Logistics association to assist in national plan on competitiveness

The Việt Nam Logistics Association (VLA) on Wednesday launched a ceremony to implement the Government’s first national action plan to improve the country’s competitiveness and its logistics sector by 2025.

Lê Duy Hiệp, VLA chairman, said that VLA had been assigned to complete several tasks of the plan.

In February, Prime Minister Nguyễn Xuân Phúc approved the action plan, which aims to have the logistics sector contribute 8 to10 per cent to the country’s GDP, with annual growth of 15-20 per cent by 2025.

The plan also calls for Việt Nam to become one of the world’s 50 leading logistics services providers.

The plan recommends new policies, more investment in infrastructure development, and better co-operation between local and foreign logistics companies.

The aim is to have logistics companies that can be competitive in both domestic and international markets.

Under the plan, Việt Nam will enhance connectivity with neighbouring countries and develop regional and international hubs.

The plan calls for building level-1 logistics hubs (the highest level) in Hà Nội and HCM City, and level-2 logistic centres in Lạng Sơn, Lào Cai, Hải Phòng, Đà Nẵng, Quy Nhơn, and Cần Thơ.

Trần Thanh Hải, deputy director of the Ministry of Industry and Trade’s Import-Export Department, said the country’s logistics development has been modest, as there are only 1,300-1,500 firms in the sector.

More than 70 per cent of the businesses are small- and medium-sized with average capital of about VNĐ7 billion (US$320,000).

“The country’s logistics effectiveness has been low, while available resources have not been fully exploited,” Hải said.

The action plan would provide short- and mid-term solutions to improve the logistics sector in the next seven or eight years, he added.

The initiatives taken by the Government to strengthen the logistics industry and increase efficiency have been supported by industry insiders.

Christoph Matthes, managing director of logistics firm DB Schenker in Việt Nam, said, “We strongly support the plan as the logistics has become more important than ever before.”

In addition, increasing consumer demand requires a faster and more reliable way of delivery of goods.

For many customers, logistics is no longer a matter of moving boxes from one location to another, but creating a highly efficient and reliable supply chain which enables them to be competitive in a fast-changing world.

International trade is growing rapidly as well, and thus, a need to connect to other markets via air, ocean and road freight.

Some of the largest export markets for Việt Nam include the ASEAN region and Europe, where Việt Nam competes with other countries and where logistics costs play a vital role.

Trade with Europe is expected to increase with the EU-Việt Nam Free Trade Agreement (EVFTA) coming into force next year.

Experts said more steps were needed for smooth implementation of the agreement and to make sure businesses can fully benefit as soon as the treaty takes effect.

The commitment of the Vietnamese Government to strengthen the logistics sector is an important step towards making this possible.

Nestor Scherbey, general director of logistics firm Customs, Trade and Risk Management Services Ltd Việt Nam, said the national action plan would play a critical role in raising competitiveness.

Logistics costs in Việt Nam are among the world’s highest, at 25 per cent of GDP, which hinders the cost competitiveness of Vietnamese firms, according to Logistics Insight Asia.

Logistics costs in the US, Europe and the rest of the world are around 9, 13, and 15 per cent, respectively.

“The efforts necessary to achieve a national action plan for logistics must be undertaken in co-ordination with diligent efforts by Việt Nam to implement the commitments of the World Trade Organisation Trade Facilitation Agreement (WTO TFA),” Scherbey said.

Many of the major commitments of the WTO TFA were contained in the Trans-Pacific Partnership (TPP) and EVFTA.

Full implementation of trade facilitation by Việt Nam would reduce the country’s international trade transaction costs by 20 per cent.

“It is the combination of the benefits of trade facilitation, with the benefit of reducing domestic logistics costs, that will allow Vietnamese products to become fully competitive in global markets,” he said.

Source VNS