Cai Mep Ha Container Terminal Project – 15 years of wasting and clashing

Though it is 15 years since the investment policy was granted, Cai Mep Ha Container Terminal Project has not been completed to put into operation. Meanwhile, the project itself drew much attention from several key players named as Sai Gon New Port and Geleximco. So, what is the story behind all of this?

The National Economics Strategic Project

The whole project has an estimated total investment of over 10,235 billion VND

Cai Mep Ha Container Terminal is located at Phuoc Hoa Ward, Phu My Town, Ba Ria – Vung Tau Province. Its valuable geographic location of large manoeuvre radius for vessels as well as large – and – deep streams enables the terminal to welcome large vessels. The project has a total investment of about 10.235 billion VND and its location as well as scale was defined by the People’s Committee of Ba Ria – Vung Tau Province in 2006. According to the initial plan, the total project scale is approximately 86.6 ha, expected to welcome vessels up to 160.000 DWT. The project would have 2 phases: phase 1 from 2010 to 2013, projected to complete and put into operation berths with 600m length, while the project would have been finished with all of its designed capacity in phase 2 (from 2013 to 2015).

Vung Tau ShipYard Corporation (VTSC) was the project investor after being granted Investment Policy No. 381/UBND – VP on 20th January 2006, the Investment Certification on 20th September 2010 and Decision No.2912 – QĐ – UBND by the Ba Ria – Vung Tau Province Committee to transfer more than 86ha of land used to implement the project.

Super – Terminal: 15 years in rusting – Excuses of related parties

With its sufficient preparation in legitimacy, the project should be in smooth flow in construction. However, the expectation soon went wrong: the Department of Planning and Investment of Ba Ria – Vung Tau Province, suspended the project by issuing the Decision No. 49/QD – SKHDT on 13th October 2017. The reason provided by the Ba Ria – Vung Tau People Committee was: the slow process of the project deployment; not fully execute investing procedure (1/500 ratio planning and re-assessment of effects on the environment (since the project was put in 2008) had not been executed; insufficient capital contribution (2710 billion VND) and the contribution itself was considered to be improper according to the law. Specifically, Cai Mep Ha Investment JSC was founded in September of 2016 for the project investment. Shareholders of the JSC included: VTSC with 150 billion VND – equal to 16,67% of capital, AquaOne Water JSC with 749,5 billion VND – equal to 83,28% of capital, Mr Do Minh Son with 500 million VND. The Inspectorate of Resources and Environment Bureau of Ba Ria – Vung Tau province accused these contributions to be improper.

Cai Mep Ha Port Investment Joint Stock Company’s Shareholders

Besides, Inspectorate also informed that the main investor had not fulfilled financial duty of landowning and not put the land in use after 5 years of transformation.

However, about half-month before, on 30th September 2017, VTSC had sent a complaint to the Prime Minister about the “future legal decision” – which was the Decision No. 49/QD – SKHĐT – of the Ba Ria – Vung Tau Department of Planning and Investment. Some points were lined out by VTSC including:

About the slow process of project deployment, VTSC gave the following reason: right after being granted investment policy, the Government Office had directed the investor to “continue deploying other procedures of investing, but the investor is not allowed to sign any commitment or collaboration with any foreign investors until any further decisions would be issued by the Prime Minister”. However, the LNG import terminal project of PVGAS – should be the project that put in use these transferred land, was intended to cooperate with foreign investors. VTSC itself had many times sent reporting documents for further decisions but there was no reply. As a consequence, the collaborating project could not be implemented, even after holding an Investment Certification.

About the unfulfilled financial duty of landowning to the authority, VTSC informed that they had paid full tax according to the tax notification. However, the local authority had pressed all related parties to suspend handling all the procedures for the project. As a consequence, the Tax Bureau of Tan Thanh District must return all the money that VTSC had paid to the State Treasury. Moreover, VTSC declared that the tax payment of the Corporation was legal and proper according to the document of the Ministry of Finance in March 2017. The document revealed that VTSC and AquaOne Water JSC had signed a cooperating and co-investing commitment which regulated that AquaOne Water JSC had the right to pay the tax to the State Treasury on behalf of VTSC. At the same period, the Inspectorate of Resources and Environment Department had filed that VTSC’s tax payment was not illegal and affirmed that VTSC’s land was not evicted due to Land Law violation.

Despite these above points of VTSC having full legitimacy according to law and other related documents, there were only 3 of 5 points to be illuminated. The procedure of capital contribution, insufficient contributed capital and improper contribution procedure were still left in open question. So, the happy ending still seems far away to the investor, with the lawsuit that the People’s Committee of Ba Ria – Vung Tau Province had filed to the Prime Minister to review to put an end to the project activities and choose other capable investors to handle.

