STUDY ON ECONOMIC PARTNERSHIP PROJECTS IN DEVELOPING COUNTRIES IN FY2011 STUDY ON THE VESSEL NAVIGATION AND SECURITY MANAGEMENT NETWORK REINFORCEMENT PROJECT IN THE SOCIALIST REPUBLIC OF VIETNAM SUMMARY February 2012 Prepared for: The Ministry of Economy, Trade and Industry Prepared by: 第 1 章 Japan Radio Co.,Ltd Toyota Tsusho Coporation
1. Background and Necessity of the Project The Socialist Republic of Vietnam installed the Global Maritime Distress and Safety System (GMDSS) at main ports and rivers under the Japanese yen loan for the period of March 2000 to January 2007 to perform the SOLAS Convention (International Convention for the Safety of Life at Sea) and the SAR Convention (International Convention for Maritime Search and Rescue) as required by International Maritime Organization (IMO). This Project was highly evaluated by the Vietnam-Japan joint evaluation of this Project made in 2008, but it was recommended to build up the Vietnamese capacity to fully comply with the provisions of the said International Conventions by introducing the Automatic Identification System (AIS) and the Vessel Traffic System (VTS). After Vietnam has recently become a member of the WTO, the economic globalization has increased the imported and exported cargo volumes. Vietnam has a long coastline of about 3,200km extending from north to south and rivers with a total length of 198,000km and many ports are distributed along the coastline and the river. In the international trade, the marine transportation accounts for over 80% and the domestic cargo transportation from south to north depends largely upon sea transportation. Therefore, it is considered that the future increase of cargo handling volumes at main ports will necessarily face the some problems, to which the Vietnamese Government should make urgent solutions; (1) Securing the safety of navigation in coastal waters and main rivers in Vietnam; (2) Building up the capacity of sea transportation by efficient operation of port facilities; (3) Reinforcing the action against ocean pollution due to sea accidents; and (4) Reducing the CO 2 emissions from growing marine transportation. In this background, the Study of port development project will be conducted through collection of information and hearing with related agencies. In addition, the project for development of the system for vessel traffic surveillance and the system maintenance and operation program will be planned through the examination of them from the following viewpoints: 1) Securing the safety of vessels navigation; 2) Enhancing the efficiency of port maintenance and operation; 3) Taking the measure for protecting the ocean environment in the surrounding waters of ports; 4) Reducing the CO2 emissions in navigation of vessels; and 5) Establishing the concentrated port management system in Vietnam 2. Basic Policy to determine the Project Scope of Work 2.1 Basic Concept 1) According to the port development plan, the monitoring system (such as VTS) should be installed to watch the movement of vessels in port and on route. 2) For the port operation, the information of vessels should be collected by using of VTS/AIS and so on. 3) To keep the safety of vessel traffic and the high efficiency of port operation, maritime Geographical Information System (GIS) should be introduced for narrow channel and intercept of route in port. And the information should be disseminated to vessels/users. 2.2 Problems and Solutions Many ports in Vietnam are located along river basins and the vessel s draft is shallow and largely affected by the fall and rise of the tide. Large-type vessels have to use barges for cargo loading and unloading at present. This problem resulting in very inefficient marine transportation has already been pointed out. As the ports are located along rivers, their site areas are limited and restrictive for construction of large-scale crane facilities and storehouses. Therefore, the transportation cost becomes high even though the production cost is set to a low value, and the cost competitiveness that the port areas should originally have is reduced. As the measure for buildup of the marine transportation for S-1
