New ferries for Vietnam 

New ferry fund gives ferry companies in Vietnam’s Mekong delta access to financing for the purchase of new ferries or the modernisation of old ferries. Danish efforts are paving the way.
Vietnamese crossing the Mekong River in the most densely populated part of Vietnam will now have access to new and more operationally reliable ferries.

With a loan of USD 1.7 million, one of the ferry companies operating in the delta has been able to acquire six new 60-ton and two new 100-ton ferries. The financing has come from a special ferry fund administered by Vietnam’s Development Assistance Fund (DAF). COWI was requested by DANIDA to help DAF establish the ferry fund.

Ferry fund

"In Denmark a credit guarantee scheme ensures financing for smaller, non-profitable ferries that ply routes between small islands,” explains project manager Niels Palmvang, who has just completed the project for DAF.

He continues: "In Vietnam, the ferry fund has been established in recognition of the fact that the existing ferry fleet is run down and that the ferry companies, which were previously state-financed, must now find alternative financing for their operations. Therefore this project is attracting much support in Vietnam."

Financial reforms

The project is part of the financial reforms that are seen as crucial to Vietnam’s continued economic growth. In the longer term, state-owned companies such as ferry companies are expected to survive under market conditions. The ferry fund can help by providing financing at below market interest rates.

Niels Palmvang adds: "The state-owned companies, whose investments were previously financed via the state budget, in reality can now only borrow from DAF or, if the loan can be repaid on market terms, from commercial banks. In the longer term, therefore, the project is an important element in the privatisation process currently under way in Vietnam."

Published: 28.06.2004
By: Christina Tækker, cht@cowi.dk


Facts about the project 
The establishment of the ferry fund is part of a bigger DANIDA-financed project which has already included delivery of six 100-ton ferries (an investment of DKK 47 million, repayment of which will be directly to the ferry fund to provide financing for future ferry acquisitions).

COWI's contribution has included 1) the recommendation for direct lending at subsidized interest rates from DAF to ferry companies 2) detailed loan application, evaluation and approval procedures for the ferry fund and 3) training of key DAF staff and staff of ferry companies in preparation for the start-up of the ferry fund.