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Exports remain a key factor in Vietnam’s economic growth, but high logistics costs mean they are unable to achieve their full potential.

Economists and other experts, speaking at a conference on policies for economic growth, said the country’s export achievements would be even greater if it tackles issues like corruption, low value-addition, and, most importantly, the high logistics costs.

Pham Minh Duc of the World Bank said the country saw strong exports in the last two decades, with average annual growth topping 17 percent, but exports are “reaching their limit.”

Companies have to pay very high rates for logistics compared to global rates, he said.

Exports last year topped US$114.6 billion

News website Saigon Times quoted Paul Vallely, another World Bank official, as saying logistics costs account for a quarter of Vietnam’s gross domestic products compared to 19 percent in China and 8-9 percent in Japan.

Deepak Mishra, the bank’s lead economist in Vietnam, blamed the weak performance by state-owned companies on the high cost of logistics.

Do Xuan Quang, chairman of the Vietnam Logistics Association, was critical of the country’s infrastructure, saying many ports are not well-placed in terms of access to industrial zones and warehouses.

Trailing behind

Last year the bank ranked Vietnam 53rd out of 155 countries in terms of logistics performance, trailing behind almost all of its neighbors.

The country has been “nearly left behind” in terms of logistics services, Duc said.

To put things in perspective, in Vietnam it usually takes firms 21-22 days to complete customs procedures, four times the time it takes in Singapore.

So firms are convinced that they should pay “unofficial fees” to customs to speed up the process, the bank said.

But it said that the country achieved “a strong trade performance in a difficult external environment,” with exports rising 34 percent in 2011, 18 percent in 2012, and nearly 20 percent in the first quarter this year.

But it has been less successful in diversifying its export basket and moving up the global supply chain, it added.

The bank suggested that the country should establish a national committee for trade facilitation to enhance its competitiveness.

According to the logistics association, the country has around 1,000 logistics companies. While domestic firms make up 80 percent of this they account for only 20 percent of the market share.

Source Thanh Nien

A business delegation from Japan’s Kobe city has explored investment opportunities in southern Ba Ria-Vung Tau province in seaport development, logistics and supporting industry.

During the delegation’s working session with the provincial authorities on March 18, Vice Chairman of the provincial People’s Committee Ho Van Nien informed the delegates of Ba Ria-Vung Tau’s potential and strengths in tourism, fishing, and the oil and gas industry.

The province is focusing on developing its port industry, logistics and supporting industry over the next 30-50 years, he said, adding that it is completing a one-door policy, teaching Japanese to workers and building infrastructure to meet Japanese investors’ requirements.

Ba Ria-Vung Tau has so far cooperated with Japan’s Kawasaki province in building the Kawasaki industrial zone, Nien noted.

The Japanese delegates showed their keen interest in infrastructure and human resources in Tan Thanh and Chau Duc districts that are calling for Japan’s investment.

Following a fact-finding tour to Cai Mep-Thi Vai sea port on the same day, they said they hoped to have more specific information to facilitate their investment in the province.

Source: VNA

Rising export turnover in recent years and the trade surplus achieved last year shows that there is potential opportunity for the growth of the logistics industry, experts have said.

Deputy Minister of Industry and Trade Tran Tuan Anh told participants at Vietnam Logistics Forum 2013 in HCM City on November 15 that last year the country’s import-export value was 228 billion USD, up 12.4 percent over 2011.

Of the amount, exports exceeded $114 billion, outpassing imports 750 million USD.

“This year exports are expected to rise 14.3 percent to 141 billion USD and imports 15.6 percent to 131.4 billion USD, and the strong trade activity development has highlighted the important role of logistics,” said the deputy minister.

Vietnam has entered eight bilateral and multilateral economic agreements while another six are under negotiations, and these agreements aim at free trade, thus providing opportunity for the industry.

According to Dr Bui Thien Thu, deputy head of the Vietnam Maritime Administration, Vietnam ‘s logistics businesses have managed to provide insurance and transport services to 18 percent of the country’s total imports and exports.

Currently, up to 90 percent of Vietnam ‘s imports and exports are delivered by sea and the growth rate of container shipments was 17 percent a year between 2001 and 2010.

By 2015 Vietnam ‘s seaport throughput is expected to reach 400 million tonnes, 680 million tonnes by 2020, and more than 1.1 billion tonnes in 2030.

Logistics costs remain high, weakening the competitiveness of service users, said experts at the forum organised by the Thoi Bao Kinh Te Vietnam (Vietnam Economic Times).

Deputy Minister Tran Tuan Anh said logistics costs in Vietnam represent 25 percent of the country’s GDP, while the rate is 11-13 percent in developed countries and 15-20 percent in other developing countries.

“Reducing the costs will surely help our economy improve its competitiveness in an integrated environment where competition has become fierce,” he said.

On the issue, he said factors including infrastructure, legal framework and services providers, should be considered.

“We have spent a large amount from the State budget and ODA sources on infrastructure development to facilitate goods transportation and logistics service development. Our seaport systems have been built at a large scale and with modern handling equipment,” he said.

“However a problem remains: the poor connection with goods areas, which needs improvement,” he said.

He also wants logistics related regulations to be updated to match current realities.

Meanwhile, domestic service providers have a lack of skills, networks and capital to invest in advanced technology.

Do Xuan Quang, chairman of the Vietnam Logistics Association, suggested that logistics companies should have a deep understanding of trade like payment and insurance regulations as well as tariff incentives from Free Trade Agreements to support importers and exporters.

“On their part, importers and exporters should know about freight forwarding, transportation and other logistic services as well as trade agreements that Vietnam has concluded so they and logistics companies will be able to support each other, and thus improve their competitiveness,” said Quang.

He further proposed the establishment of a State management organisation and a national logistics committee to guide the operations of logistics firms, both local as well as foreign.

The organisation would be expected to act as a bridge between businesses and the State in mapping out strategies, policies and action programmes for the growth of the logistics industry.

This in turn would help the country’s trade and production development, he said.

Source VNA