The role of state management in logistics services development in quang nam province



Logistics is a series of related activities (with the two basic pillars being sea ports and non-sea ports) such as employment, synchronous infrastructure, investment capital, interest rates, incentive policies, regional linking, science and technology and international cooperation, etc. Therefore, the conditions for development of logistics services in Vietnam in general and in Quang Nam Province in particular should be supported by growth-oriented policies. The basic and comprehensive policies will create sustainable development steps, gradually affirming the important role of State management in orienting the development of logistics centers in Vietnam including Quang Nam province.

Keywords: Impact, development of logistics services, Quang Nam, State management.

1. Introduction

Logistics plays an important role in optimizing the flow of production and business from input of raw materials and accessories to end products to end users. Since the 1970s, successive energy crises have forced businesses to pay attention to costs, especially transportation costs. In many periods, high bank interest rates made businesses more aware of capital, as capital was locked due to maintaining too much inventory. It is during those periods that the way to optimize production, storage and transportation was placed at the forefront. And with the help of information technology, logistics is a powerful tool to do this. Logistics helps managers make right decisions in production and business: In production and business, managers must solve many difficult problems in terms of raw material supply, effective quantity and time to supplement raw materials, means and trips of transportation, locations, storage and yards of finished products, semi-finished products, etc. To effectively solve these problems, the role of logistics is necessary, because logistics enables managers to control and decide correctly on the above mentioned problems to minimize arising costs and ensure efficiency in their production and business activities. Logistics plays an important role in ensuring just-in-time factors: the process of economic globalization has made goods and their movement more abundant and complex, demanding tight management, and setting new requirements for freight forwarding services. In Quang Nam, according to statistics, the average output of goods through Chu Lai Port is currently over 100,000 tons/month. In 2017, it was estimated at 1.5 million tons of goods going throughput the port, up about 20 % from 2016. Chu Lai Logistics One-member Limited Liability Company of Thaco Group has made concretization by proposing construction of Chu Lai port and obtained the approval from Quang Nam Province's People's Committee; the Management Board of Chu Lai Open Economic Zone (KTM) continues to carry out the project of dredging the navigation channel from buoy 0 to Chu Lai port in the second phase with the depth of -11.0m to receive ships of 30,000–40,000 tons in 2019. Therefore, it can be seen from the above statistics that logistics is a series of related services... So, the role of logistics will have the impact of entailing a series of socio-economic issues of the country in general or region in particular, including Quang Nam Province [2].

2. The role of logistics in the economic development of Quang Nam Province

1. Development of infrastructure

Logistics plays a key role in bringing products to right places at right times. In fact, products and services can satisfy customers’ needs and are valuable only if and when they reach the right customers at the right times and places. Therefore, in recent years there has been an increase in industrial parks, export processing zones, and economic zones throughout the country. This has taken place especially in the provinces where there are sea lanes, seaports, airlines, train stations, synchronous road systems such as Quang Nam Province. So, after nearly one year of construction, the project to expand Chu Lai Port — Chu Lai Open Economic Zone (Quang Nam) has been completed, contributing to increasing the capacity of logistics service chain here and promoting the development of the Port into a logistics center of the Central key economic zone. The Project to expand Chu Lai Port has been invested and constructed by Chu Lai — Truong Hai Port one-member limited liability company since 2016, including the following items: expanding the port dock upstream and upgrading the warehouse system; completing the infrastructure... with a total cost of VND 120 billion. As a result, the investment capital to build Chu Lai port from 2010 to present has been raised to nearly VND 800 billion. Especially, with 171m of expansion upstream, Chu Lai dock has total length of nearly 500m, depth before the terminal of -9.5m, enabling this port to receive 3 ships with load of 20,000 tons at the same time. Besides, the warehouse and workshop system has been expanded from 71,040m2 (2016) to 91,200m2, contributing to increasing the capacity of the Port. It is known that Chu Lai Port is divided into three separate functional areas for different types of goods, including: containerized goods; general bulk cargo and liquid cargo. Along with that is the specialized handling equipment, raising the capacity of Chu Lai port to meet almost all demands for waterway transportation of shipping lines and enterprises in the region when arriving at the port for loading and unloading goods.

With respect to industrial development, Chu Lai Open Economic Zone and Dien Nam — Dien Ngoc Industrial Park are among the most efficient and effective industrial parks in Central Vietnam. Along with the efforts of authorities at all levels, agencies and businesses home and abroad, the system of socio-economic infrastructure of Quang Nam Province has made a breakthrough, and the investment environment has improved continuously to meet the increasing investment demand over the past years. In addition to the expansion of Chu Lai Open Economic Zone, many other industrial parks have been included in the investment action plan for the 2018–2025 period (7 industrial parks with total area of 4,295 ha). With regard to tourism, the favorable natural conditions with over 125 km of coastline, Co Co river and the development of Hoi An Tourist Area and Dien Nam — Dien Ngoc Urban Area have created a great advantage for investment in development of tourism and services of the province.

