Poor infrastructure proves a logistical nightmare

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That disappointing assessment was delivered at last week’s “Vietnam’s trade facilitation, value creation and competitiveness” conference in Hanoi, where World Bank expert said in its latest study that Vietnam’s administrative and physical trade infrastructure was ranked far below several regional competitors in terms of time, cost and reliability.

Vietnam’s international trade continued to grow, according to the study, but Vietnam’s average time for exporting and importing a commodity was 22 and 21 days, respectively—much longer than Singapore (five and four days), Thailand (14 and 13 days), Malaysia (17 and 14 days) and the Philippines (15 and 14 days).

As if underscoring the maxim “time is money,” Vietnam’s average cost for exporting and importing a container was $580 and $670, respectively, compared to $456 and $439 for Singapore, and $450 and $435 for Malaysia, for example.

“Reducing such cost by 10 per cent would result in resources saving of 2 per cent. Vietnam’s transport, logistic and border management cost has been found to create trade barriers almost as high as tariff barriers in 70 per cent of 91 countries sample [surveyed in the study],” said the World Bank senior economist Pham Minh Duc.  

He said each day of delay in the border was “equivalent to additional cost of 0.8 per cent of the value of freight.” Meanwhile, a study that graded trade logistics quality and competence on a point system found that Vietnam’s score had lost 31 points, while several other Southeast Asian countries had remarkably improved,  with Myanmar up 38 points, Cambodia up 15, Indonesia up 30, Laos up 32 scores and the Philippines up 8.

“Vietnam has been over-reliant on public investment in infrastructure, which has been found to be unaffordable, inefficient and therefore unsustainable,” Duc said.

The World Bank in Vietnam’s country director Victoria Kwakwa said these figures were “very important and pressing” to the Vietnamese government, policy makers and enterprises. As Vietnam’s economy was very much open to the world, this bottleneck would continue undermining its further growth, she said.

“Vietnam is challenged by how to improve its trade facilitation to develop into an industrialised nation by 2020. It will also affect the country’s efforts in negotiating potential free trade agreements with foreign partners,” said Deputy Minister of Industry and Trade Nguyen Cam Tu.