bathymetric/Topographic Map in Project Site (Tien Sa Port)

Source: Draft Feasibility Study Report for Tien Sa Terminal - Da Nang Port Improvement Project (Phase 2) in Da Nang, 2014, PMU85

Layout Plan Prepared by Study Team

Abbreviations ADB Asian Development Bank AIDS Acquired Immune Deficiency Syndrome ASEAN Association of South-East Asian Nations AH Asia Highway B Beam BA Bidding Assistance BD Basic Design CFS Container Freight Station CKEZ The Central Vietnam Key Economic Zone CS Construction Supervision DARD Department of Agriculture and Rural Development DD Detailed Design DONRE Department of Natural Recourse and Environment DPA Da Nang Port Authority DPC Da Nang Port Holding Limited Liability Campany DWT Deadweight Ton EIA Environment Impact Assessment EIRR Economic Internal Rate of Return EWEC East-West Economic Corridor EZ Economic Zone FIRR Financial Internal Rate of Return GC General Cargo GDP Gross Domestic Product GRT Gross Ton GMS Great Mekong Sub-region HCMC Ho Chi Minh City HIV Human Immunodeficiency Virus HWL High Water Level ICB Interlocking Concrete Block ICD Inland Container Depot IZ Industrial Zone JICA Japan International Cooperation Agency JPY Japanese Yen LOA Length Over All LWL Low Water Level

MONRE Ministry of Natural Recourse and Environment MOT Ministry of Transport NH National Highway ODA Official Development Assistance OECF The Overseas Economic Cooperation Fund OEZ Open Economic Zone O/M Operation and Maintenance PAP Project Affected People PC People’s Committee PIANC International Navigation Association PMU85 Project Management Unit 85 RAP Resettlement Action Plan RS Reach Stacker RTG Rubber-Tyred Gantry RWL Residual Water Level SAPROF Special Terms for Project Formation SEZ Special Economic Zone SS Suspended Solid SSG Ship to Shore Gantry STEP Special Terms for Economic Partnership TEU Twenty-foot Equivalent Unit TOR Terms of Reference VINALINES Vietnam National Shipping Lines VINAMARINE Vietnam Maritime Administration VND Vietnamese Dong VMS Vietnam Maritime Safety WB World Bank

Satellite Image in Project Site (Tien Sa Port) Bathymetric/Topographic Map in Project Site (Tien Sa Port) Layout Plan Prepared by Study Team Abbreviations

CONTENTS

1． Approach of Study ................................................................................................................ 1

1.1 Project Background ................................................................................................................................. 1

1.2 Flow of Study ........................................................................................................................................... 2

2． Review of DFS Report .......................................................................................................... 3

2.1 Objective of Project ................................................................................................................................. 3

2.2 Back Ground and Necessity of Project .................................................................................................. 3 Current Condition of Tien Sa Port ..................................................................................................... 3 (1) Issues of Da Nang Port and Other Ports in Vietnam .......................................................................... 9 (2) Current Trend and Policy of Industrial Developments in Da Nang Port Hinterlands ...................... 11 (3) Activities of Overseas Aid Organizations to Ports Projects in Vietnam ........................................... 42 (4) Current Condition of Road and Railway Network ........................................................................... 42 (5) General Concept of Da Nang Port Development ............................................................................. 60 (6) Traffic Demand for Tien Sa Port ...................................................................................................... 64 (7) Necessity of Project ......................................................................................................................... 72 (8)

2.3 Project Scope .......................................................................................................................................... 78 Terminal Layout ............................................................................................................................... 78 (1) Yard Layout ...................................................................................................................................... 81 (2) Basic Design of Major Facilities ...................................................................................................... 86 (3) Construction Method and Schedule ................................................................................................. 99 (4)

2.4 Procurement Method ........................................................................................................................... 102

2.5 Draft TOR for Consulting Services .................................................................................................... 103

2.6 Project Cost and Financial Plan ......................................................................................................... 103 Project Cost .................................................................................................................................... 103 (1) Financial Plan ................................................................................................................................ 105 (2)

2.7 Implementation Schedule .................................................................................................................... 105

2.8 Implementation Structure of Project ................................................................................................. 106

2.9 Management System of Port Development in Central Vietnam ...................................................... 106

2.10 Structure and Budget for Maintenance and Operation ................................................................. 107 Operation System ........................................................................................................................... 107 (1) Potential Local Operator ................................................................................................................ 108 (2) Potential International Operator ..................................................................................................... 112 (3) Maintenance System ...................................................................................................................... 112 (4)

2.11 Operational Efficiency and Economic and Financial Analysis ...................................................... 114 Operational Efficiency ................................................................................................................... 114 (1) Financial Analysis .......................................................................................................................... 114 (2) Economic Analysis......................................................................................................................... 127 (3)

2.12 Natural Conditions Study ................................................................................................................. 132 Land and Seabed Elevations .......................................................................................................... 132 (1) Sub-soil Conditions ........................................................................................................................ 132 (2) Wind Conditions ............................................................................................................................ 133 (3) Wave .............................................................................................................................................. 133 (4) Water Level .................................................................................................................................... 133 (5) Seismic Condition .......................................................................................................................... 134 (6)

2.13 Environmental Considerations ......................................................................................................... 135 Overview of Project Components that gives Environmental and Social Impacts .......................... 135 (1) Background of Natural and Socioeconomic Environmental Conditions ....................................... 138 (2) Organization and Legislation for Environmental Considerations in Vietnam ............................... 139 (3) Assessment of Alternatives ............................................................................................................ 140 (4) Scoping and TOR for Environmental Surveys ............................................................................... 141 (5) Results of Environmental Surveys and Simulations presented in the Project EIA Report ............ 142 (6) Impact Assessment ......................................................................................................................... 146 (7) Impact Mitigation Measures and Cost ........................................................................................... 148 (8) Monitoring Program....................................................................................................................... 150 (9) Public Consultations .................................................................................................................... 155 (10) Necessity of Resettlement ............................................................................................................ 157 (11) Monitoring Form (proposed) ....................................................................................................... 158 (12) Environmental Check List ........................................................................................................... 162 (13) Environmental Regulation on Industrial Zones by Da Nang City ............................................... 163 (14) Post-resettlement Conditions Survey ........................................................................................... 163 (15)

3． ATTACHMENT ................................................................................................................ 166

3.1 Construction Cost ................................................................................................................................ 166

3.2 Draft TOR for Consulting Services .................................................................................................... 170

3.3 Financial Plan ...................................................................................................................................... 182

3.4 Environmental Check List .................................................................................................................. 183

List of Figure

Figure 1-1 Da Nang Port Map ..................................................................................................................1 Figure 1-2 Flow of Study ..........................................................................................................................2 Figure 2-1 Handling Volume of Da Nang Port .........................................................................................3 Figure 2-2 Distribution of Shippers and Consignees of Container Cargo (Provinces) .............................7 Figure 2-3 Facilities Layout of Da Nang Port ..........................................................................................8 Figure 2-4 Container Handling Volume (TEU) of Container Ports in CKEZ Provinces ..........................9 Figure 2-5 Industrial Zone in CKEZ (1) .................................................................................................17 Figure 2-6 Industrial Zone in CKEZ (2) .................................................................................................17 Figure 2-7 Industrial Zone in CKEZ (3) .................................................................................................18 Figure 2-8 Industrial Zone in CKEZ (4) .................................................................................................18 Figure 2-9 Entrance of Da Nang IZ (Left) and Companies Located in the IZ (Center, Right) ...............24 Figure 2-10 Entrance of Hoa Cam IZ (Left), Trailers Turning Around to Enter the IZ from the Da Nang

Port (Center), and Inland Container Depot in the IZ (Right) ..........................................................24 Figure 2-11 Entrance of Hoa Khanh IZ (Left), a Factory Complex Managed by a Japanese Trade Firm

(Center), and Another Japanese Factory (Right) .............................................................................25 Figure 2-12 Construction Site on the Way Connecting Hoa Khanh IZ with Tien Sa Terminal (National

Highway No.1) (Left) and a Trailer Detouring in the City Center (Right) .....................................25 Figure 2-13 Auto Assembly Plant Located in Hoa Khanh Extended IZ (Left and Center), and Road in

the IZ (Right) ..................................................................................................................................26 Figure 2-14 Factory (Left), Road (Center), and Railway Yard (Right) in Lien Chieu IZ .......................26 Figure 2-15 Construction Site of Da Nang Hi-tech Park (Right Picture Shows an Access Road to

National Highway No.1) .................................................................................................................27 Figure 2-16 Main Gate, Factory and Road of Dien Nam - Dien Ngoc IZ ..............................................28 Figure 2-17 Access Road to Dien Nam - Dien Ngoc IZ from Da Nang Port (Left: in Da Nang City,

Center and Right: in Quang Nam Province) ...................................................................................28 Figure 2-18 Gate (Left), Auto Assembly and Chemical Plant (Center), and Another Auto Assembly

Plant (Right) in Chu Lai OEZ .........................................................................................................29 Figure 2-19 Access Road (Right), Gate of Commercial Port (Center) and a Berth of Military Port (Left)

in Ky-Ha Port ..................................................................................................................................29 Figure 2-20 Oil Storage (Left) and Road (Right) in Chan May - Lang Co EZ and Chan May Port

