Hanoi (VNA) – Logistics costs amount to 20.9 percent of Vietnam’sgross domestic product (GDP), impeding the country’s competitive edge,according to experts.

The Business Environment and CompetitivenessDepartment under the Central Institute for Economic Management (CIEM) has saidthat transport costs make up some 59 percent of logistics expenditure, with roadtransport, equal to 77 percent of the total, the priciest type of transport.Meanwhile, unofficial costs often account for 5-10 percent of transport costs.

Businesses have to spend 5.8 million VND (249.65 USD) to ship a 40-footcontainer via road from Ho Chi Minh City to Tan Thanh border gate in the northernborder province of Lang Son. However, it costs them only 4.6 million VND (200 USD)to deliver the same container by sea to the US.

The firms have to pay about 17.5 million VND (753 USD) in road maintenance foreach truck per year in addition to paying road toll fees.

Economists attribute soaring transport costs to weak connections betweenvarious means of transport. In addition, multi-modal transportation has notbeen developed in Vietnam due to a shortage of proper infrastructure andcomprehensive investment in linking transport modes.

Prime Minister Nguyen Xuan Phuc pointed out barriers to the development oflogistics firms at a national logistics conference held in mid-April 2018,saying high logistics costs have critical impacts on the competitive capacityof local firms and the whole economy.

He underlined that asynchronous investment and poor connectivity result insteep transport costs.

PM Phuc described the early completion of logistics mechanisms and policies asan urgent measure to handle the issues.

Along with efforts to accelerate administrative reforms and improve thebusiness climate, the Government has encouraged global integration by joiningregional and world free trade agreements, helping reduce costs for local firms.

Relevant ministries and localities should implement the Prime Minister’sDecision No.200/QD-TTG on an action plan to improve competitive capacity anddevelop logistics services until 2025.

Meanwhile, experts suggested logistics businesses invest in automatedtechnologies and better their operation ability. They should work withe-commerce firms to ensure quality products and timely transportation.  In the context of the Fourth IndustrialRevolution, they need to boost research and application of new technologies tobetter logistics operation.-VNA