The reason why Vietnamese industry cannot develop or even lags behind is because of policies that have been discussed for too long.

Precision mechanical production line of Nidec Tosok Company at Ho Chi Minh City High-Tech Park.

“The technology of sugar cane and vertical kiln cement imported from China is an example that makes Vietnam pay a high price.” That is the opinion of former Deputy Minister of Trade Luong Van Tu at the forum “Production and Industry of Vietnam (VN) 2016”, organized by the Vietnam Chamber of Commerce and Industry in coordination with the Ministry of Industry and Trade, Ministry of Planning and Investment… on April 21.

It took 10 years to discuss… the policy!

Mr. Tu believes that an important reason why Vietnamese industries cannot develop, or even fall behind, is because there are policies that have been discussed for too long. For example, the construction of an oil refinery. “At first, we planned to locate it in Vung Tau. But after discussing the policy for a long time, it took 10 years before we decided to invest and move it to Dung Quat. Meanwhile, the world's oil refining technology in those 10 years has made great strides. Those 10 years have caused many opportunities to profit from oil refining to be missed,” Mr. Tu regrets.

Furthermore, with the rapidly changing technology situation in the world, Mr. Tu pointed out that countries tend to sell old technology at low prices and give high commission discounts to importing countries. "Every time we import old technology, Vietnam will fall behind the world by 15 to 20 years," Mr. Tu commented.

The reason why Vietnamese industry cannot develop or even lags behind is because of policies that have been discussed for too long.

Taking another example of the mechanical and steel industry, Mr. Tu commented that Vietnam is still struggling to find a way to develop. He said: "In the past, when we had to deal with inefficient mechanical and steel factories, the world had long since switched to high-tech industries."

Having chaired the 30-year review of Vietnam's economic development, Director of the Vietnam Economic Institute Tran Dinh Thien concluded that the core industries for industry in general, processing and manufacturing, have only increased by 1.6% in 30 years. "In the high-tech era, if the growth rate of processing and manufacturing only increases by 1.6%, is Vietnam's industry standing still or falling behind? Why did the construction industry increase by 16%? Why is Vietnam's industry still weak?" - Mr. Thien asked himself and answered: "It is because Vietnam only likes to develop the construction, mining and processing industries. The core sector for the future, processing and manufacturing, is very weak."

For those reasons, Mr. Thien believes that Vietnam is already tired of chasing Thailand now, and it will take decades to catch up. Unfortunately, the way Vietnam will catch up with Thailand has not yet been determined.

No industrial billionaires

Speaking at the forum, Mr. Le Phuoc Vu, Chairman of Hoa Sen Group, concluded: “Most of Vietnam’s billionaires are real estate and stock tycoons, not industrialists. Moreover, many tycoons today are trying to get rich at all costs, while they should create value and then profit.”

Speaking further about this, Mr. Thien explained: “State corporations do not enter into industrial and technological sectors, but mainly exploit resources. Meanwhile, resources are almost exhausted, and cheap labor is also scarce.”

Mr. Luong Van Tu recognized that Vietnam's characteristics are low capital, not much medium and long-term lending. Not only that, while the world has low medium and long-term lending interest rates, Vietnam is the opposite of the world, with very high medium and long-term interest rates.

“We keep blaming industrialists for not investing long-term, but if we borrow money to invest long-term, we will definitely lose money. These are the things Vietnam must consider to solve the problem of capital, technology, and research.”

Mr. Tu cited that for Nokia to become the world's leading mobile phone brand, they had to spend 25% of their profits on research for 20 years. However, when they stopped investing, Samsung replaced them. In 1972, Samsung came to Vietnam to buy coal, and now Samsung is investing in the world's leading mobile phone factory in Vietnam.

“Right leg is atrophying”

In order for Vietnamese industry to develop, many delegates emphasized the need to review the structure of Vietnamese enterprises, especially to pay attention to the private economic sector, considering the private economy as the foundation.

“Even the Investment Law needs to be reviewed so that domestic and foreign enterprises are treated fairly and equally. At the same time, industrialists need to link up and form alliances to create high value chains. For example, poor transport links like today will make logistics costs account for up to 20% of GDP, how can we compete!”

Mr. Thien strongly proposed to review the enterprise structure: “The enterprise structure needs to have both domestic enterprises and foreign investment. Domestic enterprises must take private companies as the foundation. In industry, the private sector is decisive, private corporations are the pillars. Although state-owned enterprises are very important, they do not necessarily have to be the pillars.”

Figuratively, Mr. Le Phuoc Vu said: “Any economy needs foreign investment. However, we must define the economy as a body, with domestic companies being the right leg and foreign companies being the left leg. Only when both legs move steadily can we be sustainable, while the right leg is still atrophied.”

Mr. Vu shared that industrialists, as well as the Vietnamese business community, currently need encouragement from the Government, and at the same time need an open administrative mechanism to avoid harassment and subjectivity from civil servants who make it difficult to do business. "This can only be achieved when the government becomes a serving government," said Mr. Vu.

According to Ho Chi Minh City Law