Investment in logistics infrastructure - key to success in Hai Phong

As a big city with large sea and islands, Hai Phong locates in the maritime strategy of the whole country with 126 km of coastline and more than 4,000 km2 of sea surface area, Hai Phong is the largest port city in the North of Vietnam, an important traffic hub and main door to the sea of ​​the Northern provinces, converging conditions to become a logistics service center. Hai Phong's logistics infrastructure system has high connectivity between modes of transportation: road, rail, maritime, sea and air, making it convenient to connect multimodal transportation. Recognizing the location, potential, and strengths of Hai Phong city, the central government and the city have focused on investing in infrastructure development, especially traffic infrastructure to promote logistics services in the city:

1. Regarding seaport infrastructure: New construction upgrade of seaport infrastructure in a synchronous and modern direction, suitable with the development trend of regional and international shipping. Complete and put into operation terminals No. 1 and No. 2at Hai Phong international gateway port. The Prime Minister has also approved the policy of project building container terminals No 3, 4, 5 and 6 in the Lach Huyen Port area. Currently, the city's seaport system consists of 5 terminal areas, 98 kinds of wharves with a total length of more than 14km and 8 main fairways, basically meeting the reception of large ships at Hai Phong Port.
2. Road traffic system: Basically meeting the connection of seaports with industrial parks, service zones, land port system, connecting with Northern provinces, cities, two corridors, one belt. In particular, in the past 5 years, many large projects located on national highways and main routes have been invested and built, effectively served the transportation through Dinh Vu and Lach Huyen ports, such as: Hanoi - Hai Phong Expressway, Tan Vu - Lach Huyen Highway and Bridge, renovating and upgrading National Highway 10, Hai Phong - Ha Long highway, trunk roads of Dinh Vu Industrial Park, grade separation intersections on Nguyen Binh Khiem street, city highway... At the same time, Hai Phong focuses on investing in a transportation infrastructure system connecting with Quang Ninh, Hai Duong and Thai Binh.
3. Aviation infrastructure: Cat Bi Airport was invested, built and upgraded to a level 4E international airport, ensuring the operation of B747 aircraft and the airport has enough 10 parking spaces for A321 aircraft in rush hour, the terminal has a capacity of 4-5 million passengers per year. Currently, Cat Bi International Airport is operating 15 routes, including 4 international routes with the participation of 6 airlines. Cat Bi International Airport has been continuing to invest, preparing to start the construction of passenger terminal 2, upgrading the cargo terminal, and building new runways, waiting yards and other items.
4. The system of warehouses and yards serving logistics services in the city is distributed centrally along the Cam River area (the area of ​​Hoang Dieu port, Chua Ve port, Dinh Vu port...). The total area of ​​warehouses and yards reaches more than 700 hectares with more than 60 main warehouses including warehouse systems at seaports; bonded warehouses; warehouse systems at container freight stations, centralized inspection locations, common and cold storage systems.
5. Resources for logistics infrastructure investment:

Total investment capital in the area in the period 2016-2020 reached 562,309 billion VND, nearly 3 times higher than the period 2011-2015 (188,356 billion VND). In which, the investment capital in the transportation and warehousing industry reached 133,550 billion VND, accounting for 23.75% of the total investment capital of the whole city, with an average growth rate of 20.03%/year.

Accounting to December 31, 2020, the city has 28 foreign direct investment projects (FDI) projects in the field of transportation services, warehousing, and logistics with a total registered capital of 116.1 million USD, in which some big prominent projects of C.Steinweg Hai Phong Co., Ltd (40 million USD), Sembcorp Hai Phong Infrastructure Services Co., Ltd (20.7 million USD), SITC Dinh Vu Logistics Co., Ltd. (20 million USD), SLP Park Hai Phong 2 Project (17.26 million USD), Project 19 - BW Dinh Vu Logistics Industry Development Co., Ltd (15.3 million USD).

