Facts of Vietnam Freight forwarding industry and the role of Vietnam Freight Forwarders Association (VIFFAS) to the industry in international economic integration processhelpful to Oristar.

INTRODUCTION Freight forwarding industry plays a significant role in expanding trade by procuring efficient and economic modes of transport. It creates necessary conditions to ensure that import and export products may timely reach their destinations and helps to deliver efficiently goods from sellers to end users. This national industry is still young in Vietnam, but it has gradually contributed to the improvement of the country’s balance of payment by assisting export promotion and giving support to the national Carrier & Insurers. Vietnam Freight Forwarding industry has played, to somewhat extent, an active role in facilitating trade by simplifying and rationalizing trade and documentary procedures, thereby reducing transport cost. Vietnam went through a lot of hindrances and difficulties to reach the splendid achievements over the past years. In international economic integration process, challenges remain considerable but there are always opportunities for the development of national economy. Freight forwarding industry also finds its opportunities to grow up, contributing to the national development strategy of restructuring the economy, intensifying the industrialization & modernization process and laying the foundation for rapid & sustainable development of national economy. During my internship at Vietnam Freight Forwarders Association (VIFFAS) in Ho Chi Minh City, I have learnt a lot about the facts of Vietnam freight forwarding industry and the Association’s importance to the industry, especially in today’s economic integration process. Therefore, I chose the topic “Facts of Vietnam Freight forwarding industry and the role of Vietnam Freight Forwarders Association (VIFFAS) to the industry in international economic integration process” for my Field Study Report.

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TABLE OF CONTENTS INTRODUCTION CHAPTER 1: FACTS OF VIETNAM FREIGHT FORWARDING INDUSTRY Definition of “Freight Forwarder” The importance of Freight Forwarding industry To the national economy To enterprises Facts of the industry Advantages to the development of the industry Pressures on Vietnam freight forwarding industry Comments on the facts of Vietnam freight forwarding industry CHAPTER 2: VIETNAM FREIGHT FORWARDERS ASSOCIATION (VIFFAS) 2.1. Introduction of VIFFAS 2.1.1. History of VIFFAS Management Board of VIFFAS 2.1.3. Statues and Standard Trading Conditions of VIFFAS Functions & Main Activities of VIFFAS PAGES 1 3 3 3 3 4 4 4 7 12 13 13 13 13 13 14 2.3. Activities of VIFFAS during the past term 2.3.1. VIFFAS with the role of member’s representatives 2.3.2. External activities 2.3.3. Actions for members’ benefits 2.4. Roles of VIFFAS to Vietnam Freight forwarding industry in international economic integration process 2.4.1. Achievements of VIFFAS 2.4.2. Some weaknesses of the Association in the past terms CHAPTER 3: RECOMMENDATIONS Macro scale Micro scale CONCLUSION REFERENCES 16 16 16 16 18 18 21 23 23 25 26 27 INTRODUCTION Freight forwarding industry plays a significant role in expanding trade by procuring efficient and economic modes of transport. It creates necessary conditions to ensure that import and export products may timely reach their destinations and helps to deliver efficiently goods from sellers to end users. This national industry is still young in Vietnam, but it has gradually contributed to the improvement of the country’s balance of payment by assisting export promotion and giving support to the national Carrier & Insurers. Vietnam Freight Forwarding industry has played, to somewhat extent, an active role in facilitating trade by simplifying and rationalizing trade and documentary procedures, thereby reducing transport cost. Vietnam went through a lot of hindrances and difficulties to reach the splendid achievements over the past years. In international economic integration process, challenges remain considerable but there are always opportunities for the development of national economy. Freight forwarding industry also finds its opportunities to grow up, contributing to the national development strategy of restructuring the economy, intensifying the industrialization & modernization process and laying the foundation for rapid & sustainable development of national economy. During my internship at Vietnam Freight Forwarders Association (VIFFAS) in Ho Chi Minh City, I have learnt a lot about the facts of Vietnam freight forwarding industry and the Association’s importance to the industry, especially in today’s economic integration process. Therefore, I chose the topic “Facts of Vietnam Freight forwarding industry and the role of Vietnam Freight Forwarders Association (VIFFAS) to the industry in international economic integration process” for my Field Study Report. My Field Study Report is divided into three chapters. In the first chapter, I will describe the facts of Vietnam Freight Forwarding industry and then analyze the opportunities as well as challenges to Vietnam freight forwarders in the international economic integration process. In chapter 2, I want to introduce about Vietnam Freight Forwarders Association (VIFFAS) and then emphasize on the role of the Association (VIFFAS) to Vietnam freight forwarding industry in international economic integration process, summarize the achievements of the Association and analyze its weaknesses during the past time. Finally, in chapter 3, I would like to make some recommendations for improving the efficiency of the Association in the future. I hope my Field Study Report will help the Association see what strengths they need to promote and what weakness they need to overcome to gain more