Vietnam is blessed with huge potential for port and logistics services development. The process of international economic integration requires Vietnam to actively overcome adversity while maximising its potential for port and logistics development to enhance its competitiveness. Deepwater container ports are a breakthrough step and the gateway for Vietnam to reach out to international markets. However, in an interview with the Vietnam Business Forum, Chairman of the Vietnam Seaports Association (VPA), Le Cong Minh, said that the lack of synchronous development of domestic markets and infrastructure systems have held back the speed and outward development of the Vietnamese maritime industry. Thanh Binh reports.
Could you briefly introduce Vietnam's seaport development potential, especially for deepwater seaports, as well as local competitive advantages?
Seaports are defined as a key component of the marine economy. Compared to ocean shipping and marine services, ports have many advantages for rapid and sustainable development. They are the foundation for greater development, forming large marine trade service centres to serve regional markets based on the natural advantages and local competitive advantages of Vietnamese ports. Given these conditions, deepwater container terminals are a breakthrough step and a bridge for Vietnam to reach the world market.
To achieve this breakthrough goal, a series of requirements must be met to ensure effectiveness and rapid and sustainable development in the context of limited resources. Besides, it is important to create a favourable environment for port operators and investors to unlock potential.
With Vietnam’s conditions, the public private partnership (PPP) method has been assessed and recognised as the best mechanism to develop infrastructure to catch up with demand, with the market-regulated mechanism ensuring the stability and sustainability of the development process. The State’s role is to decide direction, planning and prioritisation in conjunction with development roadmaps and standardisation to compete at an international scale, and form a legal framework for sustainable development. Implementing roles belong to domestic and foreign enterprises and investors.
As a professional association representing interests of seaport companies, how has VPA worked out existing problems needing to be cleared for port development?
Currently, the seaport development plan for the period from now to 2020, with vision to 2030, has been approved. However, related planning, especially port-connected traffic development planning, is not carried out synchronously. The construction of many ports is completed but connecting roads remain unconstructed. This causes huge waste in the society and distresses investors. The late traffic development - lagging behind the market and people’s demands - has had enormous impacts on the economy, society and environment. The spirit of localisation and the lack of synchronisation in development planning result in substantial waste in implementing separate plans. Not just a few ports are unnecessary on a regional scale.
Planning that doesn’t follow market demand and lacks synchrony with related infrastructure also gives rise to a number of other problems. However, it is difficult and time-consuming to change and supplement planning, as it is legally passed by many levels of authority.
While logistics service development planning for separate areas has not taken shape, the market requires small service providers to meet its demand on its own way, while large investors are just waiting. Hence, logistics service development is spontaneous, piecemeal, segmented and inefficient. Thus it is no surprise that such services are not very competitive. Logistics costs account for a substantial proportion of overall shipping expenses and far exceed cargo handling fees at ports. In the future, large-scale international logistics corporations will invest in Vietnam and they will play a decisive role in creating interconnectivity. Then, quality standards will be essential to improve the competitive position of Vietnam in the world market.
What are the fundamental elements for sustainable deepwater seaport development in Vietnam? What is the platform for the industry to reach vast international markets?
In addition to social and environmental factors, to ensure economic sustainability in accordance with Vietnam’s seaport development orientation, the unlocking key is the standardisation of services in a healthy legal and competitive environment, characterised by reasonable service charges, to ensure the efficiency of investment projects.
Apart from port operating services, other services like logistics, ship agent, pilotage, towage, ship chartering, and customs clearance procedures are also involved in the flow of freight at ports. Besides, there are fees paid by shipping companies for maritime safety, navigation channel, tonnage charge and procedure fees. The inadequacy of any one type of service in size, quality or time weakens the general service chain at ports. And if this situation persists, it will diminish the productivity and sustainability of the entire system.
The legal environment related to administrative procedures, financial and monetary regulations and law-based long-term investor protection continues to be improved.
As regards the transparency and healthiness of the competitive environment, many aspects lack sufficient attention, particularly equality for all enterprises in the principle of market supply/demand with State supervision.
It is also important to ensure fair competition and effective investment. This is a complex and decisive element for the sustainability of the system. Fees imposed by the State are essentially suitable and flexibly regulated on the basis of effectively competing with other ports in the region. Service charges need to be calculated accurately and reasonably in order to avoid imposing below-cost prices to win competition, to encourage intensive investment, modern equipment, environmental protection and value-added service provision.
In general, Vietnam has great potential to develop its marine economy powered by the port system and major related services. The formation and successful operation of deepwater ports is the initial step that opens up the greater development potential of maritime trade and the maritime economy of our country. Inadequacies and inconsistencies still exist while financial and management capacity is limited. Thus, the consensus and determination of the State and the business community will create a powerful shift, maintain a rapid and sustainable growth rate, and step up the realisation of the national maritime economy strategy.
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