Business Investment News
How do I go to Vietnam?
14:30:33 | 21/01/2010
When the pulse power is weak gradual growth, the challenges are revealed more clearly the area of restructuring the economy is no longer a question that needs to settle eventually drain to find the wave of new growth .
When the capacity is released
There are many reasons to create success for over 20 years of innovation in Vietnam. However, the most important factor is the production capacity is released and promoted. Once capacity has been accumulated, the economy capable of producing 40 million tons of food just to pay the farmers field on hand can achieve the potential or contingent crowded private enterprises have been command field office by the Enterprise Law in 2000 to create a wave of strong growth in nearly a decade.
Successful result is wonderful with more than half the population out of poverty. Vietnam becomes a middle income country (GDP per person from $ 1,000 or more) after maintaining high growth rates (more than 7.5%) more than two decades.
If you use the images you can simply say a lack of food to import food and essential goods, after more than 20 years Vietnam has become one of the country leads the world in agricultural exports products and household items such as pepper (1), rice and coffee (2), tea, rubber, seafood, textiles, leather footwear and furniture.
In other words, Vietnam was a "big country" on the export of items listed above by exploiting their strengths. Moreover, this is the sector to help create jobs and improve living standards for most people of Vietnam.
However, consideration of this item is new only in the preliminary treatment or processing. The investment in these phases have a higher value seems not to be interested properly.
Prep for the future
In order to achieve the goal to become an industrialized country by 2020, in time, many industries such as automobile manufacturing, steel, shipbuilding or have been constructed or assistance through various tax incentives billion. However, inevitably many people will e dè to say that these are industry strength and promise of Vietnam despite most of the manufacturers leading car had been in Vietnam and a few years ago Vietnam has signed a contract close to the ship over 50,000 tons of payload. Simply are not developing countries based on the strength of other factors. Examples of automotive industry is an aspect (see box at end of article).
Conversely, when Vietnam policy development industrialization more than a decade ago, few would have thought that someone on the top technology firms like Intel, Canon or Samsung put billions of dollars building plants is university in Vietnam.
Why this company bet billions of dollars into Vietnam? The answer probably lies in two reasons:
First, the potential large market Vietnam. For example just one-tenth the population of Vietnam using the Intel chip's market size has up to three, four billion dollars.
Second, the potential human resources quality.
This is probably the sectors that Vietnam has the potential based on their strengths. However, with current conditions, it is difficult for Vietnam to develop yourself, to rely on the leading strategy is probably more reasonable at all.
Temptations of the modern industry
The founder of the economic development that (1) products that a country exports mean to the economic and (2) industrialization created the spread benefits from the resulting increase growth. However, due to lack of formal models, theory orthodox economists have been unable to match the idea. Instead, two approaches are used to explain the specialization of countries.
The first approach focuses on the relative rates of production factors (physical capital, labor, land, skills, human capital, infrastructure and institutions). Focus on poor countries produce goods using labor intensive skills, land, while rich countries specialized products require infrastructure, institutions and human capital and physical capital.
Monday approach emphasizes differences in technology and must be supplemented by a theory about what led to the difference. Models of diversity and the quality ladder always assume that a product is a bit more advanced or just a product that other countries can participate without pay any attention to the similarity of product when considering growth and structural transformation.
In fact many countries are benefiting so much from division of labor, but because of political factors, so the first approach does not appear to be the developing countries noted for their little one wants to specialize in the "selling labor. Contrast, the second method seems ideal for what is expected of the industry is "key", high technology content.
Argue a country can move to produce those goods advanced without interest to the current platform, plus a ton of pictures comparing rice export only bring about 400 dollars, only a machine weight about 100 grams or photos a chip less than a few grams of fruit is the temptation to focus more resources for capital intensive industries and because of their gray matter that can not be rich if simple to manufacture. However, the desire and ability are often two quite different categories.
Theory of gas leap
Based on the arguments of Adam Smith, "The secret of the wealth of nations concerning the division of labor. When people and businesses that specialize in different activities economic efficiency will increase and the inadequacies of the two approaches mentioned above, groups of scholars: Barabasi, Hausmann, Hidalgo, Klinger of University Harvard has launched theory leap of monkeys (monkey jumping) by analyzing experimental product development and industrialization of the economy in the world.
Imagine a product like a tree and all the products as a forest. A country consisting of a collection of business, assuming like monkeys living on the trees and exploit different product. Growth process as moving from the stunted forest where trees have little left over to fresh areas better. This means the monkey to jump through the gap, or businesses to rearrange human resources, physical capital and institutional orientation to new products with existing production activities.