efficiencies and successes. CHAPTER 1: FACTS OF VIETNAM FREIGHT FORWARDING INDUSTRY Definition of “Freight Forwarder” According to the definition from Wikipedia, the free encyclopedia, a freight forwarder is an individual or company that dispatches shipments via asset based carriers and books or otherwise arranges space for those shipments. Common carrier types could include waterborne vessels, airplanes, trucks or railroads. Acting as a link of logistic series, freight forwarders typically arrange cargo movement to an international destination. Also referred to as international freight forwarders, they have the expertise that allows them to prepare and process the documentation and perform related activities pertaining to international shipments. Some of the typical information reviewed by a freight forwarder is the commercial invoice, shipper's export declaration, and other documents required by the carrier or country of export, import, or transshipment. As an analogy, freight forwarders have been called travel agents for freight. The importance of Freight Forwarding industry To the national economy Freight forwarding activities plays an essential role in producing, circulating and distributing import & export goods. Around the world, the average cost of freight forwarding service for imports and exports equals about 15 percent of the value of import or export goods, the highest rate accounts for 40 percent and the lowest around 10 percent. Experts predict that Vietnam exports and imports together could come to US$200 billion per year by 2017, and thus freight-forwarding services could earn Vietnam about 30 billion USD in 2016. Accordingly, the development of freight forwarding industry will naturally contribute to the improvement of national economy as well as Vietnam freight forwarders if they know the tips to do their business and catch their own opportunities in the international economic integration process today. To enterprises Freight forwarding in particular and Logistics in general are the keys for enterprises to deal the input and output problems. They help to change the input material and maximize the flow processes of material, goods and services and therefore reduce the cost and enhance enterprises’ competition. Without freight forwarding or logistic services, enterprises’ business activities would meet huge troubles and may come to a deadlock. Facts of the industry Advantages to the development of the industry Freight-forwarding industry is still young in Vietnam, but it has rapidly become a developing field and played a significant role in the national economy. Now Vietnam has become a member of WTO, favorable conditions would be created for Vietnam freight forwarders. According to Vietnam Freight Forwarders Association (VIFFAS), there are four reasons to do freight-forwarding/logistic services in Vietnam. Firstly, the Government policies have strongly encouraged enterprises to penetrate deeper and wider into international market. For example: Vietnamese Government Decree No 55/1998/ND-CP of July 22, 1998 dealing with cargoes that are retained by sea carriers. Decree No. 10/2001/ND-CP of March 19, 2001 regarding business conditions for maritime service provision the Government. Decree No. 125/2003/NDCP of October 29, 2003 on international multi-modal transportation the Government. Vietnam Commercial Law Provisions on Freight Forwarding Services Furthermore, Vietnam is speeding up the integration process in both scope and rate by amending structure, policies, bureaucracy and building the law of economic & financial system to make it more suitable to international rules. Secondly, Vietnam has a strategic location in South-East Asia with a more than 2000km of coastline, deep-water ports, international airports, trans-national railways and a rather developing road network, which are good backgrounds for developing freight-forwarding services. Moreover, borderlines with China, Laos and Cambodia can bring favorable conditions for providing transport services, especially the multi-modal transport, an important factor in logistics service chains. With such advantages, Vietnam import-export turnover will increase accordingly. The table below shows the data and estimate of the amount of merchandise carried via Vietnamese ports: Figure: Estimate of Amount of Merchandise Carried Via Vietnamese Ports Lines Unit 2000 2010 Seaway mil. tones 86.20 227.80 Vietnamese imports and exports mil. tones 73.51 169.49 Transit cargo (of Laos, Thailand, Cambodia, South China) mil. tones 3.19 9.31 Goods transferred between foreign ships mil. tones 9.50 49.00 Airway tone 127.629 431.644 Source: Vietnam Maritime Department, Ministry of Planning and Investment, and Vietnam Airlines The third, joining WTO, ASEAN Free Trade Area and normalizing relationship with the U.S have created the best conditions for the development of many industries and services, including freight-forwarding industry. There are more and more money from ODA projects, non-governmental organizations and foreign investors pouring into Vietnam to raise infrastructure. Many deep-water ports and airports have been upgraded to attract customers. Land route system as well as railway system have been repaired and renewed to serve in transportation. The fourth, freight forwarding and logistics activities have drawn the attentions of Governmental institutions as well as local and foreign freight forwarding enterprises. As a result, many container ports and airports have been taken into long-term investment projects and development programs. In addition, land routes and railway systems are being upgraded and expanded. Therefore, there are 25 leading international logistic services providers (LSP) established their branches in Vietnam to exploit this abundant source of income. Finally, the strong development of Information