Five letters "CH" for stable export

Economist Pham Chi Lan

Some comments are supposing that the lack of close linkages between domestic firms in the value chain is one of the important factors that reduces the competitiveness of Vietnamese goods in the international market. What is your point of view?

Most Vietnamese enterprises are small and medium enterprises. With such scale, enterprises lack a lot of resources to be able to participate in the chain. Oftentimes, enterprises are short of capital, and in addition, have lack of information, human resources, management level, machinery and technology, etc.

Meanwhile, if you want to participate in the chain, creating products with high added value, enterprises must control the quality from the beginning, through the procedures of processing a variety of different stages before the product is put into market. In the connection between enterprises, usually we only see the most common form is buying through to selling the products together, or delegating others to market the product to consumers. What is lacking here is the connection between companies to jointly develop new products or coming together to market. Current forms of association make Vietnam's products more difficult to export than for other countries, especially those that have better production and market economy working together in the value chain.

According to you, to participate in the value chain, promoting export growth, what are the "bottlenecks" that Vietnamese enterprises have to remove?

The businesses themselves have to solve a number of problems, it can be called 5 letters CH.

Firstly, for enterprises wanting to participate in a high value chain, those enterprises must ensure the quality of products. Products need to be controlled through a process, accessible from the beginning to the end product.

Second, the products of the company must meet the different standards of importing countries. The standards of countries for importing goods are often very different. The industrialized countries wanting higher value products, of which Vietnam wants to penetrate, are consumer markets requiring higher standards.

Third, enterprises have to join the value chain together to connect, support each other. Linking this chain helps to bring about better value for each company.

Fourth, enterprises must improve the specialization of products. Vietnamese enterprises are more likely to pursue more quantity or to spread more products to minimize risks. However, if there is no specialization, enterprises will find it difficult to become professional in the global market today.

Fifth, enterprises must try to process products in depth, making high-quality finished products that require no further processes. If the company exports raw or with only preliminary processing, they cannot have good added value to join the chain. In addition, enterprises must try to make use of geographical indicators; factors that can ensure the origin and enhance the brand for Vietnamese goods. Currently, Vietnam has about 80 geographical indicators that have been issued, but businesses have not made good use of this to build their own brands, specific products of Vietnam.

I suppose, if enterprises cannot do the above letter CH, they will close.

Over the past time, the Government has continuously upheld the spirit of creating, reforming administrative procedures and improving the business environment. What do you think about the impact of these moves on facilitating the export of goods?

In recent years, the government has pushed many ministries and sectors to reduce unreasonable business conditions and improve business conditions in order to create more favorable conditions for enterprises to operate.

Currently, specialized testing is becoming the biggest problem. Each sector just wants to check a few steps, but there are dozens of different procedures for businesses. Many specialized inspection procedures take Vietnamese goods a long time to be checked, causing problems in import and export, causing businesses more time expense, money and additional costs. This causes companies to miss sales opportunities because they can not guarantee orders will be delivered on time to the importers.

Photo: ST

As you have already mentioned, the efforts of the Government and state management agencies in the past time to promote exports despite certain results, are not as expected. From the perspective of the management agency to help Vietnamese companies participate more deeply in the global value chain and sustainable goods export, what is the solution to promote the next phase?

To promote the enterprises to join the value chain for export success, the role of the State is extremely important. In fact, successful and unsuccessful businesses are 50/50 due to the business environment created by the State.

I think the government has to do a lot of things. First of all, the State should continue to remove restrictions, reform more simply, creating more convenient procedures and business conditions. It is not possible to impose strict regulations, binding all enterprises in the "one person with disease, makes the whole village to take medicine”. The proportion of shipments subject to specialized inspection in Vietnam prior to customs clearance is still very high (about 30%), while countries usually only select samples, the sample rate is under 10%, even below 5%. Even though the status of a business has been good at successful export for many years, they still suffer from a system of general inspection, which is unacceptable.

Logistics is a very important part, accounting for 20% of GDP, which means that it accounts for a very high proportion of the costs for an enterprise. Therefore, the second point, the State needs to improve logistics and infrastructure to reduce costs, saving time in development activities. Vietnam has a long coastline, but for each shipment, the travel costs for exports are much higher than in other countries which even have unfavorable geographic conditions like Vietnam.

Thirdly, the Government is encouraging enterprises to apply the 4.0 technology. These policies must be implemented practically so that enterprises access preferential policies. In fact, nowadays even enterprises which have applied technology still reflect that it is quite difficult to access preferential packages or incentive policies.

Thank you very much!