Vietnam's Logistics Enterprises Fail to Meet Market' Demands

 

According to estimated statistics, Vietnam now has more than 800 small enterprises engaged in logistic industry and 101 enterprises of which are members of VIFFAS. In which, 80 ones are official members and the rest is associate members (according to statistics of July, 2007). Average duration of operation of these companies is about 5 years with registered capital of VND1.5 billion (US$ 93,750). In general, Vietnam’s logistic companies are young and small- sized ones, Mr Nguyen Tham, VIFFAS vice chairman.

 

Private enterprises making up 80 per cent of the total suppliers of logistic services in Vietnam. They are run under small capitals, even some have registered capital of about VND300-500 million (US$18,750); meanwhile, enterprises have to mortgage their assets or bank’s guarantee as security worth US$120,000 to sign waybill of multinational transportation in accordance with current regulations of enterprises. Besides, when issuing waybills into American market, these enterprises will have to register another fund of US$150,000 in accordance with America’s Laws of shipping.

 

Some state-owned enterprises are privatized becoming joint stock model with charter capital of VND5 billion (US$312,500). With such a small size and capital, Vietnam’s logistic enterprises are not able to meet demands of the international markets. Most of them haven’t had representative offices abroad yet. At some big enterprises, supplying in formation and solving problems in overseas markets are carried out by dealer system while general trend of Logistics industry is global logistics.

 

Vietnam hasn’t got any professional college or Institute of Logistics. In order to have a wide knowledge of logistics, Vietnam’s officials have to study abroad or read books. They also   receive partly Logistics knowledge through Vietnam’s universities or short-term course supported in the United Nations Economic Social Committee in Asia -Pacific region. The projects are largely for officers of public sector and partly for those of private sector.

Recently, some of Vietnamese logistics enterprises have exported logistics services to neighbouring countries such as Laos and Cambodia. Besides, Vietnam’s enterprises cooperated with foreign partners to gain the contract of supplying Logistics services from the third country transited Vietnam to China, Laos or Cambodia. It can be seen as exported products bringing foreign currency earnings for Vietnam’s enterprises.

 

Vietnam’s logistics industry started equally penetrating, cooperating and partnership with foreign trading partners, especially partners from high-developed- Logistics industry. Vietnam has adjusted Laws to comply with WTO’s regulations, making policies more clear, open and transparent. Accordingly, more foreign investors choose VN to invest. Vietnam will have many projects and manufacturing factories.   Vietnam’s logistics industry will have more chance to develop in domestic market.

 

To fulfill VIFFAS’s function as bridge linking Vietnam’s logistics enterprises, VIFFAS will unify all enterprises to become a larger Logistics association. Only by becoming a bigger association, VIFFAS can seize Vietnam’s market share, said Mr Nguyen Tham, VIFFAS vice president. He also agreed that when VIFFAS hasn’t associated all the enterprises, the Government should have reasonable policies to develop some State -owned enterprises making the capable of meeting market demands.

 

Besides, it is necessary for Vietnam’s logistics industry to have a specialist training center of Logistics a long with sending students to overseas college to update knowledge and technology. If so, Vietnam’s logistics industry can meet demands of continual development of global logistics.

According to Mr Vuong Dinh Lam, general director of Vietnam Maritime Administration (Vinamarine), the Vietnamese seaport system has satisfied the demand of imported and export cargo handling and goods circulation, which is said to contribute to the stable growth of GDP. In the past years, the Vietnamese seaport handled over 90 per cent of imported and exported commodities.

To meet the cargo throughput of nearly 200 million tonnes in 2010 and 340 million tonnes in 2020, the Prime Minister has approved the master development plan for the Vietnamese seaport system until 2010 and vision to 2020. In the 1990s, the previous master seaport development plan systemised and rearranged the Vietnamese seaports, with precedence given to key ports in most important economic zones. Thus, Vietnam has focused on building key seaports such as Haiphong, Cai Lan, Tien Sa-Da Nang and Cai Mep-thi Vai.

Haiphong Port: The Haiphong Port now consists of four areas, namely Vat Cach, Hoang Dieu, Doan Xa and Chua Ve. To tackle difficulties arising from the building of the port like narrow back-port and ship-turning areas, shallow passageways and wharfs, Haiphong Port advocated to build a tranship area in Got Wharf which can support ships of 30,000 DWT and to develop a port in Dinh Vu Island for ships of 20,000DWT. The plan has been approved by the Ministry of Transport and is underway.

Cai Lan Port: Although the development of the port had been studied for long, the port was only able to open the first wharf for ships of 10,000 DWT in 1995. The service of Wharf 1 was a milestone in the economic development of Quang Ninh Province in particular and northern Vietnam in general. The first phase of Cai Lan Port was completed in 2003 with three new wharves capable of accommodating ships of 40,000 DWT. The front area is a wide water area with the depth of 13 metres. This was the first itme Vietnam had a modern seaport capable of receiving three heavy cargo ships at a time. The port, warehouse and equipment system enabled the quick release of ships and reduction in operating costs.

Da Nang Port:Da Nang Port lies in the central key economic zone, which is in the middle of waterway, railway, roadway, airway and seaway connecting the northern and southern regions.

