Develop smooth logistics to circulate goods

Long An international port opened in 2019 has helped businesses reduce freight costs. Photo: TH

Underdeveloped traffic

According to economist Phan Chanh Duong, looking at the current situation of the Mekong Delta shows that this area has not received much investment. The most prominent example is that the traffic is extremely poor compared to other regions. A place produces a lot of agricultural products with a large tonnage, but it has very poor roads.

“Inner traffic from the countryside to the city alone will cause the quality of agricultural products to decrease many times and the value is lower. The role of traffic is very important," Mr. Phan Chanh Duong said.

Next are the weaknesses in the logistics and the value-added chain. The value-added chain helps one product become the raw material of another product, and this other product is the raw material for another product, through many new stages to the final product.

The current value chain is not linked and not fully studied. Parallel to this value chain is the logistics chain.

As an enterprise specializing in providing logistics services, Ms. Do Thu Huong, Deputy Director of Marketing, Saigon Newport Corporation, said that the Mekong Delta region focuses on many seafood and agricultural import-export businesses. To exploit this source of goods, Saigon Newport has invested in seven exploitation ports in the Mekong Delta. To connect customers through major port systems in Ho Chi Minh City and Ba Ria - Vung Tau, the unit develops both road and waterway links, but encounters many difficulties.

For the road, the difficulty lies in the transport infrastructure because it has to go through many provinces and cities, but it is not synchronized, the cost increases, accounting for 20-30%. The waterway solution supports the road a lot, in the direction of green logistics. Saigon Newport has invested in a fleet of barges connecting the Mekong Delta ports to Ho Chi Minh City, but it also faces obstacles in terms of limit  ed channels.

The Mekong Delta is rich in natural resources but is the poorest region in the country; GDP is only 2/3 of that of Ho Chi Minh City, developing slowly compared to the whole country.

As a locality with interlaced rivers and canals, the paradox is that water transportation costs are higher than road costs; labor is abundant, but enterprises lack labor. This is a consequence of asynchronous development.

Mr. Vo Van Hoan, Vice Chairman of the People's Committee of Ho Chi Minh City, admitted that the development linkages between Ho Chi Minh City and the Mekong Delta provinces are not adequate, just stopping at the individual cooperation between Ho Chi Minh City and each locality. Transport infrastructure has not been fully invested, it is necessary to have a regional development plan, in which traffic, especially the development of waterway transport and seaports, not only within the framework of the provinces: An Giang, Ben Tre, Can Tho and Dong Thap but it must be expanded in the whole region including 13 provinces and cities in the Mekong Delta.

The leading role of the economy

Mr. Bui Ta Hoang Vu, Director of Ho Chi Minh City Department of Industry and Trade, provided evidence that during the pandemic, goods were surplus in the Mekong Delta production area, but scarce in Ho Chi Minh City. The price is low in the production area, but in the consumption area of Ho Chi Minh City, the price is many times higher.

From this fact, it is very important to link regional logistics to avoid supply chain disruptions. State logistics cannot invest but needs investment from businesses and investors. In the role of market linkage, it is enterprises who have an important role. During the pandemic, it was the suppliers and logistics enterprises that helped Ho Chi Minh City quickly overcome and provide goods to the people.

Also giving the experience of linkage during the pandemic, Mr. Nguyen Dinh Tung, Vice Chairman of the Vietnam Fruit and Vegetable Association said exports via air are limit  ed in quantity, with only 10 tons of goods per week. Through the US market, the shipping price is too high. Sea transportation is not better, shipping lines also refuse to transport, and there is a lack of containers, making it difficult for businesses to manage. Despite the pandemic, businesses still export normally thanks to the linkage in the supply chain. However, due to broken supply chains and logistics services, enterprises only exported 60% of orders; the rest had to be sold to agents.

Economist Phan Chanh Duong said that while fighting the pandemic, it is necessary to ensure that the economy develops, people move and goods circulate. Policies must be flexible and on the basis of logistics development. In the logistics chain, it is not to prevent but to support the development of this activity. In the current conditions, the logistics flow in the Mekong Delta must clearly define the role of each province and city to create a transparent system such as an automation system. The government has policies and mechanisms to attract investment and develop logistics in the Mekong Delta, which is an opportunity to create logistics services that bring competitive value to import-export enterprises.

Affirming that logistics is very important and is the backbone of economic development, Mr. Bui Ta Hoang Vu, Director of the Ho Chi Minh City Department of Industry and Trade, said that the competitiveness of HCMC logistics enterprises is still low.

Ho Chi Minh City has developed a logistics development project, calling for investment in nine large-scale professional logistics centers; invest in information technology to create big data input and link regions. Economic space Ho Chi Minh City dominates in terms of scale, HCM City develops a chain of river and seaport activities of Ho Chi Minh City and the Southeast region Ministries and Mekong Delta to support goods circulation and increase export capacity.