A new report titled “Trade Facilitation, Value Creation and Competitiveness: Policy Implications for Vietnam’s Economic Growth” prepared by the Vietnam National Committee for International Economic Cooperation and the World Bank affirmed that trade is contributing greatly to economic growth, so that Vietnam’s export growth in the future should be based on enhancing competitiveness and generating greater added value.
According to the report, Vietnam has achieved high efficiency in commercial activities in the context of the external environment getting more difficult – export increased by 34 percent in 2011, 18 percent in 2012 and 20 percent in the first quarter of 2013. However, Vietnam has not achieved such success in diversifying export products and moving up to the global value chain. The ability of Vietnam to escape from “middle income trap” is also dependent on the ability to build the economy more competitive and efficient.
“The advantages of trade liberalisation in contributing to the growth of trade are reaching certain limits. It is time to have a new approach to enhance competitiveness and promote export growth in Vietnam,” Deputy Prime Minister Vu Van Ninh shared in the preface of the report.
According to Ms Victoria Kwakwa, Country Director of the World Bank in Vietnam, in the Strategy of Social and Economic Development 2011-2020, Vietnam’s economy is facing an important crossroad. The traditional motivation for economic development, available favourable conditions and the public sector – are no longer the optimal. In a world of globalisation, competitiveness, particularly in exports, is the major deciding factor for long-term growth of Vietnam.
“Vietnam has taken some measures in liberalization and signed trade agreements in the past two decades. To maximize these policies, alongside other measures, Vietnam needs to improve competitiveness by conducting further reforms to improve infrastructure and logistics services in domestic and related to exports, “said Ms Victoria Kwakwa.
According to Ms Victoria Kwakwa, this report analyses three pillars of national competitiveness which mutually. The pillars include: infrastructure of transportation and logistics, legal procedures for export and import, and organizing the production value chain. The pillars receive support by the government’s policies and institutions need to support them to improve competitiveness.
The first part of the report is a survey which shows an impressive growth as well as challenges for Vietnam’s exports. According to the report, the driving force behind the growth in exports is almost exhausted and Vietnam should actively attempt to find new ways to improve the competitiveness of exports.
In the analysis of the first pillar – transportation infrastructure and logistics services – the report shows that trade-related infrastructure in Vietnam is not meet export growth. However, the amount of investment needed to remedy this situation is beyond the capability of mobilizing public investment. In addition to improving the efficiency of public investment mechanism through focused investment and avoiding spreading, Vietnam also needs to pay more attention to transfer financial resources from the private sector.
Legal procedures of Vietnam in pillar 2 should also be improved. Although Vietnam has paid much attention to the customs reform and achieved results in the management of cross-border trade, many agencies still apply backward procedures which are time consuming, unclear, and easy to cause involved corruption. The report details the areas that Vietnam should focus to simplify processes and improve institutions – the very important work of reform.
Concerning pillar 3, the weakness in the value chain of industrial and agricultural processing production of Vietnam has made exporting difficult to reduce costs and create added value needed. The report suggests the strategy to restructure production value chain, targeting two objectives – further involve in creating added value in Vietnam, and in particular, encourage domestic enterprises to participate in this process. In addition, to facilitate the growth of supporting industries, even as a long-term effort, also has important implications.
Institutions issue is a key to facilitate trade in general and the above issues in the particular. However, the institutional environment of Vietnam is facing challenges at many levels. At the macro level, there are too many overlapping strategic plans, but they did not focus on trade facilitation, and many international agreements have been signed but not yet implemented. At the middle level and the enterprise level, many agencies of different levels of government implement trade facilitation activities but lack of coordination.
Thus, according to Ms Victoria Kwakwa, the government will play an important role. Specifically, the government should support activities to bring a positive influence from the outside, and provide support to boost the flow of trade. At the same time, the government should remove the obstructing factors, including gradual withdrawal from the areas where the private sector can play a leading role. The Vietnamese government can do more things at once above work. Among that there are many initiatives and investments to restructure the production value chain will benefit not only in terms of trade facilitation.
The report proposes a number of policy recommendations for the development of this approach, including: Establishment of the National Commission on Trade Facilitation (NCTF) to develop and implement national action plans to enhance trade competitiveness, developing infrastructure and transport services, simplify regulatory procedures to reduce the time and costs and increase the reliability of border trade, restructuring industrial processing supply chain to create value and actively participate in global value chains and restructuring agricultural production chain.
To successfully implement these proposals, according to the report, all stakeholders will need to make effort and persistence, and the government plays a supporting and coordination role. Vietnam also needs to get political commitment from leaders because the proposed reforms have conflicts of interests. If Vietnam does not act now, the competitiveness of Vietnam in the future will be seriously affected because other countries are continuing programme to facilitate their trade.
Quynh Chi
Đăng ký: VietNam News
