Necessary and sufficient conditions to develop logistics services in Ba Ria - Vung Tau

To improve an investment-business environment, to perfect the legal basis, to set up an effective mechanism to develop logistics services and to integrate with the existing global logistics are what the leaders of BR-VT have been trying to carry out.

SITUATION AND THE NEED FOR A LEGAL ENVIRONMENT IN INTEGRATION PROCESS

In global integration, transparency of the investment – business environment is of great importance. The improvement of the environment will have great impacts to investment efficiency and business activities as well of any country’s economy.

As a commitment when joining WTO, Vietnam will allow 100%- foreign capital logistics service companies to have equal activities in fields of sea, air, land, railroad and local waterway transports. Similarly, there was another commitment in ASEAN with four specific contents among which are free trade and lifting tax barriers and non-tariff barriers for convenient goods flow (according to the roadmap, tax inside ASEAN community will be 0 in 2015). This will surely attracts companies operating in logistics field to Vietnam, but at the same time, this will place Vietnam business community in fierce competitions and challenges.

However, in Vietnam, accessibilities to capital sources, information of land and services, and procedures have been limited. Interacting among the government and functional organizations –businesses and their partners has been weak, causing issues in goods control in the process from production point to consuming point.

BR-VT has been under construction and development to be a modern sea port center in the region, with logistics being its major activities. The province has been trying their best to reach the target: to establish a logistics supply chain to join the global supply chain. According to schedule, the first phase of logistics center in Cai Mep will be put into operation in 2015. Therefore, it is necessary to build a clear transparent legal environment to boost up development of the logistics.

MANAGEMENT MODEL-MECHANISM, LEGAL BASIS TO DEVELOP LOGISTICS SERVICES

In preparation for 2014, the final time to open logistics services, in experts’ opinions

Management model –mechanism: the legal environment in BR-VT should be built in the manner that the local authorities will be given carte blanche to make development planning and land leasing mechanism… and the Government will manage in macro level only. And the Government will invest in infrastructure system including land transport (roads and railroads), main navigation access channels, local waterways, airports, electricity and water supply systems… and logistics businesses will lease land and invest in warehouses, factories, equipments for their operations. As management models being carried out in many countries worldwide, a company will be assigned by the Government to carry out investment in the infrastructure in the center and manage leasing. The company either belongs to a local government (Ports and Harbors Bureau in Japan) or public private partnership (PPP) model (Bremen Transport Village in Germany).

Mechanism for land: as the model from Ports and Harbors Bureau in Japan, a local government will assign its land to a sea port management administration – a kind of company with capital accumulated from the central and local governments. BR-VT should consider the model. Sea ports and logistics center will be run by the company. Land will be valued on its position or infrastructure conditions, or it will be valued by an independent organization.

Investment policies: A solution that the provincial government will lend ODA-funded capital from the Government in accordance with financial institutions or a provincial company or organization will be financed from provincial budget to invest in infrastructure of a logistics center should be considered to develop the logistics. However, there should be assisting policies that help logistics business approach capital sources from local and foreign financial institutions. An investment budget or a investment finance company should be established to financially assist businesses with management from the provincial People’s Committee. Capital sources can be taken from the annual contributing capital to the central Government’s budget.

Investment attracting policies: Incentives policies (incentives to land leasing price, imported equipments and machines for production purposes) and assistance “one package-one stop” to organizations or individuals from local and abroad with investment plans to Logistics center should be applied. Researches on incentive policies should be also carried out with much attention to private investments or PPP. There should be encouragement policies to logistics services JVs or to local strong businesses with qualified partners from abroad for a boost.

Policies on profit sharing and reinvestment should be carried out. A certain proportion of profit should be regulated for reinvestment, together with incentive policies. Administration reforms should be paid attention: simplifying customs procedures, completing e-customs, making it easier for goods clearance; focusing on procedure reforms to vessels coming in/out ports, applying one-stop customs mechanism and e-customs, minimizing time and cost for businesses. It is also necessary to hire foreign consulting organizations, together with local consulting ones, to make a master plan to develop logistics infrastructure, and plans for a logistics center.

Port economy will be a spearhead capable to develop BR-VT and the Southern Key Economic Zone in the time to come. It is a necessary and sufficient condition to build a legal environment, a particular mechanism, a management model and an adequate infrastructure to develop the logistics section in BR-VT. This requires efforts and determinations from leaders and organizations from the central government to provincial government to achieve the target “BR-VT will be a central port city of the country in 2020”