In the context of Vietnam’s deeper penetration into the world market, it is currently a challenge to reach the full potential of the logistics market and ensure its sustainable development. Vietnam Business Forum had an interview with Mr Vu Xuan Phong, General Secretary of Vietnam Freight Forwarders Association (VIFFAS), on this issue.
On the integration road, which programme does Vietnam Freight Forwarders Association apply to attract domestic logistics companies and meet the requirements of its member companies?
Being aware of the role and position of the association in the Doi Moi (renovation) era, the standing board of the association always pays attention to maintaining operations and developing the association by concrete policies as follows:
- Disseminating the purposes of the establishment and operation of the association, a social - professional grouping - to logistics, forwarding and shipping companies;
- Creating favourable conditions for logistics firms to join the association when they satisfy requirements stated in the Association Charter; and eliminating member companies violating the Charter;
- Gathering opinions from member companies to produce a common voice to protect the rights and interests of member companies; Sending opinions to policymakers on legal documents that may affect the operations of the association and its members;
- Providing information on new regulations and policies on production and business to its members; receiving feedback regarding difficulties in business and production of member companies; exchanging solutions to those difficulties or requesting competent agencies to seek solutions;
- Disseminating professional knowledge and skills to association members
After joining the WTO, Vietnam has to gradually reduce direct intervention in all economic operations. Hence, the responsibilities will go to associations and organisations. What do you think about this matter?
Leaders of our association, as well as our members, understand the role and position of the association in the integration process, and determine that the liabilities of the association are to carry out its duties and authorities stipulated by the law and functions stated in the Charter of the association, ensuring intensive and extensive development.
How do you assess the opportunities and challenges for Vietnamese logistics companies now?
The concept of logistics is quite new in Vietnam. Several logistics companies in Vietnam are now only able to provide secondary services, acting as subcontractors for foreign companies and providing basic logistics services like supervision of goods in Vietnam, customs clearances, domestic transportation and documentation works mandated by foreign partners. Logistics companies in Vietnam are of small and medium size. Association between Vietnamese logistics companies is weak and ineffective. Competitiveness, especially on the global market, is blunt. In the domestic market, logistics firms mainly compete by service price cuts, not by professional service, quality and reputation. The managerial and professional level of logistics workforce is generally low. In addition, the legal environment is incomplete and asynchronous. The infrastructure system for logistics services is inadequate and weak.
Vietnam is integrating into the regional and global economy, and the Vietnamese economy is developing and expanding trading activities with other countries. These require compatible development of the logistic industry to meet the growing market. The State has defined logistics as a priority industry in Vietnam. It signed a framework agreement on multimodal transportation with ASEAN countries, and encouraged logistics companies to grasp favourable conditions to widen their logistics services in the greater sub-Mekong region. Logistics has been legalised in the Law in Commerce 2005 and other logistics-related regulations and policies. The government is focusing on developing infrastructure systems, including those for logistics operations. These are great opportunities for Vietnamese logistics companies.
However, apart from legal environment and infrastructure system for logistics development, Vietnamese companies encounter numerous challenges as follows:
- First, Vietnamese logistics companies have to raise intensive and extensive investment for production and business operations. Second, they must improve competitiveness to hold domestic market shares and extend to regional and world markets, by business efficiency, quality and reputation. Third, they should team up with other Vietnamese logistics firms for mutual benefit. Fourth, they should have long-term strategies for their own human resources.
The scattered development, weak association and business strategies of Vietnamese logistics companies need general management. How will this general management unit organise and function to resolve these issues?
This general management unit should not operate as a state agency, as this kind of mechanism has proven cumbersome and ineffective. The organisation of this association was stipulated in government Decree 88/2003/ND-CP dated July 30, 2003, and we are discussing the construction of the Association Law. Surely, all information about the functions and organisations of an association will be available in this law.
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