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VN must diversify input sources

Update: June, 07/2014 - 09:20

Viet Nam has to widen its base of raw material sources, Vu Tien Loc, President of the Viet Nam Chamber of Commerce and Industry, tells theThoi bao Kinh te Viet Nam (Viet Nam Economics Times) newspaper

What should Viet Nam do to avoid its heavy dependence on agricultural and industrial inputs from China?

At present, the percentage of Chinese inputs in our agriculture and industry production is very high. However, there are quite a few opportunities for us to switch to inputs from other countries.

Regarding the agriculture sector, we are in the process of negotiating for the

Trans Pacific Partnership Agreement (TPP) and the Viet Nam - EU Free Trade Agreement. These are good opportunities for us to diversify the inputs to our primary industry.

Up to now, we have imported agricultural inputs from various manufacturers. They are mostly made in China and include machine tools, fertilisers and pesticides.

Once Viet Nam becomes a member of the TPP or Viet Nam-EU FTA, our import choice will be much wider. We'll have more opportunities to attract foreign investment in manufacturing of agriculture machinery right in our country.

These two agreements will also help us be less dependent on material inputs from China for our industries like, garment and textile, footwear, electronics, engineering and others.

For example, the TPP will enable us to import inputs from other markets in the TPP with a lower price, but higher quality than those from China.

However, if we don't want to depend so much on inputs from other countries, the only way is to develop our own supporting industries. The government has already introduced policies and guidelines to promote the development of supporting industries. This is the only way we can add value to our present industries.

In this context, what are the steps that Vietnamese enterprises should take?

We are now embarking on the path of industrialisation and modernisation. The government has already identified the industries that have comparative advantages during the course of international integration.

Based on government policies, each enterprise should choose for themselves, which businesses they are strong at.

For agricultural enterprises, I suggest, you establish commodities, associations and work closely with farmers to establish agriculture value chains. The enterprises must be the bridge linking the farmers with domestic and foreign markets.

What should we do to attract domestic and foreign investors to develop supporting industry in our country?

We've tried hard to improve our business and investment environment. On March 18 this year, the Prime Minister issued the Resolution No 19/NQ-CP focusing on the improvement of business environment and promotion of the comparative advantages of the economy. This is the first time we have got such a government resolution on this matter. High on the agenda of the ongoing session of the National Assembly is the discussion on amendments to the Enterprises Law and the Investment Law.

It is expected that the approval of two revised laws will improve Viet Nam's comparative advantage to about 50-60 steps in the global comparative advantage ranking by the WB. If this becomes a reality, Viet Nam will be one of the three countries in the world having the best comparative advantage environment.

Foreign investors in Ha Noi, Ho Chi Minh City and other provinces have all said that Viet Nam is a good and safe place for them to do business. They appreciate the government's resolve to improve the business environment and reform the institution. — VNS

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