Pressure from integration force Vietnam to take action promptly

VietNamNet introduces the last part of the talk “Integration and Development”, with the participation of Mr. Nguyen Lien Phuong, Director of the LP Entrepreneur Institute, Prof. PhD Nguyen Quang Thai, Vice President of the Vietnam Economics Association and Dr. Tran Dinh Thien, Director of the Vietnam Economics Institute.

The last chance for Vietnam

Eager for the speed of growth, Vietnam will lag behind forever

Pressure from integration force Vietnam to take action promptly

From the left: Nguyen Lien Phuong, Nguyen Quang Thai and Tran Dinh Thien.

VietNamNet: We have talked a lot about the opportunities and the need to find a way, a new development model for Vietnam in the age of high-level integration. To do that, it is required that our leaders and elites have serious discussions. In the framework of today's roundtable talks, what are your suggestions? 

Nguyen Lien Phuong:  In building a model to develop brands for goods and services of Vietnam to integrate into the world, there are two major subjects. The first is entrepreneurs. 

I want to emphasize entrepreneur rather than business because the brand is attached to people. And the second subject is a policy ecosystem for those entrepreneurs to realize their aspirations and dreams of building their brands.

Vietnam has only two advantages. One is nature, which is well-known throughout the world, but packaging nature to perform to the world is very difficult because we are entangled in our customary practice, which is arbitrary behavior. 

For that reason, Vietnam is a beautiful country but in 2015 we welcomed only 8.5 million visitors while Thailand, which is not more beautiful than Vietnam, hosted nearly 30 million foreign tourists. We can see that to clear this gap, it is very difficult.

I think tourism is still an advantage of our country. But to solve all of the problems, from infrastructure to packaging, it's very hard. Of course we must do it, as for many other industries. 

Luckily, we still have an advantage that we can package to bring out to the world. That is our agriculture, our agricultural products and our food.

We can package our special products and sell them all over the world, with excellent Vietnamese brands. The most important thing is to identify who can package them. 

Here we have to make it a little clearer that what we are selling today is only the raw and semi-processed process. This can be called “bagging”, which is completely different from packaging.

This is an example: annually we export about 300,000 tons of coffee to Germany, and Germans package that coffee to export it back to supermarkets in Vietnam, at prices that are many times higher than the prices of raw coffee from Vietnam. 

We sell coffee for $2.5 per kilo while we re-export our coffee after processing and package it at the price of $10 per average for 100 grams, or $100 per kilo.

VietNamNet: How do you have a good team of packagers?

Nguyen Lien Phuong: I would like to say that we have not found any Vietnamese brand, basically on international shelves of goods. Vietnamese goods cannot appear at foreign supermarkets because we do not understand this story and we have not had any policy for this. 

We are promoting so-called productivity, which means that we have to pack a lot of bags for export, but we will have to shift from bagging to packaging in order to reach a higher level and build a global system for Vietnamese specialties. But we have not done this yet so I would like to suggest that this is one of the option we have.

And this is a one-time option that can be used for many generations because the advantage of food is that once it fits the taste of a market, that market will be familiar with the food and does want to change the taste, like our Pho (Vietnamese noodles), Nem (spring roll) and banh my (Vietnamese sandwich). 

That taste is extremely durable and we don’t have to worry about technological changes, while investment is very simple. For example, the investment in a modern agricultural processing or food processing is just about $3 million to $50 million while investment in a factory to manufacture a piece of equipment for Samsung may be worth hundreds of million USD and the technology changes very quickly. Therefore, I do not advocate that entrepreneurs invest in something like supporting technology.

To pack our agriculture, we do not need supporting industries because there are a lot of great supporting things around us. In the past three years, I have been able to research the world packaging industry, and I see that we can completely re-exploit Chinese production that is currently falling to get their support in packaging. 

As you know, the world's leading firms, like Swiss watchmakers, also order packaging from China, so we need to produce packaging. They make packaging at very cheap price, and the quality is very high. There is no need to set up packaging factories here. We only need to build our own brands and set them up on a level that can compete internationally. 

I think the packaging of agriculture is relatively simple. We also do not have to study technology because there are a lot of great technologies of processing in the world today. We don’t need to be very creative and investment is not big either. 

The issue here is whether our entrepreneurs have aspirations. At present we have the startup movement and a lot of young people are packing but I have to say that we cannot rely on them immediately because they are very slow.

We now have a lot of big businesses that are investing in agriculture. The state should gather them and encourage them to invest in agriculture, doing their duty to the economy, to the country. 

However, to encourage them to pack, the state should offer them opportunities, create a legal corridor to facilitate their products to go to the world market.

I think we are discussing the construction of special economic zones but we do not discuss the construction of a legal corridor for entrepreneurs, businesses that have the capacity to pack and build brands. Why can the Germans pack but we cannot pack? 

Why do we have so many famous things, many things that can make the game change such as pepper, for example. Our pepper accounts for more than 40% of global market share and the quality is the world's top.

