Joint logistics development – Drivers of economic growth in the Southeast region of Vietnam

Summary: Through an overview and analysis of recent related studies, we clarify the role, importance and significance of logistics development in the economic growth of the Southeast region of Vietnam.

The results show that the Southeast is a region with a lot of potential for logistics development, but there are many “bottlenecks”, notably infrastructure, an important issue affecting logistics activities. The Southeast needs many policies to overcome these “bottlenecks” to develop stronger logistics.

Key word: Linkage, logistics development, growth, economy, Southeast region.

1. Introduction

Logistics is one of the fields with high growth rates in the world. The strong development of Logistics comes from the role this industry plays in the economic development of each country. It can be said that logistics is the key to economic growth of any business or country. It helps production and trade activities become convenient and economical. At the same time, it is a decisive factor in the competitiveness of businesses with each other.

The Southeast is an important economic driving region of the country, contributing about 40% of GDP and about 50% of the total industrial production value, export turnover and the national budget. As an area with important logistics infrastructure, the Southeast region currently has nearly 18,000 businesses registered to operate in the logistics field, accounting for 46% of the 39,000 logistics businesses and responsible for 45% of the total volume of goods as well as like more than 60% of the country’s container cargo volume (General Statistics Office).

Resolution No. 24 of 2022 of the Politburo on “Socio-economic development and ensuring national defense and security in the Southeast region to 2030, with a vision to 2045” has identified the Southeast region’s goal as dynamic development region, with high economic growth rate, the largest growth driving force in the country; center of science, technology and innovation, high-tech industry, logistics and highly competitive international financial center. In particular, the Southeast Regional Coordination Council has just been established to perfect the institutions and coordination mechanisms for regional development. (Resolution No. 24 of 2022 of the Politburo) One of the Council’s key tasks is clearly stated as “coordinating in the fields of urban areas, logistics, and high-quality services including financial centers, regional logistics centers, science and technology, innovation and digital transformation”.

2. Overview of the economy of the Southeast region of Vietnam

2.1. General introduction to the Southeast region

The Southeast is a new land in the country’s development history, an area with many urban areas located between the South Central provinces and the South Central Highlands, which are rich in land, forest and mineral resources. The West and South-West borders the Mekong Delta, which has great agricultural potential and is the largest rice granary in the country; The East and Southeast border the East Sea, rich in seafood, oil and gas resources and convenient for building seaports, creating economic and trade links with regional and international countries; In the Northwest, bordering Cambodia, there is Moc Bai border gate in Tay Ninh province, creating extensive exchanges with Cambodia, Thailand, Laos, and Myanmar. With this location, the Southeast is an important exchange hub of the southern provinces with the whole country and the world.

2.2. Economy of the Southeast region

The Southeast includes 4 provinces and cities: Ho Chi Minh City, Dong Nai, Binh Duong, Ba Ria – Vung Tau, which is determined to become the southern driving force region and Ho Chi Minh City is the growth pole.

* Contributing 32% of the country’s GDP
The Southeast region has long been identified as the leading economic region and driving force of the whole country. This is a region with wide, diverse terrain, favorable for agricultural, industrial and urban development, construction of traffic systems.
The provinces and cities in the region are linked and adjacent to many other regions such as: the North borders the South Central Coast and the South Central Highlands, which are areas rich in resources and minerals; The West and South-West border the Mekong Delta, where the country has the greatest agricultural potential; The East and Southeast border the East Sea, rich in potential for marine economic development, especially seafood, oil and gas resources, as well as conveniently connected to the most important and busiest international sea route. world, connecting the Pacific Ocean with the Indian Ocean; The Northwest is adjacent to Cambodia, with Moc Bai and Xa Mat border gates (Tay Ninh province), facilitating exchanges and cooperation with Cambodia, Thailand, Laos, and Myanmar along the trans-Asia land route.

With outstanding potentials and advantages, in recent years, the Southeast region has achieved many important achievements in the process of socio-economic development.

