‘New approach' needed
‘New approach' needed
With trade becoming a major contribution to economic growth, Viet Nam's future export growth must be based on enhancing competitiveness and capturing greater value addition, experts have urged.
At a workshop held yesterday in HCM City, representatives of the World Bank and the Viet Nam National Committee for International Economic Cooperation discussed recommendations in their new report, "Trade Facilitation, Value Creation and Competitiveness: Policy Implications for Viet Nam's Economic Growth".
They said Viet Nam had posted a strong trade performance in a difficult external environment, with exports rising 34 per cent in 2011, 18 per cent in 2012 and nearly 20 per cent in the first quarter of 2013.
However, Viet Nam has been less successful in diversifying its exports basket and in moving to global supply chains, they said.
"Viet Nam's ability to escape the middle-income trap is also predicated upon its ability to create a more competitive and efficient economy," the report says.
In his foreword to the report, Deputy Prime Minister Vu Van Ninh noted that the advantages of trade liberalisation were reaching their limits.
"It is time to have a new approach to improve trade competitiveness and export growth," he said.
World Bank economist Pham Minh Duc told the conference that the key for export growth was enhancing competitiveness.
Thus, the country must improve trade-related infrastructure, border management and manufacturing supply chains.
According to Duc, trade-related infrastructure in Viet Nam is weak, including poor transport and services, high transport costs, weak access to ports and inadequate inland container depots.
In addition, there is weak awareness of logistics and an inadequate framework for public-private partnerships (PPP) and logistics operators.
Also, warehousing, trucking services and freight forwarders lag behind global standards.
"Investment in annual transport infrastructure was 3.1 per cent (an average from 2009-11) of gross domestic product, far below the average for countries at the same level of development," the report says.
Speaking to Viet Nam News, Duc said: "Viet Nam should have a comprehensive legal framework so that PPP can be widely applied in the country."
"Exports are predicted to increase threefold over the next 10 years. So, we need support from the private sector as well as from the Government budget," he added.
As for border management, the World Bank report says slow, inconsistent procedures are a problem.
Complex business processes and weak coordination among key stakeholders, including customs, ministries and border troops, are other constraints.
Another weak area is supply-chain usage. Viet Nam has a weak capacity for sourcing materials and is dependent on intermediaries for sourcing supplies and receiving market signals. It also lacks working capital, the report notes.
To improve trade, the report recommends the establishment of a National Committee for Trade Facilitation to develop a national action plan for trade competitiveness enhancement and improved infrastructure and transport services.
Simplifying regulatory procedures to reduce time and costs and improving the reliability of cross-border trade are other recommendations.
In addition, it is imperative to restructure the manufacturing supply chains to capture value and to participate proactively in global value chains. The restructuring of agriculture supply chains is needed as well.
According to the report, success will require considerable and sustained effort by all stakeholders, with the Government playing the role of a facilitator and coordinator.
Political commitment will be needed from the top leadership, given that the recommendations will affect country competitiveness and directors of social and economic development at large, the report concludes.
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