the time being, it is considered to develop the ports having deep waters to ensure large vessels to berth, in particular, aiming at international gateway ports. Such unique feature of the Vietnamese ports is an impediment to plan a long-term national port development project. In the Master Plan, the functions of ports including international gateway ports and local hub ports are defined clearly to set the priority order of development and to start the efforts to formulate the comprehensive policy covering all the ports of different categories. The port development project was submitted by Vinamarine through Ministry of Transport to the Prime Minister Office and approved in July 2009. It is planned that this project will be implemented to construct the necessary port infrastructure and facilities by 2020 looking to 2030. The basic systems as the solutions for the problems in port will be outlined below. a. VTS outline and functions: The Vessel Traffic System (VTS) consists of radar equipment, AIS base station, camera equipment, database, multiplex transmission equipment and VHF radio equipment. The integrated information is displayed on the radar monitor for the concentrated management of vessel traffic in providing effective information for vessel traffic safety and efficient operation of port facilities. b. AIS outline and functions: The Automatic Identification System ( AIS ) is designed to broadcast the information including navigational information such as vessel s position, course and speed, vessel s name and cargo information in the VHF band to receive and display the vessel information transmitted from other vessels.under the International Convention for the Safety Of Life At Sea(SOLAS)Convention as revised in 2000, after July 1, 2002 are obligated to carry the AIS on and after that data, and the existing vessels are obligated to carry the AIS for the period from July 1, 2002 to July 1, 2008. c. Environmental GIS outline and functions The environmental GIS (Geographic Information System) collects various types of information from shore-based radar stations, shore-based AIS stations, vessels and meteorological support sites as necessary and stores such information as the database in order to display it on multiple monitors and PCs and provide it to the external. 2.3 Expected effects By the development of VTS/AIS and environmental GIS to provide various types of information in a comprehensive manner, the following effects can be expected: 1) VTS, AIS and the oceanic environmental GIS will effectively function to secure the safety of navigation and reduce the congestion in ports and narrow channels, contributing to the buildup of marine transportation capacity and the reinforcement of investment environment and export capacity. 2) Those systems integrated with the existing GMDSS will allow the safety on main routes to be secured quickly, in particular in event of vessel distress. 3) The energy efficiency control on vessels will allow CO2 emission control and reduction, bringing large economic effects in the environmental aspect. 4) The information of vessel/port in Vietnam will be provided to the vessel and port users, included the Maritime Administration as the management organization of port. The integrated management of such information will be enhance the organization of Port Authorities. 5) Vietnam is located at the gateway of the Southern Economic Corridor (Thailand, Cambodia and Vietnam) and the East-West Economic Corridor (Thailand, Laos, Myanmar and Vietnam), and it is expected to shorten the lead time of agricultural and industrial products from the surrounding countries and increase the frequency of transportation. The high spin-off effect to promote the economic growth in the ASEAN countries is also expected. 6) The Vietnamese Government plans to increase the export to 4 times or more for the future 10 years. If the export industry is revitalized in Vietnam, it is expected that the import and export in or from Japan will grow, promoting the economic growth in both countries. S-2
3. Outline of the Project 3.1 Basic Concept for the project (1) The ports to be developed in Phase 1 will be Hon Gai, Hai Phong, Da Nang, Vung Tau (Ba Rịa - Vung Tau) as shown in Figure.A-1, TP.Ho Chi Minh and the management and monitoring system for vessel traffic at each port at the headquarter of Vinamarine, and it is planned to start their construction works in May 2013 and complete them in March 2016 (FY2015). (2) The Phase 2 of the Project includes 11 ports and some additional works in Vinamarine headquarter as shown in the Figure. A-1. The construction work is planned to be started in July 2017 and completed in December 2020. 3.2 Configuration of the project (1) Construction of radar sites A total of 15 radar sites will be constructed to configure the VTS and AIS at each of the main ports and a radio transmitting/receiving station will also be installed at each radar site. (2) Construction of VTS and AIS network The vessel information, channel information and port information to be transmitted from VTS and AIS will be integrated at each Maritime Administration, which will be networked with each adjacent Maritime Administration and the Vinamarine headquarters via links. (3) Installation of oceanic environment GIS at Data Center As there are the problems of narrow channels and congested waters at main ports, the oceanic environment GIS will be installed at the Data Center to support the energy saving navigation and shorter waiting time off shore from the environmental viewpoint. 