Vietnam Overseas

Updated on 2/7/2008 at 16:56

Vietnam is having many opportunities to achieve rapid and sustainable growth in the coming years. However, it is not easy for the country to become the new “star” or “tiger” in Asia.

“Vietnam – Asia’s rising star” was the main theme of a business roundtable held recently in Hanoi with the participation of nearly 130 chief executive officers and more than 600 representatives from leading domestic and international businesses. While attending the event, Prime Minister Nguyen Tan Dung had direct talks with the business community.

Great advantages

“Vietnam has great advantages.” This view was shared by all investors and businesses at the conference.

Charles Goddard, Editorial Director of the Economist Intelligence Unit’s Asia-Pacific Region, said Vietnam is emerging as a rising star. He said that the Vietnamese economy has developed steadily in recent years to become a phenomenon in Southeast Asia. The country has gradually shifted from an agriculture-based economy into an industry-driven economy. The shifting has created numerous opportunities for the country to seize, such as investment projects, profitable business deals and jobs for the people.

Justin Wood, director of the Corporate Network and Southeast Asia expert for the Economist Intelligence Unit, said “The economic outlook for Vietnam is highly positive, with a growth of over 8 per cent in 2007 and a similar rate forecast for the next couple of years.”

In the long term, he said that Vietnam has many positive advantages in maintaining a high growth in the coming years thanks to its young, cheap and rapidly expanding workforce as well as being increasingly technologically savvy. He said that the Government’s commitment to liberalizing the economy and introducing more market-based reforms “will underpin this positive outlook.”

HSBC Vietnam president Thomas Tobin

Thomas Tobin, President and Chief Executive Officer of the Hong Kong and Shanghai Banking Corporation (HSBC) expressed his optimism about Vietnam’s future prospects and forecast that Vietnam would achieve a GDP growth rate of 8.5 percent in 2008 thanks to increasing consumption and foreign investment inflows. According to him, Vietnam is accelerating financial reforms in 2008 in line with its WTO commitments, which will lead to a vigorous development in the banking sector.

Stuart Dean, President of General Electric (GE) South East Asia regarded Vietnam as the new tiger in Asia and said that the country is attracting investors thanks to abundant workforce and efficient operations. He said that GE, which came to Vietnam in 1993, will build a plant in Hai Phong port city and increase its employees to 1,000 from 500 at present. Besides power development, the group also plans to lure other investors to pour money into the aviation and oil industries.

Challenges ahead

However, leading businesses said that it is not easy for Vietnam to become a “rising star” or a “new tiger” in Asia because there are many challenges lying ahead.

Charles Goddard said, “Inflation is worryingly high…. The regulatory environment is still embryonic and can create big headaches. Another problem is a lack of technicians and managers.”

According to him, although the Government is working hard to reduce the prevalence of corruption, investors and businesses in Vietnam express concerns about this negative effect.

Meanwhile, Justin Wood said that Vietnam’s legal system is incomplete, citing the fact that it takes foreign businesses too much time to explore and be integrated into the country’s legal system, particularly in taxation. Administrative procedures remain more cumbersome than in neighbouring countries.

Though Vietnam has a young and abundant workforce, it lacks highly qualified workers with professional skills. In addition, these workers require higher salaries than those in other regional countries.

Thomas Tobin said that the banking sector is in dire need of high-quality personnel and that it takes a lot of time and money to train specialists that are adaptable to rapid development of the sector. He forecast that Vietnam will continue to lack these human resources for several more years.

Many investors and businesses, however, were interested in the infrastructure development, saying poor infrastructure will hamper the country’s development. They suggested that Vietnam pay more attention to improving the infrastructure, particularly in the transport and power sectors.

Determination

Prime Minister Nguyen Tan Dung said that despite many achievements over the past few years, Vietnam remains a developing and low-income economy and is coping with big challenges.

To overcome these challenges, he said the Vietnamese Government has worked out several major solutions as follows:

(i) Striving to achieve a GDP growth rate of 9 percent, along with implementing the targets for social progress, poverty reduction, environmental protection and especially efficient price control and the stabilization of the macro economy;

(ii) Improving the living conditions of the people, especially those living in flood-hit and remote areas and those inhabited by ethnic groups; reducing the rate of poor households to 11-12 percent;

(iii) Improving the socio-economic infrastructure and personnel training to meet development requirements;

(iv) Accelerating administrative reforms, with a focus on building and perfecting legal institutions and administrative procedures; and

(v) Continuing the fight against corruption and wastefulness and encouraging the practice of thrift.

The PM delivered the Government’s strong commitments to equitising State-owned enterprises, combating corruption, reforming administrative procedures and improving the business environment. He assured the business community that corruption will be cleaned up because “for Vietnam, nothing can thwart our determination”.

(CPV/VOV News)

Updated on 2/14/2008 at 21:1

The lack of competent professionals is an obstacle to the development of Vietnam’s economy and its ability to draw larger amounts of foreign direct investment (FDI).

After 20 years of opening up, Vietnam is now considered to be a top investment destination.

FDI is forecast to continue significantly with the growth of both domestic private and state-owned companies. However, a serious bottleneck remains with the lack of skilled labor and professionals.

“Recruiting skilled labor is indeed a challenge in Vietnam, as seen by the relatively high vacancy rates for managerial and high level occupations,” said World Bank economist Jeffrey Waite.

A survey by the Ministry of Labor, War Invalids and Social Affairs shows that only about 80 percent of planned recruitment at the managerial level has been completed.

A survey of Japanese firms operating in Vietnam found problems in recruiting middle-management and engineers. The most recent Vietnamese investment climate survey acknowledged that and pointed to “major” or “very severe” shortages in staff. According to human resources consultancy, Navigos Group, the supply of qualified workers is consistently 30 percent lower than demand and is forecast to increase significantly in the future.

