State-owned enterprises (SOEs) account for only one percent of businesses in Vietnam, but hold total assets of over VND3,000 trillion (US$133.5 billion), of which the State holds VND1,100 trillion, according to the Ministry of Planning and Investment. SOEs currently control 90 percent of telecom services, 56 percent of financial and credit services, 85 percent of electricity, and 70 percent of exported rice. These big numbers show part of the enormous difficulty in SOE reform. According to a recent study by the Central Institute for Economic Management (CIEM), SOE's current assets are equal to 80 percent of Vietnam’s gross domestic product (GDP), equivalent to VND2,800 trillion, of which large-scale economic groups make up roughly 60 percent. Compared with other countries in the world, this ratio is quite high. For example, this rate is around 15 percent of GDP in Africa, 8 percent in Asia, and 6 percent in Latin America. In high-income countries (classified by the Organisation … [Read more...]
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Unlocking Capital Flows for Transport Infrastructure
According to the Vietnam transport infrastructure development plan in the 2016- 2020 period, Vietnam will need VND1,000 trillion for transport infrastructure development. This is a huge value if it relies only on State budget and official development assistance (ODA) capital. Therefore, according to economic experts, attracting private capital via the form of public private partnership (PPP) is the key to this capital shortage. However, PPP enforcement is currently facing many difficulties.Risks for businesses Speaking of difficulties in transport infrastructure investment projects in the form of PPP, Mr Pham Quang Dung, President of Tasco Joint Stock Company, said transport infrastructure investors are facing a lot of risks. For example, construction capital and owner's equity invested are not counted as profits in the course of construction. Shareholders lose confidence because they do not receive dividends. Meanwhile, companies have to borrow money at high interest rates, even 1.3 … [Read more...]
Low-income earners burdened by high fees
VietNamNet Bridge - Vietnamese now have to spend 21.4 percent of their total monthly living expenses, according to Numbeo, the database on living costs. Tuoi Tre newspaper reported that with VND15,000 per kilometer for a five-seater car and VND16,000 per kilometer for seven-seater cars in HCM City, the taxi fee in Vietnam had left other regional countries far behind. Vietnamese have to spend 1/5 of their total income on travelling, while the remaining 4/5 is used for other items from food to electricity and water, from clothes to entertainment services. Meanwhile, in Singapore, which is believed to have the highest living costs in South East Asia, the taxi fee is VND8,700 per kilometer, half of the charge in Vietnam. The taxi fee in Cambodia is also lower than in Vietnam. Cambodians pay VND12,000 for every kilometer, while transport costs account for 15 percent of their total monthly spending. Thailand has the lowest taxi fee, VND5,000 for every kilometer, just 1/3 of Vietnam. … [Read more...]
Coordination in developing inter-region and trans-nation tourism
The international conference on "Coordination to develop tourism in the Central South Coastal Region with the Mekong Delta, the central Highlands, the provinces of Southern Laos and North-East Cambodia" was organized by the Ministry of culture-sports-tourism, the coordinating board of developing the central region and the people’s committee of Binh Thuan province. The conference was aimed at introducing lots of solutions for regional coordination and trans-nation coordination, in connection with developing products, particular forms of tourism to establish tours and tourism destinations at regional and international level. Deputy minister of culture-sports-tourism, Mr. Le Khanh Hai, asserted :the central coastal region is in the particularly significant location in economy, politics, national defense-security, being the main traffic axis, connecting the economy of North-South and East-West, bearing the close relationship with the highlands provinces, Southern Laos, North-East … [Read more...]
Pressures from Economic Institutional Reform
"Lagging is a fact, not a risk anymore," said Dr Tran Dinh Thien - Director of the Vietnam Institute of Economics. The correlation of Vietnam's position to regional and global economic maps shows that we are much lagging behind in some areas. This fact is evidenced by data announced by the General Statistics Office (GSO): Vietnam's GDP per capita was US$2,052 in 2014, 21 times higher than in 1990, but it equalled that of Malaysia in 1988, Thailand in 1993, Indonesia in 2008, the Philippines in 2010, and South Korea in 1982. Vietnam's GDP per capita in 2014 was equal to three-fifths of Indonesia, two-fifths of Thailand5, one-fifth of Malaysia, one-fourteenth of South Korea and one-twenty-seventh of Singapore. So, Vietnam's GDP per capita is 30-35 years after that of South Korea, 25 years after Malaysia, 20 years after Thailand, and 5-7 years after Indonesia and the Philippines. GSO saw that the economic structure and macroeconomic balances have been shifted towards a positive but slow … [Read more...]
