March 12, 2009, 3:53pm
High logistics costs are responsible for holding back the development of the Vietnamese economy. This is just one of the conclusions of the latest market research report from Transport Intelligence, Vietnam Logistics 2009.
At the same time as Vietnam is seeking to terms with the global economic slowdown, weak infrastructure and high inventory levels are proving to be a significant drag on its economic development.
Logistics costs in the market are estimated to be 20-25 percent of Vietnam’s GDP, a ratio far higher than that in developed economies such as the US and higher even than in other developing economies such as China. These high costs have hindered Vietnam’s efforts to take advantage of its cheap labour resource and develop the national export economy.
The report puts this down to a combination of over-stretched and ageing transport infrastructure, including ports, airports, road and rail; inefficient bureaucracies, customs clearance delays; and the unwillingness of Vietnamese manufacturers to outsource to foreign 3PLs (third party logistics providers).
The report additionally finds that a substantial proportion of Vietnam’s logistics costs can be attributed to high inventory holdings.
However, the report also finds that this situation is gradually changing.
The Vietnamese government has invested billions of dollars in the country’s infrastructure and this investment is slowly beginning to pay dividends.
In addition, the government is encouraging foreign direct investment in projects such as the Cai Mep Container Port near Ho Chi Minh City in the Mekong River delta. An estimated $628m is being invested in the construction of that facility which will have an annual handling capacity of 1.7m TEUs (twenty-foot equivalent units) on completion. The new Long Thanh airport, near Ho Chi Minh City, should also improve supply chain efficiency when it is finally constructed, although this won’t be until 2015.
One of the most obvious logistics-related benefits to Vietnam from increased investment in transport infrastructure has been enhanced road links with its neighbors.
The Kunming-Hekou-Hanoi-Haiphong Corridor has allowed road freight operators such as TNT and Kerry Logistics to connect the country to their regional ground networks, bypassing ports and airports and hence reducing international freight costs by up to 30%.
However, overall, it can be said that the speed of infrastructure development in Vietnam is much slower than that in its neighbour and rival, China. Large inventory holdings and slow moving supply chains will delay the Vietnamese economy’s recovery, post global recession.
Thursday, March 19, 2009
High logistics costs hold back Vietnam’s economic development
Dung Quat Industrial Zone licenses foreign-funded project
The Dung Quat Industrial Zone’s management board has granted an investment licence to the wholly foreign-invested DOOBON Viet Nam Co Ltd, which has US$28 million for investment.
The company plans to build a 98,300sq.m factory for the production of a range of household goods, such as shampoo, hair conditioner, sunscreen and liquid soap.
This is the 33rd foreign project licensed in the industrial zone, with combined registered capital totalling more than $4 billion.
Da Nang calls for investment in hi-tech park
The Da Nang Investment Forum 2009 will take place on March 27 at Furama Resort to introduce and call for investment in a 1,400ha hi-tech park.
According to the Da Nang Investment Promotion Centre (IPC Da Nang), this hi-tech park will be built on 1,400ha of land in Hoa Nhon commune, Hoa Vang district, around 20km from the centre of Da Nang, 10km from Da Nang Airport and 30km from Da Nang Port.
This park will include a hi-tech zone, a research and development area, a technology nursery, a human resource training centre, a non-tariff zone, a service and management zone, accommodations for exports and daily service area.
IPC Da Nang’s Deputy Director Le Canh Duong said the city will apply many incentives related to tariff, land, and administrative formalities to promote investment in this park.
At the forum, the chief representative of the Japan External Trade Organisation (JETRO), Hiroyuki Moribe, will deliver a presentation about Japan’s experience in building hi-tech parks.
Da Nang and the Viet Nam Post and Telecommunications Group (VNPT) will sign an agreement on building telecom facilities for the park. The city will also sign a deal with the Telecom and Computer Integrated Solutions JS Company on manufacturing hi-tech products in the park.
The forum will attract over 200 delegates, including government officials, over 90 of whom are from foreign organisations and groups in the US, Japan, South Korea and Taiwan and foreign investors in Viet Nam.
Kume Sekkei opens its subsidiary in Vietnam
Kume Sekkei, one of Japanese largest architecture and construction companies, has chosen Viet Nam to base its subsidiary, named Kume Design Asia.
At a ceremony to open Kume Design Asia in Ho Chi Minh City on March 18th, the General Director of Kume Sekkei Yukio Yamada said that with the opening of Kume Design Asia, Kume Sekkei has officially entered Vietnamese architectural market.
Kume Design Asia will run business in not only Viet Nam but also other countries in its neighborhood, the Middle East and North Africa as well, said the General Director.
According to him, the world economy will escape from the current economic recession in 3-4 years and Kume Design Asia will then have a chance to be a leading designer in Asia.
Founded in 1932 and based in Tokyo, Kume Sekkei has so far designed more than 6,000 projects in Japan and 40 other countries.
Kume Sekkei has marked its presence in Viet Nam with its participation in designing Can Tho university and the Japanese Embassy in Hanoi and it is now realizing a project to erect Nikko Sai Gon.
Tuesday, March 17, 2009
Construction of two hydro-electric power plants kicked off in Gia Lai
Construction of two hydro-electric power plants, Ia Hrung and Chu Prong, has been kicked off in Ia Grang commune, Ia Grai district, Central Highlands province of Gia Lai.
Both plants have been invested by Phan Vu Electricity Construction and Investment Joint Stock Company. Ia Hrung plant has a capacity of 4.5 MW and Chu Prong, 3.7 MW. Both plants will generate 40 million kWh annually.
Total investment for the two plants is put at VND 200 billion. Construction is slated for 16 months.
