VietNamNet Bridge – Why does Vietnam pursue the goal of becoming a country with modern industries, while it can develop using other advantages? The question was raised by Nguyen Duy Nghia, a reader of VietNamNet’s Vietnam Economic Forum.
Below is Nghia’s article. The author believes that in order to follow an industrialization process, Vietnam should use its comparative advantages. For example, by persuading the world to buy rice, eat fish and drink Vietnamese coffee, use seaport services in Vietnam and travel to Vietnam.
In the 1960s, in an effort to industrialize, Vietnam with the support of the Soviet Union, built a large mechanical engineering factory in Hanoi. After that, with the support from China, it built the Hong Ha office supply factory, also in Hanoi.
Following this, factories and workshops mushroomed in other provinces and cities, especially mechanical engineering factories,. However, these failed to advance Vietnam’s economy.
Beginning in 1990, Vietnam designed 10-year plans for industrialization and modernization, first for1991-2000 and then 2001-2010. Over the past 20 years, Vietnam achieved a lot in terms of economic development, but it has still not industrialised.
Vietnam’s heavy industry is mainly based on raw materials exploitation, preliminarily treatment of exploited ores, or assembling machines using simple technologies. Precise technology remains luxurious for Vietnam. The Hoa Lac High-tech zone has been completed for a long time, but to date it has not attracted high-tech firms. The plan on developing supporting industries is still not being implemented. Vietnam still has to import many goods from razors to press studs. The country is determined to become a powerful shipbuilder, but it still has to import the necessary equipment, including soldering sticks.
after many years, Vietnam still relies on imports. It has to import production lines, separated machines, spare parts, raw materials and technology. However, even with imported technologies, Vietnamese consumers are still not persudaded by the quality of the domestically made products High income earners do not want to use products made domestically, from non-stick pans to luxurious cars.
Still going ahead?
Vietnam needs five factors to successfully industrialize: big capital, profuse electric power, developed infrastructure, high technology level and good labour force. However, it seems that all these five areas remain problematic.
1. The capital for development remains small. Vietnam’s state budget has been relying on import-export tax and crude oil exports. Meanwhile, expenditures are always high and urgent. By the end of 2010, Government’s debts may reach 44.5 percent of GDP, the national foreign debts 42.2 percent of GDP, and public debts 56.7 percent
Vietnam is a poor country, but the wealth of individual people is profuse. Some can spend billions dong on car plates with auspicious numbers. However, their money does not contribute to the country’s industrial development. They inject money into stocks and real estate market or deposit it at banks.
Vietnam’s productivity is low, $2000 per head, equal to just ½ of that of the Philippines or Indonesia, 1/3 of Thailand, 1/10 of Malaysia, 1/30 of Singapore. Over the past 20 years, foreign investors made a lot of promises, but they have donelittle . In 1991-2000, the registered foreign direct investment capital was $43.9 billion, but the implemented capital was $19 billion only, or 43 percent.
2. Vietnam has been exporting coal, while the country itself needs coal to run power plants. Vietnam still cannot meet its own demand for electricity.
3. The traffic density per 1000 people in Vietnam is much lower than in other countries, but the quality is bad. Traffic jams remain an unsettled problem
4. Experts believe that Vietnam’s current technology level are just equal to that of China in the 1980s, of Malaysia in the 1970s, South Korea in the 1960s and Japan in the 1920s
5. Vietnam has many engineers, but it lacks skilfull workers. The bad salary scheme does notencourage the development of talented people.
Why does Vietnam still want modern industries?
For the past many years, Vietnam has been striving to industrialize. However, the path proves to be rough with many difficulties ahead. Is it imperative for Vietnam to continue, if it can choose another, easier way?
many other countries do not choose industrialization. They have been taking full advantage of their geographical positions, histories, beautiful landscapes, to focus on trade and services. Their achievements are admirable, because they known their own strengths.
Vietnam is a developing country, but it has great potentials in its coast, islands, agriculture, natural landscapes, culture and history. Therefore, Vietnam should use industrial products made by other countries, and in return, persuade the world to buy its rice, eat its fish and drink its coffee, attract more tourists to Vietnam to enjoy beautiful landscapes and persuade ships to use seaport services in Vietnam.
Nguyen Duy Nghia