On July 31st I was invited to attend the 2nd Vietnam Private Sector Forum, which facilitates dialogue between the Vietnamese Private Sector and Government, and encourages a bottom up approach from grassroots business. The Forum, sponsored by the Australian Government and the Asian Development Bank was chaired by the Prime Minister Mr. Nguyen Xuan Phuc.
The main focus of the forum was developing an action program in the light of Central Communist Party’s Resolution 5 – “….for developing the private sector as a driving force in the socialist orientated market economy”. The forum also focused on 3 sectors: The Digital Economy – Effective policy implementation to catch up with the Industrial Revolution 4.0; Agriculture- Market driven restructuring of agriculture; and Tourism, eliminating bottlenecks and facilitating sustainable development.
The support for ICT development is very evident, and the forum heard of the tremendous progress and achievements in Hanoi. The private sector asked for more opportunities to bid for government projects and a reduction in fees for internet providers. Hanoi is only the 9th City in the world to introduce I parking, which is now applied to approx. 250 street parking spaces in the city. The revenue from these spaces has increased 70% since the introduction of I parking. The private sector also raised the issue of the need for urgent guidelines on electronic payments and the need for guidelines on smart city development applying to those from the UK and Singapore.
For agriculture, there are an estimated 78 million hectares which have not been properly developed for agriculture yet. Key issues for the sector are land size, technology, taxation, finance and the lack of large scale farming. There is no proper planning and identification of potential export markets. The private sector advised Government that trade policies need to be improved and more PPP projects are a must. There needs to be a stronger global and regional integration, and a focus on marketing.
Tourism has shown an impressive 28% growth in 2016 with over 10 million foreign visitor arrivals and over 60 million domestic tourists. This growth has continued into 2017, however over 70% of visitors (and a much higher percentage of tourists) say they will not return to Vietnam.
Vietnam lacks a significant national marketing and promotion budget at approximately US$ 2 million, which is lower than all of Vietnam’s regional competitors including Laos and Cambodia, and insignificant compared to more than US$ 100 million spent by Thailand. Vietnam has one of the lowest number of visa exemptions in Southeast Asia, and there are concerns about public and environmental safety.
The private sector requested the establishment of a Tourism Promotion Council, together with a fund of VND 200 billion, and an additional 7 countries to be given visa exemptions valid for 30 days, and the period of exemptions being granted to be extended to 5 years rather than subject to annual renewal. There is a general agreement on the need for better product development and quality, better safety and security, a reduction in environmental pollution.
The Prime Minister concluded by saying that the Government wants to build an enabling environment for the private sector, but that the private sector also needs to reform itself to get rid of their bad habits, and that they need to develop a broader vision based on research and trends. There needs to be confidence to develop exports and ITC, and a better environment for startups to thrive. Provinces should connect and cooperate more and not compete in an unhealthy ways, in order to make land for agriculture more easily accessible.
Kenneth M Atkinson
Executive Chairman of Grant Thornton Vietnam