June 16, 2019 08:09

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Vietnam Logistics: Efforts not to 'Miss Ship'

15:38 | 13/12/2018

VCN  - The deepening international economic integration has opened up many opportunities for the logistics industry in Vietnam. However, to avoid "miss ship", Vietnam should really make efforts to solve the difficulties, squeezed from year to year.

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Vietnam should link multi-modal transportation, promote waterway and sea transport. Picture: Dang Nguyen

Small business, high cost

The World Bank’s (WB) report on Logistics Activity Index (LPI) released in July 2018, shows that Vietnam ranked 39 out of 160 countries surveyed, up 25 levels from 2016, ranked third in ASEAN countries. Vietnam is also ranked in the top in emerging markets. This is the best result that Vietnam has gained since the World Bank's LPI ranking in the past decade.

According to the Ministry of Industry and Trade: At present, there are about 3,000 logistics enterprises in the country operating in the fields of road, rail, sea, inland waterway and air transportation, as well as freight forwarding, warehousing, customs agent, cargo inspection, cargo handling, ... Besides, the companies also undertaking part of international logistics services by acting as agent for foreign companies are ship owners, and international logistics service providers.

Deputy Minister of Industry and Trade Cao Quoc Hung, said that although Vietnam's logistic sector has achieved rapid development, Vietnamese logistics enterprises are small in scale with about 90% of enterprises having registered capital less than 10% billion dong; 5% with capital from 10 to 20 billion; The remaining 5% has the capital of 20 billion or more. Meanwhile, the number of logistics enterprises participating in the Association of Logistics Services is only 360 companies. This shows that the linkage of Vietnamese logistics companies is not extended; most of them still operate individually.

Regarding the inadequacies and challenges in the development of logistics services in Vietnam, Vice Minister Cao Quoc Hung further added that the logistics infrastructure of Vietnam is a typical problem. In particular, due to the lack of awareness of the development of the logistics industry as a basic service sector to support other economic sectors, some provinces and cities have the potential but the commercial infrastructure and transportation infrastructure as well as information technology infrastructure is not invested adequately. This makes it difficult to promote cooperation between domestic and international logistics businesses in Vietnam.

"The weakness of Vietnamese companies is the high cost of services, the quality of some services and professionalism is not equal, this is due to the limited size, capital, experience and management. The ability to apply information technology, human resources of enterprises has not been effective," Vice Minister Cao Quoc Hung emphasized.

Accelerating administrative reform

Vietnam has become a center of manufacturing many products at the "top" in the world. Notably, in Vietnam, the presence of many leading corporations, especially in the fields of electronics and information technology such as Samsung, Fujitsu, Intel, Samsung, Nokia, Siemens, LG ...

In addition, Vietnam has been increasingly integrating into the world economy with the signing of many Free Trade Agreements (FTAs). Most recently, the Trans-Pacific Partnership and Transition Partnership has been ratified by Congress. It can be said that these are important facilities for Vietnam to open up opportunities for the logistics industry, especially creating favorable conditions for foreign companies to cooperate in investment and logistics services in Vietnam.

How do Vietnam logistics services make best use of development opportunities which have been opened? Deriving from the weak points of the logistics industry in Vietnam, Mr. Ousmane Dione, Director of the World Bank in Vietnam, said: In order to increase efficiency and reduce logistics costs, Vietnam must first speed up the reform of administrative procedures, especially customs procedures for export goods.

In this regard, the Central Institute of Economic Management (MPI) also pointed out that 50% of business conditions, management reform, cutting 50% of goods subject to inspection according to the Government's direction, ensuring the essence and effectiveness of the construction and development of the trading floor.

"Road transport is currently four times larger than inland waterways and railways, adding that multimodal transport, ocean freight and shipping should be connected. In the current difficult funding conditions, Vietnam should prioritize spinal projects that are interconnected rather than individual projects," said Ousmane Dione.

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Some logistics companies have expressed their viewpoint: Logistic activities are multi-sectors. In particular, cargo transportation is managed by the Ministry of Transport; warehousing and distribution activities managed by the Ministry of Industry and Trade; Import and export activities managed by the Ministry of Finance ... All other ministries and branches manage specialized procedures applied when importing goods. Logistics must be managed, organized and planned effectively, it is necessary to establish state management agencies or to assign state management responsibilities for logistics activities to a specific ministry or branch.

According to the Prime Minister's decision 200 / QĐ-TTg dated 14/2/2017 approving the action plan to improve competitiveness and develop logistics services by 2025, the objective is: By 2025, the contribution of logistics services to GDP will be 8% -10%; service growth rate is to reach 15% -20%; logistic outsourcing rate to be 50% -60%; logistics costs to fall to 16% -20% of GDP; ranking by the national logistics capacity index (LPI) in the world to reach 50 or more.

By Thanh Nguyen/Bui Diep