VIETNAM SEAPORTS ASOCIATION (VPA)

REPORT OF THE 6TH. STANDING COMMITTEE

AT THE VPA ANNUAL MEETING IN 2008

September 11, 2008 – Nha Trang City

1. GENERAL SITUATION

Based on the orientation and action plan approved by the 6th. VPA General Meeting in Vung Tau

on 07 November 2007, the 6th. Standing Committee has directed the implementation of the

association activities last year within the economic and market scenario of mixed opportunities and

challenges with some results and assessments as follows.

1.1       On general economic, trading and shipping conditions

Following the general assessment, last year, the economy of Vietnam continued to grow fast but due

to abnormal price increases in some essential commodities (fuel, rice) on the world market and the

doubling of FDI capital as compared to previous year leading to the high trade deficit, inflation and

financial and monetary instability in the country.

Import/export volume increases by 20% in 2007 (higher than the average of previous years of 13%)

in which containerized cargo volume increases by 25% thus exerting heavy pressure on the port

system and hinterland connections at the focal economic areas, as reason the shipping conferences

had based on to impose port congestion charges.

The main problem of Vietnam at the moment is transport infrastructure and the hot spots are the

container terminals as predicted. New port projects has been carried out quite fast by local and

foreign enterprises but hinterland connections as well as supporting utilities and services including

maritime services, cargo clearance, information, finance services to be developed properly with

integrated planning and specific implementation schedules.

Nevertheless, Vietnam is still regarded as a highly potential market in shipping services. With its

advantageous geographic location, the port system of Vietnam, if well developed with proper

facilities at world standards, would create significant changes to the container shipping business of

the region in the next decade.

1.2       On mechanism of port management and development orientation

The new policy on maritime economic development strategy with the potential transshipment port for

Vietnam has stirred up investment from many business groups in deep water ports for Vietnam.

However, the process of PPP to cooperate in seaport infrastructure development has just been

started with the participation of big corporations from inland and overseas. The requirements on

investment viability, seaport infrastructure development amid a situation of lacking integrated

transport master planning and proper management mechanism present big challenges to the State as

well as to the investors.

On legislation, in addition to the Maritime Code, many legislative acts have been promulgated or

drafted including the draft Decree on the administration of seaport infrastructure development

reforming toward a landlord system. This is a mechanism specifying the authority of administrating

and regulating the seaport service market that in practice would depend on the extent of investment

made by the State and the private sector. In a situation where capital reserved for investment in

seaport infrastructure and market regulation capability is limited, the State can hardly control the

seaport infrastructure once the main ports are invested by the foreign companies. The landlord

system with the controlling role of the State is being ushered to a system of service ports following

practically the pure market mechanism. Under current situation, by 2010, the controlling right in

equity and management of container ports shall be 56% by the foreign side.

On maritime sector regulatory functions, there have been some important changes toward the market

economy and world economic integration. Port service rates are decided by the port enterprises

themselves. Customs have introduced measures to improve the customs declaration, procedures for

electronic clearance at the ports. The maritime administration has affected improvements in

procedures at the ports and provided guidelines, approval of compliance with ISPS Code and is

studying the standardization of codes for ports and commodities.

The maritime sector has also many statutory and organizational changes. The National Shipping

Lines Corporation now become a holding company and is preparing the proposal for approval as a

Vietnam maritime group. The equitization of state enterprises (ports) toward limited liability

companies is being speeded up within the whole sector. In general, the newly equitized and

transformed units have shown more efficient and pro-active in business.

Under the pressure of increasing the competition capability worldwide, the Vietnamese maritime

groups are expanding their business toward multi functions, multi fields, undertaking big port

projects. However, beside the potential projects, the feasibility and viability of some port

projects are still to be justified such as Lach Huyen, Van Phong, Ben Dinh Sao Mai.

On the administration of the associations, the Government has Decree 88/2003/NĐ-CP dated 30

July 2003 stipulating the association organization, activity and administration; and guiding Circular no.

01/2004/TT-BNV dated 15 January 2004 of the Ministry of Interior. In general, the roles of the

associations have been legalized with more concrete rights and liabilities and the Ministry of Interior

is the state organ administering the associations together with specialized authorities at ministerial

level. In addition, the Chamber of Commerce and Industry of Vietnam has been mandated as

representative of the employers including the enterprises and associations nation wide.

