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Value-added exports crucial to growth
Unified trade and industrial policies that help increase value-added exports in which Viet Nam has a comparative advantage are now crucial, warns Viet Nam National University Centre for Economic and Policy Research Director Nguyen Duc Thanh.
Research showed that several ASEAN countries – even those that have made progress similar to Viet Nam – have shifted to high value-added exports, he said.
Yet, Viet Nam continued to increase its exports of labour-intensive or value-added products.
The economist complained that Viet Nam's exports have shifted from labour-intensive or natural resource-intensive exports in the 1990s to those which were just labour-intensive.
The export of low-price agricultural produce has made Viet Nam a major exporter by volume
But the lack of processing technology and the inability to properly label and market the produce has made it impossible to yield either high revenue or a global reputation for the exports.
Viet Nam was ranked second among the world's rice exporters by volume but its trademark was all but unknown, says Institute of Agricultural Science for Southern Viet Nam Director Bui Chi Buu.
Whenever he went abroad he saw "Made-in-Thailand" but not "Made-in – Viet Nam" rice, he said.
But the return for processed agricultural produce was often ten-fold that of raw exports, he said.
Exported raw catfish earned about US$1 per kilogramme, filleted and packaged it realised $10 per kilogramme.
Pepper
Viet Nam Pepper Association president Do Ha Nam said 70 per cent of pepper was exported raw and often sold at below the international price, as a result.
"Indonesia, Malaysia, India and China imported and processed our raw pepper and sold it into the international market at much higher prices," he said.
The lack of support industries continued to ensure high import costs and little export of value-added garment, footwear and electronic goods.
The garment industry, Viet Nam's second export earner after crude oil, imported 70 – 80 per cent of its materials.
Although export revenue reached $9.1 billion last year, the industry imported material worth $4.3 billion for production.
The low and inconsistent quality of domestic fibre forced garment manufacturers to source materials from foreign suppliers.
Manufacturing
The Industry and Trade Ministry's Institute for Strategic Research and Industrial Policy director Phan Dang Tuat reports that manufacturing makes the least effort in the five endeavours to produce value-added goods.
They are research – design, component production, manufacturing, distribution and sales.
Elsewhere, only five of 100 enterprises that create value-added products are manufacturers, he says.
"But in Viet Nam manufacturing enterprises overwhelm the supporting enterprises."
The director says Viet Nam has about 2,000 garment enterprises but only about 250 supporting enterprises. The mechanical and electronics industries are the same.
Support
Former trade minister Truong Dinh Tuyen said development planning and strong government encouragement for supporting industries are crucial to value-added exports because of the fierce competition and harsh trade barriers Viet Nam faces.
He suggested that the Industry and Trade Ministry establish a Supporting Industries Department.
Dr. Yoshiharu Tsuboi from Japan's Wesada University's Political Science and Economics Department says that although the development of support industries is crucial, Viet Nam has done little but discuss theories over the past 10 years.
Viet Nam has failed to address such key questions as how supporting industries should be developed or how to improve their competitiveness, he says.
Dr. Tsuboi suggests Viet Nam select support industries to develop based on two criteria: Which industries are likely to develop as living standards improve and which are not inefficient.
Once the industries have been defined, government support through favourable development policies is critical, he says.
The Industry and Trade Ministry must also research the working of State owned Enterprises that make components.
Trademark
The development of national trademark will also enhance the competitiveness of made-in-Viet Nam exports.
The National Trademark Programme, approved in 2003, is intended to build Viet Nam's image as a provider of high-quality products and services, says Deputy Trade and Industry Minister Nguyen Thanh Bien.
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