In 2020, the scale of gross regional product (GRDP) of the Southeast region increased 4.9 times compared to 2005 and 2.6 times compared to 2010, exceeding the set target. The Southeast region has contributed 32% of the country’s GDP and 44.7% of total state budget revenue. The average income per capita in 2020 is the highest in the country. (General Statistics Office)

The region’s economic structure is shifting towards modernity, with the proportion of processing and manufacturing industries increasing rapidly; The proportion of the service sector exceeds the set target; the service sector’s growth rate is the highest in the country.

Resolution No. 24-NQ/TW dated October 7, 2022 of the Politburo on the direction of socio-economic development and ensuring national defense and security in the Southeast region until 2030, with a vision to 2045, confirming clearly defined the goal that by 2030, the Southeast region will become a dynamic development region, with high economic growth rate, the largest growth driver in the country.

* Developing infrastructure and connected urban areas
At the end of 2022, the Government issued an action program to implement Resolution 24 of the Politburo on socio-economic development and ensuring national defense and security in the Southeast region until 2030, with a vision to 2022. 2045 aims to unify the direction of all levels and sectors to thoroughly organize and implement it drastically and effectively, creating a clear change in the awareness and actions of officials, civil servants and public employees of ministries, central and local agencies in the Southeast region. In particular, infrastructure and urban development is considered a highlight that creates development momentum for the Southeast region.

The Southeast region plays an important role in the country’s socio-economic development; is the economic engine, industrial center, seaport, aviation and logistics center of the country with the driving force area of Ho Chi Minh City – Binh Duong – Dong Nai – Ba Ria Vung Tau region; At the same time, it is a dynamic economic region, an important transportation hub with all 5 modes of transportation: road, rail, waterway, aviation and pipeline, playing an important connecting role in trade both nationally and internationally.

However, the forecast for transport demand far exceeds the response capacity of the transport infrastructure system, there are still many limitations, and development is not commensurate with the potential and advantages of the region, especially the region. Inter-regional transportation infrastructure is lacking, weak, and not synchronized.

Therefore, in the road network planning for the period 2021-2030, with a vision to 2050 approved by the Prime Minister, the expressway system connects the region with Ho Chi Minh City and the international airport. Long Thanh, international border gate, and Cai Mep – Thi Vai international seaport receive special attention. Currently, the Ministry of Transport has completed and submitted to the Prime Minister for approval 4/5 national sector plans. This will be a good opportunity to integrate into regional planning and planning of provinces and cities in the region, contributing to the formation of a complete and synchronous transportation system, creating a premise and driving force to maintain its position as the economic driving force center of the country.

In particular, according to the road network planning, the Southeast region will form a North-South expressway in the East and West, expressways connecting Ho Chi Minh City with important gateways and traffic hubs. ring roads in Ho Chi Minh City area.

Along with 20 national highways with a length of about 1,743km, it will take care of transporting passengers and goods for inter-regional connection. The Ministry of Transport estimates that the total investment capital need for expressways connecting the Southeast region is about 413 trillion VND.

With the position of the most dynamic economic development region in the country, the Southeast region is also the region with the most developed urban system, in which Ho Chi Minh City plays the role of the central urban area, the largest urban area in the regionand of the whole country.

Minister of Construction Nguyen Thanh Nghi said that according to statistics, the current population of the entire Southeast region is about 18.3 million people, accounting for 22% of the country’s population; Of which there are 14.9 million people in urban areas, reaching an urbanization rate of more than 67%, the highest among socio-economic regions of the country and much higher than the average urbanization rate nationwide in 2022 is 41%.

Although many achievements have been achieved, the urban development process of the Southeast region is also facing many difficulties and challenges that limit the potential, strengths and urban development.

As the most developed economic region in the country, the Southeast, especially the region’s large urban areas, attracts a large number of people to do business and live, so it has a rapid mechanical population growth rate and high density. large urban population. This has created great pressure on technical infrastructure and on solving problems of housing, health care, education, and social security.

2.3. Advantages and disadvantages of the Southeast region

2.3.1. Advantages and disadvantages of natural conditions and natural resources in the Southeast

– Advantages of natural conditions and natural resources in the Southeast region
To talk about the natural conditions and natural resources of the Southeast region, it can be affirmed that the Southeast is the region with the best natural conditions and natural resources for rapid economic development. From terrain, land, climate, rivers, forests, seas or other mineral resources.

