Cat Lai port.—File Photo

HA NOI (Biz Hub)— Viet Nam needs to improve its transport and logistical services, simplify trade regulations and restructure its supply chains to enhance the country's competitiveness and increase added value to ensure future export growth.

These issues were highlighted in a report titled "Trade Facilitation, Value Creation and Competitiveness: Policy Implications for Viet Nam's Economic Growth", that was jointly released yesterday in Ha Noi by Viet Nam's National Committee for International Economic Co-operation and the World Bank (WB).

The report said that Viet Nam had posted a strong trade performance during a difficult economic period, with exports rising 34 per cent in 2011, 18 per cent in 2012 and by nearly 20 per cent in the first quarter of 2013.

However, the advantages of trade liberalisation, in helping to encourage trade growing, was reaching it limits, said experts, adding that it's now time to have a new approach to speeding up a growth in exports.

According to Pham Minh Duc, WB's senior economist, Viet Nam faces a serious deficit with many major partners, especially China and other ASEAN countries, as the country's exports remain primarily low value goods.

In addition, Viet Nam still only produces and exports products of a low technological value.

Falling behind

Duc went on to say that Viet Nam was behind many of its regional competitors in terms of time, cost and reliability.

An inadequate transport infrastructure, inefficient customs and a lack of transparency were the three biggest challenges, he said.

The annual investment into transport infrastructure in 2009-11 was 3.1 per cent of the country's gross domestic product, still well below average for countries at the same development level, while exports are expected to triple by 2020.

"This might cause an imbalance as an upgrade of the transport infrastructure would fail to keep pace with the rapid growth in exports," said Duc.

"Viet Nam clearly needs to upgrade its deteriorating infrastructure, simply to maintain its export competitiveness, yet the current level of investment has been inadequate," said the report, pointing out that the participation of the private sector was crucial when public investment was clearly not enough.

Do Xuan Quang, Chairman of the Viet Nam Logistics Business Association, said that the poor awareness of logistics and services lagging behind global standards was another barrier to developing the trade.

The report also revealed that Viet Nam's regulatory procedures for imports and exports were slow, inconsistent and vulnerable to administrative corruption.

Regarding the third pillar, supply chains, the report said that weaknessesin Viet Nam's supply chains for anufacturers and agricultural products prevented the country from lowering its exports costs and gaining much needed added value.

Manufacturing mainly depends on imported materials while agricultural production was still low quality and extremely fragmented.

Recommendations

More Government commitment was needed along with the development and implementation of a national action plan to enhance trade competitiveness, said the WB.

The WB proposed setting up a National Committee for the Facilitation of Trade and a sound policy framework to carry out the action plan.

According to Paul Vallery, the WB's Transport Cluster Leader, efficient logistics is an important part of enhancing Viet Nam's competitiveness.

He said that modernising the customs system must be sped up, to ensure transparency and consistency, reduce time and costs and improve the reliability of cross-border trade.

The development of the haulage industry, which was now fragmented and an increase in business at Cai Mep-Thi Vai Port were also essential in the next five to ten years, he added. — VNS