3.3. Project Cost The Project will be carried out in 2 phases to be completed in 2015 and in 2020 respectively. The total project cost for Phase 1and Phase 2 is shown as bellow; Table 1 Total Costs of Project for Phase 1 and Phase 2 No Item Japanese Yen (1,000) VND(,000) 1 Vessel Traffic monitoring and management system 11,205,900 2 Construction VND293,714,359 3 Installation, inspections 1,670,784 4 Training and O&M Support 154,417 Total(1-4) 13,031,101 VND293,714,359 5 Consulting fee 757,724 VND 14,685,718 Total(1-5) 13,788,825 VND308,400,077 6 Contingency 689,441 VND15,420,003 Total(1-6) 14,478,266 VND323,820,081 Total(Thousand Japanese Yen) 14,478,266 1,221,963 ( Total project cost in JPY,000 15,700,228 ) Total(Thousand US$) $185,619 $15,666 Source : Prepared by study team, Exchange rate: US$1=JPY 78.0; JPY1=265VND as of Nov. 2011 In estimation of the equipment investment amount, the equipment cost is estimated in the CIF price basis and the local construction work cost is estimated by using the consumer price index to correct the procurement costs in similar projects which have been implemented in Vietnam in recent years. The consulting price is estimated on the basis of per diem operation cost. S-3
3.4. Outline of Results of Preliminary Financial and Economic Analysis 3.4.1 Preliminary Financial Analysis In regard to revenues in implementing this Project, it is impossible to collect any new fees from port users. The main purpose of the VTS/AIS functionality is to realize efficient operation of ports and channels and safety of navigation in ports for port and channel controllers. Usually, port and channel users pay the port use tax or port dues for using port facilities. These typical charges are shown in Table 2 taking the example of the example of Ho Chi Minh Port (Cat Lai container terminal). Table 2 Breakdown of Port Use Charges by Example of Cat Lai Wharf of Ho Chi Minh Port 1 No. Item Unit Cost Remarks 1 Dockage charge US$0.0031/hour/GT Paid to: Maritime Administration(MA) 2 Tonnage tax US$0.032/GT 2 (two-way) Paid to: MA 3 Navigation due US$0.1/GT 2 (two-way) Paid to: MA 4 Pilotage charge US$0.0015/GT distance 2 (two-way) Paid to: Pilot company 5 Tag boat fee US$800/10,000GT Standard Paid to: tag boat company Source : Prepared by study team Note: No.1 through No.3 are the same across the entire country and No.4 and No.5 are a little different from port to port. : MA stands for Maritime Administration As mentioned above, the costs such as port facility charge for the port facilities to be constructed in this Project are collected as other charge items and it is considered as difficult for VINAMARINE to raise such charges by implementing this Project. As this Project will be implemented in 2 phases as described in the preceding Section, the maintenance and operation expenses for the facilities to be constructed in this Project may be different because the M&O system is different after completion of Phase 1 and after completion of the entire Project. Therefore, the maintenance operation expenses are estimated in referring to the present budget scale and number of personnel of VINAMARINE as shown in Table 3. Table 3 Maintenance and Operation Expenses per Employee (based on price as of November 2011) Item Unit Price Unit Price (dong) (USD) Remarks Wages 70,000,000 3,387 Electricity charge 30,000,000 1,451 Communications cost 1,500,000 73 Fuel cost 14,000,000 677 Other expenses 6,000,000 290 Source : Prepared by study team, Exchange rate: US$1=JPY 78.0; JPY1=265VND as of 2011 Table 4 IP network charge per point (based on November 2011) Item Unit Cost Unit Cost (dong) (USD) Remarks Annual IP network charge 12,,000,000 581 IP network subscription fee 1,000,000 48 Only at the time of subscription Source : Wideband service triff (Vietnam Post and Telecommunication) In addition, the financial analysis of this Project was made on the following conditions: a. Period for assessment: The durable service life of the equipment is 20 years. b. Currency exchange rate: 1 yen = 265VND ; US$1 = 78 yen (as of November 2011) 1 By interview with shipping companies in Vietnam as of October 2011. S-4