First are the advantages shown in the terrain of the Southeast region. The terrain of the Southeast has low hills and mountains, gentle surfaces, and the altitude gradually decreases from northwest to east. The terrain of the Southeast is mainly semi-plains, midlands and low mountains below 1000, and the terrain gradually lowers from Tay Ninh to the East Sea. With such a low terrain and gentle surface, it is very convenient for construction.

The second characteristic is about land. The land in the Southeast region is mainly gray soil, basalt soil suitable for growing crops such as tobacco, tea, coffee, cocoa.

Climate of the Southeast: Because it is located in the south of Vietnam, the Southeast region borders the equator, has an equatorial sub-monsoon climate, hot and humid all year round. Therefore, it is very suitable for growing crops in all four seasons.

Rivers: In the Southeast region, Dong Nai River is a fairly large river, where river tourism and freshwater aquaculture can be developed. Besides, it also provides a large source of water for production and daily life for people here.

Forest resources: The Southeast region is often known for Can Giao biosphere reserve in Ho Chi Minh City or Cat Tien National Park in Dong Nai. Although the forest area here is not large, it is also a condition for developing eco-tourism or having a source of wood to supply to the papermaking industrial park.

Marine resources: A major economic strength of our country is that many provinces and cities border the sea, so the potential for marine economic development has also developed strongly since then. The Southeast is a coastal region, so it has a lot of seafood and large fishing grounds. The Southeast is close to the fishing grounds of Ninh Thuan, Binh Thuan and Ba Ria Vung Tau provinces and the fishing grounds of Ca Mau and Kien Giang provinces. Such bordering the sea helps the Southeast have conditions to develop seaports and marine tourism to exchange with countries in the East Sea region.

Mineral resources: Mineral resources of the Southeast region such as oil and gas on the continental shelf, clay, kaolin.

– Difficulties in natural conditions and natural resources of the Southeast region:
The terrain of the Southeast region is strongly divided by the river system. Although the terrain is quite flat, it is divided, which is also a factor that makes economic development planning difficult. Besides, due to the low terrain, the land here is often contaminated with salinity and alum. So this place needs to be washed with salt every year.

Another difficulty with the natural resources of the Southeast region is that the amount of land here is quite small. Forests account for a small proportion. The climate has two distinct seasons, the rainy season and the dry season, causing difficulties in people’s daily life and production.

2.3.2. Advantages and disadvantages of socio-economic conditions of the Southeast
The socio-economic advantages of the population of the Southeast region are as follows:

The Southeast is a region known to have a large population, and the population density here is quite high. According to 2021 statistical data from the General Statistics Office of Vietnam, the total population of the Southeast region is 18,719,266 people, the area is 23,560.6 km 2, from which the average population density here is 795. people/km 2, accounting for 19.1% of the country’s population. (General Statistics Office) With such a large population, the Southeast region has a fairly abundant labor source. With such a labor source, this is a market to attract large investors. The commodity market also follows that and becomes more developed.

In addition to a large population and a large and dynamic market, this place also has the most developed transportation and communication infrastructure. Due to the economic development, the demand as well as the ability to pay for services here are also higher than in other areas of the country.

The economy here develops in industry, agriculture and tourism. In industry, a number of industries are developed here such as oil and gas, electricity, electronics, light industry, consumer goods production. Large industrial centers are in Ho Chi Minh City, Bien Hoa, Vung Tau accounts for up to 50% of industrial production value in the entire region and a high proportion in the whole country. Agriculture, the development of perennial crops, livestock and poultry raising or aquaculture is also quite developed because there are many favorable conditions in terms of natural food sources and climate. For tourism, the Southeast region develops eco-tourism and marine tourism.

In recent years, the Southeast has always been active in building its economic development. Improve infrastructure and transportation in the best way, services are increasingly perfect to meet the increasing needs of the people. Actively innovate thinking and vision, further promote dynamism and creativity in directing and managing local economic development. Mobilize maximum resources for regional economic development, in which internal resources are determined to be fundamental, long-term strategies are decisive, and harmoniously combine factors together for economic development.

