Despite being very busy with his new year works, Mr Tran Huy Hien, General Secretary of the Vietnam Logistics Business Association (VLA) and CEO of DACO Logistics Company, still arranged a meeting with Vietnam Business Forum on opportunities for the Vietnamese logistics services industry when the Trans-Pacific Partnership (TPP) Agreement is successfully concluded, as well as strategic objectives of DACO Logistics Company in the coming years. Vy Anh reports.
How do you assess the real condition of the Vietnamese logistics services industry in the past year? Do the Government’s decrees pave the way for the sustainability of the Vietnamese logistics industry?
The robust development of import and export activities in recent years has made logistics an important services sector of international trade and caught the special attention of State management agencies and the Vietnamese business community. The sector’s infrastructure systems have been invested, including building new ports, upgrading airports and roads, developing logistics information technology. Hence, the logistics services sector can meet domestic and international demand.
However, in recent years, logistics services businesses in Vietnam have much common ground with importers and exporters. Most logistics companies have small scale, small capital and insufficient facilities such as warehouses, storage yards, information technology and transport means.
To ensure the sustainable development of the logistics services industry commensurate with its potential, Vietnam needs to pay attention to infrastructure, legal framework, service providers, service users as well as current industry development trends like applying information technology, changing import and export restructuring to change “CIF buy, FOB sale” practice of local enterprises.
Understanding the importance of logistics services, in recent years the Government has issued decrees aimed at creating favourable conditions for the development of Vietnamese logistics industry, particularly Decree 140/2007/ND-CP of the Government detailing the Law on Trade of 2005 on conditions for logistics services business; Decree 115/2007/ND-CP of the Prime Minister on conditions for maritime transport services; and Decision 175/QD-TTg of the Prime Minister approving the overall Vietnam services development strategy towards 2020, including the Vietnam logistics services development strategy.
In 2012, the Government of Vietnam issued Decree 87/2012/ND-CP on e-customs procedures with a lot of reform in customs procedures; Decision 950/QD-TTg on the Action Programme for implementation of Import Export Strategy for the 2011 - 2020 period, with an orientation towards 2030, which underscores the accelerated socialisation of logistics services, warehousing investment in major ports, customs clearance locations, nationwide logistics system planning, and freighting market share increase in Vietnam. Today, the Law on Customs is also being amended to facilitate trade and logistics and suit international and regional practices. All these factors will be the solid foundation for the Vietnamese logistics sector to secure sustainable development in the coming years.
The expected successful conclusion of Trans-Pacific Strategic Economic Partnership Agreement (TPP) negotiations will create both opportunities and challenges for Vietnam’s exports. Would you mind elaborating on this?
TPP will be a very good way for Vietnam’s exports to enhance price competitiveness while they make inroads into TPP partner countries. In particular, tax advantages have a special significance to Vietnam’s goods in the US and North American markets amid fierce competition from other countries which have been already granted tariff preferences by the US. Domestically, the opening of the Vietnamese market for goods and services from TPP countries will create a more competitive business environment where prices are cheaper, quality is higher, technologies and materials are more diverse. Competition and pressures from foreign rivals will also motivate Vietnamese enterprises, industries and the entire economy to self-correct, self-improve and self-perfect. But apart from opportunities, a number of challenges are also anticipated, including the risk of losing competition to the flood of imported goods flowing from TPP economies. Besides, TPP requires member countries to prove the origin of non-agricultural exports from TPP countries to enjoy preferential tariffs. Meanwhile, the majority of materials needed for domestic production are imported from non-TPP nations like China, South Korea and Laos.
In early 2014, if negotiations are successful, TPP will be the largest free trade area in the world with a population of almost 1 billion people and gross product value of US$29,000 billion. Compared with BTAs, AFTA and WTO, the TPP is broader in trade in goods, services, investment and intellectual property. Additionally, non-commercial issues such as government procurement, environment, labour unions and SME supporting are also defined in TPP.
DACO Logistics is now a dynamic and adaptive business and it has attained rapid growth amid worldwide economic crisis. DACO Logistics has an average growth rate of 30 per cent a year in the past years. Could you tell us more about the company’s development strategy for the coming years?
As a service provider, the first criterion in DACO Logistics Company’s long-term development strategy is to always ensure good service, stable and competitive price for customers, build up dynamic and professional workforce of international standards. To maintain and improve the current position in addition to a sound governance strategy, the company leadership has also thoroughly worked out long-term development orientations. With its right development strategy and effective investment direction, DACO Logistics is confident of being stronger in the future to continue the mission of providing the market with a variety of high quality logistics services. The most solid foundation of DACO Logistics has generated high competitiveness, good workforce and well-reputed brand, and these pluses will be promoted by the company in the future for the sake of sustainable development.
To realize this strategy, DACO Logistics needs to have domestic and foreign strategic partners. 2014 is a banner year for the company to make breakthroughs and build the global strategic partnership system. In March 2014, DACO Logistics will host the Global Agent Conference which is expected to be attended by 35 guests from 30 countries around the world. At this conference, partners will discuss solutions to improve service quality, enhance cooperation, and exchange professional experience in order to strengthen long-term cooperation and sustainability.
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