Orientation for successful development of exporting and transportation enterprises

Monday - 14/03/2016 09:32
Orientation for successful development of exporting and transportation enterprises

The Conference on Market information and trade facilitation mechanism: Dialogue with import-export and logistics enterprises” held by Asia – Pacific Market Department (Ministry of Industry and Trade) in association with Asia Development Bank (ADB) on November 17th 2015 in Hanoi and on November 19th 2015 in HCMC.

The conference aims at updating information for enterprise community on mechanism and policy in export and import industry and transportation industry as well as collecting opinions of enterprises on hardship and difficulty, and proposal for solutions to create commercial favors.

Necessary to grow in quantity and quality

At the conference, Deputy Minister of Ministry of Industry and Trade, Mr. Nguyen Cam Tu, emphasized that Vietnam was having both opportunities and challenges when participating in Free Trade Agreements (FTA), especially the Trans-Pacific Partnership (TPP). Such economic frame was creating forces for Vietnam to integrate deeply to grow in both quantity and quality in export development.

In order to integrate successfully, Mr. Le An Hai, Deputy Director General of Asia – Pacific Market Department (Ministry of Industry and Trade) said that, in general context of global capital transition, Vietnam needed to be more active in improving its investment environment to attract more investors with its reasonable policies. There had been quite a few large enterprises that paid their attention to Vietnam recently. The target in the near future for Vietnam is to increase the rate of goods made in Vietnam to 60%, instead of the current 40% rate.

According to Mr. Le An Hai, Vietnam’s point of view of developing markets is to promote and diverse exporting market in sustainable way while expanding its scale and elevating its exporting value in coherence with transition in exporting goods structure following industrialization and modernization scheme.  Meanwhile, it is also important to promote export to South East Asian markets, North East Asian, Chinese speaking markets, Oceania, Europe, the United States, Canada, Latin America, Africa, West Asia, and South Asia.

In addition, one of the targets in the direction for export – import in the near future is to reduce import from China. To be more specific, in those Chinese speaking markets, it is important to decrease deficit and export of raw material as well as to increase export of products with high technology and added value. The goal is to reach average export growth in 2015 – 2020 of 10-12%/ year, and exports in 2020 being US$ 300 billion.

In order to reach the above goal, it is necessary to execute some commerce promotion activities such as: enhancement in development and promotion of made-in-Vietnam products, priority to penetration to foreign market of products under the National Brand Program. To be more specific, it is crucial to continue to develop targeted markets and other advantaged exporting products like produce, forestry products, and seafood, textiles industries, footwear, and plastic products. Besides, it is necessary to conduct research and develop policy to encourage enterprises to participate in fertilizer production chain in foreign markets; as well as to support enterprises to counter international trade defense and commercial disputes.

Ms. Dang Phuong Dungz, Vice President of Vietnam Textiles and Apparel Association, said most of enterprises in the supply chains are trying to call for foreign investment in production of materials to reduce on the proportion of import. In order to achieve commercial favor, we have to trade off a lot of conditions of some industries when participating in or signing trade agreements. Therefore in order to benefit from such policies unless the industry itself produces raw materials, it is impossible for such industry to favor from the trade agreement.  

In order to support enterprise to integrate successfully, Le An Hai said that, Ministry of Industry and Trade and administrative bodies had implemented many activities to support enterprises to promote their export. Together with signed trade agreements, ministerial bodies constantly exchanged information of governmental level, handling issues and difficulty in commercial relations with other countries. Especially, many commerce promotion activities for specific products and markets are carried out with great support of representative bodies in other countries.

Ministry of Industry and Trade noted to enterprises and local authorities that in order tto promote export it is necessary to make use of privileges from FTA with special concern about the fact that products must meet the origin regulation set specifically for each FTA. Enterprises should have good assessment of impacts of the agreement on their business activities  as well as their partners’ counterparts’. Each local authority also needs to have planning and direction for enterprises to transit manufacturing mechanism to be suitable to changing business environment caused by FTA.

Logistics Development for better integration

In the context of overall economic integration, logistics industry of Vietnam still faces many challenges. A representatives of enterprises of marine industry said that most of Vietnamese enterprises were signing the importing contract under CIF terms and exporting contract under FOB terms, therefore, exporting and importing products were transported by foreign carriers. Meanwhile, foreign enterprises rarely chose domestic enterprises to transport or insure products. As a result, a large amount of expenditure of product transportation fell into hands of foreign companies, being approximately US$ 17 billion/ year. If signing the contract under FOB terms, Vietnamese enterprises would be able to collect billions of USD transportation expenditure for state budget.

Mr. Bui Hong Minh, Export and Import Department (MoIT) admitted that logistics industry of Vietnam lacked mid and long-term direction. Infrastructure remained backward, while connection and collaboration between exporting enterprises and logistics enterprises seemed inefficient.  Logistics expenditure in Vietnam currently accounted for 20% of total expenditure for each unit and was higher than that of some countries such as Singapore. Moreover, manpower for logistics service was in shortage, affecting competitiveness of exporting enterprises.

Besides, lack in synchronization of different methods of transportation created stagnancy in the flow of logistics, causing increase in expenditure and limit in the development of logistics at national scale.  This lowered competitiveness of Vietnamese products and services.  Infrastructure was poor; and connection and collaboration between exporting enterprises and logistics enterprises lacked efficiency.

According to Mr. Bui Minh Hong, the government issued a Decision on planning to develop central logistics system throughout the country with the model: 1 grade center, national and international; 2 grade center, provincial and sub-provincial, and economic corridor; specific center. Action plan on improving competitiveness and logistics service development would also be implemented to support and enhance export.

With regard to the opinions at the conference, Deputy Minister Nguyen Cam Tu said that attractiveness and efficiency of logistics business were undeniable; however, though considered as million dollars industry, it was still not given favorable conditions to develop in Vietnam.

Deputy Minister Nguyen Cam Tu also stated that the weakness after integration of Vietnam was its commercial competitiveness, clearly shown in its supply chain which had created little added value and low technology proportion. Procedures and regulations on border commerce, especially transportation infrastructure, and logistics service remained neglected. As a result, the improvement in service and infrastructure, and commerce would play an important role in promoting export of key industries in Vietnam.

Source: Vietrade

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