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Logistics key to competitiveness

HA NOI (VNS)— With its export-driven economy, Viet Nam should prioritise investment in trade logistics to improve competitiveness, economists have suggested.

Speaking at a consultative workshop on trade promotion, value creation and competitiveness on Wednesday, the World Bank economist Pham Minh Duc said it predicted the country's export volume would triple by 2020.

However, poor commercial infrastructure and logistics services cost Viet Nam in terms of of time, money and reliability, making it less competitive than rival nations, he said.

Meanwhile, according to the World Bank's latest report, solid infrastructure and logistics can help boost GDP by up to one per cent.

It also claims that every 10 per cent reduction in logistics costs can help save resources worth two per cent of GDP.

However, in Viet Nam, according to the General Statistics Office, transported goods volume increased over 12 per cent annually for the last 15 years and trade volume saw a yearly increase of 18 per cent but the proportion of investment for transport infrastructure has hardly risen.

Major shortcomings included high transport costs, poor access to ports, improper inland container deports and insufficient awareness about the importance of logistics, Minh said.

"The sector requires huge investment but Viet Nam is targeting cuts in public spending, so this poses huge challenges for mobilising capital," he said, adding that a boost of public - private partnerships (PPP) in transport infrastructure development could be the solution.

However, he noted that the implementation of PPPs in Viet Nam is hampered by a bottleneck in legal framework and risk sharing mechanisms between public and private investors.

Former deputy minister of Industry and Trade Luong Minh Tu said inexperienced and financially-incompetent enterprises in the logistics sector hindered its development.

Moreover, poor connections between roads, railways, airports and waterways, as well as transport networks with industrial parks were also problems, Tu said.

The World Bank also recommended three key pillars to improve Viet Nam's competitiveness including more logistics investment, administrative reform and a restructuring of the supply chain for exports.

According to the World Bank's report in the 2012 Logistics Performance Index, Viet Nam ranks 53rd out of 155 surveyed nations. — VNS