c. Inflation: The inflation has an impartial influence on revenue and expenditure. The inflation rate is estimated to be 9.26% in average over the previous year based on the average of the consumer price indexes for 8 years from 2003 to 2010. d. Exchange rate between foreign currency and Vietnamese dong: According to the currency policy of the Vietnamese authority, the currency rate between the domestic currency and USD currency was depreciated yearly at 3.36% in average for 8 years from 2003 to 2010 and it is anticipated that it will decrease at the same rate in future 2. The exchange rate between USD and JPY is assumed to be constant. e. Investment amount: The demand for funds during the periods of construction works are assumed to be 30% for the initial period, 40% for the medium period and 30% at the end of this Project based on the past experience in similar projects. For the foreign currency for assessment, the assessed amount in the currency depreciated to the USD currency will be used. Since the equipment and systems will be installed at coastal area, their damages by sea air will be considered and it is assumed that main equipment will be replaced every 10 years. f. Revenue: Subsidy from Ministry of Transport is assumed as the revenue from the project. Subsidy is assumed to cover the capital expenditure as well as Operation and maintenance expenses g. Discount Rate: Discount rate is 15% which is the legal interest rate for applying on deposits with commercial banks. The discount rate is used for conducting Net Present Vale (NPV) as well as Benefit-Cost ratio (B/C). Under such conditions, Financial Rate of Return (FIRR), Net Present Value (NPV) and Benefit Cost Ratio (B/C ratio) and those sensitivities are obtained: FIRR=0%, NPV=0, B/C=1 as shown in the following table. Table 5 Results of Preliminary Economic Analysis Case FIRR NPV B/C Remarks Base Case 0% 0 1 10% increase of Investment 0% 0 1 Supposed as the subsidy covers increased amount by 10%. 10% decrease of Revenue minus -457 Bill. VND 0.9 Supposed as the subsidy is cut off by 10% Source : Prepared by study team (2) Preliminary Economic Analysis The benefit may be deprived by the sur-charge of the insurance on trade commodity. Nippon Kowa insurance company require the surcharge on trade commodities/goods when shippers use aged vessels. The percentage of surcharge varies depending on the age of vessels and indicates additional 0.1 % to regular insurance rate in case of vessels of 10-15 years old. Some of Vietnamese shippers may accept as same percentage as those if they use the safe navigation in ports. Therefore 0.1% on the trade value, which usually stands for insurance value, is supposed as the benefit of the project. The domestic cargo is excluded in the analysis. 1) Benefit Calculation Average benefit value per ton in Vietnam are shown in Table 6. 2 Source: Calculated based on various types of data of Statistics Directorate General of Vietnam S-5
Table 6 Average benefit value per ton Average value per ton of trade commodities/goods US$2,527 Conducted trade value per trade Volume from the year 2000 to 2009 (1) Proportion of trade volume to Volume of freight by transport sector 7% Additional surcharge % to the regular insurance tariff 0.1% Equivalent to the surcharge of employing 10-15 year vessel (2) Average benefit value per ton US$ 0.18 Source : Prepared by study team based on the data from (1) Statistical Office of Vietnam and (2) Nippon Kowa Insurance Corporation The number of ship s calls, cargo handling volumes and number of containers at the ports for which this Project will be implemented in Phase 1 and Phase 2. Table 7 Predicted Number of Beneficiary Vessels, Cargo Volume and Number of Containers at Ports under this Project Year 2015 2020 2025 2030 2032 Ports under Phase 1 Number of ship s calls (vessels) 46,566 117,316 317,069 900,140 1,379,753 Cargo handling volume (t) 166,771 297,759 531,970 950,950 1,199,856 Number of containers (TEU) 14,512,943 40,574,108 113,563,698 318,210,472 480,660,010 Ports under Phase 2 Number of ship s calls (vessels) 21,408 33,499 54,169 66,166 Cargo handling volume (t) 46,331 76,379 126,481 154,952 Number of containers (TEU) 1,491,340 3,857,606 10,043,775 14,753,495 Source : Prepared by study team These predicted figures were obtained in the following procedure: a. Calculation of growth rate from 2011 to 2032 The cargoes are divided into North, Central and South Regions because it is possible to adopt alternate routes depending upon the grade of development of land and marine logistics networks. The number of ship s calls, cargo handling volume and container handling volumes that are changing in each of such Regions for 5 years from 2005 and 2010 3 and the average growth rate in each year to the previous year are obtained and the growth rate is applied to each of the ports under this Project. b. Calculation of number of ship s calls at each port and its growth rate Based on the location of each port, the growth rate in each Region obtained in item a. above is applied to the handling volumes at each port to calculate the number of ship s calls at each port. the benefit calculations, it is necessary to convert the prices into international prices, but such prices will be not corrected based on the standard conversion factor because the source of value is supposed as an international price. 