technology has significantly contributed to modernize freight forwarding industry. Since July 2005, Electric custom-clearance procedure has been applied in some ports and will be deployed widely in 2007. In some recent years, General department of Customs has invested more than 10 billions VND to develop Information technology and upgrade Local Area Network (LAN) and Wide Area Network (WAN). Moreover, some enterprises have tried to use “tracking & tracking” network and “booking through the net”. The five advantages above are the keys for Vietnam freight forwarding industry to open the door of development now and in the future. How do they use those keys properly to open the door? It depends on other factors, which include troubles and their own capability. Pressures on Vietnam freight forwarding industry In spite of many advantages to develop freight forwarding services, it still exist many problems, which set obstacles to the industry’s development. Mr. Nguyen Hung, deputy director of Sotransn gave his comment: “Freight Forwarding industry in Vietnam is still small, fragmentary, mugging and always ready to dumping to struggle for customers.” a/ Outside pressure The development of material-distribution modal is the main outside pressure on the industry. It can be divided into 4 kinds: + The change of consumer-demand modal, market and the attitude to the availability and diversity of goods + The pressure of reducing cost + The development of Information technology + The pressure of globalization tendency Those pressures set many hindrances to Vietnam freight forwarding enterprises. Once they cannot make some reform or changes to catch up with the development of the industry, they may be kicked out of the field. b/ Inside pressures Vietnamese businesses in the freight forwarding industry are facing various difficulties now. According to Mr. Nguyen Tham, Deputy President of Vietnam Freight Forwarders Association (VIFFAS), freight-forwarding enterprises are held back by their small size, lack of skilled employees, and minimal cooperation among businesses in the field. General Secretary of VIFFAS, Mr. Vu Xuan Phong also stressed that poor transport infrastructure, small financial scales, unskillful employees, low technological capacity, insufficiency of Government laws & regulations as well as poor understanding of international laws and marine transport procedures & policies and loose co-ordination are the inner problems that Vietnam Freight Forwarding industry needs to get over. The first problem is poor infrastructure. Many ports in Vietnam Port System are very old and out-of-date. They are shallow in draft and their yard & warehousing systems are insufficient for accommodating containers and cargo. Today, there are only a few ports with modern handling facilities and equipment to serve big ships. Accordingly, freight-forwarding activities are conducted mainly in big cities and their suburban areas such as Ho Chi Minh City, Hanoi, Hai Phong, Da Nang, and Qui Nhon. Airports and airlines are also undeveloped. There are about 100 airports throughout Vietnam, but only three serve international routes. Those three international airports are known as Tan Son Nhat, Noi Bai and Da Nang. Moreover, there are only two national airlines, Vietnam Airline (state-owned) and Pacific Airline (joint stock), which are basically passenger carriers. Vietnamese freight forwarders use these two lines for approximately 20% of their cargo volume, whereas the other 80% is contracted to the foreign airlines market. Land transportation system is uncompleted. The road system of Vietnam is about 106,000 km long. Land transport accounts for about 65% of domestic passenger and cargo transport. While pre-export and post-import legs for door-to-door shipments require land transport, roads in Vietnam are still limited in quantity and bad in quality, resulting in traffic congestion and posited negative impact to logistics activities. On the other hand, the railway system in Vietnam with about 2,600 km long is not absolutely exploited. Container transport by rail in Vietnam is still at primitive stage and operated only by the state-owned Vietnamese Railway Company. While land transport is very limited as mentioned above, inland waterway transport is very advantageous in serving transport in the Mekong Delta linking to Cambodia. The total length of the inland waterway (IW) system is about 40,998 km, mainly in the Red River Delta and the Mekong Delta. In the past few years, inland waterway transport accounts for about 30% of the domestic cargo transport volume, but in fact, inland waterway has not been optimized enough to get expected results. The second problem is financial scale. According to official statistics of VIFFAS (Vietnam Freight Forwarder Association), there are more than 800 freight forwarders in Vietnam at present, 18% of them owned by the state, 70% privately owned, 10% non-registered and about 2% made up of foreign logistics companies. Privately owned companies now account for 80% of total logistics companies, most of which are very small with the capital of VND300-500 million (US$18,750-31,250) for each. Several joint stock companies have been set up on the foundation of equities parts of state owned enterprises. These newly set up companies have the total capital of 5 billions VND or 312,500 USD, with which they cannot meet the requirements for joining the world’s logistics companies. With such very small financial scales, Vietnam freight forwarders just have the ability to provide simple logistic services such as customs declaration, trucking, and warehousing. About 80% of them have to outsource warehousing and trucking services. Today, only 10% of Vietnamese freight forwarding enterprises has ability to provide consolidated service at their own warehouses (or their contractors’ warehouses). They issue House B/L but only some of them buy Civil Liability Insurance for transport operators. In addition, many companies have 3-5 staffs only, including managers. With such modest capital and few staffs, the companies just can fulfill simple works for separate clients. In other words, Vietnam still lacks “full-package” or “door to door” logistic providers, who can provide logistics or freight forwarding services sufficiently and completely. Moreover, while logistics are going globally, most Vietnamese logistics companies do not have overseas representative offices. That creates the risk of losing international market share and being lagged behind. One more problem to freight forwarding enterprises is human resource, whose poor quality and professional skills do not satisfy the demand of logistic activities. Professional training in logistics/freight forwarding business is unavailable in Vietnam, and employees who are working in this field have to get their training with simple theories and unfulfilled reality. As a result, most of them do their work basing on experiences without total knowledge and skills. Lacking of modern technology is also a big trouble for Vietnam freight forwarders. Applying modern technology in freight forwarding activities is one of efficient measure to reduce inconvenient procedures and minimize cost for enterprises. However, many of them do not pay much attention to this problem. Some Vietnam freight forwarding enterprises have cooperated with foreign MTOs (Multimodal Transport Operators) at ports of discharge under a sub-contract to arrange transport to the final destination by a single B/L, but that is just “a grain of sand on the seaside” while inadequate of information technology, international networks as well as information and experience in logistics; local logistics companies still hold back enterprises from entering wider and deeper into international market. For this reason, they will let big foreign companies with global networks share most of this market. Insufficiency of Government laws & regulations and poor understanding of international laws as well as marine transport procedures & policies are also obstacles to Vietnam freight forwarding enterprises on the way of international economic integration process. For example, Decrees on Logistics have not been given into Commercial Law system yet. Maritime law, Investment law or competition law are in the same situation. Financial, custom clearance, custom procedures at airport and seaport are not unified and thus making troubles to logistic actions. Due to lack of regulations and an incomplete legal framework on activities of freight forwarders, the quality of services has not met the requirements of the industry's development yet. A lack of decrees stipulating activities of air and inland waterway freight forwarding services has put obstacles and created gaps for enterprises to take advantages, resulting in negative impacts in business activities. While the National Assembly discussed anti-monopoly and anti-dumping draft laws, only TSC Company has power to do business in warehouse services in the Tan Son Nhat international airport. Cases of unfair competition have occurred and the irresponsibility of some enterprises has opened up smuggling opportunities. Moreover, companies do not have necessary understanding of international laws and the laws of the nations that Vietnam’s freight forwarding services may concern. Misunderstanding of international laws and cases may put Vietnam freight forwarding enterprises into troubles. Those problems need to be overcome so that enterprises can follow up the development of logistic industry. Finally, the willingness to cooperate with each other is something that Vietnam freight forwarding enterprises lack and they even compete unhealthily with each other, making them less competitive in the eyes of international partners and clients. It can be easily seen that the port management system in Vietnam is much diversified. VINAMARINE, which is under the direct control and management of the Ministry of Transport, manages three ports - Nghe Tinh Port, Qui Nhon Port and Nha Trang Port. VINALINES (Vietnam National Shipping Lines), which is also under the direct control and management of the Ministry of Transport, is the state-owned company responsible for shipping activities in Vietnam. It manages Hai Phong Port and Quang Ninh Port in the north, Da Nang Port in central Vietnam, and Sai Gon Port and Can Tho Port in the south. Local governments, such as cities and provinces, also take part in port management. For instance, Ben Nghe Port is directly under the supervision and management of the Department of Transport and Public Works of Ho Chi Minh City. State-owned corporations under other central government ministries are also another type of port management body in Vietnam. Some state-owned corporations, which are under control of provinces and cities, also manage ports. For example, Hon Khoi Port is managed by a salt company under the control of the People’s Committee of Khanh Hoa province. The participation of the private sector in port management in Vietnam is still very limited. There are only two ports with private sector participation so far. It is the discrimination in the industry that must be removed to create healthy business environment for all enterprises. The problem can partly create gaps among enterprises, especially in today’s violent competition. The separation should be replaced by the co-ordination, because it is the key to gather all sources of the industry to compete against foreign companies, who are experienced in delivering high quality service at the most competitive price and opening offices next door. Most foreign companies with large amount of capital have reach to that point after starting out