Friday, October 03, 2008

VietNam logistics infrastructure still lagging

Experts have said that logistics will be a key element to enhance Viet Nam’s competitiveness, as the country is expected to become a hub for both logistics and port operation. However, there are some concerns about the development of this sector. Thanet Sorat, vice-president of V-Serve Group, a leading Thai logistics service provider, spoke with Viet Nam News reporter Ha Phuong about the Thai logistics system and commented on Viet Nam’s situation on the sidelines of the International Logistic Fair 2008 in Bangkok last month.

How do you assess Viet Nam’s logistics system compared to regional countries?

Inland transportation from Thailand through Laos to Viet Nam is still very expensive since double handling is concerned. Thai logistics cost 19 per cent of the GDP (gross domestic product), which is quite high compared to developed countries. However, Thailand’s transportation infrastructure has improved over the last 10 years, since we have the Laemchabang Port, which is ranked the 21st largest port in the world. We also have the new airport, Suwanpumi, which is located in the centre of world transportation.

Based on my opinion of logistical infrastructure, Viet Nam is clearly less competitive than Thailand, Singapore and Malaysia. However, considering that Viet Nam is a developing country with the potential to grow, and that Viet Nam should have high quality labour in the future, I think Viet Nam has the potential to be a major logistics provider in the region.

What can Viet Nam learn from Thailand’s logistics system development?

I think that what Viet Nam can learn from Thailand about the logistics development process is that it takes time to develop, and the country must follow the proverb "Rome was not built in a day" if the Vietnamese seriously want to develop and improve their logistics system.

My point of view is that the Vietnamese Government must pay attention to developing policies to improve supporting areas, such as setting up a road map about how to improve Da Nang sea port into a major port for Indochina. They also have to develop land transportation that connects to the western part of Laos and the southern part of China.

Land transportation and cross border logistics will be supported and helped thanks to the GMS project (Greater Mekong Sub-region), and so the Vietnamese Government has to think of how to develop its logistics through an education system. It is also crucial to improve and facilitate the notion of network building at the international level.

What needs to be done to improve transportation between Thailand, Laos and Viet Nam?

I’ve been able to survey the road from Mukdahan, Thailand, through Laos to Viet Nam, and have seen many areas to improve. V-Serve has developed a project to be undertaken after the survey.

It would be great if Viet Nam’s local authorities could help Thai investors make successful investments, because Thai investors do not know about Viet Nam’s legal system. It is also important that local authorities help Thai investors match up with Vietnamese investors.

I don’t think that my business activities alone can boost border trade, because there are many factors concerned. For example, the number of logistics providers must be sufficient to support demand from Thailand.

If the legal system between countries is friendly and fair, then there will be more people interested in transferring their cargo using this logistics route and the dream of freer borders will become true.

Can you tell us more about the activities of V-Serve Group in Viet Nam?

V-Serve Group, one of the biggest Thai logistics service providers, carries out logistics activities in Viet Nam, mostly in exports. Most cargo exported to Viet Nam is electronics parts and canned food. Most of the transportation is done by sea. However, we are also looking for inland cross border logistics, which can transfer products from Mukdahan Province, Thailand, to Savannakhet in Laos, from where cargo can be transferred to Viet Nam. — VNS