SUMMARY

A-SOME UNDERSTANDINGS AND INTERNATIONAL EXPRIENCES ON THE SERVICE SECTOR DEVELOPMENT

I-THE ROLE OF THE SERVICE SECTOR IN THE SOCIO- ECONOMY

Service is a process including invisible factors, solving the relations between the providers and clients. In terms of commodities, service is invisible goods bringing value chains to satisfy a certain demand. According to the common concept, services create products which do not exist in the physical forms, to fulfill more timely, effectively the demands in the production process and the human life.

In the economy and in the social life as well, the service sector plays an important role. The fact shows that service is a sector which contributes to increase the added values of products; in the same time, service also is a sector to serve all human’s demands, improve people knowledge to make people life better.

1- The role of services in the economic activities

Services contribute to foster goods production and distribution, strengthen trade relations in the national and international scales. It can be said that services just are bridge between “inputs” and “outputs” in the production and consumption processes. For example, some services as retails and whole sales keep the immediate roles to link producers and consumers; in the same time, they foster the goods consumption process to help the producers recollect rapidly capitals to reinvest.

The more developed the economy is, the more diverse the services. At present, the service development level reflects the nation’s development level. Many countries has shifted economic structures in the direction of service development, focusing on financial, tourism services,...

2- The role of the service sector for developing the rural and agriculture areas

For the rural and agriculture sector, the service sector plays a key role not only in improving productivity, and quality of the agricultural products but helping to expand the markets and diversify job structures in this area. The fact shows that the agricultural production requires inputs of services.

3- The role of services in human development

Human resources play a key role to develop the economy. Fulfilling this requirement, the healthcare and education services are very important. According to statistics, in some industrialized successfully as Japan, human capitals take account for 80% of total national assets. Therefore, education and healthcare sectors are given high priorities.

Apart from education and healthcare services, the human development also is under the positive affect of many other services such as services which relate direct to foreign direct investment, technology transfer,...

II-SERVICE TRADE LIBERALIZATION IN THE WORLD ECONOMY AND VIETNAM PARTICIPATION

1- Service trade liberalization within WTO framework

Due to the important of services, in the Uruguay Round, the GATT members agreed to bring services into the negotiations. The members signed a multilateral exclusive agreement for the service sector which is GATS. This agreement introduces principles, legal international standards to adjust trade aspects in service supply among WTO members. Service trade activities which are provided in GATS base on four service supply modes such as: trans-border supply; consumption outside the territories; commerce presence; personal presence to provide directly services in the other member countries.

According to WTO rules, the service sector are divided into 12 branches in which each branch is divided into sub branches: business, communication; distribution; education; environment; finance; healthcare; tourism; culture and entertainment; transport; and other services.

2- Expanding the service sector in the ASEAN

In the ASEAN economies, the service sector plays an important role. This sector has contributed from 41-72% in GDP, higher than the industrial sector. Along with the goods trade, service trade has increasingly role in the economic life of the sector. Service trade liberalization has positive effect in improving the competitiveness and attractiveness of the ASEAN market. Therefore, the leaders of ASEAN countries set up the road map for liberalization completely for the service sector in the 2020.

In December 1995, the ASEAN Framework Agreement on Service (AFAS) signed. This agreement includes commitments for opening the service markets based on MFN and NT applied for the service providers of the members within WTO/GATS framework. There are 7 service branches are given priorities to negotiate under AFAS, namely: financial, telecommunication service, goods transport, airway transport, tourism, business and construction services

The road map for service market liberalization of ASEAN has been divided into two period as the following:

- The period 1999-2001: Focusing to liberalize the branches or sub branches within AFAS and GATS Framework.

- The period 2001-2020: The members will select a suitable framework for each branch and sub branches which are appropriate for countries’ conditions to liberalize wholly for all branches and service supply modes in 2020.

3-Opening Vietnam’s service sector market

VietNam has opened and reformed radically its service trade system in the last two decades. This process has been undertaken step by step through the ASEAN integration; bilateral agreements; especially the WTO access process had strengthened and fostered further the openness for service trade.