The development vision to 2045 is that the Southeast will become a developed region, with strong economic potential and modern economic structure; center of science – technology and innovation, industry, high technology, logictics and international financial center belonging to the regional and world investment group; modern and synchronous infrastructure. Harmonious development between economy, culture, society, environmental protection and ensuring national defense and security; have a high quality of life, and have the highest level of health and education in the Southeast Asian group.

Besides the great socio-economic advantages as well as the development directions of the Southeast region mentioned above, this place also has many potential difficulties. Sometimes the advantages always come with difficulties.

The first difficulty that can be seen is that the population density is quite high. Besides providing large human resources, the fact that workers from other places come here will put pressure on the economy of the Eastern region. In the Southern region, the job creation mechanism needs to be paid attention to and implemented quickly. High population density also makes it difficult to solve problems related to housing, health care, education from which it is also under great pressure. Rapid economic development also leads to the risk of rich-poor differentiation and a large gap in living standards.

The large population concentration also raises huge questions about how to treat people’s household waste in a way that minimizes environmental pollution. With high population density, the amount of waste here will be large. There is a lot of waste in industrial zones and household waste, so the risk of environmental pollution also increases. This is one of the issues that relevant authorities need to find solutions as quickly and effectively as possible.

Thus, it can be concluded that the Southeast is a region with a fairly developed economy, but in parallel with that development, the Southeast region also has difficulties in natural conditions as socioeconomic conditions. Advantages will always come with limitations.

3. Linking logistics development in the Southeast – Driving force for economic growth

3.1. Current status of logistics development in the Southeast

Currently, the Southeast region has about 14,800 businesses providing logistics services, accounting for nearly 50% of the total number of logistics businesses in the country. This is a very high proportion, mainly concentrated in the city. Ho Chi Minh with more than 11,000 businesses, Binh Duong with nearly 1,700 businesses and Dong Nai with more than 1,200 businesses. The region is responsible for 45% of the total cargo volume and more than 60% of the country’s container volume through the Cat Lai, Cai Mep – Thi Vai port system.

However, the Southeast currently has many bottlenecks, notably infrastructure which has a significant impact on logistics activities.

Road transport infrastructure does not meet demand because of small, narrow roads and limited load capacity (especially for container and construction goods); Too many intersections cause congestion and traffic conflicts.

While road traffic does not meet the appropriate load capacity for goods trade, connecting ports with industrial parks, factories, and warehouses, multimodal transport is not effective because of the lack of connection between railways, road, air and inland waterway. Investment in these methods is not consistent, often inconsistent and lacks unity in terms of goals and implementation time plans.

The entire region currently only has the Ho Chi Minh City – Long Thanh – Dau Giay expressway. Projects planning ring roads and connecting traffic axes are being slowly implemented.

Regarding waterways, the region has six inland routes, however, many river-crossing bridges on the main routes do not ensure clearance and clearance for boats (Binh Trieu bridge, Binh Phuoc bridge).

For Ho Chi Minh City, the belt routes connecting the Southeast and Southwest provinces have not been invested properly, negatively affecting two-way traffic and goods transportation.

The road system, especially the belt system 2, ring 3, ring 4, is not complete; Frequently congested road routes to Cat Lai port and Truong Tho ICD. (General Statistics Office)

3.2. Solutions for logistics development in the Southeast region

In order to increase the competitiveness of the logistics industry, localities in the Southeast region focus on stable, long-term overall planning as well as synchronous implementation of solutions; In particular, special attention should be paid to developing green logistics and increasing regional connectivity.

3.2.1. Developing green logistics
State agencies need to continue to perfect a uniform legal framework for green logistics activities in the region, avoiding overlap between ministries and branches, especially regulations on air pollution control and regulation. exhaust gas emissions, limit the amount of CO2 gas from transport vehicles to limit the types of vehicles on the road, and promote businesses to choose vehicles that meet emission and noise standards.

