Professor Hoàng Đức Thân. — VNA/VNS Photo Lê Phương

Professor Hoàng Đức Thân, former Director of the Institute of Trade and International Economy under the National Economics University, talks to Vietnam News Agency about attracting investors to develop infrastructure for commercial activities in mountainous areas

How do you evaluate the recent development of commercial activities in mountainous, island and border areas?

Việt Nam has 415 districts in mountainous and remote areas and 25 island districts. These regions across the country account for 50 per cent of the total population, but they have been slow to develop and residents’ living conditions are still not good.

In recent years, thanks to the State's investment attraction policies, trade activities in these districts have started to develop. The market in mountainous areas has been connected with domestic and international markets. Investment is being poured into infrastructure, creating a solid foundation for further economic development.

However, production remains scattered and small-scale because these areas lack investment capital, technology and high-quality human resources. This makes it hard to develop trade in a sustainable manner and meet increasing development requirements. Distribution chains have still not been set up.

The small scale of market demand in the region also makes it unattractive to investors.

But there is nevertheless huge development potential for commercial activities in mountainous, remote and island areas.

The Government has had many policies to develop the economy for these regions, particularly relating to the development of infrastructure and distribution systems. Do you think these policies were as effective as expected?

State policies and regulations have created a favourable legal environment and the motivation to draw investment from society to develop these areas.

However, the lack of comprehensiveness and focus have made these policies fail to meet expectations.

What are key challenges in developing commercial infrastructure in these districts?

First of all, unfavourable natural and geological conditions require huge investments while the returns for these investments are little.

Secondly, infrastructure networks, particularly transport and information and telecommunications systems, still lag behind other regions.

The conflict between investment demand and investment capacity is also a challenge. There is huge demand for investment in commercial infrastructure in these districts but the State budget is seriously constrained.

Also, most businesses investing in these regions are small and have limited capacity, while there are insufficient policies in place to attract major businesses from elsewhere.

Third, there is a lack of a long-term vision on investing into infrastructure in general, and into commercial infrastructure in particular.

Do you agree with the suggestion that developing commercial infrastructure in mountainous regions requires specialised and priority policies?

Specialised and priority policies for commercial infrastructure development are absolutely necessary. Mountainous regions need infrastructure investment policies that are different from such policies tailored for other rural areas and big cities. These policies should be suitable for the socio-economic development level of each locality and different trade models. The policies need to ensure a strategic vision and be comprehensive and transparent.

Investment policies should create a favourable environment for investors and provide incentives for localities and businesses to be more proactive.

One of the difficulties in developing a system of markets for mountainous regions is the lack of businesses investing in infrastructure. What should be done to encourage more investment from businesses?

Efforts to develop commercial infrastructure and market systems must be based on the private sector. Diversifying ways to attract private investment is also necessary.

In order to attract businesses, the State should ensure State investment capital and make a commitment to capital disbursement. Mountainous provinces should also work to improve their provincial competition index rating.

There remains a gap in commercial infrastructure development among localities. What should we do to bridge this gap?

Infrastructure development is mainly focused on urban areas so it is necessary to limit that to prevent all of our resources from pouring into big cities.

There are two groups of solutions. Firstly, it is crucial to focus on developing infrastructure for remote and mountainous areas, ensuring a smooth connection of transport infrastructure and information and communications and promoting social investment in commercial infrastructure for these areas.

Secondly, it is important to directly develop trade for remote and mountainous areas. This is considered a prerequisite for infrastructure development. Trade development will draw investors. Mountainous areas often have long borders so the State should also invest in developing border trade infrastructure. — VNS