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Logistics firms in Hanoi only meet 25% of demand: City Party chief

Hanoi is estimated to record an economic expansion of 4% in 2020, significantly higher than the national average of 2.5 – 3%.

Logistics firms in Hanoi only meet 25% of the city's demand and the local government is attracting investment in the logistics infrastructure to realize the goal of becoming a major logistics hub of Vietnam and the region by 2025, according to Secretary of the Hanoi Party Committee Vuong Dinh Hue.

 Secretary of the Hanoi Party Committee Vuong Dinh Hue at the forum. Photo: Thanh Hai. 

This year, Hanoi’s gross regional domestic product (GRDP) is set to expand by over 4% year-on-year, significantly higher than the national average estimated at 2.5 – 3%. Its state budget revenue could reach VND280 trillion (US$12.1 billion), informed Mr. Hue at the Vietnam Logistics Forum 2020 held on November 26.

Additionally, the city’s industrial production index is forecast to grow by 4.7% and retail sales by over 10%. All these major economic indicators are much higher than the corresponding national average amid the Covid-19 pandemic, added Mr. Hue, who used to be a deputy prime minister until February 2020.

According to Mr. Hue, while the country’s logistics sector remains third in Southeast Asia with a market size of US$40 – 42 billion, logistics costs are still high compared to those in other regional countries and continue to be a bottleneck to local firms’ competitiveness.

This is particularly important as Vietnam is now a member of a number of free trade agreements, including the CPTPP, EVFTA and RCEP.

 Deputy Prime Minister Trinh Dinh Dung. Photo: Thanh Hai. 

Vietnam to become regional logistics hub

Deputy Prime Minister Trinh Dinh Dung said despite the severe impacts of the Covid-19 pandemic, Vietnam has succeeded in realizing the dual target of both containing the pandemic and boosting economic recovery, which is reflected by a consensus among international organizations that the country would secure positive economic growth this year.

Mr. Dung noted such an achievement is thanks to the contribution of all economic components, including the logistics sector.

In 2018, Vietnam’s Logistics Performance Index (LPI) was ranked 39th out of 160 countries and territories, up 25 places against 2016 and staying third among ASEAN countries.

Regarding the issue of high logistics costs, Mr. Dung pointed to the lack of efficient cooperation among various sectors, while shortcomings in transport, trade and IT infrastructure are affecting the country’s connectivity with its regional peers.

Additionally, Mr. Dung said the competitiveness of local logistics firms remains weak, as such, Vietnam currently does not have large-scale logistics firms that could provide a wide range of logistics services.

 Overview of the forum. Photo: Thanh Hai. 

The Deputy PM requested the logistics sector to continue lowering logistics costs to enhance the economy’s competitiveness.

In this process, a healthy development of the logistics market is essential to ensure fair competition among all economic components and attract investment in the sector.

Given Vietnam’s strategic location in the region, the country has potential to become a logistics hub of the region, Mr. Dung stressed.

Mr. Dung said the government will revise the existing planning to ensure consistency of the current transport infrastructure and priorities for the development of the logistics sector.

Meanwhile, more efforts are needed for logistics firms, including small and medium ones, to access funds for growth. 

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