Administration innovation: Expectation for a breakthrough in the logistics sector

(Vietnam Logistics Review) Under specific guidance from the Government, ministries and sectors have been in progress of reducing administration procedures and business conditions - a remarkable advancement to boost the economy and an expectation for a breakthrough in the logistics sector in the near future.

Encouraging signs

In experts’ ideas, logistics activities are related to many sectors and have influences from various factors as infrastructure, human resource, technology and mechanism… Thus, together with improving infrastructures, the Government has had guidance to ministries and sectors, including the Ministries of Industry and Trade, Finance and Transport… to speed up administration innovations: reducing administration procedures to facilitate business developments.

Following 2017, the Ministry of Industry and Trade recently issued the Decision no.1408/QĐ - BCT to approve Holistic Alternative to Simplify Administration Procedures in The Year 2018: reducing or simplifying 54 administration procedures in 10 fields, in 19 legal documents including 10 circulars, 1 joint circulars, 1 PM’s decisions and 7 resolution, which resulted in the reduction of 729 conditions, accounting for 60% of the total of business conditions managed by the Ministry of Industry and Trade.

Also in April 2018, the Ministry of Transport had the Decision no.767/QĐ-BGTVT dated April 17th, 2018 declaring the alternative of reducing or simplifying 384/570 business conditions, equally to 67.36% of regulations on business conditions in the field of transport. Particularly, 74.36% in the field of airline transport; 73.08% in railroad transport; 68.5% in road transport; 67.34% in waterway transport; 65.08% in maritime; 61.74% in multi-modal transport services and dangerous goods transport services…

From the Ministry of Finance’s reports, in the period of 2014 - March 31st, 2018, the Ministry reduced or simplified 1,072 administration procedures (relating to tax, customs, treasury, stocks and other financial fields).

Especially in two important fields of tax and customs, the Ministry of Finance has reduced or simplified administration procedures - a reduction of 244/542 administration procedures and a simplification of 834 administration procedures, and the Customs had a reduction of 84/246 administration procedures and a simplification of 479 administration procedures.

In general, the reduction and simplification of investment and business conditions are in term of gradual shifting governmental management method to post inspection method, which is suitable to international commitments, current legal regulations and Vietnam’s practical resource conditions.

It can be said that decisions of reduction from ministries and sectors in the direction of information transparency has had great impacts to solving obstacles in production, improving import - export, improving business environment, and attracting investments.

Making driving force of development

In many recent Governmental meetings and conference with enterprises, PM Nguyen Xuan Phuc has emphasized on the targets of the term - improving mechanisms, including comprehensive administration innovations. Result from complete innovations has had positive impacts on the economy: the growth of GDP and export turnover…

For example in 2017, it was the first time Vietnam’s import - export turnover reached USD 400bn, export had an increase of over 20%. Reports from Agency of Foreign Trade (the Ministry of Industry and Trade) showed in the first 4 months of 2018, export turnover estimatedly increased USD 73.76bn - an increase of 19% year-over- year; import turnover estimatedly reached USD 70.37bn - an increase of 10.1% year-overyear. In April 2018, trade explicit reached USD 700m - an increase of USD 3.39bn after 4 months.

Although there have been positive results. Many experts and enterprises said administration reduction and simplification should be more practical, aiming to the target of cutting cost, time and of improving enterprises’ competition abilities.

In the nationwide logistics conference on solutions to cut cost and to have efficient connections of transport infrastructures held in April 2018, PM emphasized “High logistics cost is a barrier, is a burden to enterprises and will sink Vietnam’s business ship”.

WB’s evaluation showed Vietnam’s logistics cost was around 20%-21% of GDP, ranked 4th in ASEAN countries. On comparison to GDP’s proportion, Vietnam’s logistics cost almost twice higher than that from developed economy and 14% higher than that of the world’s average.

In reality, enterprises not only suffered from various taxes and fees but also suffered from the number of unofficial fees and series of red tape. For example, fee for identifying the origin of aqua-product decreased from VND 700,000/time to VND 630,000/time. In a year, a tuna processing enterprise needs 1,200 times of origin identification- equally to the cost of VND 756m pa. Or quality inspection of animal-feed product, each enterprises has to pay around VND 300m for material quality inspection. For inspection time lasts 2-3 days, they also have to for a large storage fee as well.

Experts said with the annual average growth of 14%16%, Vietnam logistics is the service sector having sustainable developments and the growth can be higher when administration innovations come into effect.

There have been many things to be done. However with achieved results, especially with the attention from the Government, we have been able to expect to a better future: making logistics a spearhead economy sector, contributing to social- economic developments of the country.