On foreign relations, under new regulations, the Central Foreign Relations Agency has the authority

to approve the organization of foreign relations activities of the associations including the organization

and participation in international meetings, seminars. Recently, VPA has obtained the directives and

timely support from the authorities and meeting the general requirements in reporting and conducting

the activities.

1.3       On the market and regulatory role of the State

Under the pressure of world economic integration Vietnam's open door policy has been developed

fast. Most of the maritime services including port construction and operation have been opened for

foreign investment. The port investment and operations environment is experiencing drastic change

giving the opportunities for the world leading port and shipping groups and JVCs to gain market

control of container terminal operations and high quality logistics services.

Logistics services are being developed in Vietnam as driven by the market with individual effort and

need comprehensive study, master planning and development investment to be competitive with

foreign service providers in line with the trends in multi-modal transport and world trade nowadays.

In addition, the bottlenecks in cargo clearance and land transport have pushed up import/export

costs which ultimately had been born by the ports by competing in reducing prices for a long period

of time. Recently, due to increase in market prices and cargo volume including container through the

ports increased, the ports have started adjusting adequate tariff to be profitable. However, port

service tariffs have been slow in catching up with oil prices

The maritime sector has many changes and achievements to meet the demand of reform in its

administrative and regulatory functions. The main drawback was the implementation of the master

plan failed to meet the market demand and the delay in establishing the mechanism to facilitate the

development investment, administering the port infrastructure in the transition process to the market

economy following the state orientation.

2. STATUS OF THE PORT GROUP:

1.1 Some outstanding issues

Vietnam position after accession to the WTO has been basically changed favorably. Cargo throughput at sea ports increased fast from 13% to 20% annually and may reach higher growth for a long time like the case of China. However, infrastructures are and continue to be the major hindrance to economic development.

The policy on sea-borne economic development strategy has brought about changes in vision and strategy as well as development plans of the whole sub-sector and enterprises individually. Provinces with advantageous natural conditions and market have chosen sea-borne economy a development priority. Nevertheless, there are still many domains to be balanced and integrated between central and local to ensure development efficiency.

The Maritime Code of Vietnam passed by the National Assembly has offered a more complete legal venue for the sector development toward world economic integration. With regard to the port group, there are important legal issues that need to be more concrete by by-laws including the seaports infrastructure administration. The national focal ports should play a pivotal role in the sea-borne economic development strategy with the active role of the inland port operators in combination with the foreign investment resources and managerial expertise.

Seaport development master plans.The Master plans of seaport development for each area have been approved with priority given to deep water ports. However, projections in the master plans are far below the market demand. The implementation of the master plans from the Government standpoint has been slow and incomplete, not yet responding to the market demand and investment schedule of the businesses. The revised master plan for the period 2010-2020 in responding to the market demand and the sea-borne economic strategy is pending release by mid 2009.

Port relocation in HCMC. In parallel with the seaport master plan for area No. 5, the plan to relocate the ports in inner city center of HCMC namely Saigon Port and Saigon New Port following the resolution of the Politburo approving the master development plan of HCMC up to 2020 is being implemented. The two ports have completed the major development steps serving the relocation. However, the relocation schedule is not yet clear or based on objective expectation while the complete and adequate conditions to execute the relocation are yet to be identified with responsible parties. Currently, the ports to be moved have to tackle themselves under the seeking and granting mechanism while other requisite conditions, particularly capital and hinterland connections for the new port projects are pending resolution.

Congestion in container transport in the Southern focal economic area. Currently, containerized cargo is growing at more than 25% each year. In HCMC and Dong Nai area, total cargo volume in 2007 reached more than 76 million tons, double the demand projection of 38 million tons by 2010 under the approved master plan. The congestion is at alarming stage in the ports of the area and in particular the restriction in many respects including the traffic capacity and load bearing of the bridges on roads connecting the ports. The consequences of the congestion now and in the following years are hard to predict accurately but obviously severe for the foreign trade and quality of life of the population in the area.

