Vietnam to serve as new industrial factory of the world

Le Phuoc Vu, President and CEO of Hoa Sen Group, agrees with the expert, saying that Vietnam has all favorable conditions to become the factory of the world, especially in some fundamental industries and high technology sectors.

Vu said the theory about the “flying geese paradigm” shows that it is now the time for Vietnam to receive the technology transfer from the “leading geese” to develop its production.

The paradigm postulated that Asian nations will catch up with the West as a part of a regional hierarchy where the production of commoditized goods would continuously move from the more advanced countries to less advanced ones.

According to Vu, a new industry usually begins taking shape in Japan, and then is transferred to NIEs in Asia (South Korea, Taiwan, Hong Kong and Singapore), then to ASEAN-4 (Singapore, Malaysia, Indonesia and Thailand). China is the next stay of the process, while the next stay would be Vietnam and some other countries.

“I believe that with the flying geese model, Vietnam’s industrial products can be exported to South East Asian and other countries in the world,” Vu said on Dau tu.

“Vietnam’s products in the potential industries such as electronics or information technology would “follow the flock of geese to fly to other markets. Hoa Sen has been following the way to boost its exports,” he added.

The group plans to increase the exports by 20-30 percent to ASEAN market in 2013. “Our products have been present in 25 markets,” said Vu Van Thanh, Deputy General Director of Hoa Sen.

Do Duy Thai, President of Pomina, a steel manufacturer, also said Vietnam is absolutely capable to become the factory of the world, which would be an important condition for Vietnam to strive to an industrialization country.

Japan, South Korea or Taiwan began their economic development from the low starting points like Vietnam’s, according to Thai. However, their reasonable policies on making investment in industries have helped them succeed.

“They are now leading the world in heavy industries and in some high technology industries,” Thai said.

Developing heavy industries should be seen as the fundamental of the industrialization process. And stemming from this point, the state should give necessary investment incentives to encourage domestic enterprises to make investment in high technology sectors.

Thai has noted that the current policies only bring preferences to foreign invested enterprises. Meanwhile, a lot of the enterprises have been conducting the transfer pricing to seek profit and avoid tax.

“The lesson from South Korea shows that in order to develop, Vietnam should start with the domestic market before the regional and then the world market,” he said, adding that this is the only way for Vietnam to follow.

Pomina, for example, has decided that it needs to develop the domestic market first, and after dominating the market, it would think of exporting 30 percent of its products.

Though keeping optimistic about Vietnam’s capability of becoming the new production factory of the world, Vu affirmed that Vietnam needs to take very cautious steps in its development path, because it is just the goose which has joined the flock.

The advantages of the new goose in the flock are the cheap labor force, profuse materials and the government’s policy to encourage exports.