L. Joseph
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WASHINGTON, D.C., June 22 -- The International Finance Corporation (IFC) will invest in Viet Nam's first private sector port project. The investment agreement for a loan to the Baria Serece Joint Venture Company was signed in Hanoi today by Mr. Jemal-ud-din Kassum, IFC's Vice President for Operations and Mr. Jean-Luc Richard, Managing Director of the project company.

Under the agreement, the Baria Serece Joint Venture Company will construct a deep water port capable of handling ships of up to 40,000 tons on the Thi Vai river, 70 km from Ho Chi Minh City. The port will have bulk handling facilities and an annual capacity of 600,000 tons. Baria Port will contribute significantly to the expansion of economic activity in a new industrial area and boost the distribution efficiency of critical goods such as fertilizers and agricultural products in the region. The port will also serve as an alternative to the congested Saigon Port where increasing shipping traffic has outgrown the existing infrastructure.

The total project cost is estimated at US$10 million. IFC will provide a loan of US$3 million of its own funds and is expected to syndicate an additional US$2 million with Banque Indosuez. The Norwegian Agency for Development (NORAD) will also provide a US$2 million loan.

The Baria Serece Joint Venture Company has 60 percent foreign and 40 percent local ownership. Local investors include a group of state-owned companies involved in the trading of fertilizers, agricultural goods, and general merchandise, and a local bank. Foreign investors include SCPA, a fertilizer supplier and a member of the EMC Group of France; SOGEMA, a subsidiary of SCPA, which handles cargo and operates dry bulk terminals in France; and Norsk Hydro, a Norwegian conglomerate and one of the largest producers and marketers of fertilizers in the world.

"Baria is a landmark project," said Mr. Kassum. "It demonstrates the Government of Viet Nam's willingness to allow private sector participation in the transportation and infrastructure sectors and serves as a model for other investors."

This is IFC's third project in Viet Nam bringing its total financing for the country's private sector to US$40.5 million. IFC is financing the expansion of the Hotel Metropole in Hanoi and is also investing in the Foremost Dairy, a milk processing facility in southern Viet Nam. In addition, IFC has advised the Vietnamese Government on the development of financial markets, including the establishment of securities markets and a leasing industry.

IFC is a member of the World Bank Group and is the largest multilateral source of equity and loan financing for private sector projects in developing countries.