Foreign investment in container ports. To this moment, most of the world port operators and shipping lines have their presence in Vietnam and have had many container port development and operation projects. In the Southern focal economic area, there are more than 8 large foreign invested container terminal projects expected to be operational by 2009-2010. Within the total container throughput capacity of more than 16 million TEUs/year by 2010, foreign investors have had about 45% in equity where the right to operate exceeds 56% of total container capacity of Vietnam including ports in HCMC (SPCT), Cai Mep, Thi Vai (PSA, APMT, SSA, Hutchison, CMA-CGM).

Berth elevation of deep water ports in Thi Vai, Cai Mep area. Under the design, the port projects in the area funded by ODA loan have the berth elevation of +5.0M while the elevation above datum of the industrial areas and design elevation of other ports all exceed +5.5M. Difference in elevation of adjacent berths, if not being resolved, shall be a phenomenon unique in the history of port development in the world.

Pilot leasing of infrastructure. Quang Ninh Port, after having Cai Lan Port under a pilot leasing contract of infrastructure from the State, had entered into operations. However, it was difficult to evaluate the core experiences due to its simple leasing form and not typical in Public Private Partnership to develop seaport infrastructures.

Collapse of gantry cranes by storm at Cai Lan Port. By the end of 2006, a strong storm at Cai Lan Port overthrew two gantry cranes in operation killing one crane operator. This accident severely affected the operations and business of the port due to prolonged replacement period even with full insurance coverage. In 2007, container throughput of Cai Lan Port dropped by 70% while that of Hai Phong Port surged by 47%. In July this year, one replacement crane was fatefully collapsed again, killing 7 workers and causing other damages.

Van Phong transshipment port. This is a big project initiated from the unexpected success of the bunker transshipment activities but is yet to attract foreign investors by lack of market demand potential initially and from that to justify the development of an international transshipment container port.

Open port. Ky Ha Quang Nam Port had been formed and located within the first open special economic zone of Vietnam. Currently, the port has supporting functions of the open economic zone with limited scope, not yet a typical model for assessing the development of open economic area having port as a center of activities.

Buoy berths, ICD. In HCMC area, container mid stream operation in combination with container barging and ICD operated by some enterprises is developing taking advantage of the low cost facilities and weak throughput capacity of the roads system in HCMC area. The ICDs continued to expand and to be transformed into corporatized and privatized enterprises while the buoy berths, with low productivity and quality, are experiencing drop in container volume amidst average growth of 25% in the area in 2007.

Container barging. Container barging has also increased in recent years with more participants in the market. At the ports, particularly in HCMC area, container delivery by barge has become a common mode with higher growth and it is projected that higher carrying capacity barges will be introduced, particularly when the deep water ports on Thi Vai river area become operational.

Pressure on using larger ships. Comparing with 2006, ship calls in 2007 has increased by 13% while increase in cargo volume is higher at 20% indicating that shipping lines are replacing small ships with bigger ones in Vietnam. However, due to limitation of access channel and port capacity, only a number of large bulk carrier ventured in, large container ships have to wait for the deep water ports. For big production investors in Vietnam, this delay costs millions of USD each year.

Can Tho Port and Dinh An channel.The Mekong Delta with its role and contribution in agriculture production to the economy has been and is receiving Government funding for developing strategic port at suitable dimension for the whole delta area with Can Tho port being considered as centre port. Định An channel will later be rehabilitated through Quan Chanh Bo channel for ships up to 10.000 DWT hopefully will attract foreign ships calling the port. However, the change in cargo flow between HCMC area and Can Tho port, if any, will be limited to medium size vessels and depending on the development of the maritime commercial and service market in the delta area. In many years ahead, cargo for the delta area shall be imported/exported mainly through HCMC ports.

Phu My bridge. The announced navigation restriction with less air clearance (37,75M) during the construction of Phu My bridge over Saigon river in HCMC has caused major concern on potential adverse impact on the business of five ports and the import/export activities of the city. By the instructions of central and local authorities, the contractor and relevant agencies are cooperating to ensure safe navigation with minimal restriction to mitigate the adverse impact on port operations and trade in the area.

Terminal security law. One of the impacts the world security situation has on Vietnam in maritime was the application of the ISPS Code effective from 1/7/2004. With the guidelines and support of Vinamarine and Vietnam Registrar, most of the member ports have received certificate of compliance to terminal security standards or inspection and extension of the same on time, although there has been no significant investment in security and safety facilities at the ports. In the near future, when cargo volume destined for USA and Europe increases, it is most likely that relating ports should be equipped with security system in compliance with ISO 28000 and US own regulations.