The traditional growth theory assumes that the trees are always in reach, and therefore the structure of forests is important. However, if forests are not homogeneous, which is crowded, which is sparse and only if the monkeys are capable of jumping distance limit, the structure of space products and orientation of a country become extremely important to the development.
In theory, many possible factors that can make the link between the product - its proximity between the trees - such as focus labor, land and capital, the level of sophisticated technology and import and export volume of participation in the value chain of products (cotton, yarn, fabrics, garments) or institutional requirements. Issues raised is the same as aspects or dimensions that are important?
If two goods related to each other because they have the same requirement for infrastructure, physical factors, the same technology or a combination that they can produce serial, opposite the Similar products are not less likely to produce together. This is called "close" (proximity) the ability to produce a new product of a country depends on the ability to produce products of this country.
For example, a country able to export apples will be able to most favorable conditions for export of pears as they have the same requirements on soil, climate, technology packaging and transportation. In addition they have the best agronomic, sanitary regulations on trade agreements easily apply to business pear. Conversely, all or most likely to be developed for the business would be useless apples for different products such as copper production or household.
This group of academics concluded: "The economy growth by upgrading the products they produce and export. Technology, capital, institutions and skills needed to manufacture new products is easier when based on a number of products than other products.
To put it simply, this group of scholars have argued not recognize a country capable of participating in any empty and that countries should choose to develop products based on the following products existing, especially products for export to promote the capacity available.
How do I go to Vietnam?
If the approach "of the colonies of monkeys leap" mentioned above is reasonable as the image-oriented industry development or industrialization of Vietnam is something unstable. Lines related to cut garments, fashion designers ... certainly close to the industrial fabric and leather shoes rather than cutting steel shipbuilding. The processed product quality and higher value from the shrimp, fish or grains of rice, beans just steps of the serial activities of preliminary processing of agricultural products and fisheries, compared to other remote produce steel or car.
The distance between the export products of Vietnam and the industry is focusing more capital and incentives may be far too difficult to businesses that move to the heart. This may be what is causing trouble for the economy of Vietnam.
To be able to reap success as expected, Vietnam should consider the following issues:
First, the focus for the industry closer to the products of agriculture, fisheries, textiles and leather shoes to promote the strengths of Vietnam. Moreover, the development of these products also contributes to narrow rich-poor gap and inequality because they benefit the most people in Vietnam.
Second, focus on developing the essential elements (especially human resources) for these industries require high concentration of gray matter. Specifically how satisfied demand labor available to firms like Intel, Canon or Samsung, or human resources software industry.
Tuesday, ready to open inviting foreign investment into Vietnam in any field as long as their activities are beneficial to Vietnam and ensure strict environmental conditions and national security.
In short, more than ever, now is the time of Vietnam to conduct restructuring the economy to promote the advantages and strengths, creating waves of strong growth and new strength to begin to Vietnam timely development of the economy, out middle-income trap.
Why do car manufacturers in Vietnam?
The answer will not be potential development based on national advantage is that preferential tax policies for a market sufficient to earn the profits rather large.
Worth $ 1 billion to import 51,000 units in 2008 car, carefully estimated assuming an average import tax rate of about 60-70% is the state tax collected would be 600-700 million dollars.
Similarly, with 1.4 billion dollars worth and components imported for production of 100,000 vehicles, assuming the average import tax rate from 20-30%, then the tax would be around 300-400 million la. But if the components are units car import tax will be 800 million to 1 billion.
Thus, the tax gap at least half a billion dollars or more than 1 million tons. This can be seen as the subsidy for the production (actually assembled) more than 100,000 cars in the country at the rate of domestic waste rather search.
Estimated average cars assembled in Vietnam is about $ 5,000 in benefits and a job in the industry (50,000 people directly and 200,000 people involved) are benefits to about 2,000 dollars a year, twice GDP per capita today.
Moreover, most of the money gap above belong to the producers (mostly foreign), but with a modest investment of foreign investors that they are likely to exploit profit through tax incentives in the short term rather than strategically developing long-term automobile industry in Vietnam. At the end of incentives and market opening they will import cars to sell in Vietnam market.
Source: According to the Saigon Economic Times Online
More Business Investment news
- 30/07 - General domestic economic news
- Businessmen fear of losing ' Heaven '
- 28/07 - General domestic economic news
- Stress airfare to Phu Quoc
- 27/07 - General domestic economic news
- luxury car segment , seen from a survey
- Business community to speak about the tax arrears van
- 26/07 - General domestic economic news
- Cars older tourists
- continue to import foreign cars go down