Foreign investors keen on Vietnam’s logistics industry

Foreign logistic firms are optimistic about the logistic sector’s development ahead of the EU-Vietnam Free Trade Agreement, taking effect in 2018.

foreign investors keen on vietnam’s logistics industry hinh 0

However, according to Tran Quoc Khanh, Deputy Minister of Industry and Trade and also head of Vietnam’s EU-Vietnam Free Trade Agreement (EVFTA) negotiation delegation, many logistics firms express concerns about the infrastructure improvements in Vietnam in preparation for the EVFTA.

Over the past few years, Vietnam’s government has paid much attention to infrastructure development. The country has stimulated investment in infrastructure such as roads, airports and seaports.

“These infrastructure developments are expected to encourage both local and foreign investors to boost operations in Vietnam while reducing production costs simultaneously,” said Khanh.

In particular, the EVFTA has some provisions to help Vietnam make the most of current infrastructure facilities.

“Vietnam permits EU companies to provide feeder services between Quy Nhon port and the Cai Mep-Thi Vai port complex, for their own vessels. Also, we allow them to transport containers in some specific routes to reduce costs. We expect that these provisions will lure more EU ships to Vietnam, thereby making the optimum use of the seaports,” he noted.

Cai Mep International Terminal (CMIT) is a deep sea terminal in the Cai Mep-Thi Vai port complex, supplying services to the shipping lines for the south of Vietnam.

The company is adaptable for all markets, especially the American, European and Asian markets. Over the past 12 months, CMIT saw a significant increase in traffic, especially to Europe, due to its new direct services.

Robert Hambleton, CMIT’s general director, shared with VIR that his firm recorded strong growth of 130% in the first quarter of 2016 when compared to the first quarter of 2015.

“The EVFTA offers great opportunities for not just the deep sea terminals but for Vietnam itself,” he said, adding that there needed to be more consolidation of the seaports to take advantage of the existing terminals.

CMIT is working to facilitate large ships to enter Vietnam. Also, the company has introduced direct container terminal services to Europe which has helped CMIT sign deals with two European customers.

Meanwhile, Logwin Air & Ocean Vietnam, a logistics firm in the textile and footwear sectors, has also seen strong growth ahead of Vietnam’s free trade agreement (FTAs), mainly coming from the intra-Asia market.

Logwin is aligning closely with exporters and potential buyers overseas, mainly in the US and EU. The firm provides consultation for exporters on how to take advantage of the FTAs.

Juergen Weber, country director of Logwin, told VIR that foreign investors had high hopes for the rising demand in the country’s textile and footwear sectors.

“Everyone in Asia knows that there will be growth in Vietnam’s market in the upcoming years. At the same time, Vietnam is eager to prepare themselves for the new coming measures and requirements of the FTAs,” he said.

However, a lot of exporters are uncertain how they can reap benefits from the FTAs. It is a long process to formulate and implement policies, therefore it will take time until the expected benefits are obvious on the Vietnamese market.

“The EVFTA will not have an immediate impact on the market this year. Logwin will see how the market moves forward in the next two years and then scale up its operations in Vietnam,” Weber added.

VIR

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