Terminal Handling Charges (THC). Recently, under the pressure from foreign shipping lines, the authority has allowed the lines to apply THC in Vietnam in a situation when local shippers' association has not yet the power to bargaining. With regards to the ports, THC remains a component of the freight imposed by the shipping lines which is normally different from the actual handling costs at the ports.

Port Congestion Charges (PCC). From the short occurrence of cargo/container congestion at the ports in HCMC area during which container ships had to wait for berth while hinterland transport had been increasingly strained, from July 2008 some shipping lines had unilaterally imposed port congestion charges on shippers on the ground of inadequate port infrastructures. This action had caused more difficulties to shippers as well as concern and reaction from other related parties against the unreasonable compulsion and market manipulation by some shipping lines operating in Vietnam.

2.2 Port operations and business

Regarding the activities of the member ports, statistics on cargo throughput of the ports in 3 years 2005-2007 grouped by area is summarized in Annex A.

The figures show total throughput of 48 member ports in 2007 reached more than 134 million tons, maintaining growth of 20% in the past two years, in which containerized cargo has higher growth of more than 25% and totaling nearly 4.5 million TEU with ports in HCMC account for more than 73% of total container volume country wide.

Ports in Northern area have an increase of +16% in cargo volume much lower than in 2006 (+26%) in which container increased by 19% with higher container throughput at Hai Phong Port (+47%) and Doan Xa Port (+25%) supplementing the drop in throughput of Cai Lan Port (-70%) due to the collapse of ship shore gantry cranes incident. At Transvina Port, although there was decrease in volume (-10%) but foreign trade component surged from 50% to 80%. In the central area, cargo volume had also increased +21% in volume and +28% in container. At the Southern focal economic area but mainly HCMC area, cargo volume had increased +21% (4% more than 2006) and container 30% higher than 20% in 2006. On average, cargo throughput country wide had increased more than 20%, in which container 25%. Cargo and container distribution to 3 areas North, Central and South were 35%, 11%, 54% in cargo and 24%, 3%, 73% in container respectively.

In general, growth in cargo throughput had been maintained at high rates continuously for the past 4 years and higher up from 2007. Cargo throughput in the Southern focal economic area was 54% of the country total. As for containerized cargo, this share was maintained at 73% including VPA non member ports. Hence, HCMC was still the center attracting containerized cargo and maintaining its growth. Saigon New Port is leading with total throughput of 25.6 million tons (1,8 million TEU of container) and accounted for nearly 40% of the total container volume as well as leading the investment in container handling facilities.

The import and export through VPA ports in 2007 was more balanced than the surge of export in 2006. Within the total throughput of 134 million tons, import volume increased 18%, 2% more than previous year; export increased 27%, 3% more than previous year; and domestic increased only 7%, a 13% drop as compared to previous year. Thus in recent years, export has had higher growth than import and for the first time in 2007 export volume exceeded import volume more than 2 million ton, excluding crude oil. Domestic cargo increase had slowed down and accounted for nearly 24% of total cargo throughput with domestic container volume took 54%. In 2007, the trade of Vietnam had been balanced in volume, while the import surplus in value was due to the higher value of import commodities than export.

Except some small ports and Song Han 9 port stopped operations for relocation, in 2007, most of member ports 38/48 (about 79%) got higher throughput than 2006. The outstanding performance with high volume and growth was achieved by ports such as Cam Pha, Doan Xa, Vat Cach, Thanh Hoa, Qui Nhon, Ba Ngoi, Dong Nai, Lotus, Tan Cang Sai Gon, Can Tho, My Thoi, Tra Noc. Tan Cang Sai Gon had highest volume of more than 1.8 million TEU equivalent to 25,6 million tons/year.

In general in 2007, amongst 48 member ports of the association, there were 4 ports having more than 10 million of throughput, 25 ports having more than 1 million tons (4 ports broke the 1 million ton threshold include Ba Ngoi, Lotus, Can Tho and My Thoi). Average throughput of 48 ports was nearly 2.8 million tons/port/year.

