Part 1: Free Trade Zones: A Key to Enhancing Vietnam's Logistics Competitiveness

FTZs are the cornerstone of modern logistics development, providing businesses with incentives to optimize transportation costs and time. According to the Vietnam Logistics Report 2024, logistics costs in Vietnam account for 16–20% of GDP, significantly higher than the global average of around 11%. The establishment of FTZs helps lower these costs by improving infrastructure, advancing digitalization in transportation processes, and increasing warehousing efficiency.

Additionally, FTZs foster multimodal logistics connections by integrating seaports, railways, and road networks, ensuring seamless movement of goods to both domestic and international markets. For instance, the development of an FTZ linked to Lien Chieu Port in Da Nang is a strategic move to connect the East-West Economic Corridor, boosting regional integration in Central Vietnam and ASEAN.

UAE: A Global Logistics Hub

The United Arab Emirates (UAE) leads the world in FTZ development. The Jebel Ali Free Zone (JAFZA), home to over 8,700 businesses, contributes around 23% of Dubai's GDP. JAFZA’s success stems from robust investment in port infrastructure and logistics integration, combined with tax exemptions and a pro-business environment.

Another highlight is its adoption of green logistics solutions. JAFZA employs solar energy in warehouses, electric trucks, and reduced CO₂ emissions, attracting environmentally conscious investors.

Singapore: Southeast Asia's Trade Center

Singapore has developed FTZs as part of a national strategy to establish itself as Southeast Asia’s largest transshipment hub. FTZs like Jurong Island offer state-of-the-art warehouses and utilize advanced technologies such as blockchain to manage supply chains, minimizing fraud and accelerating transactions.

The Singaporean government also supports businesses with logistics workforce training and applies artificial intelligence (AI) to forecast demand, optimize transportation, and reduce storage costs.

China: Growth Powered by Multifunctional FTZs

With over 20 FTZs, China has leveraged these zones to advance high-value-added industries. Shanghai's FTZ serves as a testing ground for new economic policies, featuring simplified customs procedures and fast-tracked import/export processes.

China’s focus on establishing FTZs near major ports facilitates seamless exports, a model Vietnam can emulate in areas like Hai Phong and Ho Chi Minh City.

However, Vietnam faces significant challenges, including a lack of synchronized infrastructure planning. Roads, railways, and seaports in many regions remain poorly connected, increasing costs and reducing competitiveness. Additionally, complex administrative procedures and unclear incentive policies pose substantial barriers.

To overcome these challenges, Vietnam must invest heavily in IT and digital transformation for FTZ management. For example, implementing automated customs systems and supply chain management software can reduce clearance times and streamline logistics processes. Furthermore, learning from Singapore's experience in developing a skilled logistics workforce—especially in warehousing and international transportation—will be critical.

FTZs are not just a strategy to lower logistics costs but also a foundation for enhancing national competitiveness. To maximize the benefits of FTZs, Vietnam must address infrastructure bottlenecks, simplify administrative procedures, and advance international cooperation and technology investments.

The author believes that with strong governmental determination and proactive business participation, Vietnam's FTZs can become a regional development model. This represents not only an economic opportunity but also a pathway for Vietnam to redefine its position in the global supply chain, ensuring sustainable and comprehensive growth in the future.