Seeking Funds for Transport Infrastructure Development
Recently, the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) cooperated with the Vietnam Institute of Economics (VIE) to organise a seminar on "Fund for transport infrastructure development: Demands and solutions." Top-notch specialists suggested ideas for improving the efficiency of capital attraction for transport infrastructure development.Insufficient funds for transport infrastructure development The seminar brought together over 200 specialists from State agencies, investors and international organisations interested in transport infrastructure development in Vietnam. Speakers presented 16 keynote presentations at the workshop, focusing on four major topics: (1). Capital for transport infrastructure development in Vietnam: Current situations and problems; (2). Strategic orientation and planning of future transport infrastructure development: Choosing priorities and roadmaps; (3). Capital demand for future transport infrastructure development: … [Read more...]
Vietnam’s tourist attractions a classic case of ‘more of the same’
Boat racing in Mui Ne is one of the few tourism products in central Vietnam, experts said. Photo: Diep Duc Minh Tourism officials have not minced their words when speaking about top destinations in central Vietnam. Ha Van Sieu, deputy director of the Vietnam National Administration of Tourism (VNAT), said nearly all coastal towns in the region, from Da Nang to Nha Trang and Phan Thiet, are almost the same, without any distinctive tourism products. "The only way to make tourists stay longer and spend more is to give them something special," he told a conference in Phan Thiet last weekend. Officials and industry insiders, once again, agreed that the south central region is resource rich, with 1,200 kilometers of coastlines and numerous cultural and religious sites. But they said the region failed to rack up big revenues. Tran Du Lich, a government advisor, said tourism companies really need to be creative and find new ways to make tourists spend more money, either on shopping or … [Read more...]
Tourism sector needs regional connections
HCM CITY (VNS) — Viet Nam's central-coastal, southeastern and Central Highlands regions have great tourism potential but weak linkages between these areas and neighbouring countries have led to ineffective development, according to experts who spoke at a conference in HCM City last Saturday. Forests and lakes in the Central Highlands as well as a 1,200-km stretch of beach along the central coast and southeastern areas, which border Laos and Cambodia, attract millions of tourists each year. Dr Tran Du Lich, head of the consultancy group for the Central Coastal Region Development and Cooperation, said that Viet Nam's tourism development strategy to 2020 focuses primarily on these three regions. Speaking at the conference on tourism linkages between the three regions and southern Laos and northeastern Cambodia, Lich said that, compared to other countries in ASEAN, the regions had failed to attract a large number of tourists, especially foreigners. "More co-operation between … [Read more...]
Vietnam’s transport development in a mess
VietNamNet Bridge - The cost of transportation in Vietnam has become expensive while the number of accidents is high because the country has overemphasized road development. In the past 40 years, Vietnam did not have even 1m of railway for commercial purposes. Those observations were made by experts at a seminar on funding for transport infrastructure, held by the Vietnam Economics Institute on Monday. Experts said that Vietnam has made many mistakes in developing the transport system, increasing transport costs and the number of accidents in Vietnam. Former Deputy Minister of Transport, La Ngoc Khue, said it was time to review Vietnam’s overall traffic planning. Khue said Vietnam has over-emphasized road transportation, resulting in traffic congestion and accidents. Railway transport has used less land and less fuel but in the last four decades, Vietnam did not build even one meter of railway for commercial use. For water transport, many projects have been delayed for … [Read more...]
In competing with China, weak VND policy will not help
VietNamNet Bridge - Economists have repeatedly advised the government not to rely on a weak dong policy when trying to compete with Chinese products as demand in China is falling. Dr. Luu Bich Ho, former head of the Development Strategy Institute, said the weak dong should not be the major solution to competition with China. Ho warned that this was not a method Vietnam should continue to apply. "The dong devaluation will help ease exporters’ difficulties, but we cannot devalue further because of the problems that could arise in the national economy," Ho said, adding that the sharp dong devaluation will increase inflation. He went on to say that the weak local currency policy will not work once demand is low. Agreeing with Ho, an analyst said technical solutions would not help much. Meanwhile, purchasing power has decreased in China. "Even if Vietnamese exporters try to lower the prices, they will fail to boost exports to the market where the demand is low," he … [Read more...]
