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Developing trade - logistics: Only infrastructures are not enough

(VLR) (Vietnam Logistics Review) This is an ideal from WB experts in Vietnam in the working session with Deputy PM Vuong Dinh Hue on facilitating trade, developing logistics and carrying out national OneStop at the end of June 2017.

(Vietnam Logistics Review) This is an ideal from WB experts in Vietnam in the working session with Deputy PM Vuong Dinh Hue on facilitating trade, developing logistics and carrying out national OneStop at the end of June 2017.

Infrastructure investments

One of decisive and important factors for economic developments and promotion of trade, production and import- export is investing in infrastructures, especially transport infrastructures.

Reports from the Ministry of Transport showed in five years (2011- 2015) the Ministry attracted USD6.24 bn of ODA capital for 33 projects, called for VND327,110bn out of VND 379,000vn raised as additional investments to the State’s budget. VND 186,660bn out of VND 444,040bn was invested to transport infrastructures.

Reports from the Ministry of Transport showed in five years (2011- 2015) the Ministry attracted USD6.24 bn of ODA capital for 33 projects, called for VND327,110bn out of VND 379,000vn raised as additional investments to the State’s budget.

After 5 years, the sector has built, upgraded and improved around 4,400 kilometers of road and 94,000 meter of road bridges. Besides, in the fields of local waterway, airway, urban and rural transport, transport management and assisting transport services, there have been remarkable improvements with thousands of works, creating social- economic developments and boosting import- export.

When evaluating transport infrastructures, experts said although there have been improvements in transport connection, multi-modal transport have not been caught up with the country’s development, especially in the situation of integration. Actually, Vietnam is facing with challenge that the growth of cargo quantity surpasses the GDP growth and the growth of cargo quantity surpasses the growth of infrastructures.

According to the Ministry of Commerce- Industry, it is predicted that the demand for transport infrastructure, in the period of 2016- 2020, is around USD 24bn. However, the State can provide USD 8bn only. WB suggested to mobilize private capital, trade credit and to improve operation effectiveness with participations from private sector.

However, Sebastian Eckardt, a WB’s economic expert in Vietnam said building expressway only is not enough. Infrastructures make no sense when there are cargo congestions at gateways and ports. Therefore, it is vital to facilitate cross- border trade and improve connections for local logistics: a must-do for economic development.

When evaluating the issue, Deputy PM Vuong Dinh Hue emphasized these are fields of priority in order to reach regional and international standards and to reduce costs for enterprises. In the field of transport, Vietnam is focusing on roads and the railroad of North- South. Private sector have been being called for cooperation in form of PPP in the field of infrastructure development and specialized inspection to import- export cargo.

Synchronization of policies

“It is necessary to build 4 pillars: legal framework for trade facilitating, improving trade infrastructure efficiency and connection quality, building a competitive logistics service, and improving cooperation among sectors and with private sector,” said Ousmane Dione- WB Director in Vietnam.

Analyzing current situation of each pillar’s, WB experts said in Vietnam time for doing clearance progress accounts for 76% of total time for import- export, time for stevedoring accounts for 1/3 of it. In addition 72% of procedures are from the three ministries: the Ministry of Commerce- Industrial, the Ministry of Agriculture and Rural Development and the Ministry of Health. Attempts from the ministries in innovation will help to cut trade costs and improve national competition abilities.

According to WB calculation, in 2016, there was 60% of the clearance cargo going through the green lane with 10 million of Customs Declarations forms. It proved that Vietnam enterprises obeyed the regulations. However with 346 legal documents they have to follow, it is easy to make mistake. 34.8% of cargo going through yellow lane was too high, mostly due to specialized inspections which is unable to reduce in the spirit of the State’s Resolution no.19 on improving business environment and competition abilities. Cargo going through the red lane was 5.3% lower, but there were many issued that needed further consideration.

Therefore, the Government and related organizations should recheck all procedures on environment safety, labor sanitary, which based on the fact that costs should be lower than benefits the measurements bring. And there should be mechanism of explanation to the society, enterprises of the customs’, and specialized organization with particular responsibilities.

WB also showed that there was 40% of small enterprises with knowledge and skills that should be improved. And they suggested the Vietnam Government to assign National OneStop and Trade Facilitation Committee to handle logistics development and call for representatives from private sectors to take part in the Committee.

On the basis of WB’s suggestions, Deputy PM Vuong Dinh Hue suggested WB to help the Government consult issues of framework, functions, duties and structures of the committee and an adequate standing organization handling trade facilitation, logistics and national one- stop.

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