Da Nang Port is an important facility in Vietnam, including Tien Sa and Song Han ports. Tien Sa Port now has two piers built since 1965. The piers, with 186 m long, 27.3-29.3 m wide and 11 m deep, can support three ships of 30,000 DWT to anchor. Song Han Port, with 750 m long and 6-7 m deep, can handle cargo ships of 5,000 DWT. Currently, the Ministry of Transport is carrying out a project to upgrade Tien Sa-Da Nang Port by Japanese-funded ODA capital. The upgrading will focus on the construction of 250-m breakwater, wharves, container yards, roads linking to National Road 1A, Tuyen Son Bridge and Hoa Cam Road. Once completed, the port can handle over 3.5 million tonnes of cargo a year.

Dung Quat Port:  Dung Quat Port is located in central Quang Ngai Province and is 120 km off Da Nang City to the south. Dung Quat Port is designed to have an oil port to serve Dung Quat oil refinery, a general port for Dung Quat economic zone and Quang Ngai province, and a specialised port for shipbuilding and repairing. Currently, Wharf 1 has been put into operation and is serving ships of 10,000 DWT. In the future, the wharf can handle ships of 20,000 DWT and 50,000 DWT. Dung Quat Port is located in central Quang Ngai Province and is 120 km off Da Nang City to the south. Dung Quat Port is designed to have an oil port to serve Dung Quat oil refinery, a general port for Dung Quat economic zone and Quang Ngai province, and a specialised port for shipbuilding and repairing. Currently, Wharf 1 has been put into operation and is serving ships of 10,000 DWT. In the future, the wharf can handle ships of 20,000 DWT and 50,000 DWT.

Van Phong International Container Transhipment Terminal: Van Phong Port is 50 km off Nha Trang City, the capital of Khanh Hoa Province. Knowing the importance and advantageous position of Van Phong, the government has assigned the Ministry of Transport to instruct the Vietnam Maritime Administration to draw up a master plan to develop Van Phong International Container Transhipment Terminal. In fact, Van Phong has been used for transhipment of oil for Vietnam and other countries. Vietnamese oil tankers do not need to dock at third countries in Southeast Asia to receive big oil tankers from bigger tankers carrying Middle East oil.

Ho Chi Minh City ports:With favourable conditions, Ho Chi Minh City is a good place to develop ports. According to statistics, the Ho Chi Minh City port system consists of 28 ports of various sizes lying along Saigon, Dong Nai, Nha Be and Long Tau rivers. Seven ports are used for container goods and general commodities, and 21 specialised ports are used for petroleum, wood, cement and other commodities.

Among seven big ports, four are the biggest, including Saigon, Newport, Ben Nghe and VICT. The cargo throughput accounts for 85 per cent of the total cargos, including container goods, via southern ports.

Cai Mep-Thi Vai river ports:Several ports are operating in the region, such as VEDAN Port with one pier for dry cargo ships of 10,000 DWT and another one for liquid cargo ships of 12,000 DWT, UNIQUE GAS Port, SUPER PHOSPHATE Long Thanh Port, Go Dau A Port and Go Dau B Port. Besides, Phu My area also attracted many investors to build ports. Currently, the area has a port to serve Phu My power plant and Ba Ria Serece port. Cai Mep has an area covering nearly 4 km long and over 1 km wide. In several sections, the river depth reached 30m. Currently, investors are building LPG, VINAFOOD and Saigon Petroleum ports.

The Saigon Hi-tech Park has attracted many big projects of world-leading firms over the past five years. This is actually the highlight of the foreign investment promotion activities into Vietnam and Ho Chi Minh City.

The park regarded direct foreign investment capital as the prerequisite step to develop high-tech fields. Thus, since the foundation, the SHTP Authority has focused on calling investment capital in three high-tech markets of the US, Japan and the EU. It has sent investment promotion delegations to Japan and other countries. Besides, with the instruction from the government and municipal authorities, the SHTP Authority patiently and creatively negotiated with Intel Group to call its investment into the park.

So far, SHTP licensed 27 domestic and foreign projects with a combined registered capital of US$1.403 billion, including 14 FDI projects valued US$1.287 billion and 13 domestic projects valued US$116 million. Domestic hi-tech investors include VTC and FPT while foreign-led projects are invested by Intel (US), Jabil (US), Sonion (Denmark) and Nidec (Japan). In 2006 alone, SHTP drew US$1.045 billion, accounting for 44 per cent in total investment capital in the city ad three projects worth of US$100 million in the first three months of 2006, or 24 per cent of city’s total FDI capital attraction value. Especially, the investment project of Intel Group made a drive for the FDI capital attraction in the SHTP.

To date, 40 potential investors have registered for 132 ha to invest over US$700 million, seven potential investors needed 6.5 ha with already-built workshops to invest US$113 million, and 14 investors registered to provide high-tech services. Many potential tenants are world-leading names such as Dell and Accenture. The above situation showed that the park has huge potentialities to draw investment capital in both production and service fields. Six operating factories generated export revenue of US$27.77 million and employed 2,371 Vietnamese workers and 26 foreigners in 2006. In 2007, SHTP is estimated to generate export revenue of US$50 million.

Together with investment attraction activities, SHTP also set up a high-tech fostering area to train high-tech engineers for the nation. Several study projects have brought in encouraging results such as producing liquid nano coal and anti-absorption ink.

Ms Le Thi Thanh My, Deputy Director of SHTP Authority, said, in the context of severe competition in attracting high-tech investment and hard work to clear site for new investment projects, the housing of big high-tech projects is the most outstanding achievement of SHTP. Although park has to focus on planning and building infrastructure and attracting investment, the Authority always follows the strategic goals of SHTP, that is, learning, technology transfer and technological renovation, My added.