Not much time left for Vietnam to develop logistics

Vietnam does not have much more time to improve their logistics services in order to prepare for the stiff competition that will occur when Vietnam has to open the logistics market to foreign companies.

Vietnam now has 49 ports and 217 wharfs. However, many of them still cannot meet international standards, while Vietnam still lacks transport infrastructure items which link different regions.

Logistics companies too small

According to the Vietnam Freight Forwarders Association Viffas, Vietnam now has more than 1000 enterprises which provide logistics services, most of which, about 600-700 enterprises, are located in HCM City.

Commenting on the capabilities of the enterprises, Mai Xuan Thieu, Head of the Vietnam Logistics Institute said the majority of enterprises have a modest capital of 1-1.5 billion dong.

As a result, they mostly work as agents for multinational groups and undertake some phases of the logistics value chain.

According to Thieu, the declared number of logistics enterprises is not reliable. Sometimes he heard that Vietnam has 1200 enterprises, but other times he was told that there are only 800 enterprises.

Thieu believes that Vietnam still does not have exact figures because many people still do not understand what “logistics” means.

Thieu said that Vietnamese enterprises are not capable enough of providing transport services throughout Vietnamese territory with competitive costs, while there are different service providers who provide different kinds of services.

Currently, Vietnamese companies only can meet 25 percent of the total domestic demand.

Regarding the port development, Thieu said that developing ports does not mean to try to have as many ports as possible.

Vietnam only needs several ports, but the ports need appropriate investments to meet international standards, where logistics services can be provided.

“In fact, there are many ports in Vietnam, but most of them cannot be applied to logistics, except Tan Cang.

In HCM City, 80 percent of containers go through Tan Cang Cat Lai, while the road linking to the port is not good. Therefore, other ports appear to be redundant,” Thieu said.

Logistics development doesn’t match potentials

At the forum held several days ago on logistics and the development of seaport services in the context of international economic integration held Vung Tau City, Deputy Minister of Transport Nguyen Hong Truong said the logistics services in Vietnam are still in the first stage of development.

Therefore, the total expenses of Vietnam’s logistics in 2010 reached 20 billion dollars, equal to 20-25 percent of GDP, nearly double that of Singapore, at 8-9 percent.

Of these expenses, the spending on cargo transport alone accounted for 50-60 percent. Meanwhile, if Vietnam can cut down one percent of its logistics expenses, it will be able to save 0.15-0.2 percent of GDP.

Currently, Vietnam ranks the 53rd among 155 countries which have logistics services and ranks the fifth among ASEAN countries. Experts have pointed out that Vietnam’s logistics services have not developed well to fit the existing potentials.

According to Nguyen Hung, Chief Secretariat of Viffas, Vietnam has to open the logistics market to foreigners by 2014 at the latest as per WTO commitments. Meanwhile, Vietnam’s logistics development is still in its infancy, and it is a bit late.

Hung has asked the government to take actions to develop logistics services. Specifically, it needs to think of offering tax incentives to encourage enterprises to make investment to develop.

Besides, it is necessary to set up a national logistics committee that connects ministries, branches and enterprises. If no such a committee is established, there will be no common voice in the development of ports, transport infrastructure and industrial zones.- Saigon tiep thi

Tags: vietnam logistics