World Bank’s experts gave ideas to facilitate trade for Vietnam

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Vietnam needs to build 4 economic pillars for trade facilitation. Photo: Thu Hoa.

The meeting was based on the suggestion of the Deputy Prime Minister, Mr. Vuong Dinh Hue and Mr. Ousmane Dione, the World Bank Country Director for Vietnam to consult with the Government on policymaking in this area.

According to the World Bank’s experts, Vietnam needs to build 4 economic pillars, including a legal framework for trade facilitation; improving the efficiency of commercial infrastructure and connectivity quality; building a competitive logistics industry and strengthening cross-sectoral collaboration and cooperation with the private sector.

"It's not enough to just make the highway. Accordingly, goods are still jammed at the border. Therefore, facilitating peripheral trade and enhancing domestic-logistics linkage will be very important", said Sebastian Eckardt, WB chief economist in Vietnam.

As for the situation in each pillar, the World Bank’s experts said that in Vietnam, compliance time before Customs clearance accounted for 76% of the total import time, of which the cargo handling time accounted for one-third of the total time. In addition, 72% of the administrative procedures in 3 ministries, including the Ministry of Industry and Trade, the Ministry of Agriculture and Rural Development and the Ministry of Health, so the efforts of these ministries will be significant in improving the national capacity.

According to the calculations of the World Bank, in 2016, 60% of goods were cleared through the Green Channel with 10 million Customs declarations, demonstrating that Vietnamese enterprises complied well with regulations. Because they were subject to supervision of 346 legal documents, the law should be easy to breach.

Imports through the Yellow Channel accounted for 34.8% of total exports, which are quite high compared to other countries, mainly due to specialized inspections which have not been implemented in the spirit of the Government Resolution No. 19 on improving the business environment. Imports through the Red Channel accounted for 5.3% (a slight decrease), but there were still issues to assess carefully. Reducing trade costs is the key to public administration reform and the Government must do it much more effectively.

Accordingly, the Government and agencies should review the overall procedures based on all current regulations to ensure environmental safety and labour sanitation. At the same time, the mechanism of accountability to the society, enterprises of the Customs and specialized agencies with titles of specific responsibility should be promulgated.

Experts also assessed that Vietnam had improved transport connections, but multimodal transportation had not kept up with the country's development needs. The challenge of Vietnam is that the volume of goods are growing faster than GDP growth and the volume of goods transported are faster than the current rate of infrastructure development.

The Ministry of Industry and Trade forecasted that in the period 2016-2020, the demand for transport infrastructure would be about $US 24 billion, but the State could only meet $US 8 billion. Thus, the Government must mobilize private capital, commercial credit to fill the gaps, and improve the efficiency of infrastructure operations with the involvement of the private sector.

The World Bank also pointed out that the current status of capacity and scale of Vietnam's logistics service providers. At present, there are 41% of small enterprises to improve and apply technology in this field. The World Bank recommended that the Government of Vietnam should assign the National Single Window and Trade Facilitation Committee to promote the development of logistics and invite a private representative to join the Committee.

In particular, the World Bank also announced that it would provide funding for direct multi-year funding for technical assistance programs in the areas of trade facilitation, logistics, and the National Single Window.

Highly appreciating the World Bank’s report and recommendations, the Deputy Prime Minister Vuong Dinh Hue emphasized that these were current priority areas which the Government of Vietnam aimed at regional and international standards and practices to reduce costs for businesses.

In the field of transportation, Vietnam is concentrating on road and rail along the North-South axis and suggests: "The World Bank should study this issue not only in Vietnam but also in regional and international impacts to solve this issue".

In terms of resources, the Deputy Prime Minister said that the Government would call on private partners to participate in PPP in both infrastructure development and specialized inspections for imports and exports. "The ministries only focus on building procedures and institutions; but investing in commodity control equipment should be implemented by the private sector", the Deputy Prime Minister Vuong Dinh Hue said.

The Deputy Prime Minister, Mr. Vuong Dinh Hue agreed with the World Bank's recommendations on integrating logistics development functions into the National Single Window and facilitating trade and requested the World Bank to help the Government consult with the framework, structure, and standing body to cover trade facilitation, logistics, and the National Single Window.

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The Deputy Prime Minister praised the World Bank for its support to Vietnam in implementing the policy and priority orientation in using ODA in Vietnam and assigned the Ministry of Finance to work more specifically on the modalities, contents and the use of loans.