Deputy Minister of Industry, Bui Xuan Khu

Though Vietnam’s industrial products have not done as well as hoped on international markets, this industry has contributed quite a large proportion to the GDP and export revenues. Industrial products accounted for 76% of the nation’s export turnover over the past five years.

In 2006, of the 10 products leading export sales, the majority were industrial goods like crude oil or garment and textiles products worth US$8.4bil and $6bil, respectively.

Those results represent the competitive ability and growth potentials the industrial sector is tapping into. The domestic market has also seen improved competition with the rising dominance of domestic firms like Sai Gon Beer, Ha Noi Beer and Viet Nam Dairy Products Joint-Stock Company, which account for nearly 70% of the market.

However, the overall competitiveness of industrial businesses remains weak because they have not invested in vertical production and do not co-operate with each other to play off their respective strengths due to the fact most businesses outsource. A large portion of materials are imported instead of produced here at home.

The majority of companies are small- or medium-sized firms that use old technology and lack a skilled labour force, which are other reasons for low productivity and competitiveness.

In addition, businesses have not focused on other promotion activities. Factors like poor infrastructure and too many types of fees have also contributed to the rise of consumer prices.

General Secretary of the Viet Nam Insurance Association, Phung Dac Loc

Insurance, especially in terms of financial services, has undergone the fastest integration. However, this sector has not received proper assistance from the Government to stay competitive.

The insurance sector invested more than VND35tril ($2.1bil) into the country’s economy in 2006 and contributed over VND1tril ($62.5mil) annually to the State budget.

Competition is now occurring at a fiercer level among domestic businesses as well as between domestic and foreign firms.

The number of insurance companies has continuously increased over the last few years, yet their competitive ability varies greatly, a trend that creates unequal competition.

The State should support the insurance sector to improve its competitive ability as a whole by providing human resources. In terms of the sector’s current rate of growth, there will be more than 50 companies providing insurance by 2010 that will need upwards of 20,000 staff members to operate.

Chairman of the Viet Nam Chamber of Commerce and Industry, Vu Tien Loc

Businesses should know that opportunities can only bear fruit when they have reasonable goals and good business plans. They should improve the effectiveness and competitiveness of each product they sell as well as the company’s operations as a whole.

First, each business should create a marketing and development strategy specifically designed for the integration process. The trading environment is now global because Viet Nam is a member of the WTO. Therefore, businesses should form long-term business plans and concentrate on developing key products.

Second, businesses should invest in new technologies and change managing and trading methods. Technologies play a very important part in improving the competitiveness of businesses during integration. They should build a close relationship with scientists and research centres to develop innovations in the production of their products.

In addition, businesses should also apply new standards in terms of the capacity and quality of their products. The demands of customers are not limited to quality and price. They includes hygiene, safety, environmental issues and social responsibility.

Third, they should expand their businesses by co-operating with others in their sector. It is necessary because 96 per cent of businesses in Vietnam are small- or medium-sized enterprises that use old technologies.

Therefore, by co-operating together both horizontally and vertically, businesses will be able to improve their production capacity and the competitiveness of products and services in the global market.

Businesses should build up a trading and distribution network in overseas markets, as well. Though international firms are fiercely competitive, they are also willing to co-operate for their own benefit.

Fourth, one of the factors leading to an enterprise’s success during the integration process is its human resource strategy. Each business should offer a strategy on training and competitive salaries to attract talented and experienced labourers.

Director of the General Department of Taxation, Nguyen Van Ninh

The Government has reviewed and finished the Tax Law on Value Added, Special Consumption and Enterprise Income. In addition, it also annexed 340-taxable items and has made using agricultural land tax free as of 2010.

The tax sector aims to complete the legal system, adjust taxation policies and apply international methods of tax calculation and management.

The strategy of reorganising the tax system by 2010 has been approved recently, under which value added tax items will be taxed at the same rate.

The ministry will continue to cut tariffs and amend taxes on business income. It will also finish the Law on Personal Income Tax to replace the existing ordinance.

Source: Viet Nam News