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Building a logistics center in Nghe An to make economic driving force for the Northen Central

(VLR) (Vietnam Logistics Review) Turning Nghe An to a logistics center of the Northern Central can be both an opportunity and a challenge to the province. Decision no 2468/QĐ-TTg dated December 29th, 2015 by the Prime Minister confirmed “Developing Vinh City, Nghe An, to a cultural economic center of the Northern Central in accordance to the spirit of Resolution no.26-NQ/TW by the Political Bureau”.

(Vietnam Logistics Review) Turning Nghe An to a logistics center of the Northern Central can be both an opportunity and a challenge to the province. Decision no 2468/QĐ-TTg dated December 29th, 2015 by the Prime Minister confirmed “Developing Vinh City, Nghe An, to a cultural economic center of the Northern Central in accordance to the spirit of Resolution no.26-NQ/TW by the Political Bureau”.

A logistics center is a vital demand

The Northern Central includes 6 provinces: Thanh Hoa, Nghe An, Ha Tinh, Quang Binh, Quang Tri and Thua Thien-Hue with the area of 50,000km2 and has the population of 10m, 6m of which is in labor age. The area is considered an economic potential area.

The area has a strategic position in politics, economy, society and defense and it also has advantages in economic expanding - a transshipment point for Tay Nguyen provinces, Laos, Cambodia, Northeastern Thailand, Myanmar and the exit of East - West Economic Corridor to international maritime routes.

The Northern Central in the past few years has had remarkable growth- a relatively high growth of 10%, which helps to attract local and foreign investment capitals for socialeconomic developments. However, provinces in the Northern central are poor ones. Investments to the provinces are limited, especially those from foreign investors’.

Ms. Victoria Kwakwa - the Representative of World Bank (WB) in Vietnam - evaluated highly the potentials of the area. She said the area has not had any breakthroughs for it has not made good use of its own advantages. For the purpose, there should be cooperation among local authorities in the area for a more attractive investment environment, for healthy competitions and for the area’s branding. WB will have more positive support to make it an interesting place for investors. It means the building of a logistics center is a must-do to connect the area’s logistics to other places in the country.

In the Northern Central, due to many ports, investment capitals have been scattered so that investment sizes are normally small. In addition, there are no berths for large vessels, especially for long-route container ones. Ports in the Northern Central mainly carries out consolidation activities and then transport cargo to ports in Hai Phong or HCMC for shipment.

Recent research showed that human resource for the Vietnam logistics is weak and inadequate both in number and in quality. In fact, around 80.26% accumulates logistics knowledge by themselves. And there is the lack of logistics human resource in university level. There are a few university having logistics major. In the Northern Central, there has been no university with logistics major. And according to information from many transport company, fees for the activity in the area are too high.

According to many economic experts from countries in the East- West Economic Corridor, although there are many crossborder transport service providers, legal procedures are not clear and legal mechanism has not been identical. Besides, there have been ideas that multi modal transport has been dealing with difficulties, one of them is the red tape from customs offices, which causes cost increase.

To connect 6 provinces in the key economic zone of the Northern Central, to make good use of economic corridor routes, to foster cargo flows, import- export and product consuming in local areas, there should be policies for investments in building logistics centers, especially for the building of the Logistics Center of rank 2 in Vinh, Nghe An.

Human resource plays an important role in developing logistics service sector. There should be an increase in scale of training from colleges and university in the area. And there should also be an increase in teaching staff of international standards for larger training scale. Teaching staff should be upgraded with knowledge of logistics fields. And there should be tight cooperation among logistics enterprises and universities, logistics for in-service training on different stages of logistics.

Mr. Le Ngoc Hoa

Deputy Chairman of the people’s committee of Nghe An

» In 5 years ago (2011-2015) Nghe An developed and put into operation 230km of national roads, 300km of provincial roads, 4,859km of rural roads with total expenditure of VND 19,500bn, (works by the Department as the main investor cost VND6,620bn). Many important projects have played important roles in investment attraction and social-economic developments. For example, the project of upgrading and expanding National Road 1A (section going through Nghe An with the length of 73.8km), which helps to improve transport infrastructures, to reduce congestions and to connect the economic triangle of Nghi Son (Thanh Hoa)- Vinh City- Vung Ang (Ha Tinh) and the local economic triangle of Hoang Mai, Dong Hoi- South East Economic Zone, Vinh, Cua Lo- the Western Nghe An. The province has upgraded and expanded many sections of National Road 7, National Road 46 (the bypass of Vinh City), National Road 48, Vinh - Cua Lo Avenue.

» “General purpose: Making Vinh a modern city, a political, economic, cultural center of Nghe An province- a center of the Northern Central in the fields of finance, trade, tourism, science- technology, IT, high-tech, medical, culture, sports and education- an area of typical Nghe culture and in addition, improving material and spiritual life of the people”.

(Decision no.2468/QĐ-TTg dated December 29,2015 by the Prime Minister)

» Vinh airport has been upgraded to an international airport since January 2015. It helps not only to develop the role of Nghe An in the Northern Central but also to speed up cooperation in all fields among provinces of Laos’ and Thailand’s. The number of local flights through Vinh International Airport and of passengers has been on the impressive increase: 530,000 people in 2011, 700,000 in 2012 and 1.2m in 2014. Shipment has experienced an impressive increase too: 1,800 tons in 2012 and 3,200 tons in 2015.

There should be special policies on land for building logistics centers at key economic zones for effective cooperation among sectors, local authorities and enterprises in the area to foster production, cargo flows and import- export. There should be policies to attract logistics human resource of high quality and to speed up human resource training for the Northern Central Key Economic Zone and for Nghe An Logistics Center in the first place.

Local authorities need to make clear that the logistics sector is “the glue” that connects productions activities and services, which will helps supply chains have better values added and competition activities. There should be an upgrading in awareness of State’s management staff and for part of enterprises in the manner of providing cargo and services. And thus, logistics in the Key Economic Zone of the Nothern Central is no longer either risky investments or barriers for enterprises.

There should be policies of mobilizing and managing capital sources from budgets, financial aids, loan capitals from both local and foreign organizations and other forms of investments. Universities in the areas, especially the University of Vinh should speed up training activities of logistics human resources for the Key Economic Zone of Northern Central by upgrading logistics teaching staff, coordinating with other advanced logistics school in the world, improving logistics training programs for logistics human resource of better quality…

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