2) Cost Calculation The equipment investment amounts and maintenance and operation expenses as described in the Preliminary Financial Analysis are cost items. In this case, the differences between domestic prices and international prices will be corrected by using the standard conversion factor as described later. a. Standard Conversion Factor (SCF) SCF is a coefficient to correct a distortion of a domestic price to the corresponding international price. In this report, the SCF is calculated based on the import/export amounts and customs revenues from 2007 to 2009 as shown in Table 8. 3 Source: Statistics materials of Vietnamese Port Association. For details, refer to ANNEX-3. S-6
Table 8 Import and Export Amounts and Import Customs Revenues in Vietnam 2007 2008 2009 Import amount (million USD)* 48,561.4 62,685.1 57,096.3 Export amount (million USD)* 62,764.7 80,713.8 69,948.8 Import customs revenue (million USD)** 3,439.9 5,582.0 4,511.9 Export customs revenue (million USD)** 0.0 0.0 0.0 Source : Prepared by study team, *: Statistics Directorate General of Vietnam, **: WB Official exchange rate (LCU per US$, period average) The calculation method is as follows: SCF= 2007 2009 import/export total/(2007 2009 import/export total + Total customs revenue) = 0.966 Of the revenue, equipment investment amount, and maintenance and operation expenses, the domestic procurement amount is multiplied by this SCF to obtain the international price. b. Exchange rate As adopted in the preliminary financial analysis, the conversion rates: 1JPY = 265VND and 1USD = 78 JPY (as of November 2011) are applied. c. Inflation Usually the inflation rate is excluded to have equal influence on both benefit and costs. As the economic growth and the substantial increase in wages for employees are expected in Vietnam, the inflation is estimated to rise at an annual increase rate of 9.26% over the previous year during the period of assessment based on the average value of the consumer price indexes during 8 years from 2003 to 2010. d. Exchange rate between foreign currency and Vietnam dong According to the currency policy of Vietnam authority, the currency exchange rate of Vietnamese dong to US dollar was depreciated yearly at 3.06% in average for 8 years from 2003 to 2010. It is also anticipated to be depreciated at the same rate in future 4. On the other hand, it is assumed that the exchange rate between US dollar and Japanese yen is constant. e. Investment amount The demands for funds during the periods of construction works are estimated to be 30% in the initial period, 40% in the medium period and 30% at the end of the Project. For the foreign exchange for assessment, the assessed amount in the Vietnamese dong depreciated to the US dollar will be used. 3) Sensitivity The economical internal rate of return is calculated in the basic case and in the cases that the benefit decreases 10% and that the equipment investment increases 10%. The preliminary internal rates of return calculated in the above conditions are shown in Table 9. Table 9 Results of Preliminary Economic Analysis Case Preliminary internal rate of NPV B/C return (%) (Billion VND) Basic case 39% 138,786 6.22 Benefit decrease rate of 37% 115,727 5.44 10% Equipment investment increase rate of 10% 37% 129,228 5.51 Source : Prepared by study team In this benefit calculation, althought it is addressed to the cargo values expecting domestic cargo value, 4 Source: Calculated based on the data issued by Vietnam Statistics Directorate General S-7
the results of preliminary economic analysis show that the benefit in each of the above three cases exceed 15% (The legal interest rate of deposit with commercial banks is around 15% as November, 2011) as a target in this project to be implentated in Vietnam. Therefore, it can be conducted that this Project will be feasible from the view point of economy. 3.5 Influence on Environmental and Social Aspects by Implementing the Project 3.5.1 Influence on Environmental and Social Aspects This Project will mainly use the existing port facilities and port communications systems, but it is necessary to develop a site with the area of 200 300 m2 and construct a machine house (with a floor area of 100m2) and a tower (with a height of 30m) in the vicinity of each of the main ports. These construction works will have little impact on the surrounding environment of each port area and are classified as Category C. which is the Guidelines for Environmental and Social Considerations set by Japan International Cooperation Agency (JICA), which means they are likely to have minimal or little adverse impact on the environment and society. The countermeasures is left to Implementation agency and carried out based on the Vietnamese legistlations. The details of items to be prepared by Vinamarine are described in the Check List in Appendix - Screening Form to the JICA Guidelines for Environmental and Social Considerations. 