Business urges expansion of provincial trade and investment initiatives in 2004

Dec 22, 2003

Vung Tau The year 2004 should see a redoubled effort in Viet Nam to promote trade and investment, especially at the provincial level, according to participants at today’s Domestic Business Meeting (DBM) in Vung Tau city. Citing many of the challenges facing provincial businesses as they seek to access investment funds and market their products for export, entrepreneurs and policy makers alike pledged to cooperate in finding solutions to the constraints on private sector growth.

The DBM, jointly organized by the Ministry of Planning and Investment (MPI) and the United Nations Development Programme (UNDP), attracted an audience of key ministry officials, representatives from southern provincial governments, UNDP officials, and over 150 entrepreneurs and business association representatives from southern Viet Nam.

The objective of the meeting was to assess trade and investment promotion policies in the 61 provinces and cities, with the intent of proposing solutions to improve the effectiveness of those policies. A recent survey of 11 provinces conducted by MPI’s Central Institute for Economic Management (CIEM) revealed that market support and trade-investment policies at the provincial level are inadequate to meet the private sector’s growing demand for such services. Commenting recently on the interdependency between trade and investment strategies, Deputy Prime Minister Vu Khoan said that “In the past few years, trade promotion activities in Viet Nam have improved. However, we must give more attention to the idea of closely coordinating trade promotion with investment and tourism, for these three activities strongly reinforce one another.”

Dr. Dinh Van An, President of CIEM, echoed the Deputy Prime Minister’s views, and added that “In light of Viet Nam’s ongoing integration process with global trade and financial markets, the time is now to seek ways to ensure that entrepreneurs in the provinces have access to similar economic opportunities as their fellow citizens in the major economic centers. Trade and investment promotion activities can be seen as a practical way to even out that disparity.”

Many participants voiced concerns that trade and investment policies should be tailored to the needs of individual provinces. Several businesspersons identified a need for more provincial-level initiatives on promotion strategies. One businessman from Ca Mau province in the Mekong Delta remarked that “the national programmes that do exist focus mainly on the Ha Noi and Ho Chi Minh City areas.”

Though some have indeed prioritized trade and investment support, a majority of Viet Nam’s provinces have yet to invest significant resources towards this end. Notable successes, however, include Ho Chi Minh City’s five comprehensive trade-investment programmes.

Other discussants noted that the trade and investment programmes that do exist in the provinces are difficult to access. Small and medium enterprises (SMEs), in particular, are often excluded from promotion campaigns. Over 90% of SMEs in Viet Nam report that trade and investment support is hard to take advantage of, most often due to a lack of information.

Another key issue raised at the DBM was the importance of improved consulting capacity - in fact, only about 20% of Vietnamese entrepreneurs reported that they were satisfied with the quality of consulting services in Viet Nam, according to a recent GTZ survey. As one entrepreneur from Dong Nai province observed, “It’s very difficult to become competitive in foreign markets without high-quality consulting services.”

UNDP Resident Representative Jordan Ryan commented that for all of the challenges that remain for domestic entrepreneurs, Viet Nam has made great strides in the areas of trade and investment in recent years. As he noted, “Viet Nam has really been a good performer: export growth has averaged 12% per year since 1997, and private investment has grown at a steady 20% yearly since 1999.” He continued, “National trade and investment numbers have certainly been encouraging- but what is crucial for us today is to seek ways to sustain that growth and ensure that it is spread more broadly across Viet Nam’s provinces and cities. Improve trade and investment support will clear the way for more growth and development at the provincial level.”

Remarking on the day’s discussion, Mr. Ryan said “A pragmatic and productive dialogue on provincial trade and investment promotion is an excellent way to round out a year of successful Domestic Business Meetings. This forum was particularly timely, for there is an urgent necessity in Viet Nam to free up domestic resources for new investments. We look forward to working with the Government of Viet Nam and domestic businesses alike to make progress in this area during the year.”

Since the enactment of the Enterprise Law in 2000, over 72,600 new businesses have appeared in Viet Nam, with a total investment of over US $9.5 billion. Though it only represents about 7% of total GDP, the private sector has already generated over 1.75 million new domestic jobs. Many administrative and resource hurdles still hamper a more robust private sector growth spurt, however. Yet the potential of the private sector in Viet Nam remains vast, especially in job creation, tax revenue generation, poverty reduction, and the achievement of the Millennium Development Goals (MDGs).

Due to the success of this year’s series of multi-stakholder DBMs, more meetings are being scheduled for 2004. In the short-term, though, the DBM Working Group will convene early next year to follow-up on the issues discussed in Vung Tau to ensure the feedback received from entrepreneurs is translated into the practical advice for policymakers.

Contact informationDo Thi Nguyet Nga, Programme Officer,
Tel. 942 1495 Ext. 254; Fax: 942 2267