Huge space to develop logistics in Ho Chi Minh City into spearhead economic sector

The Cat Lai port will have a big logistics center. Photo: T.H

Logistics is the backbone

Assessing the potential for logistics development in Ho Chi Minh City, Chairman of the People's Committee of Ho Chi Minh City, Phan Van Mai, said, “the logistics industry has huge potential and space, so it is pertinent to effectively exploit this spearheaded economic sector.”

Director of Ho Chi Minh City Customs Department, Dinh Ngoc Thang, said, “the output of import and export goods at Ho Chi Minh City's seaport is expected to be about 155 million tons in 2025, and about 190 million tons in 2030. Container exploitation output can reach nearly 9 million TEUs in 2025 and nearly 11 million TEUs in 2030.

According to the survey results and statistics from Ho Chi Minh City Customs Department and USAID, the city's import-export container volume will double to more than 13 million TEUs (190 million tons) by 2030.

In fact, in 2019, the total cargo capacity through Ho Chi Minh City's seaports (including domestic goods) was reported at nearly 170 million tons, nearly 9 million tons higher than the forecast by the Ministry of Transport.

However, if we estimate the growth rate under the impact of new-generation Free Trade Agreements (FTAs), such as, CPTPP, EVFTA, UKFTA and RCEP, then the containers at the city's ports can reach 15 million TEUs and over 200 million tons.

It is expected that, by 2025, the city will have recorded about US$165 billion in trade. The State budget revenue of Ho Chi Minh City Customs Department may reach VND 130,000 billion in 2025 and VND 147,000 billion in 2030, however, this estimate does not include the impact of the Covid-19 pandemic.

In order for effective operation of product development in the area, Director of the Ho Chi Minh City Department of Industry and Trade, Bui Ta Hoang Vu, said, “Ho Chi Minh City has set a target that by 2025, the revenue growth rate of logistics enterprises will contribute 10% to Ho Chi Minh City's Gross Regional Domestic Product by 2025 (GRDP), and 12% by 2030.

Given the potential and advantages of logistics development in Ho Chi Minh City, Chairman of the Ho Chi Minh City People's Committee, Phan Van Mai, expects that the logistic industry will not stop at the above target, but instead will strive to achieve higher targets.

The leader of Ho Chi Minh City Customs said, “logistics is the backbone of the economy, when Ho Chi Minh City develops into a commercial, financial and tourism center of the region, the whole country and Southeast Asia, it must closely associate with development of infrastructure and logistics quality and capacity. Customs is an industry in the logistics system and as a result, logistics enterprises and customs offices are partners. The core goal of administrative reform in the Customs sector is to best serve logistics activities.

Building eight large-scale logistics centers

According to Mr. Bui Ta Hoang Vu, in the master plan to develop the logistics industry in Ho Chi Minh City in 2025, with a view to 2030, Ho Chi Minh City aims to build eight large-scale logistics centers, divided into three groups.

The first group includes three centers. In 2021, Ho Chi Minh city called for investment in the Logistics Center of the Hi-Tech Park. The cargo clearance capacity from 2021-2025 was 150,000 tons and is expected to reach highs, in the period from 2026-2030 and after, of 300,000 tons.

By 2023, the city will make an investment in the Cat Lai Logistics Center for an area of 60-100 hectares, with a cargo clearance capacity of 1.5-1.8 million Teu. The next stage plans to make increases of 3.1 million-3.5 million Teu. The Linh Trung logistics center will connect with the Linh Trung Export Processing Zone.

Ho Chi Minh City will make an effort to complete the preparation for investment in four logistics centers of group II by 2025, and three centers of group III by 2030. By 2025, they will have completed the establishment of logistics digital maps, centralized data areas and researched applications for the logistics technology.

In addition to the groups mentioned above, Ho Chi Minh City will research and develop more logistics centers in some areas, and convert small and medium industrial zones into infrastructure for logistics activities.

To develop logistics into a spearhead service, besides developing large-scale centers, Ho Chi Minh City has paid special attention to developing human resources for this industry.

By 2025, Ho Chi Minh City will develop a logistics human resource training center to build Ho Chi Minh City into a national leader in training professional and high-quality human resources. They will aim to become a human resource training center for the whole region, capable of supplying human resources both nationally and internationally.

By 2025, Ho Chi Minh City will contribute to reducing the ratio of logistics costs to the national GDP by about 10%-15%. By 2025, the rate of outsourcing logistics services will reach 60%, and by 2030 70%.

To achieve the above-mentioned goals, Ho Chi Minh City has invested in developing infrastructure, including a logistics center system and a detailed transportation system for waterway, road and air transport.

At the same time, the city has applied information technology, such as, building a centralized data warehouse to digitize freight activities, thereby providing a basis for adjusting traffic planning, arranging parking lots and trans-shipment areas and building an information technology platform to share data on logistics activities, to serve both state agencies and businesses.

On the other hand, the city will support the development of logistics related human resources. The city will continue training and retraining plans in Ho Chi Minh City for small and medium enterprises, annually build, transfer and update the online logistics training platform and form a logistics human resource training center for the region, working towards regional connectivity and human resource sharing.