3.5.2 Outline of Vietnamese Legislation for Environmental and Social Considerations The Vietnamese Government revised the Environmental Protection Law in full scale in 2005 and introduced the Strategic Environmental Assessment(SEA)into it. In 2006- Decree for the detailed enforcement regulations and guidelines for the Environmental Protection Law (Decree No. 80/2006/ND-CP)is decided as All national projects are required to subject to the strategic environmental assessment(sea).2 and The environmental impact assessment report shall accompany the Feasibility Study Report In the future, the Environmental Impact Assessment (EIA) should be made within the framework of the feasibility study of this Project and ahead of the stage of implementing this Project. The Revised Environmental Law and the related decrees provide that the EIA shall be made for the following: 1) Important national projects; 2) Partial use of nature protection districts, national parks, historical and cultural remains districts, natural heritages, registered places of scenic beauty, and projects having adverse impacts on environment; 3) Projects that may have adverse impacts on water sources, river basins, coastal areas and ecological system protection districts; 4) Infrastructure construction projects in economic districts, industrial complexes, high-tech complexes, export processing zones and household industry villages; 5) New construction projects in urban areas and concentrated housing areas; 6) Projects exploring and using large-scale groundwater and natural resources; and 7) Other projects which may have large adverse impacts on environment. 4.Project Implementation Schedule The ports for which this Project will be implemented in Phase 1 are Hon Gai and Hai Phong in the North Region and Vung Tau and Ho Chi Minh in the South Region, which have been more congested along with the increasing cargos for logistics than ever. In addition, Da Nang Port in the Central Region which is expected to function as the logistics base for the East of Thailand and the South of Laos as a result of ASEAN Integration in 2015 will be covered by Phase1. These 5 ports are defined as International Gateway Ports or Hub Port for the surrounding ports in Each Area in the Master Plan. The Phase 2 will cover a total of 11 ports: Nghi Son, Nghe An, Vung Ang, Dung Quat, Quy Nhon, Van Phong, Nha Trang, Vinh Tan, Ke Ga, Dong Nai and Can Tho, which are functioning as the logistics base S-8
for individual areas and in the hinterland of which large-scale industrial complexes and huge power generation plants are constructed. After completion of Phase 1, it will be necessary to develop a system to maintain the safety of vessels using the ports and build up the port maintenance and operation. In consideration of this, it is anticipated that a period of about one year will be taken to develop this system and that, after the one-year period, the developed system will be deployed in the ports covered by Phase 2. The standard schedule to implement this Project based on the above plans is shown in Table A-1. 5.Feasibility for the Implementation of Project 5.1 Prospect of Financing for the Proposed Project The Vietnamese economy has shown the growth rate of over 7% since 2000 except a period of world economic crisis in 2008. The Five-Year Economic and Social Development Plan (2011 2015) of Vietnam is intended to continue to reform the economic structure, build up the competitiveness of the national economy and accelerate its integration with the world economy, aiming at sustaining the annual economic growth of 7 to 8% in average stably up to 2020. On the contrary of its positive policy of revitalizing its economy, however, Vietnam has brought its national financial condition into a revenue shortfall continuously since 2005. The investments in its economic infrastructure which will be required to be developed in the future rely on the loans within the country and from foreign countries. This situation will probably continue to the future. Vietnam Ministry of Transport has concentrated its efforts on development of the network of land and marine transportation which has been the bottleneck of economic development in Vietnam so far. It has estimated that the investment for port development up to 2020 will be 360 to 440 trillion VND and that approximately 8.6 billion VND (=32 billion Japanese Yen) will be required for development of VTS/AIS etc to ensure the safety at main ports. Vinamarine, MOT and MPI expect these fund sources from overseas funds and ODA funds. 