Boston, MA -- (SBWIRE) -- 09/25/2013 -- BMI View: Vietnam's construction sector is still in an upward cyclical phase, as evidenced by a real growth rate of 5.1% y-o-y in H113. Therefore, we are maintaining our view that the recovery in Vietnam's construction sector could last well into 2013 - our real growth forecasts for the sector remain at 5.3% for 2013 - as monetary conditions are becoming increasingly conducive to construction. We have, however, revised down our construction growth forecasts for 2014 from 6.4% to 5.6%. This is due to an increasingly poor external environment for trade, an oversupply of housing and difficulties in securing project financing within the infrastructure sector.

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The major developments in Vietnam's infrastructure sector are:

- In April 2013, Vietnam started the construction of the Lach Huyen international port in the northern city of Haiphong. The port is scheduled to be built in two phases, with the first phase entailing the construction of port infrastructure, while the second phase will include the construction of two 750m wharves capable of handling 100,000-tonne container ships. The Vietnam Maritime Administration will manage the first phase, involving an investment of more than VND18.6trn (US$885mn), while a joint venture of Vietnamese and Japanese enterprises will manage the second phase worth more than VND6.57trn (US$315mn). The port, due for completion in 2016, will have modern cargo handling equipment. It will be capable of handling container ships of up to 8,000 twenty-foot equivalent units.
- In April 2013, local authorities in the Kien Giang province announced that the Kien Luong Power Centre project is likely to be halted if the Tan Tao Group is unable to arrange capital required for investment, worth around US$6.7bn. The project was licensed five years ago. The first phase of the project, the thermal power plant Kien Luong 1, was expected to become operational by end-2013. Land clearance for the construction of the Kien Luong 1 was obtained more than 18 months ago, but no progress on it was made owing to a lack of capital, according to ITACO, a subsidiary of Tan Tao Group.
- In June 2013, India-based electric utility Tata Power secured a contract worth US$1.8bn from the Vietnamese government. The contract is to develop two 660-megawatt (MW) coal-fired thermal power plants in South Vietnam. The construction of the power project, called Long Phu 2, is likely to start in 2019. This is believed to be the largest Indian investment in Vietnam and will support Tata Power's own aspirations in South East Asia and India's Look East policy.

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