2.3       On port infrastructure development

Port development recently has remarkably increased in scope and priority for dedicated container terminals particularly in the Northern and Southern areas. In addition to the existing container terminal projects to meet the surge in cargo volume in Hai Phong and HCMC - Ba Ria Vung Tau areas other groups such as Vinalines, Vinashin, Gemadept have joined ventures with big foreign investors to develop ports in port areas No. 1, 3 and 5. Cat Lai Terminal of Saigon New Port has been invested in modern handling equipment and achieved highest throughput in the country together with a deep water port project at nearly 4,000 billion VND investment. Saigon Port has had many large investment projects with more than 800 million USD expenditures creating throughput capacity totaling more than 4.5 million TEU by 2010. Most of the member ports have had new investment projects or expansion, adding more equipment with a total of 36 projects and about 1.5 billion of USD investment from now until 2010 (Annex B). Additionally, other large JV projects are being implemented including SPCT of DP World joint venture with PC1 in HCMC and SITV by Hutchison in Thai Vai with more than 1 million TEU/year capacity.

This can be considered as the first wave of investment in sea port infrastructure in post WTO era. The second wave of investment will occur shortly after aiming at meeting the extra demand in cargo exceeding the ports capacity after 2015. The maritime sub-sector is reviewing and expanding the master planning for the next investment phase in deep water port infrastructures. However, master planning and investment in hinterland transport infrastructure and access channel to the ports can hardly meet the demand without effective and timely measures by the Government.

In the Ba Ria – Vung Tau area, the ODA project to construct infrastructure and deep water ports at Thi Vai and Cai Mep is being monitored closely together with other large projects invested by other enterprises. When these projects are completed and put into use, the transport and container operations and other complementary services will undergo major changes with the trend of moving the port center of the Southern focal economic area from HCMC to Ba Ria – Vung Tau area. Ship and cargo flow continuing to be operated in HCMC would depend largely on the capacity of port zones at Cat Lai and Hiep Phuoc.

In the mean time, new issues would arise from the lack of integrity between development of port and other facilities particularly hinterland transport and the supporting logistics service systems. Some important issues such as administrative mechanism to harmonize port operations in port group No. 5; the expansion of Road 51 and construction of a new highway as planned by the MOT whether will be executed in time to meet the demand of transporting an estimated 5 million TEUs after 2010 between HCMC and Ba Ria – Vung Tau or not and impacts of port development on transport in particular and economy in general and measures of remedy are still big questions without concrete solutions.

In the scenario with many difficulties from the free competitive market inland and pressure to open up the market for competition from foreign countries, the ports in Vietnam have had great effort and in general have achieved the objectives of maintaining the business, meeting the economic growth rate and at the same time caring the living conditions of their employees. However, except some active ports having developed up to the demand in competition and integration, the capability in general and financial resources in particular of the Vietnam ports are still weak, the management still bulky and ineffective amidst the complicated competitive market, it can be said that big difficulties and challenges are still ahead.

The role and duties of the association in the near future shall be focusing in advising the Government in the development of deep water ports, mechanism to administer the seaport infrastructure of Vietnam, other orientation and mechanism relating to the activity of the sector, stabilizing and improving the market. On internal affairs, the association needs to promote cooperation, coordination and support for the member ports to develop their business, marketing, human resources and international economic integration.

2.4       On port business operation management

On business activities last year, most of the member ports have achieved encouraging results on

expansion investment and throughput. Some outstanding ports having good conditions have

developed fast and gained higher market share amongst them some have achieved high revenues and

profit by ensuring quality and applying suitable services pricing.

On improvement in management, most of the large ports have applied measures to adjust the organization, improve management toward equitization. In addition to handling equipment, there had been also investment in IT systems affecting changes toward better efficiency using IT in port management and operations. However, based on existing conditions of equipment and management, in general, the capability in management and operations of the Vietnamese ports is still far behind the international standards.

For large port projects, the joint venture solution would meet the demand in investment capital and overcome the restrictions in port management and operations, ensuring cargo volume for inland ports. However, the selection of partner and suitable contracting terms to safeguard the long term interests of both sides are required for the sustainability of the joint venture.