5.2 Capacity Assessment of Implementing Agency of Vietnam and Countermeasures Vinamarine implemented the Radio Coast Station Development Project (1997 2007) to maintain safety of vessel traffic and to take quick action in event of sea accident under the Japanese yen loan and introduced the Global Maritime Distress and Safety System. In addition, in the background of the increasing cargo handling volume at main ports in Vietnam along with the drastic increase of marine transportation volume, it was the urgent necessity to operate the port facilities in an efficient and safe manner. In March 2005, Vinamarine made the field surveys aiming at introducing the Vessel Traffic System in Vietnam and made the feasibility study in the technical and cost aspects on this Project independently. The Radio Coast Station Development Project as mentioned above received very high evaluation in the assessment made by the Vietnam Japan joint assessment team after completion of the Japanese yen loan project, saying this Project has no problem in terms of the capacity of the implementing agency and the maintenance and operation system and is expected for high sustainability. As a result, the project implementing capacity of Vinamarine was proved. As it was experienced in the Radio Coast Station Project Phase I and Phase II and familiarized with the Japanese yen loan scheme, Vinamarine is expected to able to implement the new Project in a seamless manner. In September 2011, one JICA expert was dispatched to Vinamarine to give professional advice on the technical cooperation in port operation and maintenance and the development of the Vessel Traffic System and the Distress and Safety System. Based on the expert s advice, therefore, Vinamarine has established a support system to implement this Project. The operation and maintenance of the Vessel Traffic System to be introduced in this Project will be undertaken by each Maritime Administration under the control of Vinamarine. Cat Hai Branch of Hai Phong Maritime Administration has already enforced the 24-hour system for watching Ha Nam channel by the means of VHF and other communications and will have no problem with its maintenance and operation capacity if the VTS is introduced. 5.3 Plan of Supporting the Implementing Agency of Vietnam S-9
The actual operator of the Vessel traffic System which is expected to be introduced in this Project will be each of the Maritime Administration under the control of Vinamarine. However, it is necessary to organize the Project Management Unit (PMU) in Vinamarine in order to make centralized management of the entire Project because this Project is aiming at introducing the integrated system for the purpose of strengthening the linkage between Maritime Administrations, but each Maritime Administration will not launch an organization to implement a project individually. To implement this Project by making the use of ODA fund, the PMU should be established under the decision of Prime Minister Office 131/2006/ND-CP Decree on Issuance of Regulation on Management and Utilization of Official Development Assistance and in accordance with the following procedure: 1) Ministry of Planning and Investment will issue the Notification on the organization chart, functions and roles of the PMU; 2) Ministry of Planning and Investment and Ministry of Transportation will approve the documents on this Project before the implementing agency will issue the decision on establishment of the PMU; 3) The implementing agency will employ a Consultant in charge of management of the Project in accordance with the related law or regulation of Vietnam. 6. Technical Predominance of Japanese Companies One of the objectives of this Project is to introduce an integrated Vessel Traffic System in Vietnam. It is important to develop a VTS in each port individually for activating the port and maintaining safety and security, but the information gathered by means of the VTS can be used effectively for joint use of information by adjacent ports, use for vessel navigation services, supervision of channel equipment, countermeasure for congested water areas, channel traffic analysis for improvement, sea accident analysis, ocean pollution analysis and CO 2 emission regulation. This Project is intended to network individual VTS systems as an integrated system to allow the joint use of information by and dissemination of information to related agencies. The dissemination of information to related agencies is made in the form of access to Web which requires no dedicated terminal or software. As the information to be handled and required by information users is diverse, it is necessary to establish the forms of display which are different depending upon types of