Technical Report No. 8 PORT AND SHIPPING

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4 DISCUSSIONS ON SELECTED ISSUES 4.1 Governmental Policies on the Shipping Industry in Asia I-4-1 Vietnam National Transport Strategy Study (VITRANSS) Technical Report No. 8 Shipping and Ports These are references on Asian governments’ measures to promote shipping in their respective countries. Also summarized and attached are study reports prepared by Japan’s Maritime International Cooperation Center (MICC) in 1998 and 1999 and by the Economic and Social Commission for Asia and the Pacific (ESCAP) in 1997-1998. 4.1.1 Governments’ Development Policy on the Shipping Industry Many developing countries in Asia are supportive of their respective shipping industry, in particular by issuing policies that promote it. According to the MICC report which studied the countries of Indonesia, Malaysia, Thailand, and Taiwan in 1998, their governments are implementing the following measures: 1) Exemption from corporate tax: Shipping industries in Malaysia, Thailand and Taiwan are exempted from paying corporate tax. It was also reported that the Indonesian government might adopt a similar measure. 2) Payment of subsidies: In Malaysia, Thailand and Taiwan, there are subsidies to the shipping industry, though no details were provided. As for Indonesia, there is no subsidy except in the case of Pioneer Shipping (37 ships, 22,600 DWT) which serves domestic transport demand in the country’s remote eastern islands. It received Rp 29 billion in 1997-1998. 3) Cargo reservation: Some countries have been holding a cargo reservation right to promote the local shipping industry. In Indonesia, there existed cargo reservation laws on trade and shipping. Under the Cargo Reservation Law on Trade, some specific commodities controlled by State enterprises were transported by national flag vessels, as follows: Cement : PT Panja Niaga Flour, Rice, Soya beans : Bulog Steel : Krakatau Steel Government projects : State forwarders and private forwarder nominated by government The Cargo Reservation Law on Shipping stipulated that cargo shipments for government projects be carried by liner vessels of conference members or Indonesian flag vessels. The cargo reservation policy is now suspended after a policy dialogue with the International Monetary Fund (IMF). In Malaysia, although the restriction on local cargo/ship was abolished, there remains an incentive allowing shippers to double the freight amount
I-4-2 Vietnam National Transport Strategy Study (VITRANSS) Technical Report No. 8 Shipping and Ports transported by national ships and declare this as expenditures which can be deducted from their fiscal income (Income Tax Rules 1995). 4) Ship depreciation: In Indonesia, the following ship depreciation rule under the 1994 income tax law is applied: Ship Tonnage (DWT) Class Depreciation % Less than 100 1 4 years 50 Up to 100 2 8 years 25 100-1,000 3 16 years 12.5 Over 1,000 4 20 years 10 The depreciation term on second-hand vessels is applied using the original owner’s selected term. In Malaysia, there are provisions for vessel depreciation and accelerated depreciation is allowed. Details will be mentioned in the ESCAP report. In Taiwan, there is no specific policy supporting its shipping industry except for an exemption from corporate tax. Perhaps, it prefers to follow APEC maritime initiatives and the Asian shipping forum, supporting a freer and more fair competition in the shipping industry. 4.1.2 Fiscal Measures in Malaysia 1) Bank Industri: Bank Industri is the first bank in Malaysia to go into the shipping industry. Until now, their main business is still the financing of ships, shipyards and marine-related activities. Government, through the Five-year Malaysian Plan, allocates funds to Bank Industri. Those wanting to apply for loans for shipbuilding should purchase the vessel from the local shipyard. If local yards were incapable of building the required vessel, then foreign purchase would be allowed. 2) Shipping Fund: The Shipping Fund established by government is intended for eligible local shipping companies who wish to expand and increase their carrying capacity to meet the growth of export following the rapid pace of industrialization (Prime Minister’s Speech, 1995). The two main components of this fund are the Ship Finance Facility (SFF) and the Shipping Venture Facility (SVF). Initially, when this fund was established, government, through Bank Nagra, provided a sum of RM 800 million. Bank Nagra then chose Bank Industri as the managing authority of this fund. Of the government allocation, RM 300 million was set aside for the acquisition of new and second-hand vessels under the SFF program. The RM 500 million balance was intended for the SVF program (EPU: 1993). Under