2.5       On foreign relations, international economic integration

On foreign relations, the port sub sector has had many years of approaching and cooperating with

ports in the region through the participation in activities of APA in the last 13 years. The participation

and positive contribution of the Vietnam ports in APA activities with the leading role of Saigon Port

has obtained recognition of the ASEAN ports.

International relations of the association had been expanded to cover other regions and partners such

as APEC, EU..

Through the foreign relation and international economic integration activities in recent years of the

association as well as the member ports, it can be confirmed that the ports of Vietnam have taken

and are taking the opportunities and challenges for active international economic integration following

the general policy. Besides, the association also has obtained information to advice the government

on development policy and decision most suitable for the ports for competitive advantages in the

process of integration.

3. EVALUATION OF ACTIVITIES IN THE PAST

3.1       Main tasks executed

Based on the resolution of the 6th Main Meeting, the standing Committee of the 6th term has directed the activities of the association in 2007-2008. Results can be summarized as follows:

Good execution of the Association tasks relating to membership, fees and compliance with state and sector regulations on activities of the association including regulations on administration, reporting, reflecting the situation etc. together with the publication of a specialized magazine replacing the internal news and conduct the marketing promotion for the ports.

Advising the State and sector on important matters relating to the ports: In general, with the mandate of advising the State and protecting the interest of its members, the association has gathered information from member ports and provide inputs and proposals to the State on policy, decision for timely and effective measures to resolve difficulties, offering better conditions for the port to operate and develop. Nethertheless, opinions, reflection, contribution received from the member ports had been minimal.

Reaching consent on measures to stabilize the port tariff. The tariff sub-committee of the association has met and agreed to some minimum rates for seaport services in HCMC area recently and obtained consensus of the member ports in implementation. However, the market situation appeared to be complicated on prices and this matters should be an on going task of the association to ensure investment viability and effective port operations within a sounder market environment.

Seeking funding sources for human resources development of the ports through training, familiarization visit, seminar and other forms. VPA has recently organized some seminars on technical aspects such as information network, handling of dangerous cargoes and sent some delegates to specialized seminars organized by APA. VPA has obtained partly scholarship for 10 candidates to the Master degree study program in the Netherlands and Korea offered by STC Group of the Netherlands but so far still no sufficient candidates have registered.

Dissemination of technical information. The secretariat has prepared, disseminated some materials, information on VPA website to meet partly the demand in information of member ports and to introduce the association to some organizations, entities within the community. In addition, the on-line forum on the VPA website has attracted many participants although the total number is still limited.

Maintaining and developing foreign relations including active participation in activities organized by APA. As authorized, in 2007-2008 the member ports have sent some delegates to events, meetings under APA and VPA is scheduled to organize APA Annual Meeting by the end of 2008.

Updates on compliance of ISPS Code on VPA website.

Successful publication of some issues of Shipping Times from Feb 2005 with the support and appreciation by member ports and maritime community. The Standing Committee has agreed to the application for permit by the Ministry of Information and Communications as official magazine of the association in the near future.

The report of activities and proposed activity plan will be presented in the Secretariat report.

It can be commented that with a few non permanent members, the Secretariat of the association with the support of Saigon Port has fulfilled its tasks during the term and provided timely advices to the Standing Committee on important matters as required and implemented successfully the program of activities of the association as approved by the general meeting.

3.2       Some outstanding matters

Beside some encouraging achievements mentioned above, the main outstanding matters can be summarized as follows:

- The role of the Association in resolving the common issues, difficulties protecting the interest as well as providing support to member ports although being effective but remain limited in scope, particularly in stabilizing the market, standardize quality of port services, contributing to the master planning and supporting the implementation of the master plan.

- The Standing Committee needs to meet more often and appoint responsible persons to be in charge of part of the activities of the Association. The sub working groups should be more active in executing its duties.

- The communications between the member ports have had some improvements recently but in general still have to take full advantage of the IT using new application systems and make more use of the e-mail, website, internet. The statistics of the ports are still far behind the demand in time and contents.

- The participation of the member ports in the program of activities of ASEAN region is still limited. Following the current requirement and trend, the Association needs to promote cooperative relationship with the regional and international ports to facilitate the ports in developing human resources and for more active economic integration.

