TRADE FACILITATION, VALUE CREATION, AND COMPETITIVENESS: A CASE STUDY OF VIETNAM. Duc Minh Pham World Bank Vietnam GDLN, April 9, 2014

Transcription

1 0 TRADE FACILITATION, VALUE CREATION, AND COMPETITIVENESS: A CASE STUDY OF VIETNAM Duc Minh Pham World Bank Vietnam GDLN, April 9, 2014

2 1 CONTENT 1. ANALYTICAL FRAMEWORK 2. TRADE FACILITATION AND LOGISTICS GAPS 3. DIAGNOSIS: THREE PILLARS 4. POLICY RECOMENDATIONS

3 2 ANALYTICAL FRAMEWORK Actors : Customs, Agriculture, Health, Antinarcotics, Migration. Performance Indicators: Costs (i.e., per container movement) and quality of service (i.e., average days for import-export release) 2 Improved Regulatory Procedures for Trade Improve C/T/R Trade Competitiveness Capture Value Addition Improve C/T/R 1 Improved Transport and Logistics Services Actors : All Forms of International Gateways and Corridors, Service Providers, Logistics Operators, Performance Indicators: Connectedness, Logistics Costs, Customer Satisfaction Actors : Firms, Export Processors, Traders, Supply Chains Organizers. Performance Indicators: Backward and Forward Linkages, Improved Business Processes 3 Restructured Supply Chain INSTITUTIONAL FRAMEWORK Source: Authors C/T/R: Cost / Time / Reliability

4 3 INSTITUTIONAL STRUCTURE International Commitments on trade facilitation Policies/ Strategy National Strategies Regional & Cluster Development State-managed Agencies Institutions Laws by NA Associations Organizational Structure Legal framework Sub-Laws Trade and Transport Facilitation Activities Supply Chain Development Transport & Logistics Services Trade Regulatory Procedures Source: Authors

5 4 CONTENT 1. ANALYTICAL FRAMEWORK 2. TRADE FACILITATION AND LOGISTICS GAPS 3. DIAGNOSIS: THREE PILLARS 4. POLICY RECOMENDATIONS

6 5 TRADE FACILITATION GAP ANALYSIS Source of gap analysis: Logistics Performance Index (LPI), World Bank. Enable Trade Index (ETI), World Economic Forum (WEF). Doing Business (DB), World Bank. Liner Shipping Connectivity Index (LSCI), United Nations Conference on Trade and Development (UNCTAD). Despite some differences, indexes are consistent on overall picture: Vietnam is ranked behind a number of regional competitors in terms of time, cost, and reliability Three big challenges: transport infrastructure, customs efficiency, and transparency Improvement has occurred with some aspects, but there is scope for improvement

7 6 LOGISTICS PERFORMANCE INDEX (LPI) Lower Middle Income Average Rank (155 countries) Overall LPI Customs Infrastructure Timeliness Source: World Bank s LPI

8 7 ENABLE TRADE INDEX (ETI) Rank (among 134 countries) ETI 2009 ETI 2010 ETI 2012 Overall ETI Border Administration Efficiency of Customs Administration Efficiency of Import-Export Procedures Transparency of Border Administration Transport and Communications Infrastructure Availability and quality of transport infrastructure Availability and quality of transport services Availability and use of ICTs ETI Rank has been slightly improved, but border administration and transport remain low scored and high ranked. Source: WEF -Global Enabling Trade Reports, 2009, 2010, and 2012

9 8 DOING BUSINESS: COMPARATIVE COSTS Vietnam Singapore Thailand Malaysia Indonesia Philippines 0 Vietnam Singapore Thailand Malaysia Indonesia Philippines Cost to export (US$ per container) Time to export (days) Time to import (days) Cost to import (US$ per container) Source: Doing Business, 2012 World Bank

10 LINER SHIPPING CONNECTIVITY INDEX, Source: UNCTAD LSCI has been improved in recent year but remain far behind key competitors in the region. 9

11 10 CONTENT 1. ANALYTICAL FRAMEWORK 2. TRADE FACILITATION AND LOGISTICS GAPS 3. DIAGNOSIS: THREE PILLARS 4. POLICY RECOMENDATIONS

