"Cat Lai Port, one of the biggest in HCM City, is close to Dong Nai and Binh Duong, two major industrial provinces in the southern region, but regular traffic congestion delays loading" Kurihara said — Photo duongbo

DA NANG (Biz Hub) — Poor logistics and transport infrastructure and customs hassles are the major reasons for Viet Nam's inability to attract Japanese investment, a Japanese trade expert told a conference on investment promotion and logistics in Da Nang on August 21.

Yoshitaka Kurihara, senior advisor to the Japan External Trade Organisation (JETRO)'s HCM City Office, said: "Logistics is actually a key factor in investment. The slow modernisation of logistics services in Viet Nam has been a main reason for the decrease in investment flows."

Japanese investment fell from US$58 billion in 2013 to just $23 billion last year.

"Chaotic road traffic, slowness of rail traffic, shortage of warehouse space and poor condition of seaports preclude investment," Kurihara said.

"The cost of transporting by the trans-Viet Nam railway system, which is seen as environment-friendly, is higher due to the slow speed (average of 60km per hour) of the trains between Ha Noi and HCM City."

Rail transport between the two cities takes five days compared to three for trucks, he said.

"Hai Phong is not a deep-sea port for large ships to berth. Importers and exporters need transshipment at Shanghai, Hong Kong or Singapore port due to a shortage of direct shipping routes to Japan and the US," he explained.

He said Cat Lai Port, one of the biggest in HCM City, is close to Dong Nai and Binh Duong, two major industrial provinces in the southern region, but regular traffic congestion delays loading.

The crackdown on overloaded trucks is resulting in higher costs, he said.

Custom procedures could be completed in one minute, but paperwork is greatly delayed, he said.

A view of Da Nang Port. — Photo danangport

He called for improving roads, railways and ports and transport fleets, simplifying customs clearance and waiving tax on stocks held in bonded warehouse by foreign companies.

Tran Thanh Hai, deputy head of the trade ministry's Import-Export Agency, said Viet Nam has yet to draw up medium- and long-term plans for logistics development.

He said inadequate laws and poor infrastructure are a big challenge for Viet Nam's logistics sector.

Tran Huy Hien, general secretary of the Viet Nam Logistics Business Association (VLA), said Viet Nam's logistics quality ranked 48th out of 160 in the world and fourth among ASEAN countries.

"Viet Nam has 1,300 logistics businesses, but only of them 250 are members of the VLA.

"Foreign logistics companies hold 70 per cent of the logistics market.

"We hope logistics will contribute 10 per cent of the country's GDP by 2020 and the value of services provided by logistics companies will increase to 40 per cent [as opposed to importers-exporters taking care of logistics themselves] and logistics costs fall to 20 per cent."

Da Nang Port still handles small volumes of cargo at higher costs compared to other ports in the region, he said.

Laos had linked up with Da Nang Port for its exports, but switched to Thailand, which offered more favourable conditions and competitive prices, he said.

Nguyen Huu Sia, general director of Da Nang Port, said, "We plan to start upgrading the second phase of Tien Sa Port in 2016 and build it as a logistics centre for banks, forwarders and warehouse services."

He called on the Government to speed up construction of the Da Nang-Quang Ngai Expressway and Da Nang-Cam Lo Expressway to boost road transport in the East-West Economic Corridor, to economic zones and the existing refinery in Quang Ngai and proposed ones in Phu Yen and Binh Dinh.— VNS