Developing the logistics market: Enterprises take initiatives, The Government supports it

Developing the logistics market: Enterprises take initiatives, The Government supports it

Efforts from The Government and enterprises

In the seminar “Developing the Logistics Market for Enterprises” held in Hanoi on April 20, 2021, there were many opinions that the year of 2020 is a difficult one for the economy in genral and for the logistics sector in particular- global trade was hit hard by the pandemic of COVID-19. In the context, according to reports from the Ministry of Industry-Trade, Vietnam has been considered the most resilient economy in the region and in the world in term of growth-maintaining ability.

The country’s economic growth rate in 2020 reached 2.91% - the lowest increase in the period of 2011 - 2020. But with impacts from the pandemic of COVID-19, the result was quite impressive compared to other countries in the region or in the world having negative growth or no growth at all.

In 2020, the total turnover of Vietnam’s import and export surpassed the target of USD 500bn, reached USD 545.4bn- an increase of 5.4% compared to that of 2019. In which, the total export turnover reached USD 282.66bn- an increase of 7% compared to that of 2019; the total import turnover reached USD 262.7bn- an increase of 3.7% compared to that of 2019.

Deputy Minister of the Ministry of Industry-Trad Tran Quoc Khanh said the global logistics markets in the second half of 2020 was pushed up mainly by the restoration of international trade flows. Poclicies of trade facitating and economy stimulating in the post-pandemic era by the Government helped to expand the market. Main driving force of the market in the second half of 2020 was mainly from efforts by the Government, international organizations and enterprises which tried to stabilize the supply chain in the context the pandemic of COVID-19 has had complex happenings. “However, although the governments of countries have made efforts to maintain the goods supply chain and give priority to the circulation of essential goods. Due to the implementation of epidemic control measures and regulations on quarantine and social distancing, there are times when many activities are almost paralyzed,” said Khanh.

Great in quantity, small in size

Logistics sector is a sector with great potential for development, playing an important role, especially in the context of our country’s deep integration. The promotion of linkage among logistics enterprises, and among logistics enterprises and manufacturing and exporting enterprises, will promote the sharing of knowledge, experience, and build trust. At the same time, forming a network of large enterprises with the ability to lead the market: searching and sharing orders, reducing logistics costs, and improving competition abilities for Vietnamese products and goods...

According to VLA’s data, 95% of logistic enterprises operating is Vietnamese ones. Although they are many in number, they are small in size, limited in capital, human resource and international operation experience ase well; there have been no linkages among stages in the logistics supply chain and among logistics enterprises and import-exporters… Thus, in both selling and buying, domestic logistics enterprises are limited in their play ground.

Many opinions from leading experts believe limited size of enterprises is one of the barriers in providing an effective logistics service chain and in competing in the domestic market, not mentioning to regional and international markets yet. Thus, the Government and the Ministry of Industry Trade need to pay more attention and facilitate enterprise developments, especially by improving their policies and law on logistics services.

In addition, localities need to set priority to their land funds, to invest in logistics infrastructure by supporting enterprises to build large logistics center in key localities and cities; functional agencies need to upgrade and have synchronous connections among transport infrastructures and transport services, reducing infrastructure fees and wharf surcharges; allowing optimization of resouces through reallocation, sharing and reusing excess capacity to push Vietnam’s logistics further to international level.

Improving competition abilities

In order to remove difficulties and barriers and to create favorable conditions for logistics enterprises to develop, on April 1, 2021, the Prime Minister signed and issued the Decision 531/QD-TTg on “Approval of the Master Strategy development of Vietnam’s service sector in the period of 2021 - 2030, vision to 2050” with the orientation of focusing on developing a number of industries, products and services with high knowledge and technology content, with competitive advantages as distribution, tourism, information technology, finance - banking, logistics, education and training, healthcare...

The Government will continue to improve policies and laws on logistics services and transport

Accordingly, the Government will continue to improve policies and laws on logistics services and transport: specifically, amending a number of regulations and supplements on logistics and transportation services in the Commercial Law, creating a favorable legal basis for Logistics activities; amending and issueing new policies and laws governing logistics services, multi-modal transport, and crossborder transport with comprehensive coverage of logistics services, internalizing international commitments on logistics...;reducing logistics costs through handling supply chain constraints such as the productivity of seaports, LCDs, and inland waterway ports, warehouses and transshipment points; planning multi-modal transport to promote rapid development of low-cost freight modal.

“The service sector should be developed to become a key sector, accounting for a large proportion in the economy with high quality, high efficiency and high competition abilities, on a par with the group of developed countries in ASEAN-4, in line with international standards and practices” is the general target of development assigned by the Decision no.531/QD-TTg. Developed logistics services will improved efficiency and competition abilities of the economy and the country for competitions among countries’ economies in the context of current global economy are getting fierce.