- Activities such as human resources development, dissemination of technical materials, guiding information on marketing, foreign relations, advertisement for the association and its members could be improved. Take full advantage of the Internet to access information networks in order to reduce the gap in knowledge, business and marketing opportunities between the local and regional ports.

- More activities could be implemented with the cooperation and support of the member ports, including the establishment of consulting, services units at the association level based on the pool of experienced and high educated and expertise persons from the ports.

- Mobilizing more contribution from the experts, associates from the outside to the program of activities of the association.

- Coordinating with other professional associations in tackling issues of common interest, in particular those pertaining to the maritime community.

Although with some results, the Association should be more active and concrete in fulfilling the objectives set forth in the Charter, meeting the aspiration and effective demand of all the members.

In general, VPA has been active and effective in more than 14 years in operation and realized its active role with the contribution of the Standing Committee and all member ports together with the consideration and support of the authorities.

This year, we are happy to welcome new member ports namely Dinh Vu,Cai Cui, VICT, Binh Minh. On behalf of the Standing Committee and all members of the Association, I would like to express my heartfelt welcome to new member ports and also to other potential members particularly the new JV ports and wish to obtain more effective participation and contribution from all members for the business and development of the port sub-sector in Vietnam in general and each port in particular.

4. ORIENTATION AND NEW PROGRAM OF ACTIVITIES

Through the assessment of the results in implementing the activities of the Association in the past period as well as outstanding issues to be resolved, the orientation for activities of the next period is rather clear.

On one hand, VPA is to organize the better implementation of the tasks done in the past and find effective measures to actively resolve the restrictions, outstanding issues identified. Specifically, to have plan and concrete measures to do better the following tasks:

- membership and fee. In addition to regular members, consider the selection of related members, associates for the program of activities of the association;

- Advising the State and maritime sector on important matters relating to the ports, particularly issues of urgency, perform well the social cross examination function of the association;

- Agreeing to some measures to stabilize the port service tariff, facilitating the investment and port service markets;

- Seeking funding sources in combination of the own source to promote human resources development by training courses, seminars, visits for the ports;

- Disseminating specialized information, strengthening cooperation, exchanges, on-line information on website and VPA magazine, preparing technical materials;

- Collecting and disseminating and including inviting outside consulting experts to conduct study and evaluation with the aim to have standards on port management and operations comparable to international standards;

- Maintaining and promoting foreign relations. Participating actively in activities of APA, IAPH;

- Promote marketing information, business promotion to the ports;

- Cooperating with other related associations inland and overseas to address issues of common interest, including the development of port community;

- Having better statistics, assessment of port operation and development more frequently and in more details.

Detailed activities and estimated budget for 2009 costs are presented in the report of the Secretariat.

During the discussion, the Standing Committee proposes the delegates to deliberate and have input to the above sections including tasks carried out, the main outstanding issues identified as the basis for coming up with the program of activities of the association in the next term, in particular, inputs t the proposals to the State and other relevant authorities.

In addition, one important item in the agenda of the Meeting is to find ways of cooperation amongst member ports, organizing the successful implementation of the duties of the Association before the challenges the ports of Vietnam are facing during the period of international economic integration, pushing the ports up to the spearhead of the sea born economy of Vietnam.

5. PROPOSALS TO THE STATE AND MARITIME ADMINISTRATION

The Vietnam Seaports Association heartfully thanks the State authorities for effective directives and proper conditions provided to the association for its activities and fulfillment of its tasks in the past and wishes to continue receiving such consideration and support enabling the association to perform its functions and duties towards the maritime sub-sector in general and to serve effectively the interest of its members in particular during the transition period, development and integration full of difficulties and challenges in the years to come.

With regard to the orientation, policy, institutional measures for the ports of Vietnam, we have the following main proposals:

-    To consider development and operations of seaport infrastructures a strategic spearhead in developing the sea born economy and from that to have the concrete mechanism and policy to compete with the region and the world on operations of strategic national ports, international transshipment ports in combination with other policies including those for logistics master planning and open economic zone in the hinterland areas of the ports.

- Adjustment of master plan for port development to meet the demand in cargo growth, in particular containerized cargo up to 2020. Specifically to have integrated master plan on transport and access channel to handle large ships available on the market. In the immediate future, to have measures to ensure timely completion of the project components of access road, bridge, channel and utility, electricity and water, for the port projects being invested.

