Port System Plays Important Role in Economic Development

11:28:42 AM | 19/12/2019

With a 3,200-km coastline, located on the busiest maritime route in the world, with a market of nearly 100 million people, and with the top-rated economic growth in Asia and the world, Vietnam is becoming an attractive destination for investors, especially those engaged in maritime services. Vietnam Business Forum Magazine has an exclusive interview with Mr. Nguyen Xuan Sang, Director of the Vietnam Maritime Administration, the Ministry of Transport, on this topic. Thu Ha reports.

How do you assess the role of the maritime industry, including ocean shipping, to the economy in general and the marine economy in particular?

Having a long coastline and lying on the busiest shipping route in the world, the cargo throughout at Vietnamese seaports has kept growing over 10% a year, and is expected to reach 2,100 million tons in 2030. In particular, container cargo throughput of the Vietnamese seaport system will stay at about 250 million tons (20 million TEUs) by 2020 and 500 million tons (40 million TEUs) by 2030. In the past more than 20 years, the total volume of containerized goods through Vietnamese seaports has increased nearly 30 times. The logistics market has expanded by 20-25% annually.

It can be said that the room for Vietnam's maritime market to grow is huge. Directing the maritime industry to be a spearhead economic sector in the Vietnam Sea Strategy in the next 10 years, the Government has focused on strongly developing shipping services, effectively tapping port development potential, promoting and developing logistics to support maritime activities.

Seaport and shipping play a very important role in economic development. As much as 90% of Vietnam's annual imports and exports are handled via the seaport system. Accordingly, each port cluster in each region undertakes to transport and exchange goods for an entire economic region.

According to statistics, in the first 10 months of 2019, the cargo throughput via Vietnamese seaports totaled more than 544.3 million tons (excluding transit goods not handled at ports), up 12% from a year ago. Specifically, container cargo amounted at nearly 16 million TEUs, representing a year-on-year growth of 6%. Without doubt, looking at the current port system, we will know the “health” of the economy.

After nearly 20 years of carrying out the development plan, Vietnam's seaport system has made a great stride. What do you think about this?

Currently, Vietnam has 281 ports with a total capacity of over 550 million tons a year. The port system has been synchronously invested with such infrastructure facilities like wharves, buoys and loading and unloading equipment to meet large-scale demand across the country. Most seaports have made full use of natural conditions, met ocean shipping demand, actively served socioeconomic development in coastal areas and the whole country; and created motivation to attract and promote the joint development of related industries.

In addition, most major ports in Hai Phong, Da Nang, Ba Ria - Vung Tau, Ho Chi Minh City and other localities have been already upgraded to serve vessels of up to 30,000 DWT. Typically, Cai Mep - Thi Vai Terminal can support vessels up to 18,300 TEUs (194,000 DWT), operated on a weekly basis and directly linked to the Northern European market. Vietnam also built the first specialized passenger ports built in Hon Gai (Quang Ninh province) and Phu Quoc (Kien Giang province), which can receive ultra-modern cruise liners with a tonnage of 225,000 GT.

Not only having a system “makeover”, administrative procedures at seaports have also made “great strides”. The maritime industry has taken the lead in online administrative procedures on the National Single Window (NSW). Indeed, the time for settling in-port procedures for ships currently takes only 20 - 30 minutes. The administrative procedure handling capacity of port agencies has also increased by 3 to 5 times.

However, at present, the seaport industry still has many problems to be solved in all aspects including infrastructure, institutional framework, and supplier capacity. How will these affect the competitiveness and opportunities that free trade agreements like CPTPP and EVFTA bring in?

Currently, a lot of shortcomings in Vietnam's seaport planning have been revealed, for example uneven distribution, weak interconnectivity, inconsistent overall industrial development planning, incoherent infrastructure planning, irrational residential-urban planning, and inconsistent labor planning. Besides, although cargo throughput of seaports has increased 10-12% a year, the market share among ports is quite uneven. Specifically, northern ports account for 25-30% of the cargo throughout and they are working under their designed capacity; central ports account for only 13% of the total throughput; and southern ports take up to 57%, handle 90% of container freight and they are currently overloaded.

