VietNamNet – Since receiving autonomy, many poor provinces have been speeding up their development. However, some places with special advantages have failed to take the leading role as expected. How to take advantage of the autonomy to make breakthrough in development? Seth Winnick, US Consular General to HCM City, talked with VietNamNet about his interesting observations.

Seth Winnick, US Consular General to HCM City

You have traveled to many provinces from Hue to the South. What are your observations of potentials for socio-economic developments of Southern provinces of Vietnam, where you are the highest US government official?

One of the things that is interesting to discover about Vietnam, that I did not understand before coming here, is how much authority resides at the provincial level. There is an impression that Vietnam is a country that is controlled very much from its capital, very centralized, but in fact it is not. There are tremendous differences between one province and the next. This becomes obvious when you visit different provinces, and it shows up even looking at two provinces that are right next to each other.  You have some provinces, for example Dong Nai and Binh Duong, that have been two of the most successful provinces in terms of economic development in Vietnam. And some of the provinces that are quite close to them have been much less successful.

Fundamentally, I have found that the most important differences are those of political leadership. The provinces that have been the most successful, or the most successful relative to their neighbors, are those that have a leadership that is prepared to be open and transparent, to create a good business environment, and that means create a good business environment both for people who live in that province as well as for foreign investors. There is not really a big difference between what make a good business environment on the domestic side and a good business environment for foreign investment. 

Provinces that continue to have a very heavy reliance on state-owned enterprises and state control, provinces where the People’s Committee wants to have an ownership stake in all the important enterprises, tend to be less successful than they could be. It does not mean that they are not successful at all. Some provinces have great natural advantages, whether for tourism, industry, exploitation of natural resources or agriculture; these provinces are successful. But those that liberalize the economy, those that are open, those that restrict the role of the state to maintaining order, providing infrastructure, services, and regulation, as opposed to having the state as the owner and manager of businesses, those are the provinces that are the most successful. 

This conclusion was also demonstrated by the Vietnam Provincial Competitiveness Index that was sponsored by the VCCI with U.S. technical assistance. That study revealed the extent to which the quality of governance is a key factor for economic development at the provincial level. So even a province that is relatively poor -- some of the provinces in central Vietnam have few natural resources, very difficult climates and little arable land -- some of them are much more successful than others based on how well they have been managed and administered.

You have traveled to the Central VietNam, HCM City, the Mekong Delta and the Central Highland? What areas are you impressed the most?

It is not a question of one or another. The southern portion of Vietnam is absolutely fascinating, and each area has particular attributes and particular advantages. From an economic development standpoint, the southern economic industrial zone, the iron quadrangle of Ho Chi Minh City, Dong Nai, Binh Duong and Ba Ria Vung Tau is very impressive. Growth has been extraordinary. Social-economic development has moved very rapidly.

The Delta is also an unbelievably interesting area. From an economic standpoint there are really two parts to the Delta. The coastal delta has seen rapid growth and rising income as a result of the introduction of aquaculture to replace marginal rice growing. 

The inland delta is again very interesting from an economic standpoint because rice agriculture has become so intensive, production has become so high and there is a tremendous amount of growth that has come from that. But the problem that both of those areas are going to face is that they cannot produce much more using current technology and agricultural techniques.

In the Delta, you have areas that produce over three rice crops per year; you can’t do more than that, you can’t grow five rice crops a year, it’s not physically possible. And therefore, they face a real challenge of moving up the value chain and raising agricultural productivity.  There is a real need to go from growing more intensively to growing more intelligently.

What should Vietnamese scientists do to help farmers in the Delta to sustain the best the natural advantages?

There is great potential for biotechnology in this region, and Vietnam has a lot of expertise and capacity in biotechnology.  Unfortunately, genetically engineered varieties have not yet been approved to be released to the farmers. Vietnamese scientists have done excellent work in the laboratory but they do not have the ability yet to put these products out to the farmers.

If you look at the Delta, well, the same holds true in Vietnam overall, over eighty percent of the population makes a living from agriculture either directly or indirectly.  The only way to raise income is to raise agricultural productivity, which means you need to use less people to produce the same amount. You need to use better technology, and more capital equipment to continue to grow.

