Joining Forces for a More Developed and More Beautiful Hai Phong

8:11:17 AM | 1/26/2023

Hai Phong is a national gateway for international trade and development. The city has made contributions to national reforms. Resolution 16 of the Hai Phong People's Council in 2012 picked the Flamboyant Flower as the city's symbol flower - a flower that starts to bloom every mid-May in the expression of the will and the most beautiful color of victory and foretells a coming sunny season.

Facing the East Sea with a coastline of over 125 km, Hai Phong is an important port city, an industrial and seaport center, as well as an economic, cultural, medical, educational, scientific, commercial and technological center in the Northern Coast of Vietnam.

In the late 1970s, Vietnam confronted numerous difficulties and enormous challenges. The disadvantages of the old economic management model and mechanism clearly revealed and hindered socioeconomic development. Provinces and cities, especially industrial cities like Hai Phong, faced the most severe challenge that threatened people's being - food security. And a miracle happened with the appearance of the red Flamboyant Flower in Resolution 24 in 1980 of the Standing Board of the Hai Phong Party Committee on contracting agricultural products. Hai Phong successfully applied this model. Shortly after that, the Secretariat issued Directive 100 in 1981 on the acceptance of contractual farming and introduction of the contractual system to the entire agricultural sector of the country. Vietnam not only ensured food security but quickly became a major rice exporter in the world. The innovation and success of agricultural production stimulated and spread to other industrial production sectors toward a market economy, which was the foundation for the theory and practice of development of both the port city and the whole country. In 1982, just 40 years ago, with the city leadership’s visionary planning to reach out to the sea to "be rich and successful”, the Do Son sea reclamation project (Hai Phong) together with the canal and traffic projects for Cat Hai and Cat Ba islands, formed a completely new face of the port city - the gateway to the Northern Delta region. This was perhaps the most vivid color of Flamboyant Flower throughout the city’s history. Therefore, the most heroic poems about the city were immortalized by Vietnam's most famous revolutionary poet, To Huu: “Dig a canal and encroach on the sea to open a fortune.”

In addition to achievements of industrial development, international trade, tourism and services, the process of reforming and reaching out to the East Sea at that time of Hai Phong people contributed to the formation of marine economic sectors of the country with the creation of two new communes - Tan Thanh and Hai Thanh (Duong Kinh district), as well as promoted the effective construction and development of infrastructure investment projects in 1,329-ha Nam Dinh Vu Industrial Park-Seaport-Nontariff Area and the country’s largest port, Lach Huyen Port in Hai Phong City. The reality “a hungry belly has no ears” that has been synopsized by our forefathers for centuries, was perhaps most vividly expressed in this period. All of that was a premise for the success of the 6th historic congress of the Party (1986) and the opening of the country's Doi Moi (renovation) with the immediate release of Politburo Resolutions in 1988: 10-NQ/TW on “renovation in agricultural economic management” and 13/NQ-TW on “tasks and foreign policy in the new context.”

Today, along with the Fourth Industrial Revolution and the world economic integration, certain achievements of more than 40-year renovation have positioned Vietnam and Hai Phong city with three outstanding positions in the new context:

First, Vietnam is becoming one of the most dynamic market economies in the Indo-Pacific region with the formation of five strong (capital) resources of the country's economy: Finance, nature, product, people and society.

Second, Vietnam has become one of the very few countries occupying an important position in the East Sea, the lifeline of maritime traffic routes connecting the Pacific - Indian Ocean, Europe - Asia and the Middle East - Asia. This is considered the second busiest international shipping route of the world.

The East Sea holds great strategic importance: In addition to its potential for energy, minerals and seafood, statistics show that more than 90% of the world's commercial shipping is carried out by sea and 45% of it is shipped across the East Sea, with trade worth nearly US$5.5 trillion a year. Many countries and territories in East Asia have their economies vitally dependent on this sea route, such as Japan, South Korea, Taiwan (China), Singapore and even China.

This is a vital route that transports oil and commercial resources from the Middle East and Southeast Asia across the Indo-Pacific to Japan, South Korea, and China.

Third, certainly, with regional and global changes, there are two areas of greatest focus that shapes global trade: Standards and product supply chains. Digitally driven, logistics plays an increasingly central role in supply chains not only because it requires huge investment costs (logistics accounts for about 5% of gross domestic product on average and 20% of the product cost) but also because it determines the quality of international trade when, regardless of distance, each customer wants their products to be delivered quickly and perfectly. The OECD estimates potential benefits of ASEAN (including Vietnam) from reduced freight costs among countries in the region will result in an increase in competition and trade to US$4.5 billion every year, but if this region actively makes a direct impact, the figure will be much higher. ASEAN is built on trade relations, which are the main engine of the region's phenomenal growth and logistics is the base of the pyramid for all such trade. The formation and development of international economic integration programs, such as ASEAN - China, ASEAN - India, EUVFTA, CPTPP, RCEP, “One Road, One Belt” Initiative, and especially the Indo-Pacific Economic Framework (IPEF), have placed Vietnam in a central strategic position in the supply chain. In logistics development planning, the logistics cluster strategy is taking shape and developing at a high speed around the world. The logistics cluster is an effective way to develop the regional spatial economy, adjust the industrial structure, and form the economic strategic landscape.