(Right) .............................................................................................................................................30 Figure 2-21 Entrance (Left), Factory (Center) and Expanded Site (Right) of Phu Bai IZ .....................31 Figure 2-22 Current Status of Thuan An Port .........................................................................................31 Figure 2-23 Factory (Left), Access Road (Center), and Entrance of Access Road from National

Highway No.1 (Right) in Tu Ha IZ .................................................................................................31 Figure 2-24 Factory (Left), Commuter Bus (Center), and Location Site (Right) in Phong Dien IZ ......32

Figure 2-25 Access Road to Phong Dien IZ from National Highway No.1 (Left: Intersection with National Highway No.1, Center: Road to be Improved, Right: Overpass of Railways to be Built) ........................................................................................................................................................32

Figure 2-26 Factory of Heavy Manufacturing Industry (Left) and Wood Processing Industry (Center), and Road and Gate (Right) in Dung Quat EZ .................................................................................33

Figure 2-27 Private Ports in Dung Quat EZ............................................................................................33 Figure 2-28 East-West Economic Corridor of the Greater Mekong Subregion and Da Nang Port ........35 Figure 2-29 International Trade Flow for Each National Border in the Northeast Thailand to Lao PDR

........................................................................................................................................................35 Figure 2-30 Location Map of Four Sites (Site A to D) of Savan-Seno SEZ ...........................................36 Figure 2-31 Factories Located in Site B (Left and Center) and Reserved Area (Right) .........................37 Figure 2-32 Factory Located (Left) and Branches of Bank Constructed (Center) in Site D and Trailers

Stopping in the Front of Hyundai Factory (Right) ..........................................................................37 Figure 2-33 Current Status of Savan Park (Site C of Savan-Seno SEZ) as of May 2013 ......................38 Figure 2-34 Gate (Left), Factory (Center), and Reserved Area (Right) in Savan Park ...........................39 Figure 2-35 Improved (Left) and Improving (Center, Right) Section of the EWEC in Lao PDR ..........39 Figure 2-36 Damaged Section of Road not Covered in the Project (a few Similarly Damaged Sections

Remain) ...........................................................................................................................................39 Figure 2-37 National Border between Vietnam (Lao Bao, Left and Center) and Lao PDR (Dan Savanh,

Right). Trailer Covered with a Blue Sheet in Center Picture is Transporting Round Wood ...........39 Figure 2-38 Transshipment Station of Containers in order to Change Chassis and Trailer (Located near

the Checkpoint in Lao, 15 km from the National Border) ..............................................................40 Figure 2-39 Main Port Access Roads......................................................................................................43 Figure 2-40 Major Intersections on Main Port Access Roads ................................................................45 Figure 2-41 Simple Calculation Method for Estimating Roundabout Capacity .....................................46 Figure 2-42 Elevated Intersection at Ton Duc Thang / Truong Chinh / Dien Bien Phu .........................50 Figure 2-43 Current Traffic Condition at Signalized Intersection (No. 8) on Cach Mang Thang 8 Street

........................................................................................................................................................52 Figure 2-44 Traffic Diversion from Cach Mang Thang 8 Street to NH1 by New Bridges .....................53 Figure 2-45 Major Access Road to Da Nang Port from Industrial Zone in CKEZ .................................55 Figure 2-46 Widening from 2 Lanes to 4 Lanes and Phuoc Tuong Pass Tunnel on NH1 ......................58 Figure 2-47 Site of Tho Quang Terminal ................................................................................................62 Figure 2-48 Container and General Cargo Handling Volume in Tien Sa Port ........................................63 Figure 2-49 Current Condition and Improvement Layout Plan ..............................................................64 Figure 2-50 Share by Each Province on Export-Container Cargo Volume of Da Nang Port in the First

Quarter of 2014 ...............................................................................................................................65 Figure 2-51 Share by Each Province on Import-Cargo Volume of Da Nang Port in the First Quarter of

2014 ................................................................................................................................................65

Figure 2-52 Estimated Container Cargo Volume ....................................................................................69 Figure 2-53 Estimated General Cargo Volume .......................................................................................70 Figure 2-54 Result of V/C analysis (2025) .............................................................................................77 Figure 2-55 Recommended Terminal Layout (7A) in DFS Report ........................................................78 Figure 2-56 Distance between Face Line of Berths ................................................................................79 Figure 2-57 Comparison of Berth Layout ...............................................................................................80 Figure 2-58 Typical Cross Section of Pier and Rubble Mound Structures .............................................80 Figure 2-59 Layout Plan prepared by Study Team .................................................................................82 Figure 2-60 Typical Section of Apron .....................................................................................................84 Figure 2-61 Typical Section of Container Road .....................................................................................85 Figure 2-62 Typical Section of Truck/Passenger Road ...........................................................................85 Figure 2-63 Rate of Overtopping for Wave-Absorbing Seawall (Bottom Slope 1/30) ...........................91 Figure 2-64 Necessary Improvement of Breakwater as Seawall ............................................................92 Figure 2-65 Result of Stability Analysis against Circular Failure as Seawall ........................................93 Figure 2-66 Layout of Channel and Basin ..............................................................................................95 Figure 2-67 Typical Pavement Type and Structures ...............................................................................97 Figure 2-68 Layout of Passenger-related Facilities ................................................................................98 Figure 2-69 Water- jet + Vibro-hammer for Pile Driving into Hard Subsoil Layers ..............................99 Figure 2-70 Image of Typical Dredgers to be used in Project ..............................................................101 Figure 2-71 Location of Dredged Material Disposal Site .....................................................................101 Figure 2-72 Organization Structure of Da Nang Port ...........................................................................108 Figure 2-73 Organization Chart of Tien Sa Terminal & Number of Personnel ....................................109 Figure 2-74 VINALINES and Da Nang Port Holding Limited Liability Company ............................. 110 Figure 2-75 Sub-soil Profile along Face Line of New Container Terminal (50,000 DWT) .................132 Figure 2-76 Seismic Intensity in Vietnam.............................................................................................134 Figure 2-77 Project Site in Da Nang City .............................................................................................135 Figure 2-78 Project Site in Tien Sa Terminal of Da Nang Port ............................................................136 Figure 2-79 Location of Dredged Materials Disposal Locations ..........................................................137 Figure 2-80 Aquatic and Terrestrial Sensitive Eco-system near Project Site ........................................138 Figure 2-81 Live Corals in Mui Sung Beach on south Shore of Headland (captured by the Study Team)

......................................................................................................................................................139 Figure 2-82 Organizational Structure of Vietnamese Environmental Authorities ................................139 Figure 2-83 Small Fishing Boats ..........................................................................................................142 Figure 2-84 Location of Simulation (Turbid Water Dispersion at Dredged Material Disposal Area) ..144 Figure 2-85 Construction Photos in Phase 1 and Location of Potential On-land Disposal Area ..........145 Figure 2-86 Image of On-land Dredged Material Disposal Site ...........................................................146 Figure 2-87 Organization Chart for Environmental Management Program .........................................151 Figure 2-88 Location of Monitoring Points ..........................................................................................152

Figure 2-89 Existing Chip Factories in Tien Sa Terminal.....................................................................158

List of Table

Table 2-1 Handling Volume Trend of Da Nang port .................................................................................4 Table 2-2 Handling Record for Container, 2013 .......................................................................................4 Table 2-3 Number of Ships at Da Nang Port ............................................................................................5 Table 2-4 Expected Container Vessels Schedule at Tien Sa Port ..............................................................6 Table 2-5 Handling Equipment of Da Nang Port ......................................................................................7 Table 2-6 Scale of Main Facilities at Tien Sa Terminal ............................................................................8 Table 2-7 Industrial Output Value (at Current Prices) ............................................................................ 11 Table 2-8 Total Retail Sales of Goods and Services of CKEZ Provinces ...............................................12 Table 2-9 Import-Export Turnover of Goods of CKEZ Provinces .........................................................13 Table 2-10 GDP of CKEZ .......................................................................................................................14 Table 2-11 Socio Economic Index of CKEZ in 2012 .............................................................................14 Table 2-12 Industrial Zones in CKEZ .....................................................................................................16 Table 2-13 Owners and Operators of Neighboring Ports ........................................................................21 Table 2-14 Locator’s Operation in Industrial Zones in CKEZ (1) ..........................................................22 Table 2-15 Locator’s Operation in Industrial Zones in CKEZ (2) ..........................................................23 Table 2-16 Summary of Each Site of the Savan-Seno SEZ ....................................................................37 Table 2-17 Tourism Activity of Da Nang city .........................................................................................42 Table 2-18 Outline of Main Port Access Roads ......................................................................................44 Table 2-19 Capacity of General Sections on Main Port Access Roads...................................................44 Table 2-20 Outline and Capacity of Major Intersections on the Major Port Access Roads ....................46 Table 2-21 Description of Traffic Condition by Classification of V/C at General Section ....................50 Table 2-22 V/C Analysis Result at General Section (2012) ....................................................................51 Table 2-23 VIS/CIS Analysis Result at Intersection (2012) ......................................................................51 Table 2-24 Outline of Major Access Roads from Industrial Zone in CKEZ ..........................................56 Table 2-25 Number of Container Ships Under Service in East and South East Asia and Ratio of

