BMI's Executive Summary

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Air Asia, Malaysia's successful budget airline, signed a letter of intent with Vietnam's Vinashin Group in September to set up a new low cost airline. T A joint venture was to be set up with an initial capital of US$30mn to establish a low-cost operator in Vietnam based on AirAsia's successful business model. Tony Fernandes, Air Asia's chief executive officer, said that his company saw Vietnam as a potential tourist destination with Hanoi as the hub. With 84mn people in Vietnam and the fact that it was situated beside China with its billion-plus population, the potential for air travel was huge, Fernandes said. The new airline, to be called Vina Air Asia, was expected to begin operations in July 2008, most possibly flying routes from southern China to its operating hub in Hanoi. Separately Vietnam was expected to issue new regulations allowing foreigners to own up to 49% of local airlines, according to reports in May. In May 2006, the legislature passed an Aviation Law allowing locals and foreigners to participate in air transport operations in the country. Taking these developments into consideration, along with the growth of demand, BMI's newly-released Vietnam Freight Transport report concludes that airfreight traffic will increase by an annual average of 12.0% in 2007-2011, measured in tonnes per km.

A number of factors underpin our optimism. One is the realistic prospect of a long export-led boom in Vietnam, with GDP growth likely to average 8.4% in 2007-2011, up from 7.8% in the preceding five-year period. Vietnam Airlines is poised for strong growth. Infrastructure plans are also ambitious. The government has announced plans to build the country's largest airport at Long Thanh in the southern province of Dong Nai, at an estimated cost of nearly US$8bn. Noi Bai International in Hanoi will also be modernised, with a new runway and the enlargement of the cargo terminal.

Our overall outlook for the nascent freight transport industry across the different modes is bullish. In road haulage, we have trimmed our forecast to take account the effects of high oil prices and continuing infrastructure bottlenecks. But we still see road-freight turnover running ahead of the general rate of economic expansion in Vietnam. We see it growing by an annual average of 10.8% over the next five years, followed closely by maritime freight (10.4%), pipeline throughput (9.7%) and rail (9.3%). Full World Trade Organisation (WTO) membership, achieved in early 2007, can be seen as supportive of greater freight transport turnover relative to GDP across all modes, particularly so for shipping. We now expect total freight carried growth across all modes, measured in million tonne-km (mntkm), to average 10.2% per annum in 2007-2011.

Under BMI's freight transport business environment rating system, Vietnam achieves a composite score of 45 out of a potential maximum of 70. Vietnam's stronger points are freight growth, transport infrastructure growth and the transport intensity index, which measures the dynamism of the country's foreign trade. BMI views Vietnam as being weaker in the other four categories: economic and political long-term risks and the country's regulatory and competitive environment (corruption is a particular problem).

According to our latest estimates, the total value of transport and communications GDP will rise to US$5.1bn in nominal terms by 2011, representing 4.3% of Vietnam's GDP.

Contents

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Chapter 1 - Executive Summary

Chapter 2 - SWOT Analysis

Vietnam Road Haulage SWOT

Vietnam Economic SWOT

Vietnam Political SWOT

Vietnam Business Environment SWOT

Chapter 3 - Business Environment Overview

Table: Asia Pacific Freight Business Environment Ranking

Business Environment Rankings

Economics – Long-Term Risk

Politics – Long-Term Risk

Freight Transport Growth

Transport Infrastructure Growth

Regulatory Environment

Competitive Environment

Transport Intensity Index

Political Risk Summary

Economic Risk Summary

Business Environment Risk Summary

Legal Code/Corruption

Red Tape

Labour Force

Chapter 4 - Industry Trends And Developments

Air

Sea

Logistics

Chapter 5 - Industry Forecast Scenario

Macroeconomic Outlook

Table: Output And Population

Chapter 6 - Transport Outlook

Table: Transport And Communications Data And Forecasts

Table: Freight Carried (domestic)

Chapter 7 - Country Snapshot: Vietnam Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education And Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption And Stratification

Chapter 8 - Trade Environment

Foreign Trade Regime

Overview

Trade Agreements

Tariffs/Non-Tariff Barriers

Table: Value Of Imports By Category (US$mn)

Table: Value Of Exports By Category (US$mn)

Table: Top Export Destinations

Table: Export Trade, % y-o-y

Table: Top Import Sources

Table: Import Trade, % y-o-y

Chapter 9 - Market Overview

Multimodal

Competitive Landscape: Multimodal

Company Profiles

Road

Infrastructure

Competitive Landscape: Road

Rail

Infrastructure

Competitive Landscape: Rail

Air

Infrastructure

Competitive Landscape: Aviation

Company Profiles

Water

Infrastructure

Competitive Landscape: Maritime

Company Profiles

Pipelines

Competitive Landscape: Pipelines

Chapter 10 - BMI Forecast Modelling

How We Generate Our Industry Forecasts

Transport Industry

Sources

Chapter 11 - Appendix: Regional Demographic Data

Table: Manufacturing Wages (ave per annum), US$

Table: Population

Table: Household Spending Per Capita, US$

Table: Private Consumption Per Capita, US$ PPP

Table: Market Size, GDP, US$bn

Competitive Landscape for Asia Freight Transport Reports: Sample of Companies Ranked

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Analysis of latest projects across the freight transport sector – road, rail, air, sea, logistics – including market overview which provides an outline of the key elements driving development. SWOT analysis of the state’s business environment, transport sector, politics and economics, which carefully evaluates the short- and medium-term issues facing the industry.

Network of Asian Freight Transport Sources

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BMI's Asian Freight Transport Reports are based on an extensive network of multilateral organisations, government departments, freight transport industry associations, chambers of commerce and company reports. Information sources include: