Vietnam seeks new competitive advantage PANO – The workshop on “Redefining the Competitive Advantage of Vietnam through Greater Risk Resilience”, co-hosted by the Vietnamese Ministry of Foreign Affairs and the World Economic Forum, took place in Hanoi on December 6th. Participants to the workshop held discussions on defining Vietnam’s competitive advantage and working out solutions to improve the country’s competitive capacity. Not relying on the old competitive advantage The workshop took place after the WEF released its Global Competitiveness Report, in which Vietnam’s competitiveness index was relatively lowered. Truong Gia Binh, FPT’s CEO and Chairman of Management Board, gave an example of the cooperation between Vietnam’s Trung Nguyen coffee company and Israel on applying Israeli technology to increase coffee productivity by three times to produce final products, not just processing raw materials. Trung Nguyen coffee is now distributed in the US, a major market. “Instead of relying on old advantages, such as favourable polices and low-cost labour, Vietnamese businesses should know how to apply technology in production to boost productivity and competitiveness,” said Truong Gia Binh. Mr. Binh also praised Vietnam’s direction to pay more attention to the quality of human resources rather than relying on low-cost labour. He pointed out that a leading telecommunication corporation in the world has chosen Vietnam to place one of its research and development centres, in a strategy to contract its centres worldwide. Additionally, Samsung also decided to establish its most modern factory in Vietnam. According to Mr. Binh, these companies’ decisions were due to their confidence in Vietnam’s quality human resources, especially their learning ability. Moreover, Mr. Binh added that Vietnam has to catch up with the world’s education and training concept that education does not only training and researching, but also two additional tasks of “creating jobs and internationalizing”. This means that people who study in Vietnam should be able to work anywhere in the world. Building a “new competitive house”One factor that reduces Vietnam’s competitiveness is the lack of attention to developing added value in the global value chain. For example, though exports are a “bright point” of Vietnam’s economy in 2012, most of these achievements belong to foreign invested businesses. At the workshop, Vietnamese economic experts agreed that the issue is whether Vietnam acquires other countries’ techniques and technological knowledge to increase added value or not, rather than simply the export volume. Vu Thanh Tu Anh, Director of Research for Fulbright, argued that Vietnam’s export is focusing on quantity rather than quality. He said that Vietnam mainly exports processed commodities, raw materials and natural resources, while the volume of 'added value' exports is falling. As a result, Vietnam does not have leading businesses which operate the global value chain, but rather only participates in the lowest part of the chain, the processing phase. Mr. Vu Tien Loc, Chairman of Vietnam Chamber of Commerce and Industry, said that Vietnam’s economy has widely developed for a long time with low productivity, and has been slow to transform into a high productivity economy with high added value and higher steps in the global value chain. This creates pressure on and chances for Vietnam to move into an economic development phase with new competitive advantages. Another advantage of Vietnam is that it is “following” other countries in development. According to Vu Thanh Tu Anh, this is both a chance and a challenge. Therefore, Vietnam should learn to help its companies improve their competitiveness in international markets. “Learning the right lessons is important, but learning the complete lessons is more important,” he said.Solutions mentioned by scholars at the workshop to settle the situation include to boost regulatory reform, improve infrastructure and develop human resources. According to Mr. Vu Tien Loc, Vietnam needs to rely on four pillars in regulatory reform to build a “new competitive house” for its economy. The four pillars, in his opinion, consist of stabilizing the economy, maintaining a market economy, reforming State businesses and promoting the role of the private economic sector. Optimistic prospect Though recognizing the challenges that Vietnam has to face due to the impact of global economic recession, Sushant Palakurthi Rao, Senior Director, Head of Asia, WEF, said that he was optimistic about the prospect of Vietnam’s economic development. Mr. Rao, who has worked in Vietnam for seven years, thought that Vietnam has positive factors to develop in the long term. In his opinion, Vietnam has advantages of good human resources, young workers and being a large market itself. Especially, Vietnam is located in the middle of the region, so its opportunities are bigger. Mr. Rao noted that Vietnam needs to have confidence in investors and also make them confident in the recovery of its economy in the future. Translated by Ngoc Hung