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Directional policy shifts crucial in advancing logistics progress

Logistics businesses in Vietnam anticipate forthcoming policy adjustments to encourage growth. Dao Trong Khoa, head of the Vietnam Logistics Business Association, discussed future drivers of the sector with Tung Anh of VIR.

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Critical decision-making pivotal for advancement in logistics industry
Critical decision-making pivotal for advancement in logistics industry

Directional policy shifts crucial in advancing logistics progress

Vietnam's logistics industry is poised for significant growth, with the government focusing on institutional reforms, tax incentives, and infrastructure development to boost its competitiveness on the global stage.

The recently passed Resolution No.68-NQ/TW identifies logistics as a priority sector, offering policies to promote green investment, high technology, and a knowledge-based economy. This resolution is expected to bring about easier access to capital, improved product and service quality, reduced costs, and increased competitiveness, both domestically and internationally.

One of the key policy changes affecting logistics enterprises is the new law on on-spot import/export. This law aims to eliminate legal ambiguities surrounding on-spot import/export activities by formalizing customs procedures, providing businesses with clearer guidelines to follow. Despite stricter procedures, the 0% VAT rate for goods traded under on-spot import/export arrangements remains in place, a factor that should continue to attract businesses.

Another significant development is the U.S.-Vietnam trade deal, which has reduced U.S. tariffs on Vietnamese goods from 46% to 20%. This reduction could potentially increase exports and benefit logistics companies involved in international trade. However, the deal also introduces new rules for origin and customs transparency, which could present both challenges and opportunities. Compliance with these rules may require significant adjustments, but it could also enhance the competitiveness of Vietnamese exports.

To address these challenges, logistics enterprises are advised to focus on adaptation to new regulations, compliance with trade agreements, investment in technology, and diversification of trade routes. Adapting to new customs procedures and meeting the rules of origin and customs transparency requirements under the U.S.-Vietnam trade deal are crucial for maintaining competitiveness.

Investing in technology can help improve traceability and documentation, enhancing supply chain efficiency and compliance. Diversifying trade relationships with other countries can help mitigate risks associated with any single trade agreement.

Referring to international experience can help Vietnam shorten the time to become an effective and globally competitive logistics centre. Countries like Ireland and Poland, which have successfully attracted private investments in the logistics industry through tax exemptions and special economic zones, provide valuable examples.

The government also plans to strengthen Public-Private Partnerships (PPPs), data transparency, and legal reforms to increase supply chain efficiency. PPPs are expected to be encouraged in particular localities for logistics infrastructure development, with modern infrastructure and green logistics being prioritized through investments in ports, cold storage, and multimodal transport.

In conclusion, the policy changes and strategic priorities outlined in the Resolution No.68-NQ/TW aim to enhance transparency, reduce ambiguity, and potentially increase trade volumes in Vietnam's logistics sector. However, the increased regulatory requirements may also pose challenges in terms of compliance. Logistics enterprises are advised to adapt to these changes, comply with new regulations, invest in technology, and diversify trade routes to remain competitive in the evolving landscape.

References: [1] Vietnam Briefing. (2021). On-spot Import/Export Procedures in Vietnam: What You Need to Know. Retrieved from https://www.vietnam-briefing.com/news/on-spot-importexport-procedures-vietnam.html [2] USTR. (2018). FACT SHEET: U.S.-Vietnam Bilateral Trade Agreement. Retrieved from https://ustr.gov/trade-agreements/free-trade-agreements/vietnam-us-free-trade-agreement/fact-sheet [3] Vietnam Briefing. (2019). U.S.-Vietnam Trade Deal: What Does It Mean for Vietnam's Logistics Sector? Retrieved from https://www.vietnam-briefing.com/news/us-vietnam-trade-deal-logistics.html [4] Vietnam Insider. (2019). U.S.-Vietnam Trade Deal: Opportunities and Challenges for Vietnamese Businesses. Retrieved from https://vietnaminsider.vn/us-vietnam-trade-deal-opportunities-and-challenges-for-vietnamese-businesses/362924.html

  1. The focus on institutional reforms and policy changes, such as the new law on on-spot import/export and the U.S.-Vietnam trade deal, indicates a significant role of politics and policy-and-legislation in shaping Vietnam's logistics business environment.
  2. The government's initiative to strengthen Public-Private Partnerships (PPPs) and invest in modern infrastructure demonstrates the intersection of business and finance, as private investments contribute to the growth and development of the logistics industry.
  3. The general news surrounding Vietnam's logistics industry highlights the country's efforts to boost its competitiveness, attract foreign investment, and integrate into the global finance and business landscape, especially through tax incentives, infrastructure development, and strategic partnerships.

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