Main point: Project slow progress – Whose responsibility?

The reason behind the slow process, besides the insufficient direction and slow supporting activities from the authorities according to VTSC, many specialists pointed out that the main reason should belong to the incapability of VTSC as well as the underrated review of the authority itself.

“Even though the People’s Committee acknowledged that VTSC was a small enterprise with limited capability to execute such a massive project, that the rapid development of socio-economy of the region and prioritization for the regional business had made the local authority choose VTSC – which turned out to be inconsonant”, said the Ministry of Planning and Investment.

Specifically, the predecessor of VTSC is Vung Tau Ship Repairing Shipyard, which was founded in 1992 in the form of a state company to maintain, repair and construct ships and marine vessels. After that, VTSC transformed into a Joint Stock Company, with its authorized capital of 110 billion VND (state shareholders captured 53 billion VND, equal to 48,6%). Next, the People’s Committee of the province chose VTSC which was incapable of operating the terminal (before the authorization) but had little support for them.

Vung Tau ShipYard Corporation

The desire of competent investors: Sai Gon New Port and Geleximco

In the early of 2017, which was 10 months before the Ba Ria – Vung Tau Department of Planning and Investment issued a decision to terminate all activities related to Cai Mep Ha Container Terminal Project, Geleximco had proposed investment for this project. One year later, Deputy Prime Minister Trinh Dinh Dung also gave out his directive about the decision document No. 365/TB – VPCP, 21st September 2018: “The project’s main investor was already VTSC. Therefore, Ha Noi General Import-Export JSC or Geleximco should proactively negotiate to collaborate with the investor to exploit the terminal at its economic profit level.”

Until now, the information that: “Logistics Centre and Cai Mep Ha General Terminal is one of the massive projects that the Government assigned to Geleximco to execute in the future and it is a considerably important part of Port Direction Development Planning of the Government” is still presented in Geleximco’s main website. Parallelly, the total proposed investment for the project would be 435 million USD.

Geleximco is experienced in terminal operation, logistics as well as collaborating with global port operators. Gelemxico was one of the founders of Cai Lan Terminal Investment JSC, a collaborative project with SSA Marine – the largest port operating corporation in the USA. Altogether with Gelemxico to approach the project is ITC or International Transportation and Trading JSC – a container terminal with its reputation in effective operation in Ho Chi Minh City.

In other perspective, in November of 2015, which was 22 months after the People’s Committee of the province had announced the land – renting price of the project with VTSC was the main investor), Sai Gon New Port Corporations (a part of Naval Branch of Vietnamese People’s Army) accessed to the project slow progress information and asked the local authority to take over the project.

Specifically, Sai Gon New Port, together with Tan Phu Thinh Port Investment, Building and Development JSC, had a proposal to invest into the project, including in berths and pier, dam and embankment, container yard, parking lot, warehouse and traffic infrastructure, etc. With the expected investment of 15.800 billion VND, Sai Gon New Port would found a JSC for the terminal exploitation (51% of capital of Sai Gon New Port and the rest of their partners such as local business and international shipping lines).

About the proposal of Sai Gon New Port (both before and after the eviction of the project), the People’s Committee of the province had informed that the Prime Minister had assigned the Ministry of Defence to review policy enabling the cooperation of Sai Gon New Port and other local enterprises. The Ministry of Defense had also agreed that Sai Gon New Port should be permitted to invest in this project and founded JSC for project management. Moreover, Naval Command assigned Sai Gon New Port (with a legal document attached) to invest in Cai Mep Ha General and Container Terminal Project, which according to the Naval Command, had a crucial strategic geopolitical and economic value.

From the support viewpoint, the People’s Committee proposed Sai Gon New Port to report to the Ministry of Defense for further acceptance and direction from the Government.

VTSC, Sai Son Newport, and Geleximco: Who is the final winner?

Despite positive response from related departments and bureaus, as well as the People’s Committee of the province; however, who would be the official investor of the Cai Mep Ha Project is still left in open question. Owing to its strategic value, the project is designated as a national general terminal, international container transshipment gateway (Type IA) according to Decision No.1037/QD – TTg “Approval of adjustment of Vietnamese Seaport Development Planning in 2020, directive to the year of 2030” which was issued in 2014 by the Prime Minister. As a consequence, the answer to the question “Who is the winner?” would be disclosed by the Prime Minister. Nevertheless, his most recent reply to Sai Gon New Port and Geleximco was that: “Proactively connect and negotiate to cooperate and exploit the terminal, ensure the investment efficiency”.

Maybe a little more time of waiting is needed to get the final result.

Tu Anh, Kaiser