MoIT to lower logistics costs

The Ministry of Industry and Trade (MoIT) has drafted an action plan to lower logistics costs to 18 per cent of the country’s gross domestic product (GDP) by 2020. It also targeted to bring Việt Nam into the top 50 countries with developed logistics services.

The Ministry of Industry and Trade targets to bring Việt Nam into the list of top 50 leading countries with developed logistics services. — Photo tapchigiaothong

The costs of logistics currently are about 20 to 25 per cent of the GDP, compared with the average rates of seven to 10 per cent in developed countries.

The first action plan is expected to improve the country’s competitiveness and help develop the logistics service sector.

The ministry said this plan aims to clarify policies for the sector’s development, thus creating momentum for businesses--especially importers--to increase their competitiveness.

Trần Thanh Hải, deputy director of the ministry’s Import-Export Department said Việt Nam’s logistics development has been modest, as the number of firms operating in the sector is small at 1,300-1,500. More than 70 per cent of the businesses are small-and-medium sized firms with average capital of about VNĐ7 billion (US$320,000) and scope usually confined to local or nearby markets.

In addition, the sector has contributed only 2-3 per cent to the country’s GDP.

In addition, the rate of outsourcing has been low, thus forcing local exporters and traders to implement logistics services themselves.

Hải said that in the integration process, multinational logistics firms hold a significant market share in providing logistics services in Việt Nam. Local companies have participated in only simple works in the whole logistics process chain.

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

Statistics showed that the cost for transporting goods from HCM City to Hải Phòng is VNĐ4 million while that from Japan to HCM City with a longer distance is only several dollars.

He said the action plan will focus on short-and-mid term solutions to improve the logistics sector in the next 7-8 years.

It will complete legal frameworks on logistics as well as policies to support the sector.

The infrastructure for the logistics services--such as seaports, stations and warehouse systems--will also be improved to transform Việt Nam into a logistics hub of the region.

The ministry plans to enhance ability for businesses providing the logistics services to catch up with international development trends. It will pay attention to training human resource workers in the sector.

“We are lacking big local firms with long term investment in the logistics sector. Logistics is an industry with high profitability. Many businesses have not had resources to exploit the services, though they have seen its profitability,” he said.

The action plan will encourage leading and big firms investing in the sector, thus attracting attention from business community.

He also said Vietnamese companies can outsource FDI firms to supply the logistics services and getting lessons on their management skills.

Source: VNS

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