Page 1 and 2: Japan International Cooperation Age
Page 3 and 4: PART I: SHIPPING Technical Report N
Page 5 and 6: Glossary ADB Asian Development Bank
Page 7 and 8: Part I SHIPPING
Page 9 and 10: I-2-1 Vietnam National Transport St
Page 11 and 12: 2.2 Ongoing and Committed Projects
Page 15 and 16: 3 CURRENT SITUATION 3.1 Administrat
Page 19 and 20: 3.2 Industrial Framework Vietnam Na
Page 23 and 24: Table 3.2.1 continued I-3-9 Vietnam
Page 25 and 26: I-3-11 Vietnam National Transport S
Page 27 and 28: Owner Type 10000 ALL DWT % State 9
Page 39 and 40: 3.4 Safety Enhancement and Environm
Page 41 and 42: Recent Undertakings Box 3.4.1 Port
Page 43 and 44: I-3-29 Table 3.4.4 Accession Status
Page 45: VM Petroleum Standing Committee Fig
Page 53 and 54: Passenger Ship Cargo Ship (3) Chart
Page 55 and 56: Introduction I-4-10 Vietnam Nationa
Page 57 and 58: Figure 4.2.1 Historical Scale-up of
Page 63 and 64: 5 SHIPPING DEVELOPMENT STRATEGIES 5
Page 71 and 72: Table 5.3.2 Fleet Development plan
Page 75 and 76: 1 INTRODUCTION II-1-1 Vietnam Natio
Page 77 and 78: 3) Coastal Shipping (JICA), March 1
Page 79 and 80: 6) HCMC (United Kingdom), January 1
Page 81 and 82: 2.3 Government Plan and Policy Deve
Page 83 and 84: 3 CURRENT SITUATION 3.1 Port Admini
Page 85 and 86: II-3-3 Vietnam National Transport S
Page 87 and 88: Figure 3.2.1 Ports in Vietnam II-3-
Page 89 and 90: Box 3.3.1 Required Water Depth as F
Page 91 and 92: Source: VINAMARINE Annual Report in
Page 93 and 94: ton ton ton ton II-3-11 Vietnam Nat
Page 95 and 96: 3.5 Finance and Management Role of
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Table3.5.2 Estimated Capital Invest
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4 DISCUSSIONS ON KEY PLANNING ISSUE
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4.2 Future Development Requirements
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(3) Empty Container Ratio II-4-5 Vi
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Table 4.2.7 Port Capacity by Cargo
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II-4-9 Figure 4.3.1 Location of Hai
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4.4 Other Key Issues 1) Port Hierar
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II-4-13 Vietnam National Transport
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Table 4.4.4 Weekly Loading Plan for
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5 PROPOSED PORT DEVELOPMENT (2001-2
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Table 5.1.4 Port Hinterland by Prov
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Table 5.1.9 Port Traffic in Souther
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Table 5.2.5 Required Capacity up to
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5.3 Identified Projects for the Mas
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(6) Nha Trang Port Development II-5
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(2) Ho Chi Minh City General Ports
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Figure 5.3.1 Development Plan of Ca
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Dung Quat Figure 5.3.5 Development
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Figure 5.3.9 Development Plan of Po
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The tentative investment schedule i
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APPENDIX A DETAILED PORT DEVELOPMEN
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(Table A.1 continued) No. Name Pres
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(Table A.1continued) Present status
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Table A.2 Investment Capital for Po
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Table B.2 Intra-Asia Container Port
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Table B.4 Multipurpose Wharf for Co
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Notes: Planning base year is 2020.
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Technical Report No. 8 PORT AND SHIPPING

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