The findings were released last week by the Ministry of Industry and Trade (MoIT) and the United Nations Industrial Development Organization (UNIDO) in the Vietnam Industrial Competitiveness Report 2011 (VICR2011).
The report indicated that Vietnam jumped 14 places in just four years to rank 58th among the 118 countries in the UNIDO’s Competitive Industrial Index, “thus becoming one of the most rapidly improving countries in the world”. The country has also overtaken strong competitors with a long industrialisation tradition such as Egypt, Morocco and Russian, according to the report.
“This is a clear indication that Vietnam is turning into a rising star in the global manufacturing scene and a threat to competitors around the world,” the report noted. It also pointed out that both manufacturing value added (MVA) performance and manufactured export performance in Vietnam had been “impressive”.
MVA skyrocketed from $5.8 billion to $15.4 billion between 2000 and 2009, representing double-digit growth rates in the first and second half of the decade, “a feat that has only been achieved by China and Cambodia in the region”, while manufactured export growth in Vietnam in the last decade even outshined China.
However, whether Vietnam can keep up such impressive MVA growth rates as the absolute value increases remains a question, especially if the country maintains its manufacturing focus on labour intensive goods. The report pointed out that as countries expanded their industrial base, they were unlikely to experience less consistent growth rates.
“Industrial expansion calls for structural change towards more sophisticated industries and not juts a shift from agriculture to manufacturing as has been the case in both Cambodia and Vietnam,” the report suggested.
Vietnam’s trade pattern also raises concerns given the country’s heavy reliance on imports and limited domestic technological content.
Vietnam also has 28 border EZs covering 605,000ha but housing only about 70 foreign-invested projects with total registered capital of $700 million and 500 Vietnamese-backed projects capitalised at $1.93 billion.
A recent inspection conducted by the NA into EZs’ operations showed that investors were facing cumbersome investment procedures, slow site clearance, and underdeveloped infrastructure.
The MPI said the government would call for a halt in the establishment of new industrial zones (IZs) and industrial clusters (ICs) to focus on developing established zones over the next few years. The government would also review all approved IZs, ICs and EZs. Inefficient zones will be shut down.
The government’s move is a response to the public concerns over the massive establishment of IPs and ICs. The NA’s Economic Committee reported that Vietnam had 267 IZs covering 72,000 hectares with an occupancy rate of 45.6 per cent. Nearly 7,000 projects have registered in the zones but only 32 per cent of their commited capital had been disbursed.
Vietnam plans to raise the number of IPs to 547 with a total combined size of 200,000ha by 2020.
“This issue needs to be re-considered seriously, because 90 of the existing 267 IPs are now either under site clearance or remain on paper,” said Le Ba Lich, an NA deputy and head of Ho Chi Minh City Economics Institute.
The MPI said the government would amend Decree 29/2008/ND-CP dated March 14, 2008 on establishing and managing IZs, export processing zones (EPZs) and EZs. The plan is to place more stringent regulations on conditions and procedures for planning and establishing IZs and EZs.
VIR
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