Receivable Container Ships at (-12m) and (-14m) Terminals.........................................................61 Table 2-26 Shift of Medium Size Ship to Intra Region (Cascading) (2012-2013) .................................61 Table 2-27 Da Nang Port Handling Cargo Volume in the Past Decade ..................................................64 Table 2-28 Cargo Volume Through Via Tien Sa Terminal and Han River Terminal ..............................68 Table 2-29 Estimated Cargo Volume ......................................................................................................69 Table 2-30 Cruise Ship Regularly Called at Da Nang Port (2013.12~2014.2) .......................................71 Table 2-31 Passenger Ships at Tien Sa Port ............................................................................................71 Table 2-32 Forecast of Passengers at Tien Sa Port .................................................................................71 Table 2-33 Calculation of Present Berth Capacity ..................................................................................72 Table 2-34 Traffic Demand of Tien Sa Port based on Cargo Demand ....................................................73 Table 2-35 Comparison of Forecasted Traffic Demand in 2025 .............................................................74

Table 2-36 V/C Analysis at General Section (2025) ...............................................................................75 Table 2-37 VIS/CIS Analysis at Intersection (2025) .................................................................................76 Table 2-38 Area of Container Stacking Yard ..........................................................................................81 Table 2-39 Operational Conditions for Calculation of Container Handling Capacity ............................83 Table 2-40 Calculation of Container Handling Capacity in Existing Terminal (Phase 1) ......................83 Table 2-41 Calculation of Container Handling Capacity in New Terminal (Phase 2) ............................83 Table 2-42 Alternatives for Comparison of Berth Structure ...................................................................86 Table 2-43 Comparison of New Container Berth (50,000 DWT) Structure ...........................................87 Table 2-44 Comparison of New Container Berth (50,000 DWT) Structure ...........................................88 Table 2-45 Comparison of New Container Berth (50,000 DWT) Structure ...........................................89 Table 2-46 Summary of Comparison of New Container Berth (50,000 DWT) Structure ......................89 Table 2-47 Construction Cost of recommended Structural Alternatives reviewed by PMU85 ..............90 Table 2-48 Damage Limit Rate of Overtopping Wave ...........................................................................91 Table 2-49 Estimation of required Maintenance Dredging Volume .......................................................96 Table 2-50 Typical Pavement Type and Structures .................................................................................97 Table 2-51 Calculation of Buckling during Pile Driving Works ...........................................................100 Table 2-52 Construction Schedule ........................................................................................................102 Table 2-53 Summary of Estimated Project Cost ...................................................................................104 Table 2-54 Possible Implementation Schedule .....................................................................................105 Table 2-55 Owners and Operators of Neighboring Ports ......................................................................107 Table 2-56 Financial Situation of Da Nang Port ...................................................................................109 Table 2-57 Companies Operating Container Terminals in Vietnam (2013) .......................................... 112 Table 2-58 Record of Dredging Volume in Da Nang Port .................................................................... 113 Table 2-59 Operation Indicator and Efficient Indicator ........................................................................ 114 Table 2-60 Key Characteristics of the New Terminal ........................................................................... 115 Table 2-61 Volume of TEU and Number of Container Ship via the Terminal ...................................... 115 Table 2-62 Investment Cost and ODA Loan ......................................................................................... 116 Table 2-63 Unit Revenues of Port Operation ........................................................................................ 116 Table 2-64 Cost of Equipment .............................................................................................................. 117 Table 2-65 Unit Costs for Terminal Operation ..................................................................................... 118 Table 2-66 Result of Financial Analysis ............................................................................................... 119 Table 2-67 Result of Sensitivity Analysis ............................................................................................. 119 Table 2-68 Financial Analysis (Base Case) [Steel Pipe Pile Structure] ................................................120 Table 2-69 Sensitivity Analysis (10% Cost Increase Case) [Steel Pipe Pile Structure] ........................121 Table 2-70 Sensitivity Analysis (10% Container Volume Growth Rate Decrease Case) [Steel Pipe Pile

Structure] ......................................................................................................................................122 Table 2-71 Result of Financial Analysis ...............................................................................................123 Table 2-72 Result of Sensitivity Analysis .............................................................................................123

Table 2-73 Financial Analysis (Base Case) [Concrete Bored Pipe Pile Structure] ...............................124 Table 2-74 Sensitivity Analysis (10% Cost Increase Case) [Concrete Bored Pipe Pile Structure].......125 Table 2-75 Sensitivity Analysis (10% Container Volume Growth Rate Decrease Case) [Concrete Bored

Pipe Pile Structure] .......................................................................................................................126 Table 2-76 Items Included in the Benefit Calculation ..........................................................................127 Table 2-77 Result of Economic Analysis ..............................................................................................128 Table 2-78 Result of Sensitivity Analysis .............................................................................................128 Table 2-79 Economic Analysis (Base Case) .........................................................................................129 Table 2-80 Sensitivity Analysis (10% Cost Increase Case) ..................................................................130 Table 2-81 Sensitivity Analysis (10% Container Volume Growth Rate Decrease Case) ......................131 Table 2-82 Sub-soil Characteristics along New Container Berth .........................................................133 Table 2-83 Comparison of Project Site .................................................................................................141 Table 2-84 Results of Natural Environmental Conditions Survey ........................................................142 Table 2-85 Impact Assessment ..............................................................................................................146 Table 2-86 Environamtal Management Plan: EMP ..............................................................................148 Table 2-87 Air Quality Monitoring .......................................................................................................152 Table 2-88 Coastal Water Quality Monitoring ......................................................................................153 Table 2-89 Waste Monitoring ...............................................................................................................153 Table 2-90 Noise Monitoring ................................................................................................................153 Table 2-91 Vibration Monitoring ..........................................................................................................154 Table 2-92 Sediment Quality Monitoring .............................................................................................154 Table 2-93 Areal Impacts Monitoring ...................................................................................................154 Table 2-94 Traffic Safety Monitoring ...................................................................................................155 Table 2-95 Infectious Disease Monitoring ............................................................................................155 Table 2-96 Cost for Environmental Management and Monitoring by ES and IEMC...........................155 Table 2-97 Proposed Monitoring Forms ...............................................................................................159

1

Lien Chieu port Tien Sa port

Song Han port

Da Nang Bay

1． Approach of Study

This Study has been carried out for Tien Sa - Da Nang Port Improvement Project (Phase 2) (the Project), in a such approach that Draft Feasibility Study Report for Tien Sa Terminal - Da Nang Port Improvement Project (Phase 2) in Da Nang prepared by Project Management Unit 85 (PMU85) of Ministry of Transport (MOT) in 2014 (the DFS Report), will be reviewed and supplemented with necessary data and information by the JICA Study Team, and results of the Study has been discussed with MOT for implementation of the Project under agreement between JICA and MOT. The following understandings and viewpoints on the Project are basis of this Study.

1.1 Project Background

Da Nang port, consisting of Tien Sa port, Song Han port, Lien Chieu port and some specialized ports as shown in Figure 1-1, is the 3rd largest national port following Saigon port in south and Hai Phong port in north in terms of cargo handling volume in the ports. It is said that Da Nang port is a potential gate port on the eastern end of the East-West Economic Corridor, which runs through Indochina countries, i.e. Vietnam, Laos, Thailand and Myanmar. Therefore, The Overseas Economic Cooperation Fund (OECF) conducted Special Assistance for Project Formation (SAPROF) Study for Da Nang Port Expansion Project in 1998, which has recommended improvement of Tien Sa port as Phase 1, expansion of Tien Sa port as Phase 2 and new port construction in Lien Chieu port as Phase 3 in the project.

In the agreement on the above development scenario between OECF and MOT, Da Nang Port Improvement Project (Phase 1) was implemented from 1999 to 2004 under Japanese ODA loan. After completion of Phase 1 of the project, cargo handling volume in Tien Sa port has been steadily increased by 4.4 million tons per year in 2012 exceeding its planned capacity.

Additionally, recent increase in port calls of international passenger ships and solid economic growth of the countries along the East-west Transport Corridor are definite reasons for urgent necessity of the Project. In these circumstances, the DFS Report has been prepared in 2014 by PMU85.

Aiming at realization of the Project, the DFS Report is supplemented in this Study, in aspects of competitive port operation and management, consistency with hinterland development, etc.

Figure 1-1 Da Nang Port Map

Source: Da Nang Peoples Committee” Da Nang City Development Master Plan, 2002”

Tho Quang

2

1.2 Flow of Study

This Study has been proceed as shown in Figure 1-2, following the primary steps below.

