Seeking growth drivers for the Red River Delta region

Breakthrough opportunities for the Red River Delta region

Export-import goods passing through Hai Phong port area. Photo: T. Binh

The Red River Delta is considered the northern gateway of our country and ASEAN for economic and trade connectivity with China, the largest market in the world, and vice versa. Compared to other economic regions in the country, the Red River Delta has the most comprehensive and well-connected transportation infrastructure with all five modes of transport (road, sea, river, air, and rail) and three economic corridors running through it.

In early May, Prime Minister Pham Minh Chinh signed Decision 368/QD-TTg approving the planning for the Red River Delta region for the period 2021-2030, with a vision to 2050. Accordingly, the goal is for the region's gross regional domestic product (GRDP) growth rate to average about 9-9.5% per year by 2030. The plan also identifies the Red River Delta as a strategically critical region, a leading development driver, and plays a leading role in restructuring the economy and transforming the country's growth model for rapid and sustainable development.

In this context, Hanoi plays a leading role in the development of the region and the entire country. Hai Phong is pioneering in industrial development and seaport services. Quang Ninh is one of the key drivers of regional development, particularly in service, tourism, and industrial sectors. And Bac Ninh is one of the major industrial centers of the region, connecting along the National Highway 18 industrial corridor.

Nguyen Duc Tho, Vice Chairman of Hai Phong City People's Committee, stated that with its geographical advantages and potential, along with the strong determination of the city and the outstanding efforts of the business community and residents, Hai Phong has all the necessary factors to become a major logistics hub and a multi-modal goods distribution and transshipment center connecting the Northern Key Economic Region with the entire country, region, and internationally. Therefore, Hai Phong is focusing on promoting and attracting investment in three economic pillars: high-tech industry, seaport-logistics, and tourism-commerce.

For businesses, leveraging these opportunities for development is a crucial task, where digital transformation to meet the needs and demands of regional connectivity is highly emphasized. For the logistics industry, digital transformation is even seen as a breakthrough step for promoting regional linkage.

However, according to Dao Trong Khoa, Executive vice president of the Vietnam logistics business Association (VLA), the digital transformation level in the logistics industry is low; on a six-point scale, businesses are at levels one or two. Therefore, businesses need supportive policies such as tax, finance, and training to encourage investment in digital transformation applications. Additionally, there needs to be a complete legal framework to alleviate businesses' concerns regarding digital transformation applications.

Pham Thi My Le, Deputy Director of Marketing at Saigon Newport Corporation, added that localities need to build synchronized infrastructure systems, accelerate the progress of transportation connectivity projects, and create favorable conditions for developing logistics services. Investing in logistics infrastructure and warehouses should be increased to enhance the logistics ecosystem, remove transportation bottlenecks to facilitate goods connectivity and transportation, and strengthen regional linkage to reduce logistics costs for businesses.

Notably, alongside digital transformation, another significant aspect is the planning of Hai Phong City approved by Decision No. 1516/QD-TTg on December 2, 2023, by the Prime Minister, which outlined the task of researching the development of free trade zones in the southern coastal economic zone of the city. This model has also been proposed by other localities such as Da Nang and Vung Tau. Tran Thi Hong Minh, Director of the Central Institute for Economic Management (CIEM), affirmed that the orientation to establish free trade zones was a correct step to exploit and promote regional economies.

A free trade zone is a comprehensive advantage type, a tax-free area that attracts both domestic and foreign investment, especially from businesses that need rapid goods circulation between domestic and international markets. Free trade zones linked with seaports, airports, and border gates will be a significant support, creating great convenience for businesses.

Thus, CIEM's Director believed that promoting digital transformation from the early stages of developing free trade zones was essential to seize development opportunities. For instance, Vietnam can learn from international experiences, like Costa Rica, which has reaped 20 times the benefits from export growth and reduced public service costs after investing in an online one-stop mechanism. Moreover, digital transformation will help businesses in free trade zones connect more conveniently with supplier networks and markets both domestically and internationally. Additionally, promptly concretizing digital transformation orientations and supporting businesses' digital transformation efforts will also create momentum for modernizing the logistics industry, leading to stronger and more effective regional linkage.