HCM City assesses new logistics development plan
Nguyen Ngoc Hoa, deputy director of the HCM City Department of Industry and Trade, talks with Sài Gòn Giải Phóng (Liberated Sài Gòn) newspaper about HCM City’s development plan for the logistics industry to 2025 with a vision to 2030,
which has received positive feedback. Hoa addresses a number of issues that still concern experts.
|The building of overpass and tunnels at the My Thuy intersection has led to easier traffic to and from Cat Lai Port in HCM City. VNA/VNS Photo Vu Tien Luc|
Can you speak about the role and importance of logistics within the economic structure of HCM City?
HCM City has the most important logistics system in the Southern Key Economic Zone as well as nationwide. Thanks to its favourable geographical position, located between the East–West and North–South expressway axes and connected to giant port systems such as Cat Lai and Hiep Phuoc, HCM City has become a crucial import and export gateway in the southern region.
The volume of transported goods in HCM City accounts for 75 per cent of the Southern Key Economic Zone and 20 per cent of the entire country. In 2018, the total import and export turnover of HCM City reached US$85.2 billion, accounting for 17.7 per cent of the total import and export turnover of the country.
With regards to operation activities of enterprises, Vietnam had 296,269 logistics firms as of March 2018. Of that number, 54 per cent were located in HCM City, contributing 35 per cent of transport and warehouse revenues to the country. The city also had over 40 wharves with a total length of 14km.
Despite poor infrastructure and overloading of goods transport via HCM City ports, the city has no logistics centre that meets local demand.
In particular, in Cat Lai Port in District 2, about 70 per cent of the country’s import and export containers can be found here. Since the number of vehicles entering and leaving this port can reach 22,000, sometimes even up to 23,500 per day and night, traffic congestion is a serious issue here. HCM City needs strategic solutions for the logistics industry to develop sustainably.
HCM City People’s Committee has assigned the Department of Industry and Trade to take charge of the city’s logistics development plan. What are some advantages and challenges that the department has faced?
The planning process has been quite smooth. Firstly, both the HCM City Party Committee and the People’s Committee have affirmed that logistics will become a key and crucial economic sector in import and export activities and domestic trade development.
Secondly, relevant authorities, from the state to local levels, have agreed that successful logistics development can create a push to promote sustainable economic development. Many problems that the city has faced, including traffic congestion, can be solved by logistics.
For example, if we optimise the transportation of foods via waterways, one barge can carry from 100 to 150 containers. This would replace 100 to 200 container trucks on the road, thus reducing congestion, accidents and time for everyone.
Thirdly, various domestic logistics enterprises have developed significantly. There have been now professional logistic operators that manufacturers and commercial firms can rely on and outsource their logistics operations to. Previously, most companies take care of their own logistics need so it remained mostly discrete and not fully optimised.
In addition to those advantages, we have encountered certain difficulties. Well-coordinated logistics activities require smooth connection of infrastructure between waterways, roads, railways and airlines.
With regards to the land fund reserved for logistics activities, HCM City needs an area of up to hundreds of hectares and collaboration of many parties if it wishes to become the focal point of logistics.
Since production activities are carried out in other regions, HCM City needs a “conductor” responsible for coordinating logistics activities.
Currently, logistics activities are implemented in accordance with the state’s planning. Several deep-water ports such as Cai Mep and Thi Vai have been established. However, since rapid urbanisation has contributed to an increase in land price in HCM City, production activities have been forced to relocate to neighbouring provinces.
This has affected the leading role of HCM City. In other words, if the city does not quickly complete the construction of a logistics ecosystem, its competitive advantages will be weakened.
Some experts said that HCM City should be a centre that provides logistics services such as human resources and technology rather than allocating its land to develop logistics centres. How do you regard this opinion?
HCM City should be a logistics centre that meets the market demands since HCM City is already a key centre in the entire region. This project has been investigated and researched to see what should be done to develop a complete logistics ecosystem. It is necessary to gather detailed feedback regarding demands from relevant parties to finalise the project.
The Ministry of Industry and Trade has planned to have three logistics centres in Cu Chi, Hiep Phuoc and another one near the airport to create synchronisation and coordination.
The amount of land to be reserved for the three centres, and their scale and operation activities, will all be answered later. The planning map would also devote a chapter on the need to use the land area and water surface for logistics.
I would like to make it clear that the State only drafts a general plan, location planning and relevant policies, while the project implementation and management would be under enterprises’ control.
These centres would be financially supported by infrastructure investors, but, within each operational zone, there will be smaller investors who will find partners that need to use these centres.
Training in logistics remains weak in HCM City, as only some universities have recently started to carry out this programme.
HCM City will strengthen coordination between universities and enterprises to develop a sufficient number of quality human resources for the logistics field.
Reality has shown that HCM City will not go far without smooth cooperation with neighbouring provinces. This is considered a key concern in the process of socio-development and the logistics industry in particular. What do you think about this?
I totally agree with it. Next week, HCM City will meet relevant authorities from neighbouring provinces to reconfigure the project plan.
Discussion with Mekong Delta provinces is necessary to redefine key export products for logistics system connections and domestic consumption. I know that some provinces have been implementing their logistics projects. HCM City will work closely to see what they will do about these projects.
As of September 17, how much of the project has been implemented so far?
In my opinion, only about 15 per cent because the project is in the first phase, which is surveying and assessing demands. There have been some issues about the inland container depot system and we are collecting data to later submit a report to the city People’s Committee.
Currently, the demand for container depots is quite considerable. Since their relocation areas are not large enough, relevant authorities should find other spots or else import and export activities of enterprises will be negatively affected.
Container depots should be located near ports and ring roads to ease transport of goods across the city.
More should be done in parallel with the main project. We will complete everything and submit the plan to the HCM City People’s Committee in months to come for further review.
HCM City is working on a logistics development strategy that would make the city a major logistics hub and reduce logistic costs to 16 per cent of Viet Nam's GDP in 2025.
HCM City is making efforts to improve its logistics services to create a driving force for its economy as well as that of the southern key economic region.