Focus on developing logistics services in Vietnam

Mr. Le DuyHiep, Chairman of Vietnam Logistics Business Association (VLA), spoketo Customs Newsabout this issue.

How do you assess the current status of Vietnam's logistics service industry, especially in the Southern provinces?

Vietnam's logistics service industry has a low starting point compared to other countries in the region as well as around the world. Therefore, the development level of Vietnam's logistics industry is not high. However, along with the development and integration of the country, Vietnam's logistics service industry has made significant progress.

The country currently has about 3,000 logistics companies. In which, nearly 500 enterprises are members of VLA. The Vietnamese logistics enterprises have been able to provide most services of the logistics services supply chain such as domestic and international transportation, port and ICD operations, warehousing, and distribution services as value-added services.

As mentioned above, our country's logistics service industry has seen many significant developments, especially in recent years, the Government has paid attention to logistics development through decisions and policies to facilitate logistics across the country, creating conditions for logistics enterprises to boldly invest in expanding in a modern direction, comparable or even surpassing regional countries. The South hasthe largest volume of imports and exports as well as the busiest ports in the country such as Cat Lai Port, CaiMepThiVai port cluster,so the logistics industry also develops significantly.

Although the cost of logistics services has been reduced, it is still considered to be quite high, in which transport costs account for over 50%. In your opinion, which solution can further reduce logistics service costs?

In my opinion, it is clear that our logistics costs are still high, and not competitive. However, it is clear that the figure of World Bank (equivalent to 20% of GDP) may be outdated because it was researched in 2012.In our opinion, this feehas been greatly reduced, but even if it is low, it is notcompetitive. VLA and a number of organizations such as the World Bank, Amcham, and Eurocham have researched and published a report(also known as awhite book)on logistics which has more accurate assessments of these indicators.

Talking about the structure of logistics costs, not only in Vietnam but in most countries of the world, transportation costs always account for over 50%, because this is the core factor in the logistics service supply chain.

However, the worrying thing of Vietnam's logistics industry is that we have not mastered the part of international shipping by sea and air. Therefore, it makeslogistics costs high.

For domestic transport, there will be specific solutions to reduce this cost. That is, investing in infrastructure, expanding freight routes, reducing traffic jams in ports, to increase the turnaround rate, thereby reducing transportation costs.

On the other hand, the nature of market-oriented socio-economic developmentis always competition, which makes logistics activitiescompetitive to survive and develop, in other words, the logistics cost itself must always tend to decrease, but the rate of reduction depends on many factors such as the synchronous development of infrastructure, the State's policies related to taxes and fees, and many other objective factors such as the proactive level of international shipping capacity.

In general, the solutionsrequire the cooperation of the whole society, the whole political system as well as a strong rise of investment in our international shipping capacity. In addition, enhancing trade facilitation, including simplification of customs clearance procedures, minimizing specialized inspection areimportant factors that reduces logistics costs.

The Prime Minister has just issued Decision 221/QD-TTg amending Decision 200/QD-TTg approving the Action Plan to improve competitiveness and develop Vietnam's logistics services until 2025, what tasks does VLA deploy to develop the logistics service industry in Vietnam, Sir?

VLA has actively coordinated and participated with agencies to successfully implement Decision 200 of the Prime Minister.

Recently, the Prime Minister issued Decision 221 to supplement the above Decision 200. The VLA will continue to strengthen coordination toimplement the Government's assigned requirements.

The works being carried out include many fields of logistics such as the application of information technology in logistics management, digital transformation in logistics, commenting on policies, participating in the planning and developmentof logistics in localities as well as nationwide.

For the training of human resources for the logistics industry, through training cooperation programs with universities withspecialized logistics training, such as: Foreign Trade University, University of Transport, National University.

So far, VLA and Vietnam Logistics Development Research Institute (VLI) – an agency under VLA – has signed agreements with more than 10 universities and colleges across the country on training cooperation, as well as making conditions for students and traineesto practice in enterprises as members of VLA.

At the same time, to provide policy criticism with the Government, State management agencies to facilitate trade andthe development of commercial services in general as well as logistics in particular, VLA is participating extensively in policy criticism and propaganda about the logistics industry as well as giving comments on logistics planning, regional and local logistics development.

Recently, the Institute of VLI has also completedthe “Ho Chi Minh City Logistics Development Project for the 2020-2025period”as well as preparing to implement a similar project in Binh Duong.

With a very large seaport system, the Southern provinces in general and Ho Chi Minh City in particular have many strategic advantages in seaports and development of logistics services, but logistics services have not been developed adequately. What do you think about this issue?

Currently, logistics services related to the connection to the HCMC seaport system and the CaiMep-ThiVai deep seaport cluster are developing quite well, including connectionsof road and inland waterways.

CaiMep-ThiVai is developing well, helping to reduce traffic congestion as well as significantly reduce transportation costs. The only thing that the traffic congestion around Cat Lai port has not been completely resolved due to the inadequate traffic infrastructure, this is a complicated issue and should be re-planned accordingly.

As the head of VLA, which recommendations do you have to further develop logistics services for Vietnamese enterprises?

We have made many recommendations to local and central agencies as well as directly to the Government, through which the Government has also takenmany prompt actions, for example, related events in time of the pandemic, social distancingto help circulation of goods without congestion. In terms of macro, we also have many proposals related to policies to facilitate national logistics development, through which the Government has the basis to promulgate many mechanisms and policies to facilitate national logistics development. We can see through the issue Decision 200/QD-TTg and Decision 221/QD-TTgand many other documents.

Thank you!