Why is Vietnam still poor?

That is the question that Dr. Vũ Minh Khương, a lecturer at the National Singapore University, has received from many Singaporeans.

They said Singapore has only one seaport and one Sentosa Island while Vietnam has many seaports and many beautiful islands like Phu Quoc, Ha Long, Van Phong, etc.

But it is listed among countries with low average per capita income and low competitiveness.

This question is difficult for Singaporeans but it is not difficult for those who understand Vietnam.

Dr. Khương said that Vietnam has a large potential for development but Vietnam doesn’t know where it should focus.

According to Khương, Vietnam’s case is like that of a man who is very versatile, who can play music very well and can also draw nice paintings.

With so many talents, he sometimes does scientific research, other times plays music and then draws paintings and in the end he doesn’t become a scientist nor a musician nor a painter.

For example, Quang Ninh province in northern Vietnam has Ha Long Bay and abundant reserves of coal.

The province both explores coal and develops tourism but coal exploration harms the Ha Long Bay’s natural environment.

Tourism development in Quang Ninh, sadly, focuses on attracting large numbers of visitors, who however don’t spend much money there.

Quang Ninh is not the only one example in Vietnam.

Provinces in the Red River Delta are wondering how to explore the giant coal reserves under their rice granary, which is the dream of many countries in the current context, when food security is the top priority.

Local governments in Vietnam are striving for high growth rates and industrlisation, not thinking about the advantages they already have.

Their development plans are all similar.

And this means that they lose their competitiveness.

Let’s look at the seaport development in Vietnam.

All coastal provinces in Vietnam want to have their own seaports.

In the next ten years, Vietnam will build up to 39 seaports, with 108 wharves.

Is it good?

The more seaports there are, the less goods each seaports will service, which in turn, means higher costs.

In the US, there are only three major seaports along the 1900km-long western coast.

Vietnam seems to forget Malaysia’s lesson of seaports development.

Prior to the 1970s, it had only two big ports.

The government decided to build four more national and three domestic ports, resulting in the redundancy of seaports and severe competition among them.

With a strategic position and a long coast, Vietnam has the advantages to become an international transit center but will Vietnam take the chance?

There was a time when all provinces and cities tried to have their own sugar and cement plants and now they are racing to have their own steel plants and seaports, which are all small.

Vietnam currently doesn’t have an international transit container seaport.

It has some international ports like Saigon, Da Nang and Hai Phong, which can host big vessels but their services don’t meet the demand, service charges are high and the customs clearance duration is long (3-7 days on average compared to 10 minutes in Singapore).

There is no adequate investment in the railway and road networks connected with these ports.

Infrastructural facilities are poor.

Experts mention a story which is shows how regional interests hindering the overall development:

The Cai Mep-Thi Vai seaport in the southern province of Ba Ria-Vung Tau welcomed big foreign cargo ships.

In every aspect, this port was suitable to become an international transit port.

However, HCM City and Long An also wanted to turn their ports into international transit ports while there was a shortage of capital.

Attracting foreign investment is another area, which can partly answer the question why Vietnam doesn’t become rich though it “sits” on mounts of gold.

Though the country has a common policy on foreign investment but to lure investors, many provinces and cities have broken the rules, by offering many more incentives.

A survey by the Ministry of Finance at 48 provinces and cities in 2006 revealed that up to 32 provinces issued illegal documents, which offered special incentives for investors and 11 provinces violated the regulations on corporate income tax.

The race to attract foreign investment among provinces harmsthe national economy.

This is the race to the “bottom”.

“Instead of competition, cooperation and combination among provinces and sectors must be encouraged,” advised Professor Michael Porter.

Vietnam should seriously consider its position in the global economy at present and define its advantages that can make its name in the world.

Source: Vietnam Net


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