VietNamNet Bridge – Logistics trading is not provided adequate conditions for development in Viet Nam though it is considered a cash cow sector, Nguyen Cam Tu, deputy minister of Industry and Trade, said.

The cost in Viet Nam was as high as 20 per cent of the total for each export item.

Tu told a conference, held to provide market information and favourable commercial mechanism to facilitate import-export and transport businesses in Ha Noi yesterday (Nov 17), that Viet Nam should create favourable conditions for trade activities as well as building an effective logistics sector for better exports. In addition, the country should have high value products in the world market while increasing integration in the seaport sector.

"The country's weakness is low competitiveness due to a lack of high value products and low technology content," he said.

He added that the regulations on border gate trade, especially transport infrastructure and logistics services had not been given attention.

He suggested that Viet Nam should improve services quality, infrastructure and trade to promote the country's key export sectors.

Bui Hong Minh from the ministry's Import-Export Department said that most of the Vietnamese enterprises signed import contracts under Cost, Insurance and Freight (CIF) and export contracts under Free on Board (FOB) method, thereby transporting a majority of goods through foreign shipping companies. It was the reason that a relatively big amount of transport fees of US$17 billion a year for imported and exported goods were paid to foreign firms.

Minh clarified that logistics included warehouse services, transport and loading. In some countries such as Singapore, the logistics costs accounted for only 12 per cent to 15 per cent.

However, the cost in Viet Nam was as high as 20 per cent of the total for each export item. In addition, the lack of human resources for logistics services has also affected the competitiveness of exporters.

"The shortage of synchronous transport methods has made logistics cost higher. This has resulted in low competitiveness for Vietnamese goods and services," he said.

He proposed that Viet Nam should have reforms at the macro level, focussing on facilitation of trade activities.

Exports to TPP

Viet Nam could enjoy high export growth rate after joining the free trade agreements, especially Trans-Pacific Partnership (TPP). The country's export turnover to the United States (US) and Canada could reach $70 billion by the year of 2020, according to experts.

The US and Canada would be two biggest export markets for Viet Nam after the country joins the TPP.

They would be followed by the European market with $60 billion, South Korea, Japan, and Chinese speaking markets, and Southeast Asia with $35 billion to $45 billion export turnover.

Garments and textiles, leather shoes, electronics, and wooden furniture, in addition to mechanics would be the most preferred items in the US and Canada.

Le An Hai, deputy head of the ministry's Asia-Pacific Markets Department, said that Viet Nam should diversify its export markets while expanding scale and improving export value. It should promote export markets to the ASEAN region, Northeast Asia, Chinese speaking countries, and Europe, apart from the US, Canada, Latin America, and Africa. It should also target West Asia and South Asia.

Hai expected the export growth rate between 2015 and 2020 to be 10 per cent to 12 per cent and the export turnover at $300 billion by 2020.

He said Viet Nam has striven to improve its investment environment to attract more investors with suitable policies.

"Several big groups have paid attention to Viet Nam. The country targets an increase in the rate of made-in Viet Nam products to 60 per cent instead of the current 40 per cent," he added.

He said Viet Nam has a big FTA network with 15 FTAs which have been under negotiation, bringing advantages to the country in seeking and diversifying long-term export markets.

VNS