Illustrative image (Source: VNA)

Hanoi (VNA) – Vietnam will accelerate the development of logistics services to facilitate trade and improve the economy’s competitiveness, according to an action plan which was approved recently by Prime Minister Nguyen Xuan Phuc.

According to the plan, the logistics sector is expected to contribute from 8-10 percent of the country’s GDP by 2025 with a growth rate of 15-20 percent, an outsourcing ratio of 50-60 percent, and logistics costs reduced to 16-20 percent of the GDP. Vietnam hopes to enter the top 50 countries in the logistics performance index (LPI) ranking.

To achieve the targets, Vietnam needs to call for investment in logistics infrastructure, boosting connectivity with other countries, build regional and international-level logistics centres, and develop logistics enterprises capable of competing on the international market.

The plan points out major measures such as perfecting policies and laws on logistics, completing logistics infrastructure, improving capability of enterprises, developing the logistics market and training a qualified logistics workforce.

According to the Vietnam Logistics Association, the plan is important, directly affecting the development of the logistics sector in Vietnam in the context of the country’s deeper integration into the region and the world via free trade agreements.

Vietnam’s logistics sector has made significant progress in recent years, in terms of both diversity and service quality, with an annual growth rate of 16-20 percent, ranking 64th out of 160 countries in the world and 4th in Southeast Asia.

The development of the logistics sector has contributed to Vietnam’s export growth and bringing its export value from 111.2 billion USD in 2007 to 327.7 billion USD in 2015 and helps the local retail market grow by 20-25 percent each year.

However, Vietnam’s logistics sector still faces problems.

At a logistics forum held in November 2016, Deputy Minister of Trade and Industry Do Thang Hai said Vietnam’s logistics infrastructure remains weak because of poor connectivity between railways, roads and seaports.

Goods transportation is also time-consuming, leading to high transport costs.

Reports showed that logistics costs currently make up 25 percent of Vietnam’s GDP, much higher than neighbouring countries and most Vietnamese logistics enterprises are small and medium-sized, lacking capital and facilities to operate on a big scale.

Vietnam now has 1,300 enterprises, including foreign invested ones, operating in the field. Domestic firms account for just 25 percent of the market share while foreign companies, which make up only 5 percent of the total number, take the remaining 75 percent.

Additionally, Vietnam’s logistics human resources, technology and laws are far behind the rest of the word.-VNA