- Strengthen the regulatory role of the State in improving the port investment and operations market and maritime activities in Vietnam, in respect of the right to invest and operate the focal ports by foreign companies and the tendency of controlling the market, imposing rates by shipping conferences towards increasing the State regulatory function in safeguarding the market with the cooperation of the business asociations and community in Vietnam.

- Improve the Customs procedures toward facilitation of declaration, checking, screening container for terminal security with more flexible clearance between cargo delivery points within the same port area. Allow cargo and container destined for a particular port to clear Customs at another port or location in order to release the pressure, congestion at any location under current port infrastructure shortfalls.

- Complete and quickly implement on a pilot basis the mechanism for administrating seaport infrastructures towards and landlord system having port authority for each focal economic area to overcome current shortfalls of effective development of focal ports following the master plan.

- Establish roadmap and apply measures to stabilize and reach a unified port tariffs for domestic and international shipping. Restrict intermediaries manipulating the market and unhealthy practices in maritime services and cargo transport through the ports in general.

6. CONCLUSION

Distinguished guests, delegates

Above are some assessment and proposals, details tasks to be executed in the next period presented by the Standing Committee. We propose the delegates to discuss, make adjustments, agree and participate actively to promote further the roles of VPA, in particular the advisory role to the State and maritime sub-sector, to serve more effectively the specific needs of the member ports in the years to come, creating major changes to be well prepared for the ports to comfortably enter into the era of economic integration and international competition.

On behalf of the Standing Committee, I would like to thank all the dignitaries from the Government Office, Ministry of Interior, Ministry of Transportation, Vietnam Maritime Administration, Vietnam National Shipping Lines and related departments from the central and local agencies, other associations, the mass media for having attention and support extended to the activities and development of the Association; my thanks to the member ports for trusting and supporting the Standing Committee and the Secretariat in resolving common matters and tasks of the Association in the past. It can be said that the strength of the Association should be reflected in the power to advise, to resolve the big issues the ports are facing based on the foundation of the solidarity and active participation of all the members.

My thanks to the leaders of the local government of Khanh Hoa, Nha Trang City for providing the conditions to organize the annual meeting in the seaside city and to attend, address the meeting; my thanks to the Management and the Organizing Committee of Nha Trang Port for thorough preparation and provide every possible condition to facilitate the proceeding of the VPA Annual Meeting 2008.

My sincere thanks to the sponsors of the VPA meeting this year with the Main Sponsors namely Stinis Singapore Pte Ltd., Unico Handels GmbH / Gottwald Port Technology,  Realtime Business Solutions Pty. Ltd., Tan Cranes & Equipment Co. Ltd. and other co-sponsors namely Cotecna, Inc., Zebra Enteprise Solutions - NAVIS, Svitzer Far East Pte. Ltd., Liebherr Werk Nanzing GmbH, China Merchants Group, and regular sponsors namely Konecranes, Kirow Leipzig KE Kranbau Eberswalde AG, Muller + Partner GmbH, Jebsen & Jessen Technology (S) Pte Ltd., Weyenberg Resources International Ltd., Gensoft Company Ltd., Penta-Ocean Construction Co., Ltd., Kukdong Engineering & Construction Co. Ltd. amongst them there have been many companies having had close and long relationship with the ports as well as having precious and continued support for the activities of the Association for many years; my thanks to the staff of Shipping Times for great effort within a short period to circulate a specialized magazine in commemorating the Annual Meeting 2008 of VPA.

Distinguished guests, delegates

VPA has had more than 14 years of effective operation under the attention and support of relevant authorities and the precious contribution of the member ports, of many other organizations and individuals. We have created firm foundation in many aspects to facilitate the execution of the duties of the Association in the coming term and decade, a pivotal period of the history towards the industrialization and modernization of the country with sea born economy as the spearhead. The more important role and duties of the Vietnam ports ask for each member to be more active, pioneering, contribution their most active part for the fast and right development of the maritime sub-sector and for participating in resolving common issues in land and overseas relating to the ports.

With such evaluation ands expectation, once more, I would like to thank you all. My best wishes of very good health and success to all distinguished guests and delegates. Good success to the Meeting./

List of 49 VPA Member Ports

(2008)