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Vietnam’s logistics expects to contribute 10% of GDP by 2025
Nguyen Tung 14:32, 2017/12/16
By 2025, the contribution of logistics is expected to reach from 8 – 10% of GDP.
Leaders of associations, the World Bank, and experts discussed challenges and development potential of Vietnam logistics at the Vietnam Logistics Forum 2017. The event is held by Ministry of Transport, Ministry of Industry & Trade, the World Bank in Vietnam and Vietnam Logistics Association (VLA). 
 
y 2025, the contribution rate of logistics to the economy is expected from 8 – 10% GDP.
By 2025, the contribution rate of logistics to the economy is expected from 8 – 10% GDP.
Speaking at the Forum, the Chairman of VLA Le Duy Hiep said, Vitenam logistics is growing rapidly from 15 – 16% per year. According to the Logistics Performance Index (LPI) of World Bank in 2014, Vietnam ranked 53rd and in 2016 in 64th out of 160 countries, and being the fourth in ASEAN, after Singapore, Malaysia and Thailand. The number of logistics enterprises is estimated at 3,000, in which the majority (70%) is small and medium enterprises (SMEs), and 7% has capital over 1 trillion VND. 

Mr. Hiep said, the Vietnam logistics is facing numerous challenges such as the small and weak in business scale and logistics activities, especially in providing international market. With this being said, Vietnam logistics companies mainly operates in Vietnam, as only a handful opened representative office abroad in Myanmar and Cambodia. While in countries with strong logistics development in Singapore and Thailand, there are almost no Vietnamese enterprises operating there. 

Over the period of 10 years, enterprises in Vietnam have advantages in storing sites, checking goods and services in related to container, but still weak at sea transport and air transport. 

Another challenge is high logistics fee, which contributes to 20.8% of GDP and equivalent to 41.26 billion USD, as such, this may be the highest in the region, higher than Cambodia and Myanmar, in particularly, 16% higher than Thailand, while this number in developed countries are from 9 – 14%. Every year, logistics need about 20,000 employees, and by 2020, the number is expected to be 200,000 employees. This is a challenge to Vietnam’s logistics, with inconsistent logistics infrastructure, the situation of congested traffic, high air and sea transport fee. 

Economic expert of World Bank said, previous success of Vietnam depends on low expense and custom fee, but only to a certain extent. But in order for Vietnam to maintain this success, it is necessary to focus on reduced custom fee, including administration fee and logistics fee. With an aim to develop Vietnam’s logistics, the Prime Minister has issued Decision No.200/QD-TTg dated February 14, 2017 approving the action plan to improve competitiveness and develop Vietnam’s logistics by 2025. As such, the Decision No. 200 listed 60 specific objectives based on 4 aspects of Vietnam’s logistics. By 2025, the contribution rate of logistics to the economy is expected from 8 – 10% GDP, the growth rate from 15 – 20%, logistics outsourcing from 50-60%, logistics fee decreased from 16-20% GDP, the LPI of Vietnam to be in range of rank 50 and onward. 

As such, a better performing logistics can provide international and domestic investors with an environment where they can source products for export at a lower total landed cost than what they incur in other countries. A stronger logistics sector is also consistent with Vietnam’s long-term vision of spurring export-led growth. 
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