Investment & Finance

Vietnam-Singapore launch first joint multimodal Logistics Hub

Saigon Investment
(Saigon Investment) - The Prime Ministers of Vietnam and Singapore together launched the first project in Vietnam under the ASEAN Smart Logistics Network. The project has joint investment from Singapore’s largest logistics firm YCH Group and the Vietnamese conglomerate T&T Group for the setting up of the Vinh Phuc ICD Logistics Center, northwest of Hanoi.

Ms. Hoang Thi Thuy Lan, secretary of People’s Committee of Vinh Phuc Province, handing project to Vinh Phuc ICD Logistics Center representative, Mr. Do Quang Hien.

Ms. Hoang Thi Thuy Lan, secretary of People’s Committee of Vinh Phuc Province, handing project to Vinh Phuc ICD Logistics Center representative, Mr. Do Quang Hien.

Smart infrastructure

This is the first project of its kind that will serve as a multimodal logistics platform based on smart logistics infrastructure that will support the overall connectivity over all ASEAN countries by 2025. The project is a multimodal transportation plan that will connect railways, roads, air and sea links; improve supply chain efficiency in terms of speed and reliability in each country in the region; and subsequently reduce supply chain costs for every member ASEAN country. This idea was first muted in 2018 by Dr. Robert Yap, Executive Chairman of the YCH Group that represents Singapore on the ASEAN BAC Council.

The first project for ASEAN Smart Logistics Network will be officially launched by the Vinh Phuc ICD Logistics Center. This will be a multimodal project integrating an inland port using the most advanced technology in Asia, at a total investment of about VND 3,800 bn, and covering an area of 83 hectares. With this launch, Vietnam will be placed in a coordinating role and will help in connecting, expanding and deepening the relations between all ASEAN and strategic partners such as China, USA, Russia, Japan, South Korea, the European Union (EU), Australia and India.

While addressing the launch event during the 37th ASEAN Summit week, Vietnamese Prime Minister Nguyen Xuan Phuc said that this is a meaningful project and a manifestation of a cohesive and responsive ASEAN demonstrating proactive thinking and creativity. Singapore Prime Minister Ly Hien Long said that this vital logistics project in Vietnam is ahead of the trend of the Industrial Revolution 4.0, and this pioneering project will help strengthen regional supply chains, support ASEAN economic integration efforts, as well as initiatives in the ASEAN Connectivity Master Plan.

Improved competitiveness

According to the Vietnam Logistics Business Association (VLA), the logistics industry in Vietnam in recent years has seen growth rate of around 14% to 16%, valued at USD 20 bn to USD 22 bn per year, accounting for 9% of the country's GDP. Although Vietnam is located in the center of the Asia-Pacific region with easier sea and air connectivity, Vietnam's logistics services have been developing very slowly, leading to very high domestic production costs, which then reduce foreign investment, and also competitiveness of domestically produced goods. In 2019, the logistics industry contributed only 4% to 5% towards the GDP. Logistics operations in Vietnam currently lack the connectivity throughout to provide integrated logistics services, as not many enterprises apply highly integrated solutions.

Vinh Phuc ICD Logistics will pave the way for a breakthrough in the logistics industry in Vietnam with its first project for the ASEAN Smart Logistics Network.
The World Bank (WB) in Vietnam also pointed out that logistics costs in proportion to GDP in Vietnam are around 18% to 20%, nearly double that of developed economies and 4% higher than the global average, and nearly three times higher than countries like the US or Singapore. In addition, the cost of logistics in Vietnam still account for a high proportion in business cost structure. Transporting a container from Hai Phong port to Hanoi or the other way round, covering about 100 km, is three times more expensive than the cost of transporting a container from China or South Korea to Vietnam.

During a visit with Prime Minister Nguyen Xuan Phuc to Singapore in April 2018, Mr. Do Quang Hien visited the Supply Chain Company of the YCH Group, which is considered a miniature Silicon Valley for logistics and an important supply chain of Singapore. Since that visit, the T&T Group and YCH Group have been cooperating to invest and develop the Vinh Phuc ICD Logistics Center.

Sharing on the project, Mr. Do Quang Hien said that the Vinh Phuc ICD Logistics Center project has four main pillars: connectivity, sustainability, speed and scalability. These four main pillars rest on five main goals: building of a sustainable infrastructure, smooth logistics under international standards, reduced costs for businesses, increased competitiveness of the supply chain, and training of excellent human resources.

Using the advantages of location, better connecting infrastructure and the application of 4.0 technology, the Vinh Phuc ICD Logistics Center will set out to remove bottlenecks in shipping, optimize costs, improve the supply value chain of goods, increase competitiveness of businesses, and at the same time create a connection hub for circulation of goods between Vietnam, ASEAN, China and the rest of the world.

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