The expected execution of the EU-Vietnam Free Trade Agreement in 2020 will create great pressure on Vietnamese logistics businesses (Photo: VNA)
Hanoi (VNA) – The expected execution of the EU-VietnamFree Trade Agreement in 2020 will create great pressure on Vietnamese logistics businesses,insiders said.
When the deal comesinto effect, it would open the door wide to EU logistics service providers toenter Vietnam, and provide protection for them.
Meanwhile, the domestic logisticsfirms have limited competitive capacity.
However, economists said increasing competition will force thedomestic firms to reform and enhance their capacity.
Greater competition in the logisticsector would also allow the manufacturingand processing industries to access better logistics services atmore reasonable costs, thus cutting production costs and increasing price competitivenessof made-in-Vietnam goods,especially those destined for exports, said Nguyen Thi Thu Trang, director ofthe Vietnam Chamber of Commerce and Industry (VCCI)’s World Trade OrganisationIntegration Centre.
Under the EVFTA, Vietnam will open the market for EU investors in termsof aviation, land, railway, sea, inland waterway transport and some supportingservices of transport.
The country also commits to providing equaltreatment to EU investors and service providers.
Logisticscosts in Vietnam at present account for 20-25 percent of the country’s annual GDP, specifically 12 percent of the cost of aquatic products, 23 percent for wooden furniture, 29 percent for vegetables, and 30 percent for rice, much higher than that in Thailand,Malaysia and Singapore.
Trang said to takeadvantage of the opportunities and cope with the challenges from the EVFTA,businesses need to understand clearly the commitments under the deal soas to identify threats, thus building plans to improve their service qualityand professionalism.
Besides applying the latesttechnologies to increase information connection, logistics firms should improvehuman resources training and make use of cooperation opportunities withEuropean investors.
Businesses should also find appropriate channels to expand their linkages with other logistics service providerssuch as shipping lines, commercial and insurance agents, while actively joiningthe formulation of the State's policies on management of logistics activities and related ones such as customs, industryand trade.
Vietnam ranked 39th out of160 countries in the World Bank’s 2018 Logistics Performance Index, a big jumpfrom two years earlier when it was 64th. The Ministry of Industry andTrade is aiming to raise Vietnam’s ranking by five to 10 places by 2025./.