Flow of Study

Jun

Jul -

Aug

Sep

Oct Nov

Figure 1-2 Flow of Study

2. Review of DFS Report

2.2 Background and Necessity of Project

(3) Current trend and policy of industrial developments in Da Nang port hinterlands

(5) Current condition of road and railway network and industrial zones in Central Vietnam hinterlands

(8) Necessity of project

(6) General concept of Da Nang port development

2.7 Implementation Schedule

2.4 Procurement Method

2.13 Environmental Considerations

2.5 Draft TOR for Consulting Services

(4) Activities of overseas aid organizations to ports projects in Vietnam

2.9 Management System of Port Development in Central Vietnam

2.10 Structure and Budget for Maintenance and Operation

2.11 Operational Efficiency and Economic and Financial Analysis

Preparation and Presentation of Inception Report (ICR)

Preparation and Presentation of Interim Report (ITR)

Preparation and Presentation of Draft Final Report (DFR)

Preparation and Presentation of Final Report (FR)

2.1 Objective of Project

(1) Current condition of Tien Sa port

2.8 Implementation Structure of Project

2.12 Natural Conditions Study

2.3 Project Scope

(7) Traffic demand for Tien Sa port

(2) Issues of Da Nang port and other ports in Vietnam

2.6 Project Cost and Financial Plan

3

2． Review of DFS Report

2.1 Objective of Project

The Project aims to improve Tien Sa port, which is a main terminal of Da Nang port. Hinterlands of Da Nang port are Da Nang city, which is the 3rd largest city in Vietnam and Central Vietnam region. Also Da Nang port is expected to play an important role for the economic development of East-West Economic Corridor countries as its gateway to East Sea. The improvement of the Tien Sa port shall meet the sea traffic demand derived from social and economic development of hinterland regions.

Da Nang port consists of Tien Sa port, Han River port, some specialized ports and Lien Chieu port as the space for future expansion. The improvement of Tien Sa port shall take a functional division among such ports into consideration.

2.2 Back Ground and Necessity of Project

Current Condition of Tien Sa Port (1)

1）Handling Volume Trend for Container, General Goods and Passengers

Tien Sa Terminal is under control of The Da Nang Port. The total cargo volume in the Tien Sa Terminal and the Han River Terminal in 2013 was 5.01 million tons with average growth ratio of 12.8% for the period of 2008 - 2013. Container volume in the Tien Sa Terminal in 2013 was 167 thousand TEU

Figure 2-1 Handling Volume of Da Nang Port

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

2008 2009 2010 2011 2012 2013

Throughput (Da Nang port)

Total General Cargo Container

(t)

4

Table 2-1 Handling Volume Trend of Da Nang port

No. Criteria Unit 2008 2009 2010 2011 2012

2013 Average

growth (%)

I

Total Ton 2,742,257 3,132,343 3,303,036 3,868,545 4,423,388 5,010,238 12.8%

Import Ton 525,906 603,365 645,617 784,891 907,818 1,345,060

Export Ton 1,230,793 1,352,212 1,388,924 1,598,134 1,988,074 2,361,018

Domestic Ton 985,558 1,176,766 1,268,495 1,485,520 1,527,496 1,304,160

II

General Cargo Ton 2,113,242 2,399,659 2,365,880 2,577,800 2,856,054 3,168,321 8.4%

Import Ton 166,001 196,594 160,145 195,594 297,874 594,508

Export Ton 969,257 1,049,545 979,566 934,672 1,121,141 1,592,646

Domestic Ton 977,984 1,153,520 1,226,169 1,447,531 1,437,039 981,167

III

Container TEU 61,881 69,720 89,199 114,373 144,555 167,447 22.0%

Ton 629,015 732,684 937,156 1,290,745 1,567,334 1,841,917

Import TEU 26,616 30,304 34,977 46,888 54,423 68,232

Ton 359,905 406,771 485,472 589,297 609,944 750,552

Export TEU 29,770 31,428 41,312 51,997 61,347 69,852

Ton 261,536 302,667 409,358 663,462 866,933 768,372

Domestic TEU 5,495 7,988 12,910 15,488 28,785 29,363

Ton 7,574 23,246 42,326 37,986 90,457 322,993

Ⅳ Passenger person 29,642 30,129 32,047 38,190 40,888 115,912 31.4%

Source: DPC

with average growth ratio of 22.0％ for the period of 2008 - 2013. General cargo volume in 2013 was 3.168 million in 2013 with average growth ratio of 8.4% for the period of 2008 - 2013. Passenger via the port was about 40 thousand persons in 2013 with average growth ratio of 31.4％for the period of 2008 - 2013.

Regarding container cargo in particular, Da Nang port handled container cargo of 167,447TEU, and their profiles detailed by size, laden or empty and reefer is as shown in Table 2-2.

Table 2-2 Handling Record for Container, 2013

IMPORT EXPORT TOTAL

20’ 40’ 45’ TEUs 20’ 40’ 45’ TEUs 20’ 40’ 45’ TEUs

2013 29,246 27,444 209 84,552 28,373 27,035 226 82,895 57,619 54,479 435 167,447

LADEN 23,402 23,097 10 69,616 24,280 18,120 224 60,968 47,682 41,217 134 130,584

EMPTY 5,844 4,347 199 14,936 4,093 8,915 2 21,927 9,937 13,262 201 36,863

REEFER

(Boxes)

223 1,646 0 3,515

(1,869)

756 2,652 0 6,060

(3,408)

979 4,298 0 9,575

(5,277)

Source: DPC

5

2）Vessels

Tien Sa Terminal is a multipurpose terminal used for container vessels, general cargo vessels, bulk (wood chips) carriers and domestic cargo vessels. The number of ships arriving at Da Nang port has been increasing gradually reflecting current traffic growth.

Table 2-3 Number of Ships at Da Nang Port

2008 2009 2010 2011 2012 2013

General cargo ship 663 661 672 785 868 865

Container ship 303 363 383 465 551 577

Passenger ship 50 51 52 53 57 93

Source: DPC

Seven international and three domestic container shipping lines are providing weekly services via Tien Sa for Intra-Asian countries as shown in Table 2-4. Most of them are feeder services to trunk ports such as Hong Kong, Singapore or Kaoshun where container are transshipped for last destination, not only for Asian countries but for American or European countries. Wanhai line is the only line which provides a direct service via HCM and Taiwan ports to Japan with round schedule of 10 days. Medium size container vessels with around 10,000~20,000DWT are arranged.

According to a shipping line, they are probable to increase their calls potentially able to provide a direct service at Da Nang Port depending on the market by their own arrange or by Space Charter system.

6

Table 2-4 Expected Container Vessels Schedule at Tien Sa Port

As of June, 2014

SHIPPING LINE NAME OF VESSEL GRT DWT LOA PORT OF CALL

FOR

EIG

N

ACL JOST 16,137 17,157 161 DAD-UIH-SIN-HPG-DAD 1,200－1,400TEU weekly(1) HS PUCCINI 16,162 17,350 162

GEMADEPT PACIFIC EXPRESS 8,333 11,117 129 DAD-HPG-HKG－DAD-SGN 700TEU weekly(1) PACIFIC PEARL 8,957 11,064 133

MMC Transpor WARNOW MASTER 17,068 21,146 180 DAD-HKG

1，800－2,200TEU Feeder line of Maersk Line MEDPERL 17,068 21,281 180 DAD-KLG-HKG

weekly(2) WARNOW BOATSWAIN 17,069 21,281 180 DAD-SIN-TPP(Tanjung Pelepas) LEOPARD 16,801 22,985 184

SAMUDERA SHIPPING LINE LTD

SINAR BINTAN 13,576 17,815 148

DAD-UIH-SIN-HPG-DAD 1,100-1,200TEU

Feeder line of NYK Line SINAR BUTON 12,545 15,210 147

weekly(1) SINAR BANDUNG 12584 14984 147 SINAR BRANI 12,559 15,204 147 SITC Container Lines

ICE STAR 7,545 8,143 130 DAD-HKG 1,100TEU

weekly(1) CONTSHIP ACE 7,170 8,279 133 WAN HAI LINES WANHAI 232 17,751 21,008 191

TYO-YOK-HKG-SGN-DAD-HKG-SKU-XIA-TYO

1,800－2,200TEU weekly(2) WANHAI 263 18,872 23,635 198 WANHAI 271 15,334 18,471 172 DAD-SGN-TCG-TPE-

HKA-MIZ-UKB-OSA-PUS-KLG-TCG-KHH-DAD

WANHAI 261 18,872 23,672 198

Yang Ming YM HAWK 15,167 19,104 168 DAD-HKG 1,500TEU

weekly(1) YM HARMONY 15,167 19,104 168

DO

MES

TIC

BIENDONG BIEN DONG FREIGHTER 5,725 7,082 125 HPH-DAD-HPH 700TEU

monthly(4) VAN LY 4,879 6,832 113 VINAFCO

VINAFCO 25 4,159 5,778 98 HCM-DAD 700TEU monthly(2) VIETNAM NATIONAL SHIPPING LINES

VINALINES DIAMOND 9,957 13,719 148 DAD-VTU-DAD-SGN-DAD 1,100TEU

weekly(1) VINALINES DIAMOND 9,957 13,719 148

Port's Code Index HKG Hong Kong SIN Singapore

VIETNUM DAD Da Nang UIH Qui Nong HPH Haiphong: SGN Hochimin VTU Vongtau

CHINA SKU Shekou XIA Xiamen

KOREA PUS Busan

TAIWAN TCG Taichung KHH Kaoshung KLG Keelumg

JAPAN TYO Tokyo YOK Yokohama HKA Hakata OSA Osaka MIZ Mizushima

7

3）Regional Distribution of Shippers and Consignee

Container cargo from/to Da Nang city occupies Da Nang port and most of other provinces. However those from/to other provinces in total are over Da Nang’s cargo.

