Many large enterprises that submitted bids for rest stops on the Eastern North-South Expressway have quietly withdrawn because they realized it was not easy to make a profit in this new, highly specialized business field.
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Shaping the Lead Investor
“We are working closely with project management boards to speed up negotiations with investors. We aim to sign contracts for four investment projects to build and operate rest stops on the Eastern North-South Expressway by early July 2024,” said Nguyen Quang Giang, Deputy Director of the Vietnam Expressway Administration (Ministry of Transport).
In principle, the winning bid price remains unchanged, so negotiations with investors only revolve around shortening the progress of public works to serve the essential needs of people and vehicles participating in traffic on the route.
According to Mr. Nguyen Quang Giang, this is not a simple task, because according to the bidding documents for investment projects to build rest stops on the North-South Expressway, the overall implementation progress is only 15 months, of which the time to complete public service works is 12 months.
The public works category, providing free services at rest stops on the North-South Expressway that the winning investor is required to invest in construction within 12 months from the date of signing the contract is also very large, including parking lots; resting spaces; temporary rest rooms for drivers; restrooms; information provision areas; places to organize and launch propaganda on traffic safety; and places for rescue workers and first aid for traffic accidents.
Previously, after a period of acceleration, the Vietnam Expressway Administration also approved the results of selecting investors for four investment projects to build and operate rest stops on the North-South Expressway in the East. These four projects include: rest stop Km90+900 of the Cam Lam - Vinh Hao Component Project; rest stop Km144+560 of the Vinh Hao - Phan Thiet Component Project; rest stop Km329+700 of the Mai Son - National Highway 45 Component Project; rest stop Km47+500 of the Phan Thiet - Dau Giay Component Project.
Surprisingly, 3/4 of the investment projects to build and operate the above-mentioned rest stops belong to the joint venture of Phuong Trang Passenger Transport Joint Stock Company - Thanh Hiep Phat Company Limited (abbreviated as Phuong Trang - Thanh Hiep Phat joint venture). These are the rest stop at Km90+900 of the Cam Lam - Vinh Hao Component Project; the rest stop at Km144+560 of the Vinh Hao - Phan Thiet Component Project; the rest stop at Km47+500 of the Phan Thiet - Dau Giay Component Project.
The total cost that the Phuong Trang - Thanh Hiep Phat joint venture must spend to build the above 3 rest stops (including money paid to the state budget, compensation, support, and resettlement) is about 900 billion VND.
The initial victory of the Phuong Trang – Thanh Hiep Phat joint venture did not come easily, because all 3 component projects that this joint venture won the bid for had a very high level of competition. Even the Investment Project for Construction and Operation of the Km47+500 Rest Stop under the Phan Thiet – Dau Giay Component Project, in addition to the Phuong Trang – Thanh Hiep Phat joint venture, had up to 6 investor consortia submitting bidding documents, among which were very strong units.
To select an investor with capacity and experience in operating rest stops, the bidding documents also require that the investor or consortium member must have been in business or operating specialized road services under the project under consideration and meet one of two conditions: having a decision to announce a type 1 rest stop put into operation; having a decision to announce a type 2 or 3 or 4 rest stop put into operation, but must ensure that the rest stop has an area for inspection, maintenance, repair of vehicles and a fuel station (with supporting documents).
In case the above 2 criteria are not met, the investor or member of the consortium must have operated at least 2 services: a motor vehicle repair and maintenance workshop or a road traffic rescue and relief center and a petrol, oil fuel station or an electric car charging station. At the same time, there must be at least one service in 3 services: parking lot, food, beverage, product sales; accommodation.
Compared with the above criteria, the Phuong Trang - Thanh Hiep Phat joint venture has many advantages, because Phuong Trang (FUTA Bus Lines) is a very large passenger transport brand in the South, owning a number of large, well-invested rest stops on a number of key road traffic routes.
Among them, the Satra stop invested by Phuong Trang in Tien Giang province is the largest in scale on the entire national traffic route. This stop has an area of 12 hectares, an investment capital of up to 100 billion VND, and a synchronous utility service system.
“We have carefully assessed the capacity profile of the Phuong Trang – Thanh Hiep Phat joint venture. This is one of the major investors, capable of leading the market in investing in the construction and operation of highway rest stops,” said a leader of the Vietnam Expressway Administration.
Many surprises ahead
In addition to the case of the Phuong Trang - Thanh Hiep Phat joint venture, another enterprise that is expected to have great success in the bidding for investment projects to build rest stops on the North - South Eastern Expressway is the Vietnam National Petroleum Group (Petrolimex).
At the end of June 2024, the Petrolimex - Thua Thien Hue Petroleum Company consortium was selected as the investor of the Investment Project for construction and operation of the Km329+700 rest stop under the Mai Son - National Highway 45 component project with a value in money paid to the state budget of VND 111 billion; the preliminary value of the project implementation cost is VND 201,685 billion; the value of compensation, support, and resettlement (M2) is VND 10,454 billion.
“With strong financial potential and the largest fuel supply station system in the country, it will not be surprising if Petrolimex continues to be named as the winning bidder for the rest stop projects being implemented by units under the Ministry of Transport,” said the leader of a business that submitted a bid for the Investment Project for the construction and operation of the Km329+700 rest stop under the Mai Son – National Highway 45 component project.
According to Mr. Tran Chung, Chairman of the Vietnam Road Traffic Construction Investors Association, with nearly 50 rest stops on expressways that need to be invested in the next 2-5 years, this is a new business sector, attracting the attention of domestic and foreign investors.
However, this is a risky business, with investors having to raise up to 300-400 billion VND in a very short period of time (maximum 1.5 years), while the payback period lasts up to 25 years.
Because the public works system accounts for the majority of investment costs and costs a lot of operating costs, but is provided free of charge, investors can only expect revenue from renting premises for food and beverage businesses, fuel businesses, etc.
The investment scale of rest stops is basically the same, so if the route has few vehicles or the traffic growth is not as predicted, the location of the rest stop is not really reasonable, customers spend little, etc., investors will certainly suffer losses.
Therefore, if rest stop investment is not considered as a field in the ecosystem (like the case of Phuong Trang Company) to be able to offset costs, the possibility of investors "going bankrupt" is very high.
The Phuong Trang – Thanh Hiep Phat joint venture has carefully calculated, as all 3 rest stops they won the bid for are adjacent to each other on the North – South expressway section in the East, about 300 km long, with very good traffic flow from Dau Giay (Dong Nai) – Phan Thiet (Binh Thuan) – Vinh Hao (Binh Thuan) – Cam Lam (Khanh Hoa).
Investing in a chain of 3 or more rest stops will help investors have more “room to perform” and reduce investment and operating costs when they have the same design and management system. It will be very risky if investors only operate 1 rest stop independently.
It should be added that previously, the Ministry of Transport had received a proposal to establish a chain of modern multi-functional rest stops on the North-South Expressway from a joint venture between Vietnamese and Korean investors. This investor later withdrew its application and did not participate, because the management agencies organized bidding for each rest stop, instead of bidding for packages of 5 to 10 rest stops as they expected.
“The race to win the right to invest in the exploitation of rest stops on the North-South Expressway still promises many interesting surprises ahead, but is also full of pitfalls, if investors are not alert to build a long-term, methodical business plan for this special field,” said Mr. Tran Chung.
Source: https://baodautu.vn/kinh-doanh-tram-dung-nghi-san-choi-moi-ken-nguoi-d218893.html
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