PM affirms Vietnam’s readiness to facilitate development of logistics infrastructure

The nation will focus on developing underground space, sea space, and outer space in order to create the optimal conditions possible for the strong development of logistics infrastructure moving forward, said Prime Minister Pham Minh Chinh at the Vietnam Logistics Forum 2024 held on December 2 in Ba Ria-Vung Tau province.

To develop logistics infrastructure, the Vietnamese Government leader suggested a number of solutions such as airport-related projects and emphasised strengthening public-private co-operation; promoting integration and innovation for the cause of sustainable development; as well as following global trends such as digital, green, and sustainable development.

PM Chinh pointed out three goals and seven tasks for logistics development, and underlined efforts which can achieve double-digit growth over the coming year. It is therefore essential to reduce logistics costs in the country's GDP from 18% to 15% in 2025; increase the scale of logistics in GDP from 10% to 15%, striving to reach 20%; raise the scale of Vietnamese logistics in the world's logistics scale from 0.4% to 0.5%, striving to reach 0.6%; and increase the growth rate of the logistics industry from 14% to 15%, towards the goal of 20%.

In his speech, Minister of Industry and Trade Nguyen Hong Dien emphasized that logistics is viewed as a service industry which is considered to be the "blood vessels" of the economy, playing an important role in connecting and supporting businesses and production facilities in order to reduce costs, reduce product prices, improve competitiveness, and boost socio-economic development.

Vietnam is located in a dynamic development region of the world where the flow of goods is concentrated and the economy is highly open, standing at over 200%, with 17 free trade agreements (FTAs) signed and implemented with nearly 70 countries and territories, including most of the world's major economies, accounting for 90% of global GDP.

With import-export turnover and e-commerce consistently growing at double digits, the nation is considered to be one of the markets which boasts great potential and conditions for developing logistics services.

In recent times, the Vietnamese Party and State have issued many mechanisms, policies, and directed the effective implementation of solutions to remove difficulties, reduce costs, improve competitiveness, and create a favourable environment for the future development of the logistics service industry.

This year saw the nation evaluated and ranked by international organisations in the Top 10 emerging logistics markets; Top 4 in the world in the Logistics Opportunity Index, and Top 43 in the Logistics Performance Index.

Along with these achieved results, the development of the Vietnamese logistics service industry is not yet in line with the country's potential and advantages amid high logistics costs and low competitiveness.

Furthermore, the shortage of human resources, especially high-quality human resources and lack of infrastructure connectivity represent major "bottlenecks" which have hindered the development of logistics services over recent times.

With its strategic and potential geographical location, strengths in developing deep-water seaport infrastructure, international airports, road and railway traffic hubs with countries in the region and around the world, Vietnam has all the favourable conditions to build and develop large-scale and modern free trade zones.

The Ministry of Industry and Trade, serving as the focal point for state management of logistics services, is submitting to the Prime Minister a draft strategy for the development of the Vietnamese logistics services for the 2025 to 2035 period, with a vision ahead to 2050.

Accordingly, the draft strategy has proposed many synchronous and drastic solutions which seek to realize the goal of making Vietnam a strong country in logistics whilst actively contributing to the cause of national industrialization and modernization.

The Viet Nam Logistics Business Association (VLA) has reported that the growth rate of the logistics industry in the nation over recent years has reached about 14% to 16%, with a scale of about US$40 billion to 42 billion annually.

According to the World Bank's rankings, the nation currently ranks 43rd out of 155 countries in terms of logistics efficiency and is among the Top 5 ASEAN member states after Singapore, Malaysia, Thailand, and the same rank as the Philippines.

With an annual growth rate of 14% to 16%, this represents one of the fastest and most stable growing service industries in the country over recent times.

In 2023, Vietnamese import-export turnover hit US$681 billion, equal to 158% of the country's GDP. According to the latest forecast by Standard Chartered, the nation will be one of the key contributors to global trade growth, with export turnover expected to reach US$618 billion by 2030 and an annual growth rate of 7%.

Import turnover by 2030 is projected to hit US$578 billion, up by an average of 6.9% annually.

Currently, the country is assessed to have many opportunities in order to spur the development of the logistics service industry forward with road traffic infrastructure, airports, seaports, warehouses, commercial infrastructure, and logistics hubs constantly being expanded on a large and widespread scale.

Moreover, accompanying services have been promptly meeting the extremely diverse requirements of the market, while procedures and customs clearance times for exports have also improved significantly.

In particular, there has been a recent boom in e-commerce and logistics for e-commerce. The size of the Vietnamese retail e-commerce market has reached US$20.5 billion, an increase of about US$4 billion, equivalent to 25% compared to 2022.