Why are logistics centers in Ho Chi Minh City not attractive to investors?

Ho Chi Minh City plans to build eight large-scale logistics centers, but to date, none of them have begun construction due to complicated procedures that take a long time, making investors "discouraged".

Ho Chi Minh City plans to build eight large-scale logistics centers, but to date, none of them have begun construction due to complicated procedures that take a long time, making investors "discouraged".

12-step procedure

Sharing about investing in a logistics center in Ho Chi Minh City, Mr. Le Ngoc Anh Minh, General Director of Pacific Group Company Limited said: "Previously, we and some foreign partners considered cooperating to invest in a logistics center in Ho Chi Minh City, but after researching and surveying, the foreign investors decided to withdraw because they found the procedures too complicated."

It is known that Ho Chi Minh City has planned 8 locations to build large-scale logistics centers. However, from 2020 until now, no projects have started. Many investors came to learn, then... left.

According to Mr. Minh, if foreign investors choose to lease private land, the project will be implemented quickly, but the rental price is very high, and businesses cannot afford it. Meanwhile, if they lease public land managed by the State, the price is lower, but the bidding procedure is very complicated, with many steps.

In case of passing the land lease bidding round, investors will have to “sweat” to complete the processes and procedures. According to the investigation of the Investment Newspaper reporter, the investment process for a logistics center consists of 12 steps, including steps that take a lot of time such as establishing, appraising, approving the detailed planning project 1/500, implementing land procedures, preparing a pre-feasibility study report, etc.

The issue of investment procedures for logistics centers has also been raised by many delegates to question leaders of departments and branches at meetings of the Ho Chi Minh City People's Council.

At the Ho Chi Minh City People's Council meeting held at the end of 2022, answering questions from some delegates, Mr. Bui Ta Hoang Vu, Director of the Ho Chi Minh City Department of Industry and Trade, said that in 2023, the City will start building the first professional logistics center in the High-Tech Park, because the project has completed step 8 out of 12 steps. However, up to now, the project is still "inactive".

Investigating, reporters of Dau Tu Newspaper learned that the Logistics Center Project at Ho Chi Minh City High-Tech Park is stuck in procedures, so it cannot start construction.

The state and private sector can cooperate in investment.

As the leading economic development engine of the country, Ho Chi Minh City has identified logistics as one of the key industries that has an impact on economic growth and sustainable development. Planning logistics centers with full functions (transportation, goods distribution, state management areas for customs, taxes, specialized inspection centers, etc.) to provide a complete integrated service chain will help reduce logistics costs for manufacturing enterprises.

Mr. Bui Ta Hoang Vu emphasized that the development of logistics centers is urgent. However, according to him, the current logistics centers are mainly spontaneously developed, and none of them are of national and regional stature. Therefore, from now until 2025, Ho Chi Minh City will prioritize calling for investment in 3 logistics centers in Thu Duc City, which are the Logistics Center of the High-Tech Park, Linh Trung and Long Binh.

This policy of Ho Chi Minh City has received much attention from investors. However, investors also recommended that state management agencies build a clear and transparent legal corridor. For example, currently, many localities are confused in planning land for logistics center construction, some areas plan it as industrial land, some plan it as warehouse land, some plan it as real estate land, so it is very difficult for businesses to implement.

From an investment perspective, Dr. Nhan Cam Tri (University of Economics and Finance, Ho Chi Minh City) said that when planning a logistics center, it is necessary to focus on four issues: choosing a location, designing services, mobilizing financial resources and preparing human resources.

Accordingly, logistics centers should not be located in the inner city, but should be located at import-export hubs, near seaports and airports for convenient transportation. Logistics centers must have full services, from packaging, delivery, to accompanying services such as banking, insurance, container repair, etc. This will avoid fragmentation.

Regarding financial resources to build a logistics center, the State can invest in infrastructure, and enterprises will invest in technology and operations; or the State can invest and manage the initial period, and when it is effective, it will call for private participation. In addition, Dr. Nhan Cam Tri suggested another option: the State calls for a foreign investor with a lot of experience, a solid foundation, and a strategic vision to develop the logistics center.

Source: https://baodautu.vn/vi-sao-trung-tam-logistics-tai-tphcm-chua-hap-dan-nha-dau-tu-d228643.html