Fresh port charges hit HCM City’s logistics

Despite strong objections among businesses, Ho Chi Minh City will start collecting infrastructure and service fees at seaports from July 2021, triggering concerns over logistics cost increases.

1522 p22 fresh port charges hit citys logistics

Fresh port charges hit city’s logistics- illustration photo

Nguyen Tuong, deputy secretary general of the Vietnam Logistics Business Association (VLBA) said, “The fee collection is a strong blow to businesses, especially import-export and logistics ones. Despite disagreement, they can do nothing but follow it. This will increase logistics costs and reduce our competitiveness.”

Ho Chi Minh City People’s Council on December 9 approved a resolution on collecting public infrastructure and service fees at seaports. The subjects to the fee collection include units and individuals with temporary import for re-exports, merchandise in transit, commodities in transit, goods in bonded warehouses, and those that are importers and exporters using infrastructure at seaports (see box).

Fee collection will begin next July at Cat Lai Port and then at others in the city. This is expected to bring about revenues of over VND3 trillion ($130 million) to the city annually.

Tran Quang Lam, director of Ho Chi Minh City Department of Transport, said that the proceeds will be used to reinvest in transport infrastructure development to ease jams at seaports. “The fees are built in line with the prevailing rules on fees. We learned from other cities which have similar conditions such as Haiphong,” he said.

Lam cited statistics saying that the volume of cargo handled by local seaports in 2019 reached 170 million tonnes, accounting for more than a quarter of the country. Many seaports are facing capacity limitations due to underdeveloped infrastructure, with Cat Lai being an example.

The new fee collection may also help ease overloads at Cat Lai Port and others, and prompt businesses to rethink about other seaports. Currently, businesses from the southern provinces of Dong Nai and Long An prefer to route their cargo through Cat Lai instead of other ports such as Hiep Phuoc in Ho Chi Minh City and the Cai Mep-Thi Vai port area in the southern province of Ba Ria-Vung Tau.

In spite of that, experts said that logistics costs in Vietnam remains high, making up for 20 per cent of the country’s GDP, while other countries ranged from 9 to 14 per cent. Therefore, the additional fees would cause more financial burdens for them.

 

The Vietnam Textile and Apparel Association (VITAS) said inflated logistics costs were already hampering the competitiveness of Vietnamese goods. Vietnam’s logistics costs are 6 per cent higher than Thailand, 7 per cent higher than China, and 12 per cent more than Malaysia.

“High logistics costs do not only reduce the competitiveness of goods, but also create an obstacle for businesses to enter new markets,” said a VITAS representative.

In addition to this, competitiveness could be also reduced as the new fees would prompt businesses to make other choices. “Businesses in Quang Ninh, Long An, and elsewhere may select other seaports to cut costs,” Tuong explained.

The battle between fee increases and logistics costs in Vietnam has remained a drawn-out one. While the government has been taking actions to fulfil targets of reaching annual logistics growth rate of 15-20 per cent and reducing logistics costs to 16 per cent of GDP, cities and provinces often announce such a fee increase for various reasons.

Ho Chi Minh City is not the first to make the move. In 2017, the northern city of Haiphong began collecting infrastructure and service facilities fees at seaports, and it is estimated to fetch about VND1.6 trillion ($69.56 million) annually from the collection. VIR

Tung Anh

HCM City earmarks $4.1 bln for logistics development

HCM City earmarks $4.1 bln for logistics development

Ho Chi Minh City has approved a $4.1 billion project to develop its logistics sector over the next 10 years. 

 
 

Other News

.
Expanding action to weed out pandemic
Expanding action to weed out pandemic
BUSINESSicon  08/06/2021 

The prime minister has ordered a series of sturdy actions to fight against COVID-19 and spur on local production, as people look to the government for protection with the spectre of the pandemic looming yet again.

Vietnam a bright spot for foreign investors: experts
Vietnam a bright spot for foreign investors: experts
BUSINESSicon  08/06/2021 

Vietnam has been chosen among leading destinations in Southeast Asia by Japanese investors, Nakajima Takeo, Chief Representative of the Japan External Trade Organisation (JETRO) in Hanoi, has said.

Businesses need more effective support amid COVID-19
Businesses need more effective support amid COVID-19
BUSINESSicon  08/06/2021 

Like many countries, Vietnam may have to depend on vaccines to achieve herd immunity and be virus-free, but enterprises may not be able to wait. They are in dire need of help and are craving new momentum to return to a “real normal” situation.

Vietnam expects to see export growth in rising global demand
Vietnam expects to see export growth in rising global demand
BUSINESSicon  08/06/2021 

Global demand for goods is recovering and this is an opportunity for Vietnam to boost its exports of consumer and industrial products, according to the Ministry of Industry and Trade (MoIT).

