South Korean businesses propose measures to promote logistics investment in Vietnam
Vietnam’s logistics market is expected to grow at an average of more than 13% per year by the end of 2022 and subsequent years.
Domestic and foreign businesses and experts in Vietnam’s logistics industry have made proposals to promote business cooperation and investment to create an increasingly efficient and professional supply chain of goods and services.
Haiphong City's Dinh Vu Port with outstanding advantages is expected to compete in seaport development and logistics with those of other countries in the region. Photo: Dinh Vu Port
Within the framework of Vietnam Expo 2022, the Vietnamese Ministry of Industry and Trade (MoIT) and the Korea Investment and Trade Promotion Agency in Hanoi held a policy dialogue on the logistics sector on April 14 and attracted several local and international investors to discuss this topic.
As a representative of the South Korean logistics business community, General Director of Kukdong Logistics Company Kim Sam Mo, President of KOCA said the Vietnamese government should loosen restrictions on the proportion of foreign investment capital in several areas in the logistics industry.
“This regulation may significantly restrain foreign investment in Vietnam's logistics industry,” he stressed.
Currently, the number of logistics enterprises in Vietnam has increased from 37,000 in 2017 to 41,000 in 2020 and is continuing to grow in the fields of transportation, warehousing, customs clearance, and distribution.
Over the last two years, despite the complicated developments of Covid-19, nearly US$3 billion was poured into the logistics industry, according to the MoIT. The country is home to 30,000 providers of logistics services.
In March, DHL Express, the international express service provider, announced its investment in Hanoi Gateway, a new logistics facility located near Noi Bai International Airport via a strategic partnership with ALS Warehousing Services Co. Ltd.
In late February, CapitaLand Development (CLD) of CapitaLand Group signed a Memorandum of Understanding (MoU) on investment cooperation worth $1 billion with the People’s Committee of the northern province of Bac Giang to build its first logistics and industrial urban project in Vietnam.
At the same time, in the Mekong Delta province of Long An, the Singapore-based SEA Logistic Partners kicked off the construction of the SLP Park Xuyen A project which aims to supply warehouses. This project is scheduled to be completed in the first quarter of 2023, covering an area of 84,000 sq.m.
In January, Singapore’s Emergent Vietnam Logistics Development Pte. Ltd announced a $35 million logistics services project, including cold storage warehouses to meet the growing demand of local enterprises.
Vietnam’s logistics market is expected to grow at an average of more than 13% per year by the end of 2022 and in the subsequent year thanks to foreign investment, application of new technologies, and e-commerce.
Enhancing cooperation between South Korean and Vietnamese businesses
For South Korean enterprises to seize the opportunities and cooperate with Vietnamese enterprises to exploit the logistics market, Kim Sam Mo suggested that Vietnam needs to form an electronic data interchange (EDI) system. As a such, stakeholders in the logistics industry including transport companies, warehouses, and customs would be interconnected through a single electronic system, saving a lot of time for the logistic operations.
He also added that a uniform logistics infrastructure cost is an urgent issue for businesses. The prices of infrastructure services are not harmonized among shipping companies, affecting the financial and business plans of enterprises in the future.
In addition, the leader of the South Korean company said the Vietnamese government should also create opportunities for regular exchanges between domestic and foreign enterprises investing in Vietnam, as well as build and develop new logistics infrastructure and support policies for the development of a cold supply chain.
Agreeing, Dinh Huu Thanh, President, and CEO of the Bee Logistics affirmed that given the number of large South Korean logistics enterprises operating in Vietnam, there are many models for businesses of the two countries to cooperate and develop together, such as mergers and acquisitions, cooperation in third countries to increase the scale of service.
“To facilitate the cooperation process, the enterprises wanted the State regulators to have more specific instructions on administrative procedures and help the investment cooperation process effectively,” Thanh suggested.
Responding to the recommendations, Deputy Director of the Import-Export Department under the Ministry of Industry and Trade Tran Thanh Hai said that in the past two years, sea freight rates increased 4-6 times in many countries, including Vietnam. The businesses decided on freight rates based on the supply and the demand to improve the quality of logistics services.
He added, that given the high gasoline prices, the National Assembly has approved the environmental tax cut. This is a strong move to support economic sectors, including the logistics industry.
Deputy Director of the Transport Department under the Ministry of Transport Nguyen Cong Bang also pointed out that relevant ministries and sectors have made concerted efforts to reduce cost pressure for businesses.
“A working group related to transport was established to assess the impact of rising fuel prices, and propose appropriate solutions to the Government and the National Assembly for approval,” he said.
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