Private investment needed in infrastructure
HA NOI (VNS) — Demand for transport infrastructure is increasing, so the Ministry of Transport must review transport system planning and seek private investment for transport projects, according to officials at a workshop. The meeting was held by the Viet Nam Institute of Economics and the Bank for Investment and Development of Viet Nam (BIDV) on Monday. It focused on promoting investment in transport infrastructure. The demand for investment in transport infrastructure between 2016 and 2020 had grown to VND1 quadrillion (US$45 billion), said Nguyen Danh Huy, director of the Public-Private Partnership Department at the Ministry of Transport. The State budget is limited. It can provide about 28 per cent. However, the Ministry of Planning and Investment's plan on public investment for 2016-2020 only puts the figure at about 7 per cent of the demand or VND66 trillion ($2.93 billion). So attracting private investment at home and abroad would play an important role in transport … [Read more...]
VN needs huge funding for transport infrastructure projects
Tu Hoang According to BIDV chairman Tran Bac Ha, total funding for developing transport infrastructure in 2016-2020 is estimated at more than VND1,000 trillion, or around US$48 billion. Ha quoted statistics of the Ministry of Transport as saying that VND376 trillion (37.2%) would come from State coffers, VND285 trillion (28.2%) from official development assistance (ODA) loans and VND348 trillion (34.4%) from other sources. Ha said local banks’ lending accounts for 85% of total investment costs for transport infrastructure between 2011 and 2015, and could meet 80% of the country’s funding needs towards 2020, at around VND310 trillion. If so, outstanding loans for transport infrastructure projects in 2020 will make up 3.2% of the banking system’s total. Besides, if annual credit growth is 15%, total outstanding loans will be around VND9,675 trillion in 2020. In the 2016-2020 period, BIDV would set aside VND60-70 trillion for transport infrastructure … [Read more...]
Drastic reforms required to avert economic inertia
After 70 years of national building and development and almost 30 years undertaking its reform process, Vietnam's economy is at a pivotal point. The nation must either implement policies to grow sustainably, or else it will reach a plateau and find itself in a middle-income trap. At the crossroads Bui Tat Thang, director of the Ministry of Planning and Investment's Development Strategy Institute, said following the low-income landscape in the 1980s, Vietnam has passed its horizontal development phase and achieved remarkable growth in recent years. Still, such remarkable progress has come as a result of a market economy in its initial stages, and is basically only one step out of poverty. With reference to an economic growth model by Professor Tran Van Tho of Japan's Wasada University, Thang noted: "After three decades of reforms, the country's economy is sprouting up. However it is currently at a crossroads. If we don't want to turn on to the so-called "horizon" road, we ought to … [Read more...]
Transport companies yet to lower fares despite fuel price cuts
Despite falling petrol prices local road hauliers and bus firms seem happy to continue charging high prices for their services. Transport fees remain despite fuel price cuts On September 3, the Ministry of Industry and Trade requested petrol traders to lower prices of 92 octane petrol by VND1,198 per litre along with cutting prices for other types of fuel. Several experts said that it was necessary to tighten control over transport fees or even fine firms that delay cutting their charges. They commented that authorities can control transportation fees but nothing had been done despite urging from the finance, and industry and trade ministries. The situation is replicated across the country. "We’ve requested freight companies and bus firms to lower fees but they proposed to delay any move until after National Day," said Nguyen Hong Ky, director of the Nghe An provincial Department of Transport. Dang Van Luong, acting director of Lao Cai provincial Department of Transport … [Read more...]
Private sector to hold central role in economic development
Hanoi, September 4 (VNA) – Enhancing the role of the private sector was the focus of discussions at a forum on September 4 to boost economic growth from 2016-2020. The event, jointly organized by the Party Central Committee’s Economic Commission and the Vietnam Union of Science and Technology Associations, aimed to collect comments on the plan for socio-economic development over the next five years. Director of the Vietnam Institute of Economics Tran Dinh Thien said the private sector should be made the main driving force for economic growth. Participants stressed the need for productivity-based approaches to ensure effective and sustainable economic development during international integration. Meanwhile, former Director of the National Economics University Le Du Phong underlined agriculture production and rural development, saying that rural labourers account for 46.8 percent of the total labour force. Investment should be focused on the agricultural sector and … [Read more...]
