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Local logistics firms under threat

Update: December, 03/2013 - 10:39

Dang Dinh Dao, director of the Institute for Economics and Development Studies at the National Economics University, spoke with Hai quan (Customs) newspaper about the logistics industry.

Viet Nam will open its logistics market to the outside world in 2014. In your opinion, have Vietnamese logistics companies prepared for that day?

In four years, from 2010-13, I was involved in an independent, state-level project on the development of Viet Nam's logistics services to prepare for international integration.

I was also involved in a Vietnamese - German project on the sustainable development of our logistics system.

Thanks to the two projects, I took part in studies and surveys in 10 provinces and cities throughout Viet Nam. On those trips, I found domestic logistics services were kept busy.

However, in 2014, Viet Nam opens its logistics market to the world and, I'm afraid to say, not much is going on in preparation, either by private or public logistics companies.

There are various reasons for this. Viet Nam does not have a national master plan or strategy for logistics development. This is evident in all 63 provinces and cities nation-wide as the year 2014 approaches.

In addition, we also lack legal documents for building a national logistics system, including an infrastructure system and the development of human resources.

For example, the Lao Bao international border gate in central Quang Tri Province on the East-West Economic Corridor - the main artery connecting Viet Nam with Laos, Thailand and Myanmar - is only open from 7am to 7.30pm every day.

In Laos, Thailand and Myanmar, the opening hours are from 7am to 10pm

How about the preparations by logistics companies?

Most of our logistics companies are small to medium size and mainly act as agents for foreign companies or provide basic services. This means co-operation among them is weak. However, I think that as 2014 is drawing near, it is high time for them to prepare.

In the context of the global economic downturn, Vietnamese logistics companies or service companies are seriously affected. Quite a few have had to declare bankruptcy.

To survive in the present tough and fierce competitive market, Vietnamese companies need to work harder to prevent foreign companies from taking over our logistics market.

Of course, after next year, Vietnamese companies will have to accept the rules of the game to secure a place in the regional and international logistics market. They need support from local and central governments and other sectors.

So the Government must revise the existing legal system so that it will be in line with international law and practice. I particularly mean the 2005 Trade Law, Decree No 140/2007/CP.

I believe Viet Nam should also develop a master plan for logistics by 2020, with a vision to 2030.

Meanwhile, logistics companies must be driven by the market economy. In addition, they have to seek help from high-tech operators to improve their service quality.

I believe another important factor is that companies should co-operate among themselves - an aggregated strength they will need when entering the international market.

What do you think about the possibility of foreign companies dominating our logistics market after 2014?

We now have more than 1,000 logistics companies. However, according to official statistics, the number of companies operating in transport, warehousing, wholesales or retail as well as express delivery is about 138,000. Most of them are small to medium size.

Although Vietnamese logistics companies account for 80 per cent of all such companies operating in Viet Nam at present, they account for only 25 per cent of market share.

Big foreign logistics companies such as APL Logistics, Maersk Logistics, NYK Logistics and others, have a much stronger financial capacity than their Vietnamese counterparts.

That's not all, the quality of their human resources is also much better than ours.

In such a situation, Viet Nam needs to develop a high quality master plan for logistics. When Viet Nam joined the World Trade Organisation and the Association of South East Asian Nations, we became committed to opening our logistics market to the world in 2014.

This means that soon companies with 100 per cent of foreign capital will be allowed to take over our logistics market.

What will happen to Vietnamese companies then?

This means Vietnamese companies are likely to become affiliates of foreign companies and simply offer certain services in the supply chain or act as agents for their foreign counterparts.

It also means the image of Vietnamese logistics in the international market will fall. This will have direct negative impacts on the national interest as well as sustainable economic development. — VNS


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