Hai Phong, with its unique and prime location in Vietnam, can simultaneously connect land, air, sea, inland waterways and especially the existing railway system with other localities and countries in the region. Lao Cai-Hanoi-Hai Phong Railway is very important to form the railway transport network in the north of the Red River. This railway runs along the East-West Corridor to link the Northwest region with the Delta and Hai Phong Seaport, one of the largest maritime centers in Vietnam. Development cooperation in Vietnam-China two belts, one economic corridor, including Kunming-Lao Cai-Hanoi-Hai Phong Economic Corridor and Nanning-Lang Son-Hanoi-Hai Phong Economic Corridor. The connection with the Chinese railway serves not only inter-country transport but also inter-Asia and EU transport.

Based on such realities, the Politburo's Resolution 45/2019 on Hai Phong construction and development to 2030, with a vision to 2045, determines to build and develop Hai Phong into a leading city of the country in the cause of industrialization and modernization, being the driving force of development for the northern region and for the country, with a focus on logistics services.

The city's seaport system which now consists of five terminals with 98 wharves of all kinds and eight main navigational passages, can basically accommodate large vessels. Fundamental road traffic systems basically connect seaports with industrial parks, service zones and inland port systems and interconnect northern provinces and cities and the Vietnam-China two corridors, one belt. In particular, in the past five years, many large projects located along national highways and urban trunk routes have effectively served freight transportation through ports in Dinh Vu and Lach Huyen areas such as Hanoi-Hai Phong Highway, Tan Vu-Lach Huyen Road and Bridge, and Hai Phong-Ha Long Expressway. At the same time, Hai Phong focuses on investing in external transport infrastructure systems connecting Quang Ninh, Hai Duong and Thai Binh. Furthermore, Cat Bi Airport was upgraded to a 4E-level international airport.

Logistics infrastructure investment resources were valued at VND562,309 billion in Hai Phong in the 2016-2020 period, nearly three times higher than the 2011-2015 period (VND188,356 billion). Specifically, the investment fund for transportation and warehousing facilities reached VND133,550 billion, accounting for 23.75% of the total realized investment fund of the city and rising an average of 20.03% a year. Up to this point, the city has 28 foreign direct investment (FDI) projects engaged in transport services, warehousing and logistics with a total registered capital of US$116.1 million.

Hai Phong has had outstanding development in both quality and quantity in the past to meet requirements of socioeconomic development and international and regional economic integration; and established an important position and link in the global maritime route. However, with a lot of potential for strong development, the logistics sector has not developed as much as expected and there are still many shortcomings. Besides having large-scale, modern ports, there are many small and fragmented ports. The traffic connection system is limited and unfocused, while standards are not the same, especially the transport system that connects inland waterway ports with roads.  The current rail transport output is still lower than the real demand because Hai Phong-Hanoi-Lao Cai Railway is too outdated with a single track and a very limited infrastructure capacity. Moreover, the existing railway cannot connect with that of China to move into mainland China and to third countries from there and vice versa. Currently, the demand for rail transport is increasing, the Hai Phong port area has now reached a cargo throughput of 100 million tons of goods a year, but the railway can only carry just over 1 million tons, accounting for 1.7%. This is extremely inappropriate.

Currently, in the era of "Internet of Things", products must have appropriate standards to be interconnectable for continuous automation and maximum efficiency. Advantageously having an important geographical position in connecting the world’s largest production base and major international markets, Hai Phong needs to take the lead in building a strategy to position the city in the global supply chain, including all coordination of domestic and foreign partners that play a role in this network as well as sourcing, manufacturing, transportation, warehousing and marketing. The ultimate goal of the supply chain is to find processes that ensure a smooth, efficient flow of commodities, give customers a great experience, and drive businesses to national as well as regional and international levels. In addition, that positioning strategy must be based on a logistics cluster development plan in line with the sea-looking national vision for a marine economy to focus on moving and warehousing goods in the supply chain.  This linkage will create a network of economic relationships that includes companies, suppliers and service providers as well as government agencies and other organizations that provide educational support, information, research and technology to the regional economy to create competitive advantages, reduce costs (both financial and time), generate employment and economic growth, and attract more FDI capital and meet climate change goals.

To carry out the above strategy, people still play a decisive role. The traditional innovation of Hai Phong people was once again retested in the country's second economic reform as directed by the 13th National Party Congress. To have this, the color of red Flamboyant Flower instilled in Hai Phong people's undying desire for victory will be persistently proud and shimmering on the East Sea coast to go with the nation toward a 2050 vision for a “more developed, more beautiful Vietnam”.n

Dr. Doan Duy Khuong

Australia Global Alumni Ambassador

By Vietnam Business Forum