12 11 TRADE-RELATED INFRASTRUCTURE Transport infrastructure and services performance Transport costs Access to ports / int l gateways Inland Container Depots (ICDs) Awareness of logistics Logistics operators, warehousing, trucking services and freight forwarders lag behind global standard Investment gap Legal framework for PPP DEVELOPMENT CLUSTERS, CORRIDORS, AND TRADE FLOWS Source: Corridor Analysis, TDSI 2012

13 12 FOCAL ECONOMIC ZONES, DEVELOPMENT CLUSTERS, AND CORRIDORS Domestic input-output linkages: activity largely in North and South appears are connected more to foreign markets than to other local zones: FEZ: Focal Economic Zone Source: VITRANSS 2 o o Role of local gateways (ports, airports), serving as surrounding hinterland. Many advantages derived from a more intense interregional linkages would be available -> requires better domestic logistics platforms.

14 TRANSPORT INFRASTRUCTURE & SERVICES Weak Infrastructure Undermines Growth Potential 13

15 14 BORDER MANAGEMENT: CHALLENGES Numder of Declarations Per Staff Import and Export Tax As Percentage of Total Revenue Economic Growth and Transition to Market Economy increase considerable cross border transactions Greater International Integration leads to a shrink in the share of tariff revenue in total tax revenue Increasing Security Concerns suggest a backward controlfocused approach and generate higher costs to traders Recent tendency towards Protectionism threatens free trade Source: MOF and GDC

16 REGULATORY PROCEDURES: KEY CONSTRAINTS Vietnam Thailand Malaysia China Malaysia Thailand Vietnam Clerance times without physical inspection (days) Clerance time with physical inspection (days) China Multiple inspection as percentage of shipments physically inspected Physical inspection as percentage of import shipments CHECK LIST: Business process: is that slow, inconsistent, and complex? IT application: pilot and replicates manual processes, for declarations? Risk management: preliminary, can t guide post clearance audit? Coordination: MOF (Customs), MOIT, MARD, MOH, Ministry of Culture and Information (MCI), Ministry of Public Security (MPS), Border Troops Corruptions: widespread in TF-related agencies? Source: LPI

17 16 MANUFACTURING SUPPLY CHAINS: MAJOR CONSTRAINTS Organizational structure: Primary and low value-added? Imported materials: long lead-time and low flexibility to meet global market changes Sourcing capacity Dependent on intermediaries for both sourcing and marketing Cluster arrangement: current zones located near major cities, can t expand and access to labor. Relocation requires access to the land, skilled labor, cater specifically, and efficient connectivity to the major seaports. Working capitals

18 17 TYPE OF FIRMS IN GARMENT INDUSTRY Contract manufacturers and OEM: second best? Foreign vendor factories: majority? Few ODM

19 RESTRUCTURED APPAREL SUPPLY CHAIN Figure 16: Supply Chains for Vendor Factories Figure 17: Supply Chains for Contract Manufacturers Source: TTFA Survey, Authors 18

20 19 RESTRUCTURED RICE SUPPLY CHAIN Figure 9: Current Rice Supply Chain Figure 10: Restructure Rice Supply Chain Source: TTFA Survey, Authors

21 20 ROLE OF GOVERNMENT Value-added is created by moving up the value chain to high tech products Source: Ohno, 2009 Preserve Vietnam s comparative advantage More feasible and less risky than industrial restructuring (Japan, Korea, and Taiwan(China)), which is restricted in WTO rules Vietnam lacks a vibrant private sector, a major factor for the model to succeed. but also by moving along the supply chain or restructuring it

22 21 CONTENT 1. ANALYTICAL FRAMEWORK 2. TRADE FACILITATION AND LOGISTICS GAPS 3. DIAGNOSIS: THREE PILLARS 4. POLICY RECOMENDATIONS

23 22 NATIONAL ACTION PLAN (NAP) AND IMPLEMENTATION MECHANISM NAP IMPROVED TRANSPORT AND LOGISTICS SERVICES IMPROVED BORDER MANAGEMENT RESTRUCTURED SUPPLY CHAINS MANUFACTURES AGRICULTURE Source: Authors Source: NCIEC

24 23 EXAMPLE: KEY POLICY LEVERS Pillars Activities Components

25 THANK YOU 24