information. For this purpose, the integrated VTS will adopt the Geographic Information System (GIS) for joint use of information by different users and be configured with multi-layer architecture to register each type of information per layer and with system expandability allowing the information users to select necessary information easily. The GIS-based information technology is absolutely required for the integrated VTS, in addition to the conventional VTS technology. At present, the researches on Oceanic GIS in which the GIS multi-layer architecture is used in the maritime and oceanic systems are made by universities and institutes in Japan. In 2010, Tokyo University of Marine Science and Technology developed the Advanced Navigation System ahead of the world, which is used for ship operation management, vessel movement analysis and optimum routing researches. For the regulation of CO 2 emissions from vessels by IMO (International Maritime Organization), the Maritime Bureau, Ministry of Land, Infrastructure, Transport and Tourism, Japan advocates the environmental contents strongly to the world and Japan is recognized as a Country propelling ocean environment forward. In July 2011, the IMO regulation of CO 2 emission from vessels was approved and the shipping operators will be called for the control of CO 2 emissions under this IMO regulation. For the ship operation management taking account of the CO 2 emission regulation, the systems adopting the Marine GIS are deemed to be effective for handling diverse types of information and the Marine GIS will be spread not only among universities and institutes, but also to the oceanic and maritime centers and ship operation management centers. For ship operation management, the GIS is surely used to display ship s positions as used in Europe, but there are only a few examples of full-scale Marine GIS with multi-layer architecture. In Japan, some S-10
private shipping companies have introduced the Marine GIS in their systems aiming at advanced ship operation management. In addition, independent administrative institution, New Energy and Industrial Technology Development Organization(NEDO) announced to make the study of actual conditions of ship operations in the framework of the Project Finding Study for the Project for Support of Efficient Operation of Cement Transport Vessels In this project, the survey of energy saving volume that can be improved in the system to support the vessel operation plan is made by using the Japanese technology Marine GIS. As mentioned above, the Marine GIS technology in multi-layer architecture has been attracting keen attention overseas as well as in Japan. In taking into consideration the details as described above and the development of contents in the cooperative projects by academic, industrial and public sectors in Japan, the possibility of the contract for this Project being awarded to Japan is deemed to be considerably high. 7. Expected Risk/Problems for Implementation of the Project To achieve this project, Vietnamese Government will make the Feasibility Study and that the study report will be submitted to Ministry of Planning and Investment and finally that this Project will be listed up in the long list. Vinamarine will make mutual discussions with Planning and Investment Department of Ministry of Transport and Ministry of Planning and Investment to take the official procedure to make the request for yen loan from Japan. In the stage of next Feasibility Study, the implementation agency must acquire the approval by submitting EIA report complied with "Revised Environmental Law and related ordinance. Preparation of EIA report is stipulated to carried out at the time of preparing Feasibility Study report, and must be submitted the report to Ministry of Transport with feasibility study report. The implementation agency is required to submit EIA report to Ministry of Transport with the feasibility study report, and then Ministry of Transport immediately forwards EIA report to MONRE. MONRE takes at least 3 months for the evaluation, and it approves the project implementation. It is necessary to organize the Project Management Unit (PMU) in Vinamarine in order to make centralized management of the entire Project because this Project is aiming at introducing the integrated system for the purpose of strengthening the linkage between Maritime Administrations, but each Maritime Administration will not launch an organization to implement a project individually. To implement this Project by making the use of ODA fund, the PMU should be established. S-11
8. Project Location Map The location of Project site is shown in Figure.A-1 Figure.A-1 Project Location Map 200km Source : Prepared by study team S-12
Table A-1 Project Implementation Schedule S-13