Measures to increase logistics revenue for Vietnamese firms

For developing countries, revenue from logistics services account for about 15 to 20 percent of GDP. For less developed countries, this rate could be over 30 percent. It is currently 25 percent for Vietnam.

This is a huge source of revenue and an opportunity for Vietnamese businesses. However, at present, 70 percent of this revenue belongs to foreign giants. How would Vietnamese firms be able to make this huge source of revenue is the top concern of the forum on logistics and seaport services in the context of economic integration recently held in Ba Ria Vung Tau.

Presentation of Nguyen Hong Truong, vice minister of Transportation at the forum pointed out that logistics plays an important role in determining the competitiveness of industry and trade of each country.

In Vietnam, logistics activities are in the early stage of development. Statistics show that total logistics costs in Vietnam account for 25 percent of GDP, of which transport accounts for about 50 to 60 percent. Being aware of the important role of logistics services, in recent years, the State has spent large proportion of the budget investing in infrastructure improvement, in order to create favourable conditions for cargo transport and develop the chain of logistics services.

The rapid development of transport infrastructure greatly contributes to transport services. This is also an important prerequisite to develop logistics services.

However, in fact, Vietnamese businesses are facing fierce competition from foreign giants. Currently, 70 percent of the revenue from logistics services is in the hands of foreign enterprises that are professional and having strong potential. Thus, it is an excellent opportunity, which Vietnam is losing.

Comments raised at the forum said that the main reason for the logistics revenue to be in hands of foreign firms, in addition to the limited capability of Vietnamese firms, is the unsynchronised and incompatible infrastructure of Vietnam for this high‐level service. Meanwhile, the time to open logistics services under integration process is in 2014. Therefore, policy makers, management agencies should not ignore. At present, there should be promptly and decisive measures.

At the forum, many presentations given by representatives from various sectors, by domestic and foreign experts have proposed solutions to solve this issue. That is to timely and determinedly develop transportation infrastructure. This is an urgent task that the government has focused and prioritised to invest.

In addition, the system of sea transportation infrastructure should be developed, firstly seaport. At present, 70 percent of containers are located in ports in HCM City area, international container deport (ICD), warehouses, and major transport points. Quickly developing sea transport and goods unloading vehicles should also be paid attention.

This development must be conducted in line with infrastructure of road, railway, airway and inland waterways. Finally, information technology should be quickly applied to logistics service operations.

On the other hand, to improve the environment to promote logistics services, Ministry of Transport will also improve policies and mechanisms; build an equal business environment; construct and make master planning for a goods distribution area, which connects all road, railroad, waterway and airway; boost the construction of modern and high‐quality infrastructure such as deep‐water ports, international airports and open economic zones; promote training of good‐quality human resources specialized in logistics. – Vietbiz24

Tags: vietnam logistics