Figure 2-2 Distribution of Shippers and Consignees of Container Cargo (Provinces)

4）Handling Operation

Equipment being used for cargo handling is shown in Table 2-5. There is no heavy traffic in the terminal, however container boxes are fully stacked in many places of the container yards.

Table 2-5 Handling Equipment of Da Nang Port

Equipment Quantity(unit) Capacity Quayside container crane 2 36MT/50MT

Rubber tired gantry crane(RTG) 3 36MT Shore crane 2 40MT

Reach stacker 4 42MT Clamp loader 2 5MT Mobile crane 25 10-80MT

Forklift 32 1.5-22MT Tractors, Dump trucks 35 20-40MT

Tugboat 7 500-1,700HP CFS 1 2,160m2

Electric weight bridge 4 80MT Reefer plug 75 points

Source: DPC

Thua Thien Hue13%

Da Nang44%

Quang Nam33%

Quang Ngai8%

Binh Dinh1% Others

1%

Da Nang port container (export + import) hinterlands (provinces)

8

5）Facilities

Existing facilities (layout and scales) of Tien Sa port are as follows. General cargo are handled at Pier 1~2 (Berth 1~4) and container cargo is handled at Berth5. Passenger ships arrive mainly at Berth 1.

Figure 2-3 Facilities Layout of Da Nang Port

Table 2-6 Scale of Main Facilities at Tien Sa Terminal

No. Items Unit Scale Remark I Berths m 965 1 Berth1(General cargo, Passenger ship) m 185 Depth-11m(CD)

2 Berth2(General cargo) m 185 Depth-10m(CD) 3 Berth3(General cargo) m 185 Depth-10m(CD) 4 Berth4(General cargo) m 185 Depth-11m(CD) 5 Berth5(Container cargo) m 225 Depth-12m(CD)

I Warehouses ha 1.4 II Container Freight Station(CFS) m2 1,590 III Yard ha 10.68

1 General yard ha 4.4 2 Container yard ha 6.28

Ⅳ Office & Workshop 1 Office building m2 769.5 2 Customs, agency offices m2 286.7 3 Amenity building m2 450 4 Guard house m2 40 5 Mechanical workshop m2 800 6 Fuel supply station 1 7 Power supply station 4 8 Main gate gate 1 4in/out lanes 9 Container gate gate 1 4in/out lanes

Source: DPC, JICA Study Team (General cargo yard)

Berth1

Berth2 Berth3

Berth4

Berth5

9

Issues of Da Nang Port and Other Ports in Vietnam (2)

-Importance of Tien Sa Port in Container Handling

These days increase of container cargo at Tien Sa port has steadily increased with 22.0% growth rate and the throughput (TEU) reached to 167,000TEU in 2013 which is about 2.4 times of 2008 throughput. As shown in Fig 2-2, handling volume at neighboring provinces are not yet enough due to lack of facilities such as no breakwater, poor container equipment, Tien Sa’s container handling is inevitable for the industries of hinterland regions. Only Qui Nhon port has comparable facility for container handling, however these ports do not compete in container handling market since the distance between Tien Sa and Qui Nhon is about 300 km. Until the improvement of these port facilities in accordance with the port master plan of MOT, Da Nang will continue to attract cargoes from outside provinces.

-Centralization of Tien Sa Port in Container Handling

Tien Sa port has been closer to neighboring province by the improvement of trunk roads (AH1). Also the enforcement of regulation on overloading truck makes truck operators decrease the long whole transportation to HCM or Hi Phong from Da Nang hinterlands. So Tien Sa has become more important than other ports.

Figure 2-4 Container Handling Volume (TEU) of Container Ports in CKEZ Provinces

-Congestion of Container Yard

Container handling volume mostly reaches the capacity of the port from viewpoint of container yard space. Container boxes are sometimes laid outside the yard. In such a congested situation, handling efficiency has been decreased due to lack of enough space for handling.

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

2008 2009 2010 2011 2012

TEU

Container throughput

Tien Sa

Ky Ha-Quang Nam

Gemadept-Quan Ngai

Qui Nhon-BinhDinh

10

-Operation Management

According to a certain locator, cranes sometimes got out of order and had to wait for receiving the imported container and this happens few times a year. Enforcement of daily maintenance is necessary and alternative equipment for such accident time should be prepared. Even if such an accident is rare case, the issue is critically serious for companies who ship cargo often via the port.

-High Shipping Cost

According to JETRO and locator’s interviews, transportation cost to export or import container by sea route from Da Nang port is much higher than from HCM port. This is because vessels’ tariff are set to cover the cost for additional call to Da Nang port to shippers. Even so, locators in Da Nang city and neighboring provinces use Da Nang port since that full container trucking cost to HCM is higher than the cost difference between Da Nang port and HCM port. Locators find more merits in low wage cost in operating in Da Nang city and neighboring provinces than the high shipping cost compared with HCM shipping.

-Small Number of Direct Call

The number of container vessels which called at Tien Sa in 2013 was 577, while 303 ships in 2008. Currently about 10 container lines , which ever direct or feeder (to be reloaded), regularly arrive at Tien Sa container terminal. Generally locators in Da Nang have no critical inconvenience to the frequency of calls since they can adjust their shipping in accordance with ship’s call schedule. However some heavy users who ship many TEUs hope that more direct will be scheduled for the reason that direct lines provide schedule with less lead time and safer shipment. According to a certain vessel line, whether direct call is arranged or not depends the volume loaded/unloaded at the port and destinations of those containers. The number of TEU load/unload increased from 204 in 2008 up to 290 in2013. As long as economic activities in hinterland will be grown, more direct calls may be possible.

-Small Number of Vessel Line Schedules via Tien Sa

There are some locaters who are designated by their customers to ship at HCM for the total shipping cost and lead time to the destination. These locators suffer from the cost for trucking from/to HCM. These cases reflect the small number of vessel lines schedules via Tien Sa which satisfy their customers with the shipping schedule and cost.

-Limited Number of Users

General cargo handled at Tien Sa was 2,075 (000ton) in 2013. It is estimated by interview to locators that 70% of the volume is occupied by only 3 exporting locators (wooden chips and sand products). For the vessel line, WANHAI is the only container liner to going to Japan ports. Users of this port should be more diversified for a sustainable management of the port, which also depends on how much handled volume

11

will be increased.

Current Trend and Policy of Industrial Developments in Da Nang Port Hinterlands (3)

Da Nang port hinterland is divided into 2 categories, CKEZ area which is composed of five (5) provinces (Da Nang City, Thua Thien - Hue, Quang Nam, Quang Ngai, Binh Dinh) and East-West Economic Corridor areas. East-West Economic Corridor areas are defined as those along the projected road through Myanmar, Thailand, Laos and Vietnam, which was proposed by ADB.

1）Current Situation of CKEZ

The population of CKEZ in the year is 6.7 million people which is about 7% of the whole country.

The industrial value of CKEZ has been increasing at average growth rate of 51.5% as shown in Table 2-7, much greater than that of the whole country (24.8%). As a result, its occupancy to the whole nation has increased up to 6.1% in 2012 from 2.82% in 2008.

Table 2-7 Industrial Output Value (at Current Prices)

(Unit: billion VNDs)

No. Region Industrial output value at current prices Average

growth (%)

2008 2009 2010 2011 2012

I Whole country 1,903,128 2,298,087 2,963,500 3,695,092 4,627,733 24.87

II CKEZ 53,761 82,133 173,214 223,953 283,049 51.5 1 Hue 7,232 8,854 13,524 17,570 22,715 33.13 2 Da Nang 16,350 18,914 23,943 30,308 36,341 22.10

3 Quang Nam 12,491 15,816 20,640 33,440 46,343 38.79 4 Quang Ngai 6,042 25,505 98,468 122,974 153,894 124.65 5 Binh Dinh 11,646 13,044 16,640 19,660 23,756 19.51

ＩＩＩ % Region / Whole country

2.82 3.57 5.84 6.06 6.12

Source: Statistical Yearbook

As shown in Table 2-8, total retail sales of goods and services of CKEZ has been increasing at average growth rate of 27.6%, just greater than that of the whole country (23.2%). All provinces except for Binh Dinh had average growth rates fairly exceeding that of the whole country.

