Local firms fail to capitalize on huge Vietnam logistics demand

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Though Vietnam is a lucrative market for logistics with 90 percent of its foreign trade done by sea, local companies with their small scale and poor capabilities have failed to take advantage.

At the country's first-ever forum on logistics held Friday, delegates said Vietnam's 1,200 logistics companies have a combined market share of only 20-30 percent, and 25 foreign companies have garnered the rest.

Do Xuan Quang, chairman of the Vietnam Logistics Business Association, said most local companies are small with a registered capital of VND4-6 billion (US$187,600-281,400) on average.

They are unprofessional and mainly subcontract for foreign companies, he told the conference held in Ho Chi Minh City by the Ministry of Transport and Thoi bao Kinh te Viet Nam (Vietnam Economic Times) newspaper.

Do Ha Nam, general director of Hanoi-based exporter Vietnam Intimex JSC, agreed, saying that instead of cooperating, domestic logistics companies compete with each other "unhealthily."

In the meantime foreign giants like American-owned APL, Japan's Mitsui OSK, and Danish-owned Maersk Logistics are growing in Vietnam, he said.

Due to the lack of infrastructure and poor capacity, Vietnam's logistics costs make up more than 20 percent of GDP, while for other countries like China, it is only 17.5 percent

Le Phuoc Vu, chairman of iron roof producer Hoa Sen Group, blamed the inefficiency on the lack of infrastructure and cooperation within the industry, saying it is causing huge waste.

Bui Thien Thu, deputy chief of the Vietnam Maritime Administration, said the transport network is poor, ports are outdated, and distribution and storage systems are inadequate.

Quang of the Vietnam Logistics Business Association blamed the laws for failing to create an environment for healthy competition, saying inconsistency among state agencies managing logistics also hampers development.

He called for setting up a national committee on logistics that would be the sole administrative agency and also act as a bridge between businesses and the government to aid policymaking.

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