2. Enhancement of capacity of receiving ships

According to the statistics of Chu Lai Port, in the first 6 months of 2017, Chu Lai Port received 150 ships calling at the port; Implemented nearly 200 trips of towing service; Handled 23,000 TEU containers and 140,000 tons of bulk cargo, equivalent to 600,000 tons of cargo through the port. In that, containerized cargo increased by 10 % compared to 2016. Out of the total output of goods through the port, 15 % belonged to 50 outside businesses and the main goods categories included food, agricultural products, plastics, tires, paint, chemicals, batteries, consumer goods... To develop Chu Lai port into a logistics center of the Central key economic zone, in the period of 2018–2020, Chu Lai Port proposes Quang Nam province to support the dredging of the channel route to the depth of -10.7 m to receive ships of 30,000 tons in 2019. And the dredging will continue to the depth of -12m to receive ships of 40,000 tons after 2020.

3. Improvement of the efficiency of service

The effectiveness of logistics plays a decisive role in the competitiveness of industry and trade in each country. In the current powerful global trend, the competition among nations in the world is fiercer and fiercer. This has made logistics service one of the competitive advantages of a country. Therefore, any country that connects well with the global logistics service network will be able to access many markets and consumers from other countries in the world. In addition, development of logistics services will bring huge profits to the economy. According to the statistics of the US Logistics Institute, the logistics service sector accounts for about 8 % — 12 % of GDP in developed countries such as the US and Japan, 19 % in China, and higher than 30 % in less developed countries.

4. Improvement of connectivity and technology solutions

Logistics is a system of technology and management solutions to optimize the flow of goods and services, from the supply of inputs and production to consumption. Optimization of the flow of goods and services has confirmed the important role of logistics in enhancing the competitiveness of most industries and services in many developed countries. In other words, the more efficient the logistics service system is, the more efficient it will be to save social costs, increase competitiveness and bring about a significant return to the economy. However, in order to bring into full play the potential of logistics service, it requires close and synchronous cooperation of all actors in the entire socio-economic system. In that, the infrastructure system of transport, storage, information technology (IT) and other technical infrastructures are fundamental factors and methods of organizing exploitation and management of technology to ensure operational linkage and increase efficiency for logistics service. Therefore, it is necessary to start from a rational development strategy to ensure consistency, sustainable development and higher efficiency of the logistics service system in each territory, each country and the world.

In addition to development of infrastructure system, innovation of management policies in the field of logistics is considered a fundamental solution to ensure the synchronous development of technical infrastructure, information technology and other support services in order to effectively connect and utilize resources for the sustainable development of the socio-economic system of the province and key economic zones of Central Vietnam and Central Highlands. This is a very complex task, requiring systematic research and integrated multidisciplinary and multi-sectoral planning, ensuring the coordination between and among domestic provinces and economic zones and connection to the international economy.

5. Enhancement of the role of State management

Recognizing the importance of logistics for Vietnam in the new period, the Prime Minister issued the Decision No. 169/QD-TTg on 22/01/2014 approving the project of developing logistics services in the field of transport of Vietnam to 2020 and towards 2030, then the Decision No. 318/QD-TTg dated 04/03/2014 approving the strategy for development of transport services to 2020 and towards 2030; then the Decision No. 1037/QD-TTg dated 24/6/2014 approving the adjustment of planning on development of Vietnam's seaport system to 2020 and towards 2030 (replacing the Decision No. 2190/QD-TTg dated 24/12/2009); then the Decision No. 2072/QD-TTg dated 22/12/2017 approving the revision of the master planning for development of shallow port system in Vietnam to 2020 and towards 2030; and then the Decision No. 200/QD-TTg dated 14/02/2017 approving the Action Plan to improve competitiveness and develop logistics services in Vietnam to 2025. Pursuant to the Decisions of the Prime Minister, the Ministry of Transport has issued Decision No. 1841/QD-BGTVT dated 26/6/2017 of the Minister of Transport promulgating the Plan to implement Decision No. 200/QD-TTg dated 14/02/2017 of the Prime Minister;

The Prime Minister issued Decision No. 1012/QD-TTg dated 3/7/2015 approving the planning for development of logistics center network in the whole country up to 2020 and towards 2030. The objective of this Planning is «to develop a network of logistics centers to meet the demands of both domestic goods production and circulation and import and export; to effectively exploit the market of logistics services in Vietnam...To strive to achieve the growth rate of logistics services at about 24 % -25 % per year by 2020, the proportion of contribution to GDP of the whole economy at 10 %, the rate of outsourced logistics services at about 40 %, to reduce logistics cost of the whole economy over GDP to about 20 %. By 2030, these indicators are 34 % — 35 % per year, 15 % — 65 % / year and 15 % — 17 % / year respectively. Therefore, in our opinion, besides the above issues that need addressing, there should be breakthroughs in terms of legal documents on customs, tax, etc.