12

Table 2-8 Total Retail Sales of Goods and Services of CKEZ Provinces

(Unit: billion VNDs)

No. Region 2008 2009 2010 2011 2012 Average growth

(%)

I Whole country 1,007,214 1,238,145 1,614,078 2,004,361 2,324,400 23.25

II CKEZ 63,215 81,180 102,621 128,719 167,809 27.64 1 Hue 9,275 10,961 14,584 17,584 33,259 37.61 2 Da Nang 18,435 26,867 34,103 43,976 51,873 29.52

3 Quang Nam 8,956 11,155 14,179 17,490 23,937 27.86 4 Quang Ngai 10,713 13,400 17,230 21,539 25,482 24.19 5 Binh Dinh 15,836 18,797 22,525 28,130 33,259 20.38


6.28 6.56 6.36 6.42 7.22

Source: Statistical Yearbook, current price

The export turnover of CKEZ has been increasing at average growth rate of 18.8%, greater than that of the whole country (16.3 %) as shown in Table 2-9. As a result, its occupancy to the whole nation has a little bit increased up to 2.38 % in 2012 from 2.19 in 2008. Hue and Quang Ngai had much greater average growth rates than that of the whole country, while Da Nang and Binh Dinh had the less rates. The import turnover of CKEZ has been increasing at average growth rate of 15.3%, much greater than that of the whole country (9.0 %) as shown in Table 2-9. As a result, its occupancy to the whole nation has increased up to 2.53 % in 2012 from 2.02% in 2008. Hue and Quang Ngai had much greater average growth rates than that of the whole country, while other provinces had the less rates.

13

Table 2-9 Import-Export Turnover of Goods of CKEZ Provinces

(Unit: million USD)

No. Region 2008 2009 2010 2011 2012 Average growth

(%)

Export turnover of goods

I Whole country 62,690 57,100 72,190 96,910 114,570 16.3

II CKEZ 62,690 57,100 72,190 96,910 114,570 18.8

1 Hue 1,371.653 1,393.85 1,838.337 2,127.287 2,727.886 44.5

2 Da Nang 107.682 145.399 259.514 380.432 469.022 11.9

3 Quang Nam 575.287 509.000 633.685 778.824 903.011 19.5

4 Quang Ngai 238.684 235.561 256.607 421.380 486.410 63.4

5 Binh Dinh 60.000 182.224 270.045 252.361 428.200 7.9


2.19 2.44 2.55 2.20 2.38

Import turnover of goods

I Whole country 80,710 69,950 84,800 106,750 113,790 9.0

II CKEZ 1,632.503 2,782.985 4,766.550 5,970.970 2,881.951 15.3

1 Thua Thien Hue 81.730 113.365 208.259 255.594 336.005 42.4

2 Da Nang 638.253 651.758 704.778 828.823 880.722 8.4

3 Quang Nam 391.340 413.010 521.632 665.780 475.020 5.0

4 Quang Ngai 375.180 1,472.097 3,349.602 4,473.116 1,040.358 29.0

5 Binh Dinh 146.000 155.800 161.700 154.500 175.000 4.6


2.02 3.98 5.62 5.59 2.53

Source: Statistical Yearbook (Provincial)

GDP of CKEZ has been increasing at average growth rate of 11.7%, much greater than that of the whole country (5.8 %) as shown in Table 2-10. As a result, its occupancy to the whole nation has increased up to 8.85 % in 2012 from 7.08 in 2008. All provinces had 2~3 times (Binh Dinh 1.6 times, Quang Ngai 2.9 times) greater average growth rates than that of the whole country.

14

Table 2-10 GDP of CKEZ

(2010 constant price)

Item Year Average

growth (%)

2008 2009 2010 2011 2012

Nation 1,923,749 2,027,590 2,157,828 2,292,483 2,412,778 5.8%

CKEZ 100,602 112,726 130,228 143,552 156,400 11.7% Thua Thien - Hue 15,352 17,030 19,157 21,212 23,239 10.9%

Da Nang 24,809 27,469 30,788 34,513 37,413 10.8%

Quang Nam 19,613 21,779 24,611 27,708 30,903 12.0%

Quang Ngai 17,764 21,495 29,276 31,131 33,422 17.1%

Binh Dinh 23,064 24,953 26,396 28,988 31,423 8.0%

% Region / nation 5.23% 5.56% 6.04% 6.26% 6.48% Source: Statistical yearbook(provincial), IMF World Economic Outlook Database

As shown in Table 2-11, GDP per capita of Da Nang city is about two times of those of other provinces.

Table 2-11 Socio Economic Index of CKEZ in 2012

Hue Da Nang Quag Nam Quang Ngai

Binh Dinh CKEZ

Population(000 person) 1,114 973 1,450 1,227 1,501 6,268

17.6% 15.5% 23.1% 19.6% 23.9%

Industrial Output Value(B.VND) 23 36 46 154 24 283

8.1% 12.7% 16.2% 54.4% 8.4%

Retail sales and service(Tr.VND) 33 52 24 25 33 169

19.5% 30.7% 14.2% 14.8% 19.5%

Export turnover(M.USD) 469 903 486 428 528 2,728

17.1% 32.8% 18.1% 12.7% 19.0%

Import turnover(M.USD) 336 880 475 1,040 175 2,881

11.7% 30.5% 16.4% 35.0% 6.3%

GDP(B.VND,2010 constant) 23,239 37,413 30,903 33,422 31,423 54,327

14.9% 23.9% 19.8% 21.4% 20.1%

Per capita GDP (Th. VND,2010 constant) 20,861 38,451 21,312 27,239 20,935 -

(Deviation) 0.46 1 0.47 0.60 0.46

Source: Statistical year book (provincial), IMF World Economic Outlook Database Note: Lower column presents shares between CKEZ

15

2）Development Policies

CKEZ (a)

According to 「Socio-economic development of the Central Vietnam key economic region till 2010, with a vision to 2020] aims following major development objectives」(Decision no. 148/2004/QD-TT）, social and economic policy of CKEZ has been oriented as follows:

- To attain an annual GDP growth rate of 1.2 times and 1.25 times the national average GDP growth rate in the 2006-2010 and 2011-2020 periods respectively.

- To increase the average per-capita annual export value from USD 149 in 2005 to USD 375 by 2010 and USD 2,530 by 2020.

So far this goal has been attained since GDP in CKEZ increased with average growth rate of about 2 times of nation’s, as shown in the Table 2-11. And the plan has listed major solutions to promote the development of following key branches and fields.

- To speed up investment in the construction of Chu Lai open economic zone (Quang Nam province), Dung Quat economic zone (Quang Ngai province) and Chan May economic-commercial development promotion zone (Thua Thien Hue province), and to plan the construction of Nhon Hoi economic zone (Binh Dinh province), so that these economic zones can gradually become the region's development nucleus and centers after 2010.

- To promote the role of Da Nang, Hue and Quy Nhon cities as commercial, service and international transaction centers to assume the commercial, service and transaction functions as well as the role of a tourist center of the whole Central Vietnam and the Central Highlands.

These planned solutions have been promoted to the effect. Industrial output value of CKEZ has grown with more rate than that of the nation. And the role of Hue and Da Nang as commercial center has been strengthened since that growth rates of retail sales and services in Hue and Da Nang are more than those in other provinces of CKEZ.

Da Nang City (b)

According to the socio-economic development master plan of Da Nang city 「Da Nang city’s socio –economic development through 2020」(Decision no. 1866/QD-TTg of the Prime Minister on 08/10/2010), development policy has been oriented as follows:

- To make economic restructuring towards service-industry and raising growth quality towards industrialization and modernization, turning the city into an economic, cultural, scientific and technological center of the region, which joins its neighbor cities to form a North-South economic corridor.

16

- To build and develop Da Nang city into a large urban center of the country, a socio-economic center of the Central region, serving as an important service and seaport center and a hub for international and domestic goods transportation and transshipment; a postal and telecommunications as well as financial and banking center: one of the health, cultural, sports, educational and training, scientific and hi-tech centers of the Central region.

- To restructure the economy towards service- industry, construction-agriculture, which by 2020 will be proportionately as follows: service - 55.6%, industry and construction 42.8%; agriculture -1.6%;

- To maintain an annual economic growth rate of 12-13%, turning Da Nang into a city capable of motivating economic development of surrounding localities;

The direction for service industry has been promoted strongly in Da Nang city, which is confirmed by interviews to locators at Da Nang IZ. This target has been attained so far since that output value of agriculture, forestry and aquaculture decreased only in Da Nang city among other CKEZ provinces, while average growth rate of retail sales of goods and services of Da Nang city is highest of all CKEZ provinces. As for GDP growth, average growth rate was 11.2% for 2008~2012, a little bit lower than the goal targeted in the master plan.

3）Current Situation of Industrial Zones

General Review (a)

Industrial Zones have been driving force of industrial development. IZ located in CKEZ is shown in Table 2-12. Information has been obtained from these IZs.

Table 2-12 Industrial Zones in CKEZ

CKEZ Provinces Industrial Zones(IZ)

Da Nang City Da Nang Aquatic Product Service, Da Nang, Hoa Khanh, Expanded Hoa Khanh, Lien Chieu, Hoa Cam

Thua Thien - Hue Phu Bai, Tu Ha, Phong Dien, Phu Da, La Son, Quan Vinh, Chan May - Lang Co

Quang Nam Dien Nam - Dien Ngoc, Trang Nhat, Dai Hiep, An Hoa - Nong Son, Dong Que Son, Dong Thang Binh, Thuan Yen, Phu Xuan, Chu Lai

Quang Ngai Tinh Phong, Quang Phu, Pho Phong, Industrial Clusters, Dung Quat

Binh Dinh Hoa Hoi, Long My, Nhon Hoa,Nhon Hoi A, Phu Tai

17

Figure 2-5 Industrial Zone in CKEZ (1)


Lien Chieu IZ

Tien Sa Terminal

Min. wage: Group 2Close to Access road to NH1 and the port is developed.Rail freight yard is located.Heavy industry firms are moved here by the local government policy.

