Logistics development: no more hesitation

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According to World Bank (WB), the index of logistics services in 2016 of Vietnam ranked 64 among 160 countries. The average annual growth rate of the logistics industry in Vietnam is about 14-16%, which shows that logistics is among the services to have the steadiest growth rate in Vietnam for the past years.

 

 

However, there is a rising concern that the cost of logistics in Vietnam is still high, equivalent to 20.9% of GDP, of which transportation costs accounted for about 59%. Meanwhile, logistics cost in some countries in the region such as Thailand is 19%, China 13% and Malaysia 13%.

 

Senior Economist at World Bank Pham Minh Duc said that it is necessary to consider the current logistics development to come up with an effective infrastructure investment plan. Currently, the structure of export is significantly different from that 10 years ago; raw export of Vietnam has decreased, and the agricultural sector has seen a sharp increase so there should be a development of multi-mode logistics.

 

According to the Ministry of Transportation, goods are mainly transported by containers; while the costs of transportation by trains, especially by ships are relatively low, these means of transportation have not attracted as much investment as expected. The connection among the transport systems is not synchronous, so it is impossible to combine these types of delivery.

 

Such inadequacies that lead to high logistics costs in Vietnam are addressed by Economist Nguyen Dinh Cung as complications in administrative procedures that also contribute to the increase in logistics costs, not overwhelming traffic alone. According to Mr. Cung, just improving the service attitude of civil servants of such deparments as customs, taxation ... will reduce many costs for businesses in this field.

 

 

At the conference, Prime Minister Nguyen Xuan Phuc quoted politician Benjamin Franklin, one of the seven famous founders of the United States: "Beware of small expenses, a small leak can sink a big ship". The Prime Minister said that the current high cost of logistics has had a profound impact on the economy of the country. Therefore, all ministries, sectors and localities must be aware and better in the development of logistics because this is the bottleneck of trade; efficient solutions will help reduce cost, increase products’ prices and national competitiveness.

 

Prime Minister Nguyen Xuan Phuc has assigned the related ministries. Specifically, the Ministry of Transport shall take on the prime responsibility for as well as coordinate with the related ministries and branches in making general reports on solutions to reduce logistics costs, effectively connecting the transport infrastructure system; Reduce unnecessary administrative procedures. Ministry of Industry and Trade builds solutions to develop distribution and logistics service centers. The Ministry of Planning and Investment develops solutions to strengthen the capacity of small and medium logistic enterprises. The Ministry of Finance provides solutions to reduce logistics costs related to customs procedures and tax regulations to support the development of transport enterprises. Vietnam Chamber of Commerce and Industry (VCCI) develops solutions related to business conditions of enterprises and assesses the costs of implementing administrative procedures. All ministries must finish and submit reports to the Prime Minister for timely direction on logistics development in the coming time.

 

Shortly after the meeting, Vice Chairman of the province People’s Committee Tran Van Vinh also asked the specialized agencies to review the projects on development of warehouses, ports and logistics services and report to the provincial People's Committee in April -2018.

 

Prime Minister Nguyen Xuan Phuc said: "The cost of logistics services in Vietnam is too high, it is difficult to face competition although we have made some progress in making investment in transport infrastructure. Vietnam exports 250 billion USD, and expects to increase the amount up to 500 billion USD in the future. Vietnam has entered into large trade agreements, so increasing exports as well as expanding markets requires the development of logistics services."