Binh Duong Needs to Set Up Logistics Association Soon

2:59:28 PM | 15/2/2017

This is the suggestion by Mr Nguyen Thanh Son, Director of Tan Cang Song Than ICD Joint Stock Company, as the logistics industry plays an increasingly important role in economic development.

He said that Binh Duong has been among the first fastest-growing economies in Vietnam since 2007 and had the quickest and strongest industrialisation and modernisation process.

He added, “In the industrialisation and modernisation process of Binh Duong province, the logistics industry has played a very important part. Logistics means cost optimisation. Higher cost means weaker competitiveness of suppliers. Clearly defining the role of logistics industry, Saigon Newport Corporation in general and Tan Cang Song Than ICD Joint Stock Company in particular always side with businesses and join associations to work with the Provincial People’s Committee to draft policies and technological application supports to reduce logistics costs, thus positively contributing to local socioeconomic development in particular and national development in general.” Quoc Hung reports.

What do you think about the current reality of logistics industry in Binh Duong province in particular and in Vietnam in general?
According to the Vietnam Logistics Business Association, foreign companies (20 per cent) are keeping 80 per cent of logistics market share. This means that the competitiveness of logistics industry in Binh Duong province in particular and in Vietnam in general is currently low. The connectivity of importers and exporters with logistics firms is still limited and weak due to lack of trust. Almost all logistics services in Vietnam are being provided by foreign firms. It is noteworthy that foreign companies are using Vietnamese logistics service providers as their agents or subcontractors to undertake a certain stage in logistics chains, thus causing logistics costs to rise.

To a certain extent, foreign logistics companies have awakened Vietnamese logistics companies. What do you think about this?
It is undeniable that foreign logistics firms have made valuable contributions to the overall achievement of Binh Duong province but that dominance has resulted in certain shortcomings. In fact, many foreign companies corner the market and stifle domestic rivals. But, foreign firms have made Vietnamese logistics companies know what to do and how to do in a professional manner and team up for a collective strength. We have learned how to do business more effectively.

Apart from difficulties and challenges caused by intrinsic weaknesses of local enterprises, what else hinders the development of the Vietnamese logistics industry?
There are a number of obstacles to logistic sector and this is also our concern.

Firstly, I noticed that the Government and authorities understand that logistics service plays an important role in the national economy but the definition of logistics services remains unclear. I think that if we do not have an all-embracing definition, we will hardly have appropriate mechanisms, policies and priorities to support the development of this service. Logistics chain is a very long interrelated service chain. As expenditure of a person is revenue of another, the State can effectively collect enough tax but it is eventually added to product price. Without a clearly defined concept, it will be included to product and the society pays for it. For example, land for logistics business must have frontage but if it is equated to real estate land, land prices will be very high and added to product/service prices.

Secondly, the Vietnamese logistics industry remains fragmented. The Vietnam Logistics Business Association only teams up small businesses, not those with domestic and international influences.

Moreover, transportation infrastructure, regulations and administrative procedures, especially customs procedures, have been improved but yet to meet development requirements of the logistics industry.

What policy and mechanism is needed to develop the logistics industry?
Prime Minister Nguyen Xuan Phuc repeatedly emphasised the message of building “an enabling, righteous government for the people.” As far as I am concerned, the enabling government develops support mechanisms and policies that open the path to win the trust of the business community and inspire the spirit of entrepreneurship. Such a government must be followed by localities and branches. Thus, it is necessary to study mechanisms and policies to facilitate the development of logistics industry. Regulations on logistics service business, customs system modernisation, single-window customs and electronic customs must be unified. If the logistics sector can cut by 50 per cent of taxes, its competitiveness will grow substantially.

Besides, we need appropriate training policies. Some universities are training logistics but their training results are not high. Many students who follow high-level logistics training programmes in foreign countries cannot work because this sector is peculiar. In reality, people excellent at logistics do not teach at universities but they work for companies for better incomes. Logistics is a profession rather than a subject of science and academia. This business is not for all.

What will Binh Duong province need to do to facilitate logistics development?
When I worked in Dong Nai province, we advised the Provincial People's Committee to establish a logistics business association to unite member companies and consulted the province on logistics. In Binh Duong province, I hope the province will set up a logistics business association affiliated to the Provincial People’s Committee. The agency will advise the provincial government on logistics localities. The province should also consider and facilitate the formation of large logistics hub which will also include multimodal transport: waterway, railway and airway.

Binh Duong province now has waterways but barges and ferries are not navigable. The province also has railways but they cannot be used for transportation. Road transportation is only option but road transportation expenses are growing up. In addition, traffic congestion is worsening. Although the province has bought some traffic toll stations to reduce logistics costs, the sector needs more innovative solutions like connecting Song Than railway station with the road system or upgrading Binh Loi Bridge.

What do you think about the potential of the logistics sector? Would you mind talking about the business plans of Tan Cang Song Than ICD in the near future?
In the context of international integration, the demand for logistics is growing. Cooperation among ministries, branches and enterprises for development is needed.

Currently, industrial zones do not usually have warehousing systems. Otherwise, maintenance costs are very high. In any project, warehousing expense is ineffective expense. Therefore, manufacturers now tend to hire warehousing facilities. To meet market requirements and accompany the province’s development, Tan Cang Song Than ICD continues to invest in modernising logistics centres and warehouse systems to meet customer standards. The company connects with its facilities in the north, the centre and the south and develops multimodal transport including railway, waterway and airway.