High-Tech Park

Min. wage: Group 2The park construction is still on going.A few Japanese firms are ready for mobilization.

Min. wage: Group 3Located in Quan Nam Province. However, only 17km away from Da Nang port.Access road from Da Nang port is improved to four lanes except one section stretching a few hundred meters has not been improved.

Dien Nam-Dien Ngoc IZ

Min. wage: Group 2Located near the intersection of the port access and NH1.ICDs and logistic companies exist thanks to the advantage.Expansion project is on going.

Hoa Cam IZ

Da Nang Aquatic Product Service IZ

Da Nang IZ Min. wage: Group 2The oldest IZ in Da Nang city.Located near the city centre and 7km away from Da Nang port.Area is smaller than other IZ comparatively.

Hoa Khanh IZ Min. wage: Group 2The largest IZ of the existing in the city.There are some vacant lot despite Jetro says its occupancy rate is 100%.

Hoa Khanh IZ

Min. wage: Group 2Next to the Hoa Khanh IZ.Electronic processing, precise mechanics products and car assembling firms are dominant.

Min. wage: Group 22.5km away from Da Nang port.Specialized in aquatic products.Two depots for empty container cargo are located.

Road closeddue to over pass

construction.

Chan May-Lang Co EZ Min. wage: Group 3Close to Chan May port and NH1.Access road to NH1 and the port is developed.No firm was found in the EZ.

Tu Ha IZ Phu Bai IZ

Phong Dien IZ

Min. wage: Group 3Located near the south intersection of NH1 and Hue bypass.The most active IZ in the Province.

Min. wage: Group 3Northernmost IZ of the province.Quite large spaces remain without any buildings.Access road to NH1 is under construction.

Min. wage: Group 3Located near the north intersection of NH1 and Hue bypass.

18



an Yen IZ

u Lai Open Economic Zone

Dung Quat EZ

Dong Que Son IZ

To Quy Nhon Port

To Da Nang Port

Min. wage: Group 4Bulk cargo: Woodchips are exported from Dung Quat port.Container cargo: Exported/ imported via Da Nang port.

Min. wage: Group 370km away from Da Nang port.Incentive investment: Automobile assembly, new material, bio-technology.

wage: Group 3 away from Da Nang port.tive investment: Garment, en products, consumer

s.

Long My IZMin. wage: Group 414km away from Quy Nhon port.Incentive investment: Agro-forestry products, cloths processing, mechanical processing

Min. wage: Group 425km away from Quy Nhon port.Incentive investment: Agro-forestry products, electrical equipment, mechanical processing

Nhon Hoa IZNhon Hoi IZ

Min. wage: Group 410km away from Quy Nhon port.Incentive investment: High-technology, clean engineering

Phu Tai IZ

Min. wage: Group 410km away from Quy Nhon port.Incentive investment: Agro-forestry products, cloths processing, stone processing

19

Main trends and opinions related Da Nang port obtained through interviews with locators in CKEZ IZ are summarized as follow. Table 2-14 also shows the detailed result of the interviews. - The occupancy rate of most of the established IZs in Da gang city (i.e. Da Nang, Da Nang Aquatic Product Service, Hoa Cam, and Hoa Khanh) is reportedly almost 100%, although there remains space to extend or newly build factories in the site. Each IZ seems busy and lively. In addition, new IZs such as Hoa Khanh Extended, Lien Chieu, and Da Nang Hi-Tech Park have been developed. Therefore, production in the IZs of the Da Nang city is expected to increase for at least the next few years.

-Locators utilize Da Nang port more or less for their exporting or importing. Most of interviewee use Da Nang port for 100% of their shipment. Therefore Da Nang port is inevitable for their activities. Existence of the port is one of important elements in their establishment at current site.

-As shown in Table 2-14, destinations of Locator’s trade shipping are globally distributed up to USA or Europe. Locator B in the table who is main user of Da Nang port in container shipping has shown the intension for a increase of EU bound cargo. Japanese locators generally export and import to/from Japan. Foreign locators have come to CKEZ area for the reduction of cost with their market unchanged. So efficient global logistics will become more important key factor as more foreign locators investment will develop.

-Locators at 5 IZ’s in Da Nang city these days have been diversified from light manufacturing to software, designing or logistics support. Nissan automobile factory have opened production at Hoa Cum IZ, and 6 Japanese logistics companies are now in operation.

- The most important reason why the factory is located in Da Nang city rather than Ho Chi Minh City (HCMC) nor Ha Noi City is that the labor cost is cheaper. The minimum wage in Da Nang city is lower since the wage group that the Da Nang city belongs to is different (Da Nang: Group 2, HCMC and Ha Noi: Group 1). Therefore, the largest risk for the industrial development of Da Nang city is that the wage group could be changed to group 1 (i.e. same wage level as the leading cities in Vietnam). During interviews, several people mentioned that they had heard such a rumor. Almost all IZs in Thua Thien - Hue, Quang Nam, and Quang Ngai Province are located in the area of the wage group 3 (Only Hue city belongs to group 2 in these provinces, while some rural area in these provinces belong to group 4). Therefore, in terms of the minimum wage, the firms located in the IZs of these provinces have a large advantage.

-The wage merit covers the relatively high transportation cost of trucking to Hanoi or HCMC , higher ocean freight charge of Da Nang port shipping reflecting the additional call or longer shipping time due mainly due to transshipment at other trunk port.

- As shown in Table 2-14, whenever importing the materials from as well as exporting the outputs to foreign countries, the Da Nang Port is basically utilized, neither HCMC Port nor Hai Phong Port by drayage, especially for foreign investors including Japanese firms, since they decide are located on the

20

premises of the existing of Da Nang Port. There are two exceptions are; i) one company utilizes land shipping when exporting the products to China, and ii) some company utilize land shipping until HCMC when they do not have enough cargo to fill a container. By all means, the amount of exceptional transport which do not use the Da Nang port is very few.

- However, local (i.e. Vietnamese) firms, especially for light industry such as garment industry, accept their customers’ request to utilize HCMC Ports, in order to lower the shipping cost (especially for import cargo) and shorten the shipping time (especially for export cargo). One reason that foreign customers insist on using HCMC Ports may be due to the fact that their contracts are generally FOB (free on board) for export and CIF (cost, insurance and freight) for import; i.e. goods are handed over at the Vietnamese ports for both export and import cases. Therefore, Vietnamese firms have to bear the domestic land shipping cost in Vietnam. Some Vietnamese firms made an effort to shift for their export and import ports to Da Nang Port from HCMC Ports, by sharing the benefit with their customers to reduce the price to sell (or increase the price to purchase), reflecting the saved amount by the reduced land shipping cost. If the level of service of Da Nang Port will be improved in terms of both ocean freight and shipping time, more cargo than currently transported to HCMC Ports by land shipping are expected to shift to Da Nang Port.

-The IZs in Quang Nam become more attractive. Minimum wages is less than that of Da Nang, where development policy has been shifting to tourism and soft industry. Now Da Nang city promotes Japanese companies to locate at Dien Nam - Dien Ngoc IZ in cooperation with Quang Nam province. Establishment sites will be expanded toward neighbor provinces. As shown in Figure 2-2 regional distribution of shippers or consignees of container cargo at the port does necessarily centered at Da Nang city.

- There are several seaports other than Da Nang Port for neighboring provinces, future development plan of which are listed as central region seaport group (group3) in the Vietnam Seaports Development Plan up to 2020 with the vision to 2030 (MOT Master plan:Decision No.2190/QD-TTg). They include Thuan An Port and Chan May Port in Thua Thien - Hue Province, Ky-Ha Port in Quang Nam Province, and Dung Quat Port in Quang Ngai Province. Out of them, Thuan An Port and Ky-Ha Port are local ports which are not usually utilized for the firms located in the IZs in each province. Also, Chan May Port and Dung Quat Port are utilized for bulky cargo (Chan May Port is also utilized for cruise ship), but not for container cargo. In other words, Da Nang Port covers four provinces (Da Nang, Thua Thien - Hue, Quang Nam, and Quang Ngai) in terms of container cargo, while it mainly covers two provinces (Da Nang and Quang Nam) in terms of bulky cargo as its hinterland. Although those neighboring ports have development plan, they will not affect the above coverage of Da Nang port since the plans are formulated in long time span and so far there are no movement for realization of those plans.

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Table 2-13 Owners and Operators of Neighboring Ports

Port Owner Operator

Tuan An Thua Thien Hue province Thuan Port Joint Stock Company

Chan May Vinashin Chan May Port Co. Ltd

Ky-Ha Ministry of Defence Ky-Ha Port Thuong Thanh Steel Co. Ltd

Dung Quat Gemadept Corporation Gemadept Corporation

Quy Nhon Vietnam National Shipping Line (Vinalines) Quy Nhon Port Limited Company

-Currently only Da Nang port company is only port operator of the port and WANHAI is only container vessel operator for going to Japan without transshipment at other trunk port. Some locators are requesting more marketing promotion to collect cargo for cargo for the company or requesting more punctual shipment even in tough weather ,which would be more realized in the competitive situation.

