mai hien

MEKONG DELTA NEEDS TO DEVELOP LOGISTICS TO CUT EXPORT COSTS: CONFERENCE

Friday, 10 May 2019 01:34

 

Developing logistics is an urgent requirement to develop the Cuu Long (Mekong) Delta’s economy, a conference on improving its agriculture and aquaculture value chains heard in Can Tho City on Tuesday.

Nguyen Minh Toai, director of the city’s Department of Industry and Trade, told the conference that the delta, as a paddy and aquaculture hub of the country, accounted for 40 per cent of the country’s agriculture.

Over 50 per cent of the rice supply and 90 per cent of exports are from there as are 65 per cent and 70 per cent of the aquaculture and fruit production, he said.

The demand for transporting these products, some 17-18 million tonnes of them a year, is huge.

But 70 per cent of it is transported to ports in places like HCM City and Ba Ria- Vung Tau for export, increasing costs by 10-40 per cent, the conference heard.

There is thus enormous potential to develop logistic centres in the area and attract investors to the sector, experts said.

Toai said: “Developing logistics in Can Tho is an urgent requirement to develop the regional economy.”

Ho Thi Thu Hoa, head of the Viet Nam Logistics Research and Development Institute, said Can Tho City and provinces in the delta should make strong efforts to develop the logistics sector.

A national plan for logistics development by 2015 included two logistic centres in the region but they remain on paper, she said.

No logistics, higher costs

Companies blamed the logistic inadequacy in the region for pushing up costs.

Chu Van An, permanent deputy general director of Minh Phu Seafood Corporation, said every year his company exports 7,000 containers of shrimp worth US$850 million.

It takes 30 hours to reach HCM City by river and so his company uses road transport for it, he said.

“It costs VNĐ11 million ($520) to transport a container from Ca Mau to HCM City and VNĐ7 million ($300) from Hau Giang to HCM City. For 7,000 containers a year, we have to pay VNĐ60 billion.”

If the infrastructure sector is developed, companies can directly export from the delta and cut 30-40 per cent of their costs and become more competitive, he said.

Le Duy Hiep, chairman of the Viet Nam Logistics Business Association, told the conference that the delta is the country’s agricultural export hub but logistics cost them 20-25 per cent compared to 10-15 per cent in neighbouring countries.

But he warned that setting up a logistics system in the region would be highly challenging.