relatively small and growing, learning and expanding. With their experiences, they have learned the value of offering quality services. In the way of growing, they have also open branches to establish a worldwide presence. These companies are reliable and reasonably priced and naturally, they get lots of business. As a result, Vietnamese freight forwarding enterprises could even lose their Vietnamese customers if they do not associate with each other in enhancing and expanding their business. Comments on the fact of Vietnam freight forwarding industry Now that Vietnam is a WTO (World Trade Organization) member, Vietnamese enterprises, including freight forwarders, will have the opportunity to expanding their business oversea. However, poor infrastructure, small size, undeveloped Information technology, improper laws & policies and minimal cooperation between businesses are keeping logistic businesses from growing well. For this reason, Vietnamese freight forwarders are recommended to cooperate with each other to create a big joint strength to enhance their competition. Obviously, they need a common association, which takes charge of managing actions, assisting and giving the way for the development of all members, and Vietnam Freight Forwarder Association (VIFFAS) was established to satisfy the demand of improving Vietnam freight forwarding industry. CHAPTER 2: VIETNAM FREIGHT FORWARDERS ASSOCIATION (VIFFAS) 2.1. Introduction of VIFFAS 2.1.1. History of VIFFAS VIFFAS (Vietnam Freight Forwarders Association) was founded in Hanoi, Vietnam by the Government Decision No. 5874/KTN on November 18, 1993. This is the national freight forwarding industry’s trade association, a non-governmental organization presenting an industry covering nearly hundred Vietnamese leading forwarding firms. Management Board of VIFFAS Mr. Bui Ngoc Loan - Chairman Mr. Nguyen Tham - Vice Chairman Mr. Vu Xuan Phong - General Secretary Mrs. Le Thi Thanh Xuan - Standing member Mr. Hoang Dang Doanh - Standing member Mr. Do Xuan Quang - Standing member Mr. Nguyen Giang Tien - Standing member 2.1.3. Statues and Standard Trading Conditions of VIFFAS Like other associations, VIFFAS also has its own statues, which have been strictly implemented by all the members during the past years. The principles are considered as frameworks, which support guidelines to all the members to perform their action correctly and effectively.   The Standard Trading Conditions referred to as TSTC shall be applied to all services provided, handled, performed or rendered by the company acting as Freight Forwarder, even in case when the company procures a Bill of Lading or other similar document evidencing a contract of carriage between a person other than the company and the customer or owner.   Functions & Main Activities of VIFFAS VIFFAS has the function of socio-professional associated organization of the enterprises, irrespective of economic sectors and expert operating in freight forwarding, warehousing and transportation of import and export goods. The aims concentrate on co-operating, co-associating and helping members in developing professional skills, improving business efficiency and protecting the legal interest of the members in the import-export goods freight forwarding activities of the S.R. of Vietnam, and on this basis to integrate with such professional colleagues on the world. The Association has the role of coordinating the activities of the members in order to protect the interests of the members and improve the position of Vietnam in the international freight forwarding industry. Namely, VIFFAS establish the co-operative, associative and assisting relationship among its members; contribute to improve the transaction standards and the quality of business activities for enhancing the efficiency of export and import activities, expanding the external economic relations and co-operate with other country in accordance with Vietnamese laws. VIFFAS also presents the interest of Vietnamese business community in freight-forwarding field in the international co-operation and business relations. The Association’s members are divided into two categories: Ordinary members and Associate members. However, in the fourth General Congress held in Ho Chi Minh City on May 28, 2004, the Association has presented for approval by the relevant authority with following three categories of membership: a/ Ordinary members shall include enterprises with 100% Vietnamese capital who have registered to operate in Forwarding as its main business and has registered capital not less than the liability limitation of a Freight Forwarders as stipulated in the Standard Trading conditions, Article 35 (a) (iii). b/ Associate members: enterprises with foreign invested capital registering to operate in Forwarding in Vietnam under the Law on foreign shareholders who have capabilities to contribute to the development of the Association and accept its Statue may be considered to become associate members. c/ Honorary members: Vietnamese experts involving in Freight Forwarding and having high professional skills and abilities to contribute to the realization of the objectives and duties of the Association, may be invited to join the Association as Honorary members. In general, this stipulation on the membership in the Statue of the Association has paved the wider way for foreign parties to join in freight forwarding activities in Vietnam and quite in accordance with our Government’s open policy. 2.3. Activities of VIFFAS during the past term 2.3.1. VIFFAS with the role of member’s representatives Acting as the bridge between enterprises and the Government, the Association has gathered member’s ideas & expectations then submit to Government’s offices to solve troubles in freight forwarding activity and create healthy environments for enterprises. 