Forum discuss ways to enhance role of private sector
(VOV) -Enhancing the role of the private sector was the forefront of discussions at a forum on September 4 to boost economic growth from 2016-2020. The event, jointly organized by the Party Central Committee’s Economic Commission and the Vietnam Union of Science and Technology Associations is designed to gather opinions on the plan for socio-economic development over the next five years. Vietnam Institute of Economics Director Tran Dinh Thien said the private sector should play a role as a main driving force for economic growth. Participants underlined the need for productivity-based approaches to ensure effective and sustainable economic development during international integration. Former Director of the National Economics University Le Du Phong emphasized agriculture production and rural development, noting rural labourers account for 46.8% of the total labour force. Investment should be focused on the agricultural sector and rural development to create breakthroughs … [Read more...]
Forum discusses ways to enhance role of private sector
(VOV) -Enhancing the role of the private sector was the forefront of discussions at a forum on September 4 to push up economic growth from 2016-2020. The event, jointly organized by the Party Central Committee’s Economic Commission and the Vietnam Union of Science and Technology Associations is designed to gather opinions on the plan for socio-economic development over the next five years. Vietnam Institute of Economics Director Tran Dinh Thien said the private sector should play a role as a main driving force for economic growth. Participants underlined the need for productivity-based approaches to ensure effective and sustainable economic development during international integration. Former Director of the National Economics University Le Du Phong emphasized agriculture production and rural development, noting rural labourers account for 46.8% of the total labour force. Investment should be focused on the agricultural sector and rural development to create … [Read more...]
China remains thorn in side of Vietnam’s exporters
VietNamNet Bridge - Doing business with China is one of the biggest problems Vietnam has to deal with as it integrates more deeply into the global economy, economists have said. Vietnam needs to develop products that are different from those produced by China. "Any problems of the Chinese economy would have a strong impact on Vietnam because Vietnam maintains a special trade relationship with China," said Truong Dinh Tuyen, former Minister of Trade, at the Spring Economic Forum held in late August. Cyprus makes up 0.2 percent of European GDP only. However, its crisis still could shake European and the world’s stock markets. The impact would be much more serious with China, one of the world’s largest economy with $10 trillion in GDP, making up 23 percent of global economic growth. Tuyen, who led the 11-year process of negotiation to join the WTO, said Vietnam has time to change its production structure, which is now heavily reliant on China. "Vietnam needs to go the … [Read more...]
Vietnam may lose due to poor infrastructure
Tu Hoang Tran Dinh Thien gave the warning on Tuesday, prior to a seminar on transport infrastructure investment planned by the Vietnam Academy of Social Sciences and the Ministry of Transport for next week. According to Thien, huge investment capital has been injected into infrastructure in recent years but infrastructure is not yet sufficient to meet the country’s needs for more growth. Take as an example Cai Mep-Thi Vai port complex in the southern province of Ba Ria-Vung Tau, he said. The complex is running at 17-18% capacity. Scattered investments are also reported in airport projects nationwide. Meanwhile, funding is in dire need for key airports like Noi Bai in Hanoi and Tan Son Nhat in HCMC to solve overloads and the long-conceived Long Thanh international airport which will not have its first runway put into operation until 2022. Thien described the country’s railway system as too old and outdated. "Seaports and airports are in poor condition and … [Read more...]
Specialties–development way for vulnerable breeding industry in global integration, expert
Instead of running after imported products, Vietnam’s breeding industry should develop its specialties to improve competitiveness and create difference to avoid possibly bad impacts from ASEAN Economic Community (AEC) and Trans-Pacific Partnership (TPP) agreements, said head of the Vietnam Economics Institute Tran Dinh Thien. The Vietnam’s breeding industry should speed up restructuring by determining its own strengths because the agreements would not only cause difficulties but also bring some certain advantages, he added. Many experts and businesses have concerned that the uncompetitive breeding industry would suffer bad impacts of global economic integration more deeply with free trade agreements which negotiations have nearly wrapped up. The breeding industry would be offered as a sacrifice to return for incentives in other fields when Vietnam negotiated free trade agreements, said Binh Duong province based Kim Long Company Chung Kim at meeting with Minister of … [Read more...]