Transportation Enterprises Face Obstacles

Competitiveness of the transportation service in Vietnam is evaluated low. According to the figure by the 2004 World Economic Forum, the Vietnamese automobile transportation service’s competitiveness was rated as the lowest level in the region. What are main reasons and how will Vietnamese automobile transportation improve their business effectiveness?

 

In recent years, the Vietnamese automobile transportation service has seen a high growth rate, 13.5 per cent in terms of means of transport and around 15 per cent in terms of cargo volume, and around 26 per cent in the number of passengers. The figures show an important position of the automobile transportation service in the Vietnamese economy.

 

According to statistics of the Vietnam Association of Automobile Transportation, the service transports 70 per cent of cargoes and over 90 per cent of passengers of total volume of cargoes and total number of passengers transported by all means of transport. Despite optimistic statistics, Vietnamese automobile transportation enterprises are facing many difficulties. The scale of most Vietnamese automobile transportation enterprises is medium and small. This constrains the enterprises’ scientific and technological application and financial capability to renew their means of transport, thus resulting in increased management costs.

 

Addressing a conference entitled ‘Improving competitiveness of automobile transportation enterprises during international integration,’ which was jointly held by the Vietnam Chamber of Commerce (VCCI) and the Vietnam Association of Automobile Transportation, Nguyen Manh Hung, chairman of the association, said that the existing regulations on the speed of means of transport were unfit with the quality of bridges, roads and vehicles, and progress in traffic organisation. Hung said that other regulations on fines imposed on drivers were too tough, causing many troubles for enterprises. Le Dang Doanh, member of the Prime Minister’s Research Commission, added that automobile transportation enterprises faced many other difficulties, including bribery and unofficial costs, which accounted for 30 per cent of their total operation costs. Nguyen Anh Dung, deputy general director of the Hanoi Transportation Service Corporation (Transerco), said that many decrees and guide documents had administrative meanings and failed to reflect the demand and supply rule and the market mechanism.

According to the result of a survey conducted by the Socio-economic Development Research Centre and the Vietnam Competitiveness Initiative (VNCI), over 50 per cent of surveyed drivers said that they violated regulations on speed as they had to meet transportation time requirements. Around two thirds of surveyed people said that the existing regulations on vehicles’ speeds were unreasonable and difficult to observe. This shows an urgent issue caused by the regulations on speeds of vehicles, which, according to transportation enterprises, have produced a negative impact on their business effectiveness.

 

Talking about the prospect of the Vietnamese automobile transportation service, Le Dang Doanh, said that Vietnam would soon become an important end of the trans-Asia route as roads and railways connecting Kunming (China) with Haiphong (Vietnam), Nanning (China) with Lang Son and Quang Ninh would become much busier. As a result, transportation services would certainly see a more rapid development, stressed Doanh.

 

Despite a good prospect, the difficulties faced by local automobile transportation enterprises cannot be settled within one or two days. According to Dung, one of the measures for improving the business effectiveness of is to allow transportation enterprises to set their fares and costs based on input and other costs, and the acceptable level of the market as well as the State-stipulated floor and ceiling levels.

 

During international integration, fiercer competition in the automobile manufacturing industry may benefit transportation enterprises. According to a survey, up to 81 per cent of enterprises agreed to save management costs and improve utility effectiveness of means of transport. Many attendants of the conference raised an idea about the permission for enterprises to decide their fares and costs. However, only half a number of surveyed enterprises agreed to increase fares and costs.

It is possible to see that the measures are temporary. To improve their competitiveness and develop in a sustainable manner during international integration like enterprises in other sectors, automobile transportation enterprises should promote investment in improving their staff members and drivers’ foreign language skills, suggested Doanh. At the same time, they should have good understanding about regulations and laws, and focus on developing human resources.

 

Despite newly-developed and expanded infrastructure facilities, the transportation service’s supply has yet to meet the demand due to a poor planning of investment in and management of transport means. The importation of many second-hand vehicles, which have poor quality and consume much fuel, has added difficulties to transportation enterprises.

 

We propose the Vietnam Association of Automobile Transportation and VCCI to promote co-operation with authorised agencies to boost control of the importation of equipment and vehicles, while licensing foreign companies to invest in the automobile transportation service. At the same time, unsuitable regulations should be removed. Surveys should be conducted before stipulating speed of vehicles. Modern equipment should be applied in speed and weight control with automated control stations along highways.

 

At the same time, to protect the interest of enterprises, the State should stipulate joint responsibility of cargo owners, warehouse keepers and vehicle owners when they violate the regulations on transportation weight. Vehicles, which commit administrative violations, should be treated as stipulated by the Administrative Violation Ordinance, with the using of bail.

 

I propose the removal of the regulations on price negotiation. Fares should be decided by enterprises. This will help improve the business effectiveness of enterprises according to their capability and developments of the market. In fact, in passenger transportation, enterprises cannot develop their own fare systems. However, the negotiation on fares has equated enterprises, regardless of their service quality. This will constrain the development of enterprises, capable of providing high quality services with big investment while other enterprises, which offer poor quality services, benefit, let alone high fares, resulted from negotiations of transportation enterprises and making people suffer from losses.

 

I propose authorised agencies to remove all unauthorised bus stations, thus helping transportation enterprises improve their business effectiveness. Also, the management of vehicles’ journey diary should be reviewed as it is ineffective enough, creating a loophole for unauthorised vehicles to regularise their operation.

 

To prevent overloading vehicles from operation, I think that the State and enterprises should take synchronously two measures. Firstly, the State should issue regulations on penalising leaders of stations which let overloading vehicles operate. I do affirm that after the regulations take effect, there will be no overloading vehicles able to operate. Secondly, control stations should be placed in four major cities, Hanoi, Haiphong, Da Nang and Ho Chi Minh City, to supervise transportation vehicles. This is to put an end to a vicious overloading, bribery and overloading circle.