In addition, a series of other regulations and policies such as regulations on degrees and mandatory training certificates for vehicle drivers on energy saving, safety and greening the environment; policies regulating green packaging and green waste for manufacturing and warehouse businesses. Without regulations on environmental pollution control, it will be difficult for businesses to voluntarily deploy green logistics, because businesses often prioritize measures to optimize revenue sources for businesses. than environmentally friendly options.

The state needs to have preferential and appropriate policies to encourage and promote businesses in the region towards developing green logistics, especially small and medium enterprises. Support to raise awareness for logistics businesses about safety and the importance of business operations minimizing impact on the environment; Apply tax and legal mechanisms to create incentives and reduce costs for businesses such as encouraging the use of alternative energy sources in road transport; Encourage changes in transportation methods according to the multimodal transportation model, control greenhouse gas emissions, including raising awareness in reverse logistics services for waste treatment management.

3.2.2. Regional links
Resolution No. 24-NQ/T.T of the Politburo on socio-economic development, ensuring national defense and security in the Southeast region to 2030 and vision to 2045 clearly states strong development, set of national and international logistics systems associated with seaports, airports, international border gates, key economic corridors and inter-regional trade routes in Ho Chi Minh City, Binh Duong, Dong Nai , Ba Ria – Vung Tau, Tay Ninh.

Along with that, focus on building an aviation logistics center associated with Long Thanh international airport, investing in developing port logistics systems and international transshipment ports in Ba Ria – Vung Tau province and Ho Chi Minh City. Forming an international exhibition center in Ho Chi Minh City.

Forming industrial, urban, service and logistics belts along the Belt 3 and Belt 4 corridors and the region’s expressways. Developing the industrial – urban chain of Moc Bai – Ho Chi Minh City – Cai Mep – Thi Vai Port associated with the Trans-Asia economic corridor. Developing large-scale industrial – service – urban complexes in Phu My new city, Long Thanh international gateway airport city and Binh Duong industrial – urban – service complex.

The Ministry of Transport has just issued a plan to develop transport in a modern and synchronous direction, reduce costs and ensure national defense and security in the Southeast region until 2030, with a vision to 2045.

Accordingly, the national and international logistics system will be developed in association with seaports, airports, international border gates, key economic corridors and inter-regional trade routes. The Ministry will coordinate and support relevant localities to invest in building an aviation logistics center associated with Long Thanh international airport, and invest in developing port logistics systems in Ba Ria – Vung Tau and Ho Chi Minh City, especially the key deep-water seaport in the Cai Mep – Thi Vai area.

The Southern key economic region with natural advantages has quickly developed logistics activities in key localities such as Ho Chi Minh City, Ba Ria – Vung Tau, Dong Nai, Binh Duong. Therefore, regional linkages need to be clearly recognized by localities in development policies, especially sustainability. Regional integration policies need to respect and promote the potential and comparative advantages of each locality as well as resolve conflicts of interest, not only for the benefit of each locality but also for the common benefit of the region. of the country.

Regional linkages in addition to solving the region’s biggest obstacle in terms of transport infrastructure also support policies, resources, logistics demand and human resources. Specifically, regional integration promotes the development of synchronous and reasonable logistics policies; effectively exploit and synthesize resources for logistics development; Strengthening logistics demand thanks to continuously expanding potential partners; Arranging logistics infrastructure between localities into a synchronized system; Transferring quality labor resources between localities reduces training and employment pressures.

As a key economic center in the South, Ho Chi Minh City strives for the growth rate of logistics service revenue of businesses to reach 15% by 2025 and 20% by 2030, the proportion contributing of logistics into the city’s GRDP by 2025 will reach 10% and by 2030 will reach 12%, contributing to reducing the country’s logistics costs compared to national GDP by 2025 to about 10-15%.