Finance, banking, investment, infrastructure development, IT and high technology have been hit the hardest. Banking, for example, will be facing a severe shortage in 2008 when a series of both local and foreign banks will be licenced. “This is the number one challenge for many banks,” said Pham Tuan Tu, general director of Global Petro Bank.

With the shortages come rises in salaries. According to Navigos Group’s salary survey 2007, wages rose by 12 percent on average. But, pay for middle management increased by close to 50 per cent. In the foreign investment sector, middle management positions can fetch anywhere between 15,000 to 30,000 USD per year. While, banking, investment and securities professionals can earn between 60,000 to 80,000 USD per year.

Navigos Group regional director of executive search and selection, Nguyen Thi Van Anh, said: “This is of course understandable. Companies need to not only attract, but also retain the best talent. The first thing the companies do is to increase salary levels and improve their compensation and benefits.”

Since local workers have been found wanting, a growing number of companies are looking abroad to get the job done.

“The number of foreigners working in Vietnam will rise in the future. The salaries that companies pay depend on the caliber of their qualifications and responsibilities. But in general, the salary for foreigners is higher because they have better skills,” Anh said.

Australian Chamber of Commerce chairman Paul Fairhead said: “For most companies, this is a short-term solution. Usually companies bring in foreign managers with a view, to not only run the company, but also to train up local managers to take over. Skill transfer and capacity building are the objectives.”

The labor market challenges faced today also reflect the inadequacy of efforts to reform the education and training system in Vietnam. The business community continues to find that few graduates from Vietnamese universities have the skills necessary to enter the workforce without substantial additional training.

A disproportionate emphasis on theory, failure to consult with industry and a lack of focus on analytical skills means that most graduates must be re-trained or receive supplementary training from employers.

“Training institutions generally do not adhere to the training needs of industry. They also do not have enough number of teachers and tutors,” said Dang Duc Dung, vice chairman of Hanoi Business Association.

“Their teaching equipment and facilities are only updated and improved gradually slowly and their education managers lack flexibility and are unable to attract interest and support from enterprises.”

The current mismatch in the labor market is only the tip of the iceberg.

Fairhead said that without a change there would be an erosion of Vietnam’s competitive advantage in terms of abundant, cheap and educated labor.

“Indeed, Vietnam’s attractiveness as an investment destination in Asia will be increasingly questioned as workers’ salaries begin to outstrip their productivity and costs of recruitment and training rise,” he said.

In a 2007 Business Environment Survey of Vietnam’s Business Forums Secretariat, enterprises showed that the shortage of labor, especially in management level had become one of the main obstacles for expanding their operations in Vietnam.

“This problem should be addressed urgently if Vietnam wishes to maintain its competitiveness, especially during the post-WTO period when rapid increases in foreign investment will lead to an increase in demand for human resources,” a Vietnam Business Forum Secretariat report said.

Recently, US-based tire manufacturer Michelin expressed interest in building a billion dollar-factory in Vietnam.

A Michelin official said that the factory would require about 100 managers. However, the official said the supply of labor was also one of Michelin’s biggest concerns. Fairhead said the failure to confront the labor markets challenges also raised questions regarding Vietnam’s ability to handle significant expansion of complex business activities in high-tech sectors. “This is a long-term problem with no quick fixes.”

Many companies are responding proactively to the shortage of management by developing in-house training and professional development programs, cooperative partnerships with universities and performance-reward systems to be able to recruit and retain talented workers.

But, Fairhead said: “company specific initiatives will not be sufficient to maintain Vietnam’s competitiveness. The government has to step up its efforts in this area.” Waite also said that in addition to ensuring appropriately functioning, flexible labor markets, Vietnam needs to reform its higher education policies.

While the demand for skilled labor providing a strong justification for expansion of higher education in Vietnam, the evidence of bottlenecks suggest that higher education may currently not have the capacity to adapt to the growing and changing needs of Vietnam’s dynamic economy.

“While higher education institutions can produce graduates with the required technical skills, other characteristics important for successful CEOs, such as entrepreneurship, for example, may not be the primary product of a university education but are likely to result in large part from different life experiences,” Waite said.

(According to Vietnamnet)

AP - Monday, February 18

BANGKOK, Thailand - Dengue fever has sickened more than 2,800 people and killed four in Thailand this year, sparking worries about a possible wider outbreak despite efforts to control the disease, the health ministry said Sunday.

A total of 2,824 cases of the mosquito-borne illness were detected in Thailand from Jan. 1-Feb. 9, compared to 1,702 cases with no fatalities reported during the same period in 2007, the ministry said in a statement.

Countries across Southeast Asia experienced the worst outbreaks of dengue fever in years in 2007, with Thailand reporting about 60,000 cases and 29 fatalities. Large outbreaks also occurred in Indonesia, Vietnam, Malaysia, Singapore and Cambodia.

The dengue virus causes severe joint pain, high fever, nausea and a rash. In the worst cases it can lead to internal bleeding, liver enlargement, circulatory shutdown and sometimes death. There is no known cure or vaccine.

Scientists fear rising temperatures and longer rainy seasons _ like Thailand experienced last year _ will allow more mosquito-borne diseases such as dengue and malaria to flourish.

“The mosquitoes that carry the dengue virus have also been able to adapt to climate change, becoming more resistant to dry weather and breeding faster,” ministry official Praj Boonyarowong said in the statement.

The ministry advised people to protect themselves from mosquitoes by ridding their homes and surroundings of flower pots, old tires and discarded bottles or cans where stagnant water can collect and allow the insects to breed.