III- AFFECTS FROM THE GLOBAL FINANCIAL CRISIS AND ECONOMIC RECESSION TO THE SERVICE SECTOR

1- Financial- banking services

For almost economies in the world, the financial and banking services are affected adversely from the crisis due to they depend heavily on the international trade and foreign investment. Some countries such as the US, Japan,.. suffer a lot from the crisis. Singapore is the first nation in East Asia dropped into recession; three pillars in which financial and banking service has suffered a lot from this global crisis.

2- Tourism and Distribution Services

Economic recession has resulted in the decrease in the clients’ spending. It makes the retail service and tourism getting worse. For example, forecasted revenue for auto market in the US just is 14,5 millions of cars, the lowest level within recent 10 years.

3- Trade Service

Due to affects of the financial crisis, the trade service- the sector linking closely to goods export and import– will decrease dramatically. According to the statistics, the world economy in 2009 will grow slowly at the level of 2.1% compared to 4.4% in 2008. Both export and import in developing countries and developed countries will go down compared to 2008.

IV-EXPERIENCES TO DEVELOP SERVICE SECTOR OF SOME COUNTRIES

1- The United States

The importance of export-import activities for the economy has made the US government paying serious attentions on international trade in terms of services. The US policies is to eliminate barriers for services such as financial, legal consults, telecommunication, education and environment. According to many researchers, the US service sector is not only important for the US economy but for the world economy as the whole. The advantages of the US service providers in the telecommunication, healthcare, education,... contribute much to the world economy growth.

2- Japan

In Japan, the significant progress of technology and science has fostered the development of the knowledge based services. Some high knowledge content services have reached rapid growth rates. However, the speed for productivity improvement in the service sector in Japan is still lower than that of the industrial sector. Coping with this situation, the Japanese government presented a plan to develop this sector. According to the “Yomiuri" Newspaper, 24/10/2006, Japanese Prime Minister Shinzo Abe decided to establish a council to implement a strategy to make Japan becoming “the Asian Gate” for some important services such as logistics and financial services.

3- China

Although the China’s service sector has taken significant steps and contributed much to the economic growth in China in last years, the service sector development is not match with big potential of the Chinese economy. Especially, in the recent time, the service sector has developed slowly, including communication service and modern services. To solve this problem, the government has implemented many measures to develop services and issued many legal documents to facilitate the service sector.

B-POLICIES TO DEVELOP THE SERVICE SECTOR IN VIETNAM IN THE CONTEXT OF ECONOMIC INTERNATIONAL INTERGRATION

I-UNDERSTANDINGS ANS POLICIES

According to the documents of Central Party Committee IX on the direction to develop socio- economic 2006-2010 period, it needs to develop rapidly the service sector to fulfill requirements and match with Vietnam’s potentials and common development trend of the world; taking advantages chances brought by economic international integration to make breakthrough for the service sector with the growth rate 7.7-8.2%/ year.

II- ACHIEVEMENTS AND CHALLENGES IN SOME HIGH VALUE ADDED SERVICE SECTOR

This part mentions achievements and challenges of four important services; namely, telecommunication, retail distribution, tourism and banking services. For example, in the last years, the Vietnam’s telecommunication sector develops rapidly with the growth rate 25%/year. Vietnam is considered as one of nations which gain the most rapid speed in developing telecommunication service. But this sector also faces some difficulties such as monopoly, unfair competition,...

III- SOME SOLLUTIONS TO DEVELOP THE SERVICE SECTOR IN THE CONTEXT OF ECONOMIC INTERNATIONAL INTEGRATION

Many researches show that to develop the service sector in the direction of exploiting advantages of economic international integration, VietNam needs to set up a development roadmap for this sector, in the same time it’s necessary to identify correctly those sectors which need to be given priorities. The roadmap should be: The period 1: Strengthening the service sector to support industries and social areas (2005-2010); The period 2: Focusing on main services (2010-2020)

Certain solutions

- Understanding consistently and recognizing the role of the service sector in improving competitiveness of the economy.

- Strengthening coordination modes in developing national service sector.

- Building firm regulation framework.

- Creating jobs in the service sector.

- Increasing domestic demands.

-Fostering service exports.

Source: VNEP, July - 2009