2.3.2. External activities Keeps constant relationship with International Federation of Freight Forwarders Associations (FIATA) and implements fully duties of National Member to FIATA. Takes part in periodical meetings of Asean Freight Forwarders Association (AFFA) with the role of official member. Contact and exchange information & experiences to: + Singapore Logistics Association + JETRO’s logistics researchers from Japan + Japan International Freight forwarders Association + Port Sale representatives from Guangyang – Korea + Representatives of Singapore International Enterprises + Representatives of Australia consulate Signed the memorandum of Co-ordinate and exchange information & experiences with TIFFA and Freight forwarding Associations of GMS countries 2.3.4. Actions for members’ benefits Together with Marine Department of Thailand and Vietnam Maritime Administration, VIFFAS organized a course to train lecturers teaching multi-modal and logistic management on October 31 2005 in Hanoi. VIFFAS also gives introduction and advices about professional knowledge and legal procedures to members. The website of VIFFAS has been upgraded and connected to other websites of the Government & International Organizations with the aim of introducing about the Association and its activities. VIFFAS’s members are usually supplied with new legal documents and information about freight-forwarding and logistic issues and international conferences. 2.4. Role of VIFFAS to Vietnam Freight forwarding industry in international economic integration process 2.4.1. Achievements of VIFFAS Evaluating the achievements recorded by VIFFAS, president of VIFFAS, Mr. Bui Ngoc Loan stressed that Vietnam freight forwarding had seen a rapid development in quality, which has improved its status and contributed to Vietnam's transportation activities. This is thanks to the Prime Minister and State management agencies that have created favorable conditions for business associations, as well implemented strategies on developing and increasing the quality of trade services of the Ministry of Trade and the Ministry of Transport. Being the intermediary between enterprises and Government’s offices, VIFFAS has always made great efforts to catch the business needs and troubles and therefore create favorable conditions for activities of enterprises. The association has proposed the Ministry of Finance to delay the application of a tax rate of five per cent on export transportation fees of foreign transportation enterprises via Vietnam's agents. The association has also proposed the Government not to dabble maritime service charges. In international relations, VIFFAS joins periodical conferences to exchange experience in management. It successfully hosted the 10th meeting of the ASEAN Freight Forwarders Association (AFFA) in Hanoi in November 2000. This event has raised the position of VIFFAS on the international scene. Since its foundation until now, VIFFAS has recorded some considerable results in its activities: It has made recommendation to the State, concerned agencies and local authorities on issuing directions, policies, methods regarding the development and improvement of quality of Freight Forwarding services in order to stimulate the commodity exchange with foreign countries. For examples: VIFFAS has given recommendation in drafting Commercial Law (Chapter II section 10: Freight Forwarding services) which was officially passed by the National Assembly on May 1997 and in force and effect from January 1, 1998. Now VIFFAS continuing commend to revise this Chapter as LOGISTICS SERVICES and this recommendation is under consideration by the relevant authorities. VIFFAS experts also successful in giving Ministry of transport and VINAMRINE some legal opinions in drafting ASEAN Framework Agreement on Multimodal Transport and the report of Vietnam Delegation participating in the UNCTAD – IMO Conference in Geneva March 1999 to approve the final text of the International Convention on arrest of ships – 1999. VIFFAS experts have recommended Ministry of transport in revision of Vietnam Maritime Code and other by – law documents. VIFFAS has had recommendation on promulgating Decree No. 10/2001/ND - CP of March 19, 2001 regarding business conditions for maritime service provision and Decree No. 125/2003/ND – CP of October 29, 2003 on International Multimodal Transportation, and both are effective now. VIFFAS has successfully recommended Ministry of Finance so far not to collect a tax of 5% on Freight for outwards cargo transportation from Vietnam to overseas destinations organized by local Foreign Forwarders Agents. In close co-operation with VCCI, VIFFAS has initially succeeded in recommending foreign shipping lines not to impose THC in Vietnam. VIFFAS keep close contact with AFFA and FIATA by participating periodical meetings, exchanges experiences in profession operation as well as in managements. It successfully hosted the 10th meeting of the ASEAN Freight Forwarders Association (AFFA) in Hanoi in November 2000. In supporting members: VIFFAS has done its best to create the conditions for promoting and fostering the ability of the members: collect and provide them with information on related international organizations and inform timely recommendations, information, documents, contract forms and international treaties, which have been circulated and disseminated widely in the world in order to meet the requirements of domestic and foreign customers. VIFFAS backs up the members in training fields by advising the members to send their staffs for short course training at home and abroad. VIFFAS and Shipping & Transport college/ International Maritime Transport Academy (STC/ IMTA) of the Netherlands co-organized an International Training Course on Multimodal Transport and Logistics Management in Hanoi and Ho Chi Minh