If we can package that 40% of the global market, the value will not be only $1.3 billion as we are getting from exporting raw pepper. The value will be tens of billions if we pack it. I think the small and medium businesses cannot do that but only the big ones. 

If they dare to do, I am very much looking forward to a policy that supports packaged businesses at a very high level and the State can negotiate in agreements and in trade talks with foreign corporations and countries to ask their support for Vietnamese goods, at least putting them on their shelves and it is the responsibility of Vietnamese businesses to sell them.

Prof. Nguyen Quang Thai: From the point of view of Mr. Phuong, I see many ideas that we can study and that requires a state policy, ie the state’s institution to create good conditions for Vietnamese entrepreneurs to connect with peasants. 

But we have to choose businesses that have experienced challenges and successes to invest in order not to waste state funds.

Nguyen Lien Phuong: The State will only give support for businesses when their goods are placed on international shelves. The standards for taking State support are extremely fair. 

For example, Vinamilk or Viettel can get support because their products are quite popular overseas. I do not support the fact that we have to advocate for state-owned or private enterprises. 

We should support Deng Xiaoping’s idea of no matter whether it is a white or black cat, it is a good cat if it can catch mice. Here it is equal for the state and the private firms to get support from the state, even foreign-owned ones, if they help us package goods in Vietnam, help us create Vietnamese brands that can compete with foreign products. 

If we support businesses of all sectors and at that time, if big corporations enter the game, we don’t have to worry about these things:

The first is businesses choosing the products that they want to make, based on the needs of the market. They don’t need the state’s guidance to do this. They only need the state’s policies to enable them to realize their plan. 

And I would like to propose to the Government to set up a policy advisory council for businesses and entrepreneurs who are capable of building brands for integration. It means that the state only supports those who can build brands, with special incentives.

I remember when Jacques Chirac was the President of France, he went abroad very often. Once he visited China and he sold Peugeot here. During a press conference, a journalist asked him why he traveled abroad so often, meaning that he spent a lot of state budget. Jacques Chirac had a wonderful answer: "I go abroad to sell French goods."

I am very much looking forward that in the coming time, our central and local officials will also go overseas to sell Vietnamese brands. That cooperation is excellent. That's what the businesses need.

Dr. Tran Dinh Thien: I would like to add two specific points: Phuong spoke of the establishment of a business advisory council on the building of national brands. This is the task of the state, not a group of businesses only because this is a national issue, not the interest of businesses.

I would like to say that the name that Phuong mentioned is unclear but I understand that it is a council of businesses to give advice on building national brands. We can keep discussing the construction of new model for development and growth but we should go into the specific points: the major force to implement that model.

How to develop our team of entrepreneurs to cope with the pressure from the foreign-invested sector? How can we organize Vietnamese businesses, how to develop that force, how to help them escape from the old thinking of trying to hold the state budget? No, they have to go ahead.

We need a program to develop Vietnamese businesses, a national program with a start-up project as the key. We have to discuss the details and of course we need a special corridor for big firms, as Phuong said.

VietNamNet: The above policy suggestions of Phuong as well as Professor Nguyen Quang Thai are very specific and also very interesting. Now this is the last question. Mr. Phuong and Mr. Thai talked about entrepreneurship and then the story about a policy eco-system for businesses, for the economy. Do you think that the current pressures are strong enough for our leader to make new policies? We now have new leaders, including many young ones who are trained abroad, so is there hope that in the next 5 years, we will have a policy system which is the pedestal for the development of the new model?

Dr. Tran Dinh Thien: If we choose the development model in which we pack our agricultural goods, we can do it immediately, and very quickly. 

If we have the right policies and the right incentives, perhaps after a year our goods can hit the shelves of international markets, ie the transition is extremely fast. 

This is a transfer of value, but previously we did not pay attention to this. We have some businesses do this task but they are extremely lonely.

Prof. Nguyen Quang Thai: I think the answer for this question must have two aspects. The first is that we cannot avoid pressure because in principle, we must accept the game of integration. 

We all agree that integration today is at a very high level, and the conditions of commitment are far beyond the immediate response of Vietnam, far beyond our current level of development. It requires us to have it and we have made commitment so we must fulfill them. That’s the first aspect.

The second thing, which is very important – that is the method. Whether you choose the right method or not? It is very important for the country. We need the transparency and responsibility to make the right choice.

As our ability is limited, we need to collect opinions from the people. We need to encourage the people to contribute their ideas, in a transparent and open manner. It’s time to promote the national sprit, through which the people can contribute their opinion openly.

Taking a fair look at the launch of the new machine, here I observe the two locomotives of the economy - Ho Chi Minh City and Hanoi - are clearly positive, especially Ho Chi Minh City. I like Mr. Dinh La Thang’s way of doing. For any problems, he asked for the people to offer their ideas publicly. 

At first many people were skeptical of Mr. Thang’s style, but obviously he did have a database to study. The only way to do this is transparency and transparency. This spirit is new and I think we need to promote it.


Pressure from integration force Vietnam to take action promptly