1. General assessment

Thanks to the attention and focus investment in logistics infrastructure, the growth rate of logistics services in particular and the economic growth rate of Hai Phong city in general has always remained at a high level, contributing to turning Hai Phong into a major maritime service and shipping center of the country. The quantity of cargo through Hai Phong seaport system in 2020 reached 142.8 million tons, the average growth rate in the period 2016-2020 reached 15.9%/year, exceeding the forecasts, accounting for increasing market share in the seaport system of the group and the whole country. Total revenue of seaport services is estimated at over 55,000 billion VND, the average growth in the period 2016-2012 is 20.5-23%/year, logistics services have a growth rate of about 20% - 23% /year, the contribution proportion to GRDP of the city is from 13% - 15%.

However, it is necessary to recognize the limitations in logistics service development and logistics infrastructure investment:

1. The proportion of transport modes has not developed synchronously. The transportation system connecting goods through seaports is highly dependent on roads, which not only creates flexibility, does not take full advantage of other modes of transport but also creates the high risk.

- Although the road transport infrastructure system is invested, it is often overloaded, is not commensurate with the seaport infrastructure and does not keep up with the increase in good quantity through the port.

According to statistics, the volume of goods transported by road in 2020 accounted for 78.7% of the total volume of goods transported in the city and has been continuously increased over the years: in 2015 accounted for 69.9%, in 2018 accounted for 74% and in 2020 accounted for 78.7%.

At the same time, the roads connecting seaports are unique, have not yet formed parallel routes, increased logistics costs, caused many potential risks when have incidents, traffic accidents or traffic jams. …

- Other modes of transport have not been paid attention and investment to promote their potentials and advantages:

Currently, only the railway connecting to Hai Phong port is operating to deliver goods from the port (Vat Cach, Hoang Dieu, Chua Ve) but the operation is not efficient due to the highway intersection and go through the city center (only handling ~1% of goods through the port). The railway system is old, outdated, does not meet technical standards, currently does not connect to the newly invested main areas such as Dinh Vu port, there has not had a specific connecting plan to the Hai Phong international gateway port.

Inland waterways account for 5% of the market share, while the connection routes are limited (statically without Duong Bridge), the main ports lack of the capacity to handle containers (Phu Dong, Viet Tri...), Hai Phong seaport areas also lack of specialized wharves to receiving inland waterways.

+ The wharf systems are mostly scattered on the banks of Cam and Bach Dang rivers. There are many small-scale, fragmented, inadequate wharves, interwoven with residential areas, and unreasonable functional zoning.

2. The city does not have its own mechanisms and policies to support investment and logistics development.

III. Some suggestions and solutions

Resolution No. 45-NQ/TW dated January 24, 2019 of the Politburo on the construction and development of Hai Phong city to 2030, with a vision to 2045 identified the goal of building and developing Hai Phong becoming a "logistics service center", by 2025 "a marine economic center of the country, a national logistics service center", by 2030 "a modern international logistics service center by sea, by air, by highway, by high-speed railway”. In order to achieve the above goal, overcome the shortcomings and limitations in logistics development, the Department of Planning and Investment has been advising the City to implement the following tasks and solutions:

1. Firstly, research and propose mechanisms and high feasibility policies, creating a favorable investment and business environment with high competitiveness, mobilizing and using effectively invested resources from all economic sectors to develop seaport services and Hai Phong logistics services.

Recently, the city has coordinated with the Ministry of Planning and Investment to complete the pilot project of a number of specific mechanisms and policies to develop Hai Phong city and submit to the Government and the National Assembly Standing Committee, the National Assembly consider and issue the Resolution at the National Assembly’s 2^nd session. Accordingly, one of the specific mechanisms and policies proposed related to the research and implementation organization of a free - trade zone in Hai Phong city, based on the assessment and analysis of management models as well as mechanisms and policies being applied successfully in free - trade zones in the world, which is suitable with the requirements of socio-economic development in the coming time. A free - trade zone is an area with a defined geographical boundary, established by decision of the National Assembly, applied special mechanisms and policies, with a management model organized in accordance with the characteristics, requirements and development goals of the Free Trade Zone. The Free Trade Zone is organized into functional zones, in accordance with the characteristics, requirements and development goals of the Free Trade Zone.