City in October 2002. This training course appreciated by the members. After reviewing its achievements and shortfalls, VIFFAS has proposed the Ministry of Trade and the Vietnam Chamber of Commerce and Industry (VCCI) to promote the establishment of an association of goods owners as a partner for negotiations with IADA to remove obstacles and boost cooperation with foreign partners. Moreover, for further rapid and sustainable development, VIFFAS will set up a freight forwarding information, training and consultancy centre. Training courses on EDI (electronic data interchange) system application in freight forwarding will be held for members in the near future. The number of VIFFAS has increased from 7 enterprises in the first tenure to 82 enterprises. Among 82 members, 62 are Ordinary and the remaining of 21 are Associate members. Moreover, 52 out of 62 Ordinary members are the members of FIATA (International Federation of Freight Forwarders Associations). The increase of members attending into the Association can be seen in the figure below: 1st General Congress May 15, 1994 7 members 2nd General Congress May 27, 1997 18 members 3rd General Congress May 04, 2000 41 members 4th General Congress May 28, 2004 82 members This figure shows the great development of VIFFAS. The association hopes that alongside the removal of obstacles and perfection of legal documents by State management agencies, it will make great contributions to Vietnam's economic development. 2.4.2. Some weaknesses of the Association in the past terms In spite of many achievements that VIFFAS has made during the past years, there still remain some problems it needs to get over. Assessing about actions of the Association during past terms, Mr. Vu Xuan Phong admitted that the efforts that the Association made has not produced the desired effect. Firstly, the connection between enterprises and the Government’s offices are still loose. Secondly, relationships among members are not close enough to make the association become a strong block. The information of members is not fully collected in order to exchange to other associations like FIATA and AFFA. Finally, being a member of FIATA, VIFFAS has not played its role well yet. In short, VIFFAS has not done its main task well: connecting its members. The number of members is still small in comparison with the number of freight-forwarding enterprises. Moreover, current members of VIFFAS have not become an alliance to help each other in enhancing their power, expanding the scale, diversifying services and competing against foreign companies. Secondly, some proposals that VIFFAS has submitted to the Government are not helpful and relevant to current situation of Vietnam freight forwarding enterprises. At last, the effort of VIFFAS in searching collaborates for its member is not effectively in some aspects. In fact, VIFFAS can do better if it makes reform and promote some of its activities in the near future. As Mr. Pham Tu Anh, representative from VINATRANS underlined “VIFFAS must act as the core in connecting members, helping human resource training, and making proposals to the Government and policy makers on logistics concerning regulation adjustment.” CHAPTER 3: RECOMMENDATIONS Macro scale Within its WTO commitments, Vietnamese Government can take certain actions to help Vietnam freight forwarding activities. One important role of VIFFAS is giving proposals to the Government to help completing laws and regulations on freight forwarding activities. These are some recommendations that VIFFAS should do at present: Propose and recommend the concerned authorities in promulgating laws, regulations governing logistics industry in Vietnam and continue to give comments on revising Commercial Law with chapters pertaining to logistics activities. Follow up and give comments on revising Vietnam Maritime Code, which cover logistics industry. Give comments on drafting of anti-monopoly law Propose and comment on the policies, regulations, procedures pertaining to logistics industry such as duty and taxation, custom, etc. Proposed, and follow up the Ministry of Commerce and Vietnam Chamber of Commerce and Industry (VCCI) in the establishment an Association of goods owners as a partner for negotiations with Ship-owners Association on the concerned issues. Give proposal to the Government to upgrade seaports and airports and plan the network of ports reasonably. Help the Government find funds to invest in building sea-going fleets as well as container ships and dry cargo. Moreover, VIFFAS should supply important information or make some suggestions to help the Government make timely reforms. For example: The Government should perfect the legal system; adjust charges and fees, freight charges and other services fees (charges of merchandise unloading, container freight station (CFS), charges relating to import-export documents in freight forwarding; clarify the management over chartering and sea transport; reduce tax for firms investing infrastructure, buying new means of transport and exempt tax for international line. The customs formalities need to be renewed to facilitate export and import. The General Department of Customs, the Ministry of Trade and examining bodies, and the Bureau of Standards and Measures should have consensus on Import-Export regulations to prevent contrasts in contents of legal documents and forms of dealing with exports and imports. Soon issue the Customs Act specifying the service of customs brokerage to improve this kind of service. Simplify the customs formalities to shorten the time of customs clearance. Permit the consignment of cargo exported from different localities and on different date use the same bill of lading. The Government could build cargo centers and later lease them to forwarders or plan them near international ports, major