-Locators generally intend to increase their production, prospecting a shift of production center from China or Indonesia to Vietnam.

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Table 2-14 Locator’s Operation in Industrial Zones in CKEZ (1)

Source: Jica study team

Quang Nagai IZ

Lien Chieu Da NangAquaticServiceProducts

Dien Nam - Dien Ngoc

A B C D E F G H I

Industry/ ProductsTextile,

Metalwork MotorPurification

tankAutomotive

WiringsElectric

Components Steel IndustryAutomotive

PowerSupplies

ProcessedSeafood Sanitary Ware

Number of Employee 1,000 3,900 10,000 4,000 300

Import

4TEU/ MChina

TaiwanJapan

50TEU/ MChina

2TEU/ MJapan

50TEU/ MJapan

8TEU/ MChina

Hong Kong

4-8TEU/ MHong Kong

7TEU/ MJapan 50%

EU 25%Taiwan 25%

5TEU/ MChina

Export 6TEU/ MJapan

100TEU/ MSEA 30%EU 27%China 22%

6TEU/ MJapan

60TEU/ MJapan 50%China 50%

40TEU/ MChinaUSA

1-6TEU/ MChina

20TEU/ MJapan 80%USA 10%HK 10%

2.2TEU/ MJapan

Import 9Trucks/ MAsia

Few(urgent)

40Truck/ MChinaUSA

10,000ton/ MSouth Africa

Japan

Export18Trucks/ M

Japan

110Truck/ MChinaUSA

10,000ton/ MPhilippine

Use of Da Nang Port 100%Almost100% 100% 100% 50% 100% 0% 100% 100%

2 times ofcurrent

productionnext year

50%increase in

3yearswill increase

20~30%increase in

future

50% increasein future

>anxiety forshortage ofshippingschedule infuture. EU boundwill beincreased

Japaneseclients

expandsexport

2500 workersplant in Quang

NagaiDirect call

necessary forDa Nang's

choiceHCM Port >Da

Nang Port

Truck Cargo Domestic Sale (65%)

Hoa Cam

Intention ofproduction increase

Bulk Cargo

Container

Da Nang IZ

Hoa Khanh

Company

Remarks

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Table 2-15 Locator’s Operation in Industrial Zones in CKEZ (2)

(b)Situations of IZs

Current situations of IZ in CKEZ is as follows. Some basic information are excerpted from JETRO data.

IZs in Da Nang City a）

- Da Nang IZ

Da Nang IZ has the planned area about 58ha, of which 44ha is now for lease. Current occupation ratio is 75%. Some fields for incentive investment are industry of textile, apparel shoes, electronic processing, food processing. The IZ is located 5km from Da Nang port (Tien Sa port).

Dung QuatEZ

Dung QuatIZ

Thua TienIZ

J K L M N O P Q

Industry/ ProductsBoiler, HeavyEquiopment,

etc.

WoodProcessing

Textile Textile Sports Glove SandProcessing

Wood chip RubberProduct

Number of Employee 2,500 400 4,000

Import

14 TEU/ MChinaKoreaJapan

4TEU/ MChinaAsia

5TEU/ MHong Kong

ChinaTaiwan

2TEU/ MJapan 50%Korea 50%

150TEU/ MChina,

Japan,KoreaEU,SEA

Export

6TEU/ MChina 60%Korea 20%Japan 20%

62TEU/ MUSA 9TEU/ M

USA2TEU/ M

Japan

40TEU/ MAsiaEU

South America

Import

Export 17000t/MJapan 30%

50000t/MJapan

Use of Da Nang Port 100% ofContainer

95% ofContainer

85%(Ex.),30%(Im.)

40% 100% 100% 100% 95-100%

10%/yearincrease will

bemaintained

10%~20%increase in

future

50% increasein future will increase

50% increasein 2 years

Use of ownport

Chip isexported

fromGema Dept

Saigon Portis

designatedby clientsMore callrequested

Lesscompetetivethan HCMC

for USboundcargo

Japnesepulp maker

will shiftinboundingcountries to

Viet Nam

Chemicals viaHCM

Container

Bulk Cargo

Intention ofproduction increase

Da Nang city

Company

Remarks

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Da Nang IZ is the oldest industrial zone in Da Nang city. Although the area is smaller than other new IZs in Da Nang city, it is located near the city center as well as the Tien Sa Terminal. Several Japanese companies, manufacturers and a logistics company, are located in this IZ.

Figure 2-9 Entrance of Da Nang IZ (Left) and Companies Located in the IZ (Center, Right)

- Hoa Cam IZ

Hoa Cam IZ has the planned area about 221ha, of which 137ha is now for lease. 47 firms are now in operation. Current occupation ratio is 80%. Some fields for incentive investment are industry of electronic processing, food processing, agro-products. The IZ is located 10km from Da Nang port (Tien Sa port).

Hoa Cam IZ is located near the intersection of the port access road and National Highway No.1. Accordingly, many ICDs (Inland Container Depots) and logistics companies are located in the IZ to take advantage of the ideal location. However, vehicles from Tien Sa terminal cannot directly enter the gate of the IZ because there is no left turn lane at the intersection (see left picture of Figure 2-10). Therefore, trucks and trailers to enter the Hoa Cam IZ from Tien Sa terminal have to turn around the access road at the point one kilometer away from the entrance (see center picture of Figure 2-10).

The second phase of the IZ is still expanding and the cargo volume originated from/destined to the IZ is expected to increase in the near future.

Figure 2-10 Entrance of Hoa Cam IZ (Left), Trailers Turning Around to Enter the IZ from the Da Nang Port (Center), and Inland Container Depot in the IZ (Right)

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- Hoa Khanh IZ

Hoa Khanh IZ has the planned area about 396 ha, of which 298 ha is now for lease. 120 firms are now in operation. Some fields for incentive investment are industry of electronic processing, apparel, mechanical processing, petrochemical products. The IZ is located 20km from Da Nang port (Tien Sa port). Hoa Khanh IZ is the largest IZ of the existing IZs in the Da Nang city.

According to JETRO, the occupancy rate of the IZ is 100%; however, there are several vacant spaces. In addition, the JICA team learned that several companies still have available space within their own property. Two Japanese companies which are located in the IZ have a plan to increase their production levels within a few years. Therefore, the cargo volumes originated from/destined to the IZ are also expected to steadily increase over the next few years at least.

Currently, the ongoing construction of an overpass over the railway on the shortest access route connecting Hoa Khanh IZ with Tien Sa terminal means that trailers and trucks have to detour through the coastal road and narrower road in the city center (see Figure 2-12).

Figure 2-11 Entrance of Hoa Khanh IZ (Left), a Factory Complex Managed by a Japanese Trade Firm (Center), and Another Japanese Factory (Right)

Figure 2-12 Construction Site on the Way Connecting Hoa Khanh IZ with Tien Sa Terminal (National Highway No.1) (Left) and a Trailer Detouring in the City Center (Right)

- Expanded Hoa Khanh IZ

Expanded Hoa Khanh IZ has the planned area about 130ha, of which 97ha is now for lease. 9 firms are

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now in operation. Current occupation ratio is 53%. Some fields for incentive investment are industry of electronic processing, precise mechanics products, car assembling. The IZ is located 20km from Da Nang port (Tien Sa port). The IZ has been in operation since 2004. Several manufacturers including an auto assembly plant and an auto parts factory are located in the IZ. The auto assembly plant (TCIE Vietnam) is operated by Tan Chong Corporation (Malaysia) in collaboration with Nissan Motor, where the Nissan Sunny is assembled. It opened in June 2013 and produces about 100 cars per month.

Figure 2-13 Auto Assembly Plant Located in Hoa Khanh Extended IZ (Left and Center), and Road in the IZ (Right)

- Lien Chieu IZ

Lien Chieu IZ has the planned area about 198ha, of which 142ha is now for lease. 22 firms are now in operation. Current occupation ratio is 69%. Some fields for incentive investment are industry of precise mechanical processing products, building materials with new technology. In particular, some local factories of heavy industry such as steel and chemical plant have shifted (or will shift) to Lien Chieu IZ from other IZs and the sites near the city center, in line with the local government’s policy of improving the environment for citizens.

The IZ is located 25km from Da Nang port (Tien Sa port) around the intersection of Da Nang Bypass (National Highway No.1) and the old national highway, also near the Hai Van tunnel. The IZ has a railway yard (see right picture of Figure 2-14) branched from the national railway connecting Ha Noi with HCMC. It is also near the planned site of Lien Chieu Port.

Figure 2-14 Factory (Left), Road (Center), and Railway Yard (Right) in Lien Chieu IZ

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- Da Nang Aquatic Product Service IZ

Da Nang Aquatic Product Service IZ (Da Nang Seafood Service Zone) has the planned area about 50ha, of which 42ha is now for lease. 23 firms are now in operation.

Documents

The Study for Tien Sa - Da Nang Port Improvement Project ...Tien Sa - Da Nang Port Improvement Project (Phase 2) Final Report December 2014 JAPAN INTERNATIONAL COOPERATION AGENCY (JICA)