To achieve this goal, the City established a system of logistics service centers in Thu Duc city and Binh Chanh, Cu Chi, and Nha Be districts. At the same time, based on the needs of production, circulation of goods in the region and import and export, and on the basis of reviewing land funds, 7 locations for establishing logistics center systems are identified, including Long Binh, Cat Lai, Linh Trung, high-tech park in Thu Duc city, Tan Kien (Binh Chanh district), Hiep Phuoc port (Nha Be district) and Cu Chi district with a total area of more than 620 hectares. The total capital need to develop the logistics industry in this period is nearly VND 96,000 billion. From there, turning logistics into a key service industry, helping the city enhance its role as a focal point for domestic goods exchange and connection with international markets.

Regarding connection with other localities, the People’s Committee of Ho Chi Minh City determined to complete the transportation system connecting the region, especially focusing on completing the closed Ring Road 2, starting construction of the Ring Road system. 3 and 4, Metro lines 1, 2, Cat Lai bridge, Thu Thiem bridge to connect traffic smoothly within the inner city as well as between the city and neighboring localities.
Implementing the Ho Chi Minh City – Moc Bai (Tay Ninh) expressway construction investment project, accelerating the progress of starting this expressway to develop border trade economy and develop domestic tourism. Expanding National Highway 13, National Highway 22, National Highway 50, and roads connecting provinces.

For Ba Ria – Vung Tau, the province has nearly 70 planned ports, currently there are 50 projects in operation with a total design capacity of more than 150 million tons/year. Among them, there are 8 container ports with a capacity of over 8 million TEU/year. Cai Mep – Thi Vai port cluster is the main port cluster of Ba Ria – Vung Tau seaport, currently has 24 projects in operation with a total design capacity of nearly 130 million tons/year, with the potential to be an important gateway. not only of Vietnam but also of Southeast Asia.

Logistics services in the province are quite diverse, from transportation, warehousing and other support services. Ba Ria – Vung Tau is focusing on investing in infrastructure for inter-port and inter-regional traffic.

Specifically, the province focuses on implementing projects such as road 991B, Phuc An bridge, Bien Hoa – Vung Tau expressway, Long Son – Cai Mep road, Phuc Hoa – Cai Mep road, My Xuan port road after Thi Vai; accelerate the construction progress of the railway connecting the port with the distribution center in Cai Mep; Promote the development of inland waterway port projects. The province will also consider having a plan to soon dredge and upgrade the entire canal according to planning to ensure a safe depth for large ships entering and exiting the port; At the same time, strengthen procedural reform to facilitate import and export activities at the port.

The Ministry of Transport is developing and submitting to the Government a plan to improve international rail transport capacity with 8 station areas; Song Than station is planned to become a key freight station in the South. Specifically, two railway lines will be formed: Song Than – Dong Dang; Song Than – Lao Cai. From here, rail goods from Binh Duong will connect with China and countries on the Asia-Europe railway transport route.

Song Than Station has the advantage of having been granted an intermodal code. Binh Duong’s early completion of space and security requirements will further promote the station’s international intermodal effectiveness. In particular, completing import and export procedures at the station will create great favorable conditions for import and export businesses.

4. Conclusion

Logistics is the basis of economic activities of production, business and distribution to closely connect them with each other. If these activities go smoothly, it will encourage the development of the manufacturing industry, and if they stop, they will restrict trade between regions and countries, having a negative impact on production as a whole life. Therefore, when the efficiency of logistics activities in the economy is affected. A partially improved economy will improve the efficiency of the social economy.
From the assessments and analyzes of experts, it can be seen that logistics development has great significance in the economic growth of the Southeast region.

The Southeast region needs to continue to research and propose synchronous, strong and feasible policy mechanisms to diversify investment forms to promote socio-economic infrastructure development, especially into new financial institutions worthy of the ASEAN region in Ho Chi Minh City; Developing transportation infrastructure and logistics center infrastructure, ensuring connectivity to maximize the region’s comparative advantages; At the same time, proactively creating clean land funds and synchronous infrastructure in industrial zones and clusters to attract large, experienced, reputable companies and economic groups with financial, technological and administrative capabilities, has the ability to participate in the global production and supply chain and invest in stable, long-term production and business, contributing to making the Southeast region truly become a center of industrial and high-tech development of logistics service center of the country, region and world.

Image credit: Mike Swigunski