industrial and commercial center for firms' investment. These hubs would provide all services of freight forwarding. The Government should have policies to protect local freight forwarding. If the foreign giants are free to set up their branches in Vietnam, they will kill the young local industry. The freight forwarding should be focused on major state-owned companies. Small and private companies should act as agents for overland transport or the broker of customs clearance so that when they get enough financial strength and experience, they can take part in international freight forwarding. Micro scale Improve the role of associating freight forwarding enterprises and provide them with necessary information & experience is the most important target tasks of VIFFAS. To do so, the association should organize an appropriate structure including boards of foreign relations, international and domestic freight forwarding, training, finance, etc. The relations of these boards need to be identified, and the association's activities should be regularly maintained by the standing secretariat. In the fact that enterprises belong to various ministries & ruling agencies and it is hard to come to a consensus, the association is a nucleus to combine many enterprises in the same sector to utilize fully resources. Some suggestions below may suggest the development orientations to VIFFAS for improving the efficiency of its activities in the near future: Co-operate with IATA, FIATA, AFFA and national logistics associations of other countries in training for the members on logistics management. Hold more meeting and conferences for members to enhance co-operation and find common solutions to enterprises. Attract new members. Above is some recommendations for activities of VIFFAS in the coming years and hoping that VIFFAS will be more active in making worthy contribution to the integration of Vietnam’s economy in general and Freight Forwarding industry in particular into the regional and the world economy. CONCLUSION In conclusion, freight forwarding plays an important role in developing Vietnam's foreign trade, help to speed up the development of urban areas and hi-tech industrial parks. When the foreign trade grows, it will make conditions to modernize the national freight forwarding. As a result, the development of Vietnam's freight forwarding sector is necessary and the economy is expected to be more industrialized and modernized. Local forwarders should be prepared to find a firm position in foreign markets. They also need to raise their position so that they can rent foreign means of transports for their freight services in the future. When Vietnam joins the World Trade Organization (WTO), logistics service providers will have both opportunities and challenges. They are making their best effort to improve their capability, expanding business in order to compete against foreign logistic companies to the customers. As Mr. Nguyen Tham, Vice President of Viet Nam Freight and Forward Association (VIFFAS) said, Vietnam logistic enterprises have to combine to each other in order to gather enough financial power, capacity, human resources, technique and vehicle to gain the market share from foreign companies. In today’s international economic integration, the role of associations like VIFFAS is more and more important to Vietnam enterprises, and thus it should become a strong link among its members. We have reason to believe that VIFFAS can do its tasks better in the coming years and become one of the most developed Associations in Vietnam. REFRENCES BOOKS VIFFAS, Vietnam Freight Forwarders Association 2005 Revision, Vietnam Freight Forwarding Handbook 2000-2005. VIFFAS, Vietnam Freight Forwarders Association 2005 Revision, Hiệp hội VIFAS 10 năm phát triển và hội nhập quốc tế. Nguyen Nhu Tien, Ministry of Communications and Transport Publication 2006, LOGISTICS, khả năng ứng dụng và phát triển trong kinh doanh dịch vụ vận tải giao nhận Việt Nam. 4. Wann Shang Jye, Joseph, General director, First logistics development (JV) Company, Vietnam port facilities and logistics development overview. WEBSITE 5. www.viffas.org.vn/news.asp?cate_id=954 6. www.vietnamshipper.com/?action=news_detail&atcid=6934&chnlid=14 7. www.fiata.com/index.php?id=30 8. www.visabatimes.com.vn/WebPages/Main/DS_Viffas.asp 9 9. www.diendancangbien.org/?idp=2&opt=dnews&cid=19&view=9 10. www.en.wikipedia.org/wiki/Freight_forwarding ACKNOWLEDGEMENTS I would like to express my gratitude to all those who gave me the possibility to complete this report. I want to thank the Vietnam Freight Forwarders Association (VIFFAS) for giving me permission to commence this report in the first instance, to do the necessary research work and to use departmental data. I have furthermore to thank the President of VIFFAS, Mr. Bui Ngoc Loan, who gave and confirmed this permission and encouraged me to go ahead with my report. I am deeply indebted to the Secretary General of VIFFAS, Mr. Vu Xuan Phong, who served as my adviser, for all his support, many advices, and valuable hints in my research work. My special thanks must go to Ms. Tran Thi Phuong from Hanoi Foreign Trade University. This field study report could not have been finished without her help, patient guidance, and correction, stimulating suggestions and encouragement which helped me in all the time of research for and writing of this report. My classmates from the Faculty of Business English, K42, supported me in my research work. I want to thank them for all their help, support, interest and encouragement. I thank them all. At last, I wish to thank my parents, who have always been a source of love and encouragement. Their many positive influences have contributed significantly to whatever success I have enjoyed thus far in life.

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