Vietnam has the potential to become a regional and global logistics hub. With the right environment in place, we can turn this dream into a reality.
Prospects for Vietnam's Logistics Sector
Recently, Prime Minister Pham Minh Chinh held meetings in Ba Ria-Vung Tau and Hai Phong, outlining significant strategic directions for developing the maritime port system, logistics infrastructure, and more in these regions and throughout the nation.
In recent times, global transportation and logistics have been impacted by the effects of the pandemic, resulting in increased logistics costs that affect domestic production and business activities. With the growth of the economy and Vietnam's deep international integration, participating in 17 FTAs, the demand for cargo transportation continues to rise.
Therefore, the development of transportation and logistics infrastructure, in general, and maritime routes, in particular, is an urgent requirement to unlock and mobilize all resources for development, ensure supply chain maintenance, facilitate the flow of goods, reduce costs, and enhance the competitive capabilities of Vietnamese goods, businesses, and the economy. This contributes to rapid and sustainable economic development.
Logistics is likened to the "lifeblood" of the national economy, bringing not only significant benefits to the country but also playing a crucial role in transforming growth models and ensuring sustainable economic growth during the period of integration. Vietnam's logistics sector is growing strongly and is deeply involved in all aspects of the socio-economic landscape.
According to the "Competitive Assessment of the Logistics Industry in Vietnam" report by the Organization for Economic Cooperation and Development (OECD) in 2019, Vietnam's logistics sector has achieved an average annual growth rate of 12-14%, contributing 4-5% to the GDP, ranking among the top 10 ASEAN countries. In ASEAN member states, the logistics sector contributes an average of 5% to the GDP and provides 5% of the employment opportunities. Outsourcing accounts for about 60-70% of logistics costs, equivalent to 16.8% of the GDP.
Assessing Vietnam's position on the global logistics map, Le Duy Hiep, Chairman of the Vietnam Logistics Business Association (VLA), noted that Vietnam's Logistics Performance Index (LPI) was ranked 39th out of 160 countries by the World Bank in 2018, a 25-place improvement from 2016. It ranks third among ASEAN countries and tops among emerging markets.
In Southeast Asia, Vietnam's logistics capacity is second only to Singapore and Thailand, demonstrating the progress of Vietnam's logistics industry.
"With its strategic location in the center of the Asia-Pacific region, on international maritime routes, Vietnam has the potential to become a major transshipment hub for the region and the world," stated the Chairman of VLA.
To achieve this dream, there is still much work to be done, according to the Chairman of VLA. This includes focusing on developing logistics infrastructure, promoting training and development of logistics human resources, and developing highly automated and modern logistics centers that can compete with those in the region. To accomplish this, government involvement is essential in overcoming land-related obstacles.
"Many localities have not paid much attention or allocated limited land for logistics centers, and most businesses have had to mobilize resources on their own. Therefore, there needs to be a synchronized planning effort across all localities to allocate land for logistics centers. Logistics centers require a large scale, integration of multiple services, and multi-modal connectivity to effectively reduce logistics costs," commented Le Duy Hiep.
Sharing the same perspective, Dr. Dang Dinh Dao, former Director of the Institute of Economic and Development Research (National Economics University), believes that Vietnam has tremendous potential for sea transportation, given its extensive coastline. The key economic region along the central coast, with a 609 km long coastline, plays a particularly important role in the country's economic and social development and national defense and security for the Central Coast maritime area.
Vietnam possesses vital seaports like Chan May, Tien Sa, Ky Ha, Dung Quat, Quy Nhon, along with an international airport system, a national railway network, and road networks connecting various economic zones within the region.
"The dream of Vietnam becoming a logistics center for the region is within reach. The critical factor is to create an environment that turns that dream into reality. The logistics environment includes legal and regulatory logistics factors, logistics infrastructure, the development of highly competitive logistics enterprises, and a system of enterprises that use logistics services. This requires coordinated efforts from ministries, sectors, and localities," emphasized Dr. Dang Dinh Dao.
Changing Perceptions of Logistics Centers
According to a preliminary report from 45 out of 63 provinces and cities, there are a total of 69 large and medium-sized logistics centers concentrated in some industrial zones. Logistics centers of different classes, including Class I and Class II, as well as specialized logistics centers as per the planning in Decision No. 1012/QD-TTg dated July 3, 2015, by the Prime Minister, are being developed and attracting investments (Hanoi, Hai Phong, Vinh Phuc, Ha Tinh, Thua Thien Hue, Da Nang, Dak Nong, Tay Ninh, Soc Trang, Ho Chi Minh City, Can Tho).
In 2020, there was a transition from traditional logistics centers to modern, technology-driven logistics centers, embracing Industry 4.0.
However, according to Le Duy Hiep, Vietnam still lacks modern, large-scale logistics centers. As Vietnam is an agriculture-based country with significant exports of fruits and aquatic products, there is a need for logistics centers for processing, preserving, and reducing spoilage before export.
Dr. Dang Dinh Dao shared the same view and emphasized the need to change perceptions about logistics centers, identifying them as both a new business model and a connecting model.
"It is not necessary for Vietnam to invest from A to Z and then invite investors to do business. Instead, we should create an environment, establish a clean playing field, and have clear legal mechanisms before inviting investors. Investors could then choose to invest in ports, warehouses, processing, or dry ports. This will create a logistics business complex in the center," explained the expert.
He especially noted that post-port logistics centers need to be established with sufficient capacity to quickly release ships, avoid congestion, use environmentally friendly transportation methods, prevent environmental pollution, and prevent a situation where each locality attracts investment to develop its own ports. These logistics centers need to be connected with multi-modal transportation and connected to seaports through a modern railway system, creating a chain: seaports - railways - logistics centers - roads - customers.
Currently, Vietnam has Cai Mep port (Phu My, Ba Ria-Vung Tau) with the ability to accommodate the world's largest container vessels weighing up to 214,000 tons, followed by Hai Phong port with container vessels weighing 132,000 tons. In late December 2020, the world's largest container vessel, with a capacity of over 214,000 tons, capable of carrying more than 18,300 containers, measuring nearly 400 meters in length and 59 meters in width, docked at Cai Mep port. This development confirmed that Vietnam's import and export goods could be loaded onto large mother ships directly to major markets such as Europe and the United States, without transshipment through ports in Singapore, Malaysia, etc., saving costs and reducing transportation time, enabling goods to reach markets more quickly.
In addition, the former Director of the Institute of Economic and Development Research suggests that early operation of logistics centers on economic corridors should be implemented, prioritizing economic corridors such as National Highway 1A, Hanoi-Ho Chi Minh City Highway, and international economic corridors with China, Laos, Cambodia.
Furthermore, the construction of logistics industrial parks and logistics clusters is needed to connect regions and promote economic linkages, efficiently exploit economic corridors in the area, and facilitate the flow of goods. This will also attract logistics investments, deep processing of products to increase the value of goods, exports, and consumption in various localities.
Logistics industrial parks should be built in key economic centers and transportation hubs, linking various transportation modes, including roads, railways, waterways, seaports, and airports. They should be planned with a long-term vision, constructed on a large scale similar to existing industrial parks, to attract logistics conglomerates from the region, the world, and domestic logistics enterprises to invest and do business.
"Having logistics centers will reduce the burden on border gates. These logistics centers not only have cold storage facilities to preserve and process agricultural products before export but also serve as locations for inspecting and clearing goods. Vietnam aims to become a global production center, so logistics must be a large field requiring investment," emphasized Dr. Dang Dinh Dao.
Cre: Goverment News
