The green light has been given for the country’s first joint venture express delivery service to stride ahead, with licensing for the DHL and VNPT-managed venture expected to be approved soon.
The government has given in-principle agreement to the establishment of the express delivery service, agreeing to the stake contribution by DHL and VNPT (Vietnam Post and Telecommunications Group) and also designating the Ministry of Planning and Investment (MPI) to consider the service scope before granting a licence.
Almost $9 million has been set aside as starting capital for the service, with the two sides initially funneling around $5.5m into the business during its first year of operation and plans have been put forward to pump in another $4.4m over a five year period.
The venture, which is expected to be up and running by early next year, will provide an international delivery service for up to eight cities and provinces in Vietnam.
Once formed it will have its own distribution network, instead of relying on local enterprises, which, DHL says is hindering operations in the country.
However, the group may run into a hurdle concerning licensing as there is no guideline decree in the new Investment Law covering this type of operation.
“We still have plans to start operations by the beginning of next year,” said a VNPT Group official.
For the time being, DHL is the country’s largest carrier in international express delivery holding a 35-40 per cent share, followed by Sedex, TNT, EMS and UPS. The country has around 19 carriers providing international express delivery services. The joint venture is part of DHL’s bid to gain its previous market share which hit 70 per cent a decade ago.
It is expected that the venture will receive a licence within 45 days under current laws. The two sides have already signed a contract with 10-year lifespan.
Pham Long Tran, VNPT’s president, said that whenever the two companies did business together in the last 17 years they saw encouraging results. However, the companies formed the joint venture because they felt the need to upgrade their cooperation to a new level to satisfy the demands of the market, which is expected to boom once the country enters the World Trade Organization.
No. 773/August 7-13, 2006