MoIT to lower logistics costs

09:47 | 17/02/2017 Economy- Society

The Ministry of Industry and Trade (MoIT) has drafted an action plan to lower logistics costs to 18 percent of the country’s gross domestic product (GDP) by 2020.

Illustrative image (Photo tapchigiaothong.vn)

It also targeted to bring Vietnam into the top 50 countries with developed logistics services.

The costs of logistics currently are about 20 to 25 percent of the GDP, compared with the average rates of seven to 10 percent 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.

Tran Thanh Hai, deputy director of the ministry’s Import-Export Department said Vietnam’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 percent of the businesses are small-and-medium sized firms with average capital of about 7 billion VND (320,000 USD) and scope usually confined to local or nearby markets.

The sector has contributed only 2-3 percent 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.

Hai said that in the integration process, multinational logistics firms hold a significant market share in providing logistics services in Vietnam. 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 Hai Phong is 4 million VND 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 Vietnam 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 resources 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 the business community.

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

Theo VNA