Economic Sector

Last updated: Wednesday, May 15, 2019


Logistics Developed to Support Trade and Service Sectors

Posted: Tuesday, June 05, 2018

Trade and service has been among impressively growing sectors in Vietnam in the past years. In the eyes of foreign investors, the Vietnamese market is always among the most attractive emerging markets. This shows that this sector has great potential for development and brings significant benefits to the economy.

Extensive development
In fact, what the trade and service sector has contributed to the economy is not limited to the profitability and jobs generated. As an indispensable link between production and consumption, retailing is important for consumer goods manufacturing in output, inputs and profit margin ratio.

According to statistics from the Ministry of Industry and Trade, in 2011 - 2017, the average growth of total retail sales of consumer goods and services was 10 per cent annually, reaching VND3,568 trillion (US$158.5 billion) in 2016 and above VND3,234 trillion (US$144 billion) in 2017. Although the growth rate has slowed down since 2011, it was always 1.5 - 2 times higher than the country’s GDP growth of the same period.

By the end of 2017, the country had 8,539 markets, of which nearly 75 per cent were rural markets. Most markets (97 per cent) are effective and they mainly retail. It has 83 wholesale markets in total, accounting for 0.97 per cent.
In addition, Vietnam had 957 supermarkets in 62 out of 63 provinces and cities and 189 trade centres in 51 out of 63 provinces and cities. Most of supermarkets and shopping centres are concentrated in big cities and business cities rather than suburb and rural areas.

Mr Nguyen Van Hoi, Deputy Director of the Domestic Market Department under the Ministry of Industry and Trade, said that traditional markets are still playing an important role in circulating goods although the development rate has slowed down. Modern wholesale and retail trade infrastructure forms such as supermarkets and trade centres have been invested and developed rapidly, focusing mainly on urban areas and attracting foreign investors.

Despite its strong growth, Vietnam's trade and service sector has not developed sustainably. Trade support services have not been as effective as expected and traditional trade activities have not caught up with e-commerce and digital commerce development tendencies.

Building synchronous logistics systems
To develop trade and services, infrastructure and logistics connectivity need to be invested. Mr Tran Thanh Hai, Deputy General Director of the Import - Export Department under the Ministry of Industry and Trade, said that, as the heart of Southeast Asia, Vietnam has a great potential for logistics development. This industry is expected to have strong growth in the future. Currently, it has 50 logistics centres in eight provinces.

Enterprises are still not active in logistics work, such as shipping and warehousing because this business is dependent on foreign shipping firms.

The broad distribution network is uneven across the country, with sparse markets in rural and mountainous areas, not many supermarkets and trade centres in big cities, small scale of traditional markets.

Besides, development investment capital is not sufficient and irrationally allocated. Socialising investment in commercial infrastructure development encountered a lot of difficulties, especially in rural and mountainous areas.

In the coming time, the Ministry of Industry and Trade will continue to perfect mechanisms and policies on development of commercial infrastructure. The most important step will be enhancing the performance of business operators while focusing on supporting management skills as well as training in professional skills for employees in the industry.

In February 2018, the Government approved the Plan of Action for higher competitiveness and development of logistics services in Vietnam. Accordingly, commercial and service companies will be assisted in training human resources, promoting connectivity and building infrastructure among others for stronger development in the future.

Huong Ly

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