Vietnam faces obstacles in joining multi-billion dollar logistics field

When joining the World Logistics Passport (WLP) program, enterprises will have favorable conditions in global logistics and trade activities. However, obstacles still exist in Vietnam.

Bader Abdulla Al Matrooshi, UAE Ambassador to Vietnam, said at the WLP Forum on March 1 in HCM City that UAE is Vietnam’s biggest trade partner in the Middle East with two-way trade reaching $8 billion in 2022.

According to the Ambassador, under the WLP program that Vietnam has joined, trade turnover will increase through the improvement of economic and trade benefits of partners.

WLP is a global initiative led by Dubai (UAE), designed to facilitate the world’s trade flow. WLP has added Vietnam to the list of regional logistics and trade hubs.

Currently, the network comprises 29 hubs. WLP will customize benefits for members to cut costs, save time, and support the removal of trade barriers, thus facilitating traders.

Abdulla Alsuwaidi, director of WLP’s Hubs and Global Partners, said as a transit and production center of the region, Vietnam will act as an important hub of the WLP network.

Commenting about the benefits Vietnam can expect when joining WLP, Vietjet Air Deputy CEO Do Xuan Quang said in terms of air transport, when joining WLP, the air carrier can cooperate with Emirates SkyCargo to carry cargo to the Dubai hub and from there carry cargo to Europe and the US –  markets that Vietjet doesn’t have air routes with.

In HCM City, in addition to Vietjet, other enterprises have signed agreements on WLP deployment, including Saigon Premier Container Terminal (SPCT), Gemadept Port, Lotus Port and Sotrans Logistics. 

Also, 22 enterprises which are members of the Vietnam Logistics Association (VLA) have registered to become members of WLP.

Nguyen Minh Hang from the Ministry of Foreign Affairs (MOFA) noted that nowadays, when the world’s economy is facing difficulties, new markets like the Middle East have great potential for Vietnam to exploit. 

Joining WLP means promoting trade with UAE, a potential partner, and through UAE, other partners in the Gulf.

However, Le Quang Trung, deputy chair of VLA, recalled two noteworthy problems when applying for the program in Vietnam.

First, the terminal handling charge (THC) in Vietnam is very low compared with the rest of the world, and it is the lowest in Southeast Asia.

Shipping firms collected $115-140/40-feet containers, and later paid back $52/container to seaports, or 30 percent of collected fee. At present, the rate is 80 percent in Singapore and 60 percent in Cambodia.

Therefore, hubs in the rest of the world, with high THC, can lower the charges and support partners within the WLP program. 

Meanwhile, the hub of Vietnam, which has low THC, cannot reduce the THC further. And it cannot apply a fee either too low or too high, as stipulated in MOT’s Circular 54

Instead of cutting the THC, WLP in Vietnam will need to cut other costs.

Second, customs procedures in Vietnam remain complicated when exporting or importing goods, especially in Cai Mep-Thi Vai Port in Ba Ria-Vung Tau. 

Meanwhile, in WLP’s trade flow, customs clearance plays a very important role. At present, the time needed to get customs clearance at Vietnam ports is 52 hours and the country is striving to cut the time to 50 hours in 2023. 

Though expenses on customs procedures are not high, the procedures are complicated.

“The WLP program needs to consider the reality when applying in Vietnam,” he said.

Viet Nam Net