Scene behind Vietnam's confined competitiveness: Experts

By Hong Ha - Jun 18, 2018 | 09:13 AM GMT+7

TheLEADERVietnam develops but does not follow the value chain and the way economy grows in the future, whilst building many roads does not bring efficiency, according to experts.

Scene behind Vietnam's confined competitiveness: Experts
Many roads will not be effective unless it is developed in the value chain. Photo: Directorate for Roads of Viet Nam

"Six years ago, no one could imagine that Vietnam could export $45 billion worth of phones last year, most of which were shipped via air cargo," World Bank senior economist Pham Minh Duc said.

"Vietnam's transportation system does not seem to meet the demand for change in commodities, especially those with high added value but low volume,” he added.

Duc said, "If the Vietnam transport system does not develop in accordance with the value chain and the way economy grows in the future, building many roads does not bring efficiency."

"Cost is the most crucial factor of competitiveness but not all. To improve competitiveness, Vietnam must move to a higher production base, which means Vietnam has to produce more complex goods and move to the global value chain," Duc said.

Economist Pham Minh Duc recommended few priorities to improve Vietnam's competitiveness. Photo: Kieu Mai

Vietnam can achieve these goals or not depends on trade facilitation policies, transport and infrastructure system as well as capacity of the sector.

In term of trade facilitation, World Bank recommended that Vietnam should apply international standard in the classification of non-tariff measures or specialized controls to better benchmarking Vietnam against international practices and learning international experiences.

In addition, Vietnam should allow traders to outsource testing services provided by certified testing bodies to facilitate faster testing in the context of increase in number of transactions whilst lacking staff capacity, resources and equipment.

In term of connective infrastructure, World Bank recommended that Vietnam should strengthen integrated planning across modes, introduce participatory planning and deepen private sector participation in infrastructure development, including further enabling various forms of public-private partnerships (PPP) for infrastructure delivery and attracting commercial financing for infrastructure development.

Vietnam's connective infrastructure currently has many shortcomings such as higher transport growth rates than that of GDP and low speed, poor reliability and inefficiency of transport and logistics services

Moreover, demand and supply do not match in maritime port sector where some key ports are operating at or near capacity while others are severely underutilized. For example, while up to 94 per cent of Ho Chi Minh City port's capacity is filled, this figure of Cai Mep - Thi Vai is only 29 per cent.

Experts said that time cost to import in terms of documentary compliance and other unfavorable factors are making Vietnam less competitive than other countries in the region.