 

The Central: Smart tourism development

The Central Coast is interesting because while it’s an intrinsically difficult environment -- not an easy place for agriculture, but you do have a tremendous potential for industry. You’ve got a series of cities along the coast, all of which have immediate access to the sea for transportation and substantial populations of educated people, potentially very good workers. 

The question is whether this part of Vietnam is going to be able to develop its full industrial potential. And this is one of the areas where an open business environment – reducing the level of state control, state-owned enterprises, regulations, licensing, permits - and focusing government on infrastructure, education and health could create a strong environment for industry.  There is great potential there, especially if Vietnam can effectively harness its offshore energy resources.

There is an awful lot of offshore gas that can be developed to fuel industry. The key question once again is whether Vietnam is prepared to open up its investment regime quickly enough to foster that development.  Offshore gas can produce vast amounts of power for industry along the Central Coast, but industrial development all the way from coastal Thua Thien Hue to Nha Trang and Phan Thiet is only just beginning.

There has been a lot of focus on tourism of course.  Every city and province wants to be the next major international tourist destination.  The region has beautiful beaches all throughout that area, but this sector needs to be developed intelligently.  People need to identify those areas that are the most attractive and work with top tier international developers who can attract the clientele that Vietnam wants.

Central Highland 

Let’s turn to the Central Highlands.  Vietnam became the world’s second largest producer of coffee because of the Central Highlands.  But as in the Delta, there is not a lot of land left to plant with coffee or pepper or cashews. The growth in that area is going to have to come by increasing quality and moving up the value chain rather than just by increasing volume. 

There is also a tremendous need for social development in the Highlands.  Ongoing tensions between the ethnic Kinh and the ethnic minorities in the area need to be addressed by continuing to improve social services and education. There is pressure over land tenure as well.  The issues of ethnic minorities and indigenous people are difficult issues anywhere in the world, but something that Vietnam needs to continue to address.

If you look at all four regions, HCM City and its neighbors, the Delta, the Coast, the Highlands, it makes for a very interesting consular district and it means that I get to go to lots of different places and do a lot of different things.  It also means that Vietnam has a wide variety of resources and advantages that it can bring to bear if the overall policy environment is right, and that policy environment really should extend beyond any one region.  Opening up the economy, liberalizing, decontrolling, and allowing the Vietnamese people to do what they do so well, which is business, investment, trade and development, can work just as effectively in all of these regions.

Each area of Vietnam has its own particular strengths and weaknesses in terms of its physical environment, population and so forth. But in terms of a policy environment, I think that there are certain things that can be applied to any of these regions.

Governments at the provincial level that are more open, that encourage private initiative --  whether by foreign investors or domestic investors --  that focus their resources on providing key services like education, health, and roads, and that do not try to be competitors in business themselves, are provinces that are more successful.

That is the sort of approach to economic governance that works anywhere, and that’s where you see contrasts between provinces, sometimes even neighboring provinces.  This comes out in the Competitiveness Index as well. So yes, the fundamental conditions are different in different parts of the country, but there are some principles that apply across the board.

HCM City is the biggest and the most dynamic center of Vietnam, what about the prospects for cooperation and trade potentials between the city’s businesses and US businesses in the near future?

In the last five years, the U.S. has become the single largest market for Vietnam.  It is an extraordinary statistic -- Vietnam is exporting about six billion U.S. dollars worth of goods to the U.S. now.  Exports have grown by a factor of ten as a result of the Bilateral Trade Agreement and most of that flows through HCM City.

The engine of exports is in the south and in HCM City.  Even the petroleum industry is increasingly focused and headquartered here in HCM City though the petroleum itself is offshore. This is the trade center of the country; there is no question about that.

We see quite a number of U.S. business delegations coming through looking for opportunities, both for investment and for trade as well. One of the things that makes my job enjoyable is the dynamic business environment here.  There are so many opportunities, and many American companies are really still at the discovery phase, coming to Vietnam sometimes they’re just so surprised by what they find, surprised by the potential of the market here for one product or another.

(Next: Where is investment flowing to)  

Interviewer: Khanh Linh