Southeast Asia’s logistics sector is set to receive a significant boost following a new partnership between the International Finance Corporation (IFC) and two of the region’s leading companies, which will work together to develop an international logistics “super port” in Vietnam.
|The design of the superport.|
Located roughly 60 kilometers outside of Hanoi in the northern province of Vinh Phuc, the Vinh Phuc Inland Container Depot (ICD) Logistics Centre (Vietnam SuperPort) project will be developed by T&Y Superport Vinh Phuc Joint Stock Company, a joint venture between Singaporean leading logistics company YCH Group and Vietnamese conglomerate T&T Group.
The project will be one of the country’s first ICDs with multi-modal facilities, including an international distribution center and an inland port for rail connectivity and air transportation. The establishment of such a logistics hub in the North of Vietnam will significantly improve the processing of domestic and international trade, reducing logistics costs and improving the country’s trade competitiveness as it aims to become a new regional supply-chain hub.
Over the next 12 months, IFC will help YCH Group and T&T Group develop a bankable and sustainable project by providing technical expertise, helping the developers mitigate risk, and strengthening environmental and social standards.
IFC will also support the sponsors in making the logistics hub’s infrastructure green and sustainable, supporting Vietnam in its efforts to reach its net-zero carbon emissions target by 2050, while also having the right to act as lead arranger of long-term financing for the Vietnam superport.
Total investment capital for the project is expected to be around US$300 million.
The agreement marks an important milestone in the relationship between IFC and YCH Group as the logistics company expands its regional network in Southeast Asia.
“The signing ceremony with IFC is yet another significant milestone for the entire connectivity initiatives of which YCH Group intends to invest more than US$2 billion in the next five years to enhance ASEAN connectivity to improve intra-ASEAN trade, as well as trade with the rest of the world,” said Dr. Robert Yap, Executive Chairman of YCH Group.
“The partnership with IFC ensures bankable financial solutions to keep pace with the development of the ASEAN Smart Logistics Network (ASLN) and SGConnect (Smart Growth Connect). With the unwavering support of the key leaders and colleagues in ASEAN communities, we are confident that the establishment of ASLN and many more innovative initiatives will drive positive economic and social impacts to the overall ASEAN economy so that communities will continue to thrive. This is the beginning of a sustainable partnership with IFC for infrastructure across ASEAN in developing smart logistics and beyond.”
Do Quang Hien, Chairman of T&T Group, said: “We are confident that Vietnam super port’s multimodal logistics hub built with cutting edge technologies will reduce the cost of logistics and improve time to market, thereby improving trade connectivity to the world, boosting our economy as well as contributing to the symbiotic and sustainable growth of Vietnam.”
The facility is strategically located near local ports, Noi Bai International Airport, and border posts with China and Laos. It is also situated within reach of 20 industrial parks, enabling it to become a supply chain hub for local manufacturing operations. The Vietnam superport is expected to capture roughly 10% of the total container traffic generated in the country’s northern provinces once it comes into operation. It will help improve the efficiency of Vietnam’s logistics sector and reduce the cost of logistics services, which remain high in Vietnam, accounting for 21% of its gross domestic product in 2019, compared to less than 10% in OECD countries.
“We are delighted to partner with YCH Group and T&T Group to support the development of the Vietnam superport, leveraging our substantial knowledge of the global ports and logistics sectors and strong project structuring track record,” said Alfonso Garcia Mora, IFC’s Regional Vice President for Asia and Pacific.
“Our early engagement in the project will help make sure it will be developed with the highest environmental, social, governance, and climate-friendly international standards to help attract international investors. The project will not only help strengthen Vietnam’s logistics and freight sector to support the growth of the country’s manufacturing industry and bolster economic development. It could also serve as a model for YCH Group to replicate in other regional markets, which will eventually help improve logistics performance in the ASEAN region.