Stock market an attractive investment channel for local players
Stock market an attractive investment channel for local players
BUSINESSicon  08/06/2021 

The stock market is still an attractive investment channel for investors in the near future. However, it also poses many challenges for regulators and market members, said experts.

Vietnam calls for initiatives to ensure efficient functioning of APEC supply chains
Vietnam calls for initiatives to ensure efficient functioning of APEC supply chains
VIETNAM & WORLDicon  07/06/2021 

Asia-Pacific Economic Cooperation (APEC) economies needs to continue promoting free and open trade and investment, undertake initiatives to ensure regional supply chains to function smoothly and efficiently,

Small tourism businesses struggle to adapt to COVID-19
Small tourism businesses struggle to adapt to COVID-19
BUSINESSicon  07/06/2021 

The fourth wave of COVID-19 infections in Vietnam has caused disruptions to most sectors once again as the country was preparing for the tourism season.

Drawing up plans to buttress recovery
Drawing up plans to buttress recovery
BUSINESSicon  07/06/2021 

The ongoing fight against the COVID-19 pandemic has led to huge demands for capital for Vietnam to support local production. 

Solar PV market under duress from dependence on imports
Solar PV market under duress from dependence on imports
BUSINESSicon  07/06/2021 

As one of the fastest-developing countries in solar thanks to the current feed-in tariff, Vietnam’s billion-dollar solar panel market is mostly dominated by foreign investors and depending on imports.

VN game industry can become big exporter: experts
VN game industry can become big exporter: experts
BUSINESSicon  07/06/2021 

Vietnam’s mobile game market has huge potential and games can become one of the country’s major exports, experts have said.

Trade with China: $20 billion in exports, $43 billion in imports
Trade with China: $20 billion in exports, $43 billion in imports
BUSINESSicon  08/06/2021 

Vietnam’s import and export activities in May were affected by the fourth Covid-19 wave, but they still increased generally.

Record hot weather in North, power shortages could occur
Record hot weather in North, power shortages could occur
BUSINESSicon  08/06/2021 

In the most recent heat wave in northern Vietnam, electricity consumption has set "historic peaks".

Ministry denies proposing price stabilisation fund for steel
Ministry denies proposing price stabilisation fund for steel
BUSINESSicon  07/06/2021 

The Ministry of Industry and Trade (MoIT) has denied rumours that it proposed the establishment of a State stabilisation fund to cope with the sudden increase in steel prices that has impacted many businesses.

Amid crisis, airlines seek ways to prosper
Amid crisis, airlines seek ways to prosper
BUSINESSicon  07/06/2021 

Suffering heavy losses due to the drop in passenger numbers under the impact of the Covid-19 pandemic, some airlines have boosted cargo transport services and made a profit. 

VN auto manufacturers hit hard for last two years
VN auto manufacturers hit hard for last two years
FEATUREicon  07/06/2021 

The Vietnamese auto market prospered for a few years before being affected by the Covid-19 pandemic, but sales of locally assembled cars have fallen.

E-commerce sales boom during pandemic
E-commerce sales boom during pandemic
BUSINESSicon  07/06/2021 

E-commerce platforms in Vietnam have seen the number of new users grow by 41% since the outbreak of the Covid-19 pandemic. Most of the new users said they would continue to use the new form of shopping even after the epidemic ends.

Supermarkets report dramatic increase in online orders these days
Supermarkets report dramatic increase in online orders these days
BUSINESSicon  06/06/2021 

Some supermarkets and fast food stores in districts 12, Tan Binh, Hoc Mon yesterday announced a dramatic increase in online orders, up by 3-5 times compared to prior days.

New COVID-19 outbreak puts a halt to more domestic flights
New COVID-19 outbreak puts a halt to more domestic flights
BUSINESSicon  05/06/2021 

Given COVID-19 developments, the Ministry of Transport (MoT) has approved the suspension of passenger flights to Con Dao Island and those linking Quang Ninh and Gia Lai provinces with Ho Chi Minh City.

Made-in-Vietnam wooden products conquer US market
Made-in-Vietnam wooden products conquer US market
BUSINESSicon  05/06/2021 

Boasting huge production advantages and capitalising on good market opportunities, Vietnam’s furniture sector has stood firm amid COVID-19 and improved its position in the global market and especially in the US.

Hanoi wants to tax abandoned villas
Hanoi wants to tax abandoned villas
BUSINESSicon  04/06/2021 

Hanoi has proposed to the Ministry of Finance the imposition of a tax or fine on owners of half-finished and abandoned townhouses and villas which were causing considerable waste of land resources.

 
 
 
Leave your comment on an article

OR QUICK LOGIN