Hanoi (VNA) - Cutting transportation costs will be vitalto enhancing the competitiveness of the logistics industry, the VietnamLogistics Business Association has said.

Nguyen Tuong, deputy general secretary of the association, said atthe conference held by the Vietnam Chamber of Commerce and Industry last week,that heavy transportation costs continue to weigh down the sector’scompetitiveness and hurt the economy.

Currently, Vietnamese logistics costs are equivalent to roughly 21percent to the gross domestic product (GDP), compared to the ratios of just9-14 percent in developed economies.

Tuong said that transportation cost made up for a significantproportion in the total logistic cost, up to 60 percent while inventory costs34 percent and management costs 4 percent.

“Thus, it is important to reduce transportation costs so as toreduce logistics costs,” Tuong said, adding that high road tolls remain aburden that account for around 10 percent of road transportation cost, plusinformal cost which makes up for at least 5 percent.

The logistics association also proposed the collection of fees foruse of infrastructure, service facilities and public utilities at ports innorthern Hai Phong city to be halted.

Under Resolution No 148/2016/NQ-HDND of the municipal People’sCommittee, which took effect from the beginning of this year, individuals andorganisations storing shipments at bonded warehouses must now pay 2.2 millionVND (97 USD) to 4.8 million VND (220 USD) per container. This is an increase ofnearly 70 percent.

“The fees are too high and a heavy burden on export and importfirms as well as logistics providers,” Tuong said.

The collection of fees applied for foreign companies using bondedwarehouses also has caused a decline in warehousing goods, badly affectingbusinesses of warehouse firms, according to Tuong. He said that fee collectionmust be put into consideration.

The association’s statistics showed that Vietnam’s logistics serviceindustry was valued at 20-22 billion USD per year, accounting for 20.9 percentof GDP, with an annual growth rate of 16 – 20 percent.

There were more than 1,300 logistics firms operating in Vietnam,20 percent of which were foreign firms but held a market share of 80 percent.

The Prime Minister in February issued a decision to boostcompetitiveness of Vietnam’s logistics service by 2025, under which, logisticswill become an important service sector to the economy.

Accordingly, by 2025, the logistic service sector hopes tocontribute 8-10 percent to GDP, have a growth rate of 15-20 percent and reducecosts to 16-20 percent of GDP.

Experts say that improving the connectivity of logisticsinfrastructure as well as capacity of local logistics service providers areimportant steps toward boosting the industry’s development.-VNA