Furthermore, Vietnam's seaports have short-term development plans, poor ground transport links, fragmented logistics services, and passive attitude and response of local authorities to development planning and budget. Besides, management and development mechanism is also the bottleneck of Vietnam's maritime industry.

As for manpower, in recent years, maritime human resources have faced shortage, especially crew members. Statistics show that Vietnam currently has about 40,000 certified crew members. However, according to the Vietnam Maritime Administration's crew management database, in 2018 – 2019, only about 22,000 crewmen registered to work on board, meaning 43% of crewmen are not working in the industry.

Currently, Vietnam is a signatory to many free trade agreements, with more than 60 trading partners, including China, Japan, the European Union (EU), and the United States, with a strong market opening commitment. A typical example is the EU - Vietnam Free Trade Agreement (EVFTA). The impact of this pact on logistics development prospects is seen in two angles: Commitment to open transport service markets of Vietnam and the EU and transport commitment service in impacted areas in the logistics service market.

With these commitments, when it comes into effect, EVFTA can bring great opportunities to the logistics industry. Vietnam will have the chance to increase the market size, to attract investors from the EU, and to approach existing experience, management skills, capital and partner networks when cooperative joint ventures with EU partners are found. At the same time, Vietnam can reduce business costs and access logistics markets of EU member states. Nevertheless, the shortages in planning and manpower will diminish competitiveness and opportunities generated by free trade agreements such as CPTPP or EVFTA.

So, in the coming time, what specific solutions will you take to improve the competitiveness of enterprises and make good use of opportunities generated by free trade agreements?

2020 is considered a promising year for seaport companies. FTAs are likely to boost Vietnam’s cargo throughput by 12-15% a year in the coming years, driven by export and import motivations, especially from the FDI sector. Export growth in the coming years is forecast at 10% a year.

In order to improve the corporate competitiveness of enterprises, we will continue to work with the Directorate for Roads of Vietnam, the Vietnam Railway Authority and the Vietnam Inland Waterways Administration to study and assess the connection of transport modes. Together, they will conduct specific reviews (elaborate a clear roadmap) of each transport route linked to ports, warehouses, industrial parks and export processing zones (cargo centers) and point out connectivity weaknesses to jointly compose proposals for improving operations on each route, put forth mechanisms and policies on sustainable route development support, and suggest specific solutions for each of key routes. In 2020, we will also continue to coordinate with domestic and international consulting organizations to review port planning to put forth investment attraction mechanisms for seaport development.

On administrative reform, the Government has repeatedly praised the maritime sector for excellence in administrative procedure reform. We have developed a roadmap and provided online public services: 51 administrative procedures at Level 2; 35 procedures at Level 3; and 9 procedures on crew management at Level 4 to serve citizens and businesses. Over 92% of electronic records of arriving and departing ships are conducted online at 25 port authorities.

To further streamline administrative procedures and facilitate business development, the Party Committee of the Vietnam Maritime Administration issued Action Plan 07 on implementation of Resolution. 36/2018 on “Sustainable Maritime Economy Development Strategy for Vietnam to 2030, with a vision to 2045”. In particular, we will continue to review and reduce administrative procedures consistent with the reality, abolish or replace papers to be submitted, and reduce the presentation of original documents. Up to 2020, it will be upgraded all administrative procedures at the National Single Window to Level 4 to lay a stepping stone to bring all maritime management operations online in the next decades.

In addition, in order to attract high-quality human resources for the maritime industry, we have proposed solutions to the Ministry of Transport and the Government, including personal income tax reduction to zero on salaries (including wages and allowances) of officers and crew members working on seagoing ships; exempted meal and accommodation expense for maritime students, facility and equipment support for maritime students to have an effective internship environment and workmanship improvements.

Thank you very much!