Through research on international experience, the Free Trade Zone is a common economic organization form in the world. A pilot study to construct a Free Trade Zone in Hai Phong city is necessary in the construction of a Free Trade Zone in Vietnam because Hai Phong city meets two prerequisites, which are:

(1) Strategic geo-economic and political position (an international seaport, an important traffic hub of the whole country, easy connection with the region and the world).

(2) Having a solid "industrial rear" with great potential, including Industrial Parks and Dinh Vu - Cat Hai Economic Zone. In the period 2016-2020, Hai Phong city has made a breakthrough development, especially in the development of the electrical - electronic components manufacturing industry...

The successful construction pilot study of the Free Trade Zone model will keep up with the development models of other countries in the world and at the same time encourage, attract investment in economic development in general and logistic development in particular.

2. Secondly, the planning work:

- Completing the Hai Phong City Master Llan for the period of 2021-3030, vision to 2050, submitting it to the Prime Minister for approval in accordance with the Planning Law and related documents, as a basis for promotion and attraction investment.

- Coordinating with the Department of Transport to advise the City, report to the Ministry of Transport: urgently approve the adjustment of Lach Huyen port detailed plan for the period to 2020, with orientation to 2030, in which, 03 general ports and container terminals of Sun group and Deep C will be added, adjusting the length from 750m to 900m with wharves No. 5, 6. Review the development plan of warehouses and inland ports system in the area.

3. Thirdly, propose and advise on building investment a connecting traffic network and multimodal transportation:

- Advising and proposing construction investment of Ring Road 2, Ring Road 3 in order to strengthen the capacity of road transport infrastructure connecting seaports and industrial zones, improve the capacity of good transportation.

- Focusing investment capital for the external transport infrastructure system, connecting to Quang Ninh, Hai Duong and Thai Binh, routes connecting industrial parks, seaports, urban belt routes and other urban routes.

- Researching and proposing important transport infrastructure projects, regional connection to call for ODA and investment in the form of public-private partnership (PPP) such as: Tan Vu - Lach Huyen 2 bridge; continuing to build the road connecting the coastal road to Dinh Vu area (forming a new road about 10.0km from the intersection of the coastal road with provincial road 353 to Tan Vu - Lach Huyen road, building another 01 Van Uc Bridge) to further promote the efficiency of the coastal road which is being invested.

- Proposing the City report to the Government and the Ministry of Transport:

+ Investing the road traffic system behind Lach Huyen port area and Tan Vu - Lach Huyen 2 Bridge area to meet traffic and freight demand from seaports in Lach Huyen area; focus on investing in the road from wharf No. 2 to wharf No. 6

+ Considering and studying the relocation of Hai Phong Station in Ngo Quyen District to Thuong Ly Station in Hong Bang District.

+ Studying and deploying the railway line connecting Yen Vien - Ha Long route with Quang Ninh - Hai Phong - Thai Binh - Ninh Binh railway and Lao Cai - Hanoi - Hai Phong route to Lach Huyen port (including route to Dinh Vu port).

+ Calling for investment in building a cargo terminal, a logistics center serving aviation at Cat Bi International Airport. With the development of e-commerce in the coming time, the volume of goods transported by air will increase and diversify in terms of transport modes.

4. Fourthly, Implementing synchronous solutions to improve the investment environment, open business and fair competition; innovating the process of investment procedures settling, creating more transparency and convenience for investors. Encouraging and creating favorable conditions for the development of logistics services enterprises, arranging suitable land fund to attract investment in a logistics center system; calling for investment in transport and aviation logistics services.
5. Fifthly, building a digital government in Hai Phong city to serve people and businesses. Promoting the application of information technology in logistics activities such as paperless transaction system, electronic payment, direct transaction, development of E-logistics portal system.

As the role of general advisory agency, helping the City People's Committee perform the state management function of planning and investing in Hai Phong city, the Department of Planning and Investment commits to make effort to perform the mentioned tasks and solutions in order to attract all investment resources, contributing to the construction and development of Hai Phong, becoming a national logistics service center./.