Since Viet Nam joined the World Trade Organisation (WTO) over five years ago, national competitiveness has not been improved significantly. The deputy director of Information Centre of Industry and Trade under the Ministry of Industry and Trade, Le Quoc Phuong, spoke to Vietnam News Agency's Econet about what's lacking.
|Le Quoc Phuong
Viet Nam's competitiveness has traditionally rested on abundant labour and cheap costs, advantages that are considered unsustainable. How would you assess the current competitive capacity in the five years since joining the WTO?
In the five years since joining the WTO, the improvement in our country's competitiveness has been tiny in relation to the global context. The Global Competitiveness Index (GCI) released by the World Economic Forum annually showed that Viet Nam's competitiveness has remained unchanged in the past five years.
Specifically, before taking part in the WTO (2006), Viet Nam ranked 64th out of 131 countries which were ranked by the survey. In the region, Viet Nam was only higher than the Philippines and Cambodia. Last year, our country still ranked the 65th out of 142 countries with its position was just above the same two countries.
The unchanged competitiveness has many causes. One of the main reasons is that our economy has still relied on the exploitation of the available comparative advantages, or the static comparative advantages, including natural resources and cheap labour costs.
Last year, Viet Nam's total exports reached nearly US$97 billion, 2.4 times more than in 2006, but the structure of it quite similar to that of 2006, dominated by minerals like crude oil and coal, agricultural products like rice, coffee, rubber, cashews, and seafood, and processed goods like clothing, footwear, electronics and wood products which are outsourced on the basis of mostly imported materials.
To sharpen the country's competitive edges, one of the most critical tasks for the country right now is to become more involved in industries with a higher proportion of technology proportion and added value in the global supply chain. Viet Nam needs to be self-motivated to create dynamic comparative advantages on the basis of renewed technology that raises productivity and product quality.
Do you think that slow-changing institutions should be blamed for the situation?
This is considered one of three knots in the economy. These three factors, part of 12 used to compute the GCI, are institutions, infrastructure and human resources. We have made great efforts to reform institutions in the five years since joining the WTO, but the Vietnamese institutional system has not met the need to create a suitable legal and administrative framework for socio-economic development.
Has any sector taken advantage of the opportunities presented by the WTO'?
Several sectors have taken advantage, including agriculture, seafood, garments and footwear. They have boosted production and found new markets made possible by the country joining the WTO. However, these sectors have still been those with the lowest level of added value in the distribution chain. As a consequence, although they have received incentives to boost production and exports, the benefits are still diminutive.
Meanwhile, several sectors which have failed to take advantage of WTO opportunities include the automotive assembly, equipment manufacturing and the electronics industry. They did not grab opportunities to transfer technology or raise productivity. Instead, these industries have relied heavily on State subsidies while continuing to take advantage of cheap labour costs. Their competitiveness has been quite low, with production mostly focused on assembly using imported equipment and accessories.
Vietnamese businesses have faced many international barriers in terms of quality, food safety, and environmental regulations. Why hasn't Viet Nam used such technical barriers on the domestic market?
The establishment of technical barriers to manage imported products is critical and is allowed by the WTO. However, in five years of participating in the WTO, Viet Nam has rarely used such barriers to supervise imported goods and restrain its trade deficit. Under WTO rules, if Viet Nam applies any technical requirement for imported products, goods which are made-in-Viet Nam to be sold on the domestic market must meet the same requirement. This has been challeging for Vietnamese producers.
Vietnamese product quality needs to be improved and closely monitored in order for an effective system of technical barriers that monitor imports and ensure the rights of domestic consumers.
The State also should also consider specific regulations setting the responsibilities of ministries and agencies and allowing them to co-operate in setting up technical standards for dfferent goods on the domestic market. — VNS