The Future of Vietnam Logistics Sector

Logistics services in Vietnam should be given due attention in the time to come for it has been regarded as a factor that plays an important role in the social-economic development in attracting foreign investment, in improving competition abilities and import-export in the period of global integration.

FROM THE PAST TO THE FUTURE

Joining WTO and signing bilateral and multilateral agreements have brought opportunities to Vietnam business community and to logistics service enterprises as well. Statistics from Vietnam Logistics Association (VLA) shows the number of logistics enterprises in Vietnam has increased from 600-700 in 2007 to 1,200 in 2012. However, there has been a paradox: although they are larger in number, Vietnam logistics enterprises hold 20% of the market share only; the rest belongs to foreign enterprises’. The insufficiencies are mostly related to the institution, infrastructures, enterprises, management level, human resources, buying and selling habits…

According to Mr. Khuat Viet Hung – Director General of Transport Department, The Ministry of Transport – besides objectives difficulties from the global crisis, the inadequate system of legal documents, the weak infrastructures and technology, the insufficient human resource, activities in small-scale, the lack of attention from the leaders have made the logistics and transport activities in Vietnam face with difficulties. Moreover, the high transport cost has decreased competition abilities of goods from Vietnam, especially import-export ones. They are reasons that everyone can see and there should be a change.

FUTURE FOR THE LOGISTICS

Vietnam – in comparison to other countries in the area – in a potential country in developing logistics for its stable politics conditions, strategic geographic position in South East Asia- Asia- Pacific, its vast sea area, its young population and labor force that is able to acquire and apply new technology, its dynamic open-door policies, its deeper integration activities to the world.

According to reports from the Ministry of Industry and Commerce, Vietnam has been in trade and diplomatic relationships with over 200 countries and regions in the world. Export turnover has increased from USD 699 m in 1986 to USD 105 bn. in 2012 and around USD 131 bn. in 2013. Although affected from the global crisis, the amount of cargo through Vietnam’s ports has gradually increased every year. It shows that its logistics has maintained high growth and Vietnam is a potential market – an explanation why most of large logistics enterprises as TNT, DHL, FedEx, UPS have been in operation in Vietnam. In addition, according to WTO’s commitments, 100% foreign-owned logistics enterprises are allow to operate in Vietnam in 2014, promising a fierce competitions among local and foreign enterprises.

According to researchers, modern logistics is a chain of systematic activities related to processes of production, circulation and distribution. There are also many related fields as transportation, seaport, airport, warehousing and intermediate services as forwarding, brokerage, express delivery, custom declaration, tax, banking, brokerage agencies, finance, insurance, consulting, inspections… To develop a sustainable and synchronous logistics, Vietnam should pay attention to its legal institution on logistics, transport infrastructures and equipment; and enterprises providing and using logistics services should pay attention to human resource development and do researches on logistics development.

To the side of the State agencies, a system of legal documents should be carefully examined to have modifications on regulations related to logistics services to make it more practical, together with having strategic vision on developing national logistics and building action plans for every stages. And there should be more innovations in administration procedures related to forwarding, transport, customs and taxes… In addition, there should be incentive policies to encourage production enterprises and shippers to gradually get rid of the habit of “buying in CIF and selling in FOB” and have more participation in global supply chains. Building infrastructures, warehousing system, port system, and modern logistics centers should be put in priority together with having encouraging mechanism to attract local and foreign investments in building infrastructures, in IT, and in training.

To the side of enterprises, there should be investments in specialization, in improving quality of services, in cooperation to gain more market shares and compete with foreign enterprises. Enterprises should also participate in associations, national trade promotion programs and have more contact with management agencies to have information update and opportunity to expand their markets.

GOOD SIGNALS

In 2013, Vietnam’s export turnover has reached its highest increase and the Government, Ministries, and local authorities have had more special attention to logistics. There have been many projects under constructions as “Planning to Develop Logistics Center System and Exhibition Center to 2020, orientation to 2030” by the Ministry of Industry and Commerce, “Project of Developing Logistics Services in the Field of Transport in Vietnam to 2020, orientation to 2030” by the Ministry of Transport. The Ministry of Planning and Investment also has one on connecting related sectors for an overall strength. Provinces as BR-VT, Hai phong also have logistics development projects.

Besides State agencies, associations and media agencies have had international conferences, exhibitions, talks on logistics. For example, VLA and Vietnam Logistics Review with the sponsor from the Ministries of Transport and of Industry and Commerce have held exhibitions and conferences on logistics, sea and air transports… or the conference of “Improving Competition Abilities by Having Logistics and Import-Export Links” by Thoi Bao Kinh Te…

We do expect that in 2014 and in the succeeding years, Vietnam logistics is able to make good use of opportunities to have better development so that it can play a role in boosting economic growth, attracting investments, expanding import-export market and improving competition abilities of Vietnam in the course of integration.