Regional Spotlight: Vietnam’s Mekong River Delta

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The Mekong River Delta is rich in oil and gas, especially in the continental shelf

While the economy of the mineral-rich, southernmost Mekong River Delta region is diverse, with industrial sectors ranging from tourism to oil & gas, due to favorable topography and a tropical climate, agriculture remains the most important economic sector.

Geography

The region overlooks the Gulf of Thailand on the Western and Southwestern sides, borders Cambodia in the North and faces the South China Sea on its Southeastern border. The region’s terrain is quite flat, and the majority of it is attached to the mainland.

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The topography of the region has an average elevation of 0.5-1.0 m above sea level, however with lower elevations in the South, drainage is difficult to implement leading to prolonged flooding.

Industries

Agriculture remains the foundation of the economy in the Mekong River Delta region, with rice as the staple crop. Cash crops for export contribute significantly to the regional economy, with the greatest focus on coconuts, tobacco, sugarcane and cocoa. There are more than 315,000 hectares of coconut plantations, with Ben Tre coconut candy known around the world.

The fisheries sector in the region is the largest and most developed in the nation. The long coastline, extensive rivers and favorable climate in the Mekong River Delta are ideal for aquaculture. The rivers and sea in the region provide large quantities of many types of seafood such as sea bass, silver cheeked fish, sardines, anchovies, oysters, crabs and prawns – which are exported to different parts of the world.

Furthermore, the Mekong River Delta is rich in oil & gas as well, especially in the continental shelf with the Nam Con Son basin containing about 3 billion tons of oil. This is drawing huge domestic and international investment, with Chevron announcing its recent intention to invest over US$7 billion in projects in the southern region – including over US$4 billion for gas development and pipeline installation.

The Kien Giang province is especially abundant in mineral resources, with the largest limestone reserves in the south. Large reserves of clay fuel the growth of the region’s construction materials industry.

Power Production

Construction recently began on the biggest project in the area, the O Mon Thermal Power Plant, which will have a total capacity of 1,200 MW upon completion.

The Ministry of Industry and Trade also recently approved a zoning plan for the administration in Hau Giang Province to develop a 5,200 MW power complex, the Hau River Power Complex, which will consist of a total of three thermal power plants. The 1,200MW Hau River Thermal Power Plant No. 1 is expected to be built during 2013-2014, while construction on plants No. 2 and No. 3 with a combined capacity of 4,000 MW is planned to start in 2018.

Infrastructure

Nam Can Port in Ca Mau province is an important port in the Mekong River Delta as it has great potential to expand trade with nearby Singapore, Indonesia and Malaysia. There are also three ports in Can Tho on the South bank of the Hau River, the Can Tho Port, Tra Noc Port and Cai Cui Port.

Airports in the region include Phu Quoc Airport (a new replacement airport is planned on Phu Quoc Island), Rach Gia Airport and Ca Mau Airport (both small airports offering domestic flights), and Can Tho International Airport (the largest and most important airport in the Mekong River Delta area).

Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.

For further details or to contact the firm, please email vietnam@dezshira.com, visit www.dezshira.com, or download the company brochure.

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