6. Attraction of FDI and international cooperation

In 2014, Vietnam was officially opened for businesses, foreign logistics corporations to invest 100 % capital in Vietnam, enjoy preferential policies like domestic enterprises. In fact, foreign logistics service organizations are currently occupying this market in Vietnam. Meanwhile, the logistics service enterprises of our country are semi-professional, meeting only 1/4 of the actual demand. According to the general assessment, Vietnam has not had any business with sufficient material resources and skills to manage, organize and operate the entire logistics chain, albeit within the confines of serving goods circulation chain. In that sense, Vietnam has no real logistics centers that provide uniform and full-package logistics services for the goods distribution network in the country. The logistics infrastructure is generally poor, small-scaled, and unreasonably arranged Therefore, in the coming years, we believe that Quang Nam, together with other localities in Vietnam with strength for development of logistics services will receive a wave of investment from Western businesses landing in Vietnam in general and Quang Nam province in particular. Therefore, Quang Nam in particular, and Vietnam in general should step up studying and learning the experience of countries with developed logistics industry. Logistics has been growing rapidly and bringing great benefits to many developed countries such as Germany, the Netherlands, Sweden, Denmark, USA, Japan and Singapore.

7. Enhancement of regional connectivity

Together with Thua Thien Hue, Da Nang, Quang Ngai and Binh Dinh, Quang Nam province is strategically important in Central Vietnam with advantages in marine economy, tourism and industrial development. With an area of ​​10,438 km2, a population of 1.5 million people, and natural and historical conditions, Quang Nam province has a great advantage in terms of geographic location connecting the coastal provinces and cities for socio-economic development and international trade.

Currently in Vietnam, logistics services are developing mainly in the North and South, while in the Central Region — Central Highlands, it is still too insufficient compared with the demand of economic development. Da Nang, Quang Nam and Quang Ngai are strategically located in terms of economy of the Central Region and Central Highlands, positioned at the gateway to the East Sea of the East-West Economic Corridor, connecting the Central Region — Central Highlands with Laos, Cambodia, Northeastern Thailand and Myanmar...Therefore, the strategy for development of sea ports, including sea port services, especially logistics services, will be most prioritized in the economic development strategy of these three provinces. Recognizing their strategic importance, Da Nang and Quang Ngai have prepared themselves quite well for the development of logistics sector there. Specifically, the Chairman of Quang Ngai People's Committee has just issued the Decision No. 907/QD-UBND promulgating the plan to develop the province's logistics services to 2025. In Da Nang, the Department of Transport has developed the Scheme of «Master planning for development of logistics infrastructure in Da Nang city up to 2030 and towards 2050".

8. Attraction of labor and creation of jobs

We believe that Quang Nam in particular and Vietnam in general need to have policies to attract high quality logistics personnel and accelerate the training of logistics human resources for the Central key economic zone and first for the logistics centers, should soon build logistics training programs, and place logistics subjects in compulsory courses in undergraduate and postgraduate programs in economics, management and business administration in the universities of the Central key economic zone, for which on 6.4.2015, the Government Office issued Official Letter No. 2299/VPCP-KTTH on development of logistics service sector to ministries, including the Ministry of Education and Training, for them to consider the proposal. However, we believe that in order to avoid mass training that leads to the redundancy of logistics human resources in the next 10 years if there is no forecast from the researchers, the businesses and large logistics centers in Quang Nam in particular, and Vietnam in general and the State management agencies, specifically the Ministry of Education and Training (MOET) must be serious about licensing the opening of training and training logistics human resources.

3. Conclusion

The role of logistics in promoting local economy and the economy of the country can be seen clearly and therefore the State has clarified the role of State management by issuing documents from the central level namely the Prime Minister and the Ministry of Transport, along with localities including Quang Nam. However, that role is only reflected in laws. Therefore, planning, building and developing logistics centers in Vietnam in general and Quang Nam in particular is a very complex matter, requiring all levels, sectors and localities to mobilize resources to build logistics centers, as the global markets evolve with technological advances, especially when markets are opened in the underdeveloped and developed countries, the managers consider logistics a tool or a means to link different areas of business strategy. Logistics creates the usefulness of time and place for the operations of businesses. Therefore, logistics helps solve both the input and output for effective business, optimizing the process of moving materials, goods, services, etc. Logistics helps reduce costs, increase competitiveness for enterprises. Many enterprises have achieved great success thanks to the right logistics strategy and activities. Logistics will bring about economic benefits to the entire Quang Nam province in particular and Vietnam in general.

References:

1. Ngo Tuan Hung, building logistics center in Da Nang City, Da Nang Economic and Social Review.
2. http://www.baogiaothong.vn/dot-pha-phat-trien-cang-xanh-logistics-da-nang-d228843.html
3. Nguyen Manh Hung, Tran The Tuan, Da Nang — Development Of Green And Sustainable Logistics Center, Science and Education Development Trend Review (ISSN 2413- 0869), Perm, Russia
4. Nguyen Quoc Luat, Nguyen Thi Bich Ngoc; Logistics, a service that should be promoted in Vietnam, Research and Exchange Journal.
5. Ministry of Industry and Trade; Vietnam logistics report in 2017.
6. General report; Adjustment of the master planning for development of Da Nang's industry up to 2020 and towards 2030.