Vietnam 2011 Infrastructure and Technological Readiness

WEF's Global Competitiveness Report (GCI) for Vietnam:
Infrastructure and Technological Readiness Rankings


Quality of overall infrastructure 123
Quality of roads 123
Quality of railroad infrastructure 71
Quality of port infrastructure 111
Quality of air transport infrastructure 95
Quality of electricity supply. 109
Fixed telephone lines/100 pop. 70
Mobile telephone subscriptions/100 pop. 5
Technological Readiness 

Availability of latest technologies 133
Firm-level technology absorption 88
FDI and technology transfer. 62
Internet users/100 pop. 84
Broadband Internet subscriptions/100 pop. 76
Internet bandwidth, kb/s/capita 88
(Source: www.weforum.org; table by: Business-in-Asia.com)

The World Economic Forum (WEF)'s Global Competitiveness Report (GCI) is an annual report published by the World Economic Forum since 1979. The 2011-2012 report covers 142 major and emerging economies. The Global Competitiveness Index measures the set of institutions, policies, and factors that set the sustainable current and medium-term levels of economic prosperity, depending on how productively a country uses available resources.

WEF Comments for Vietnam 2011-2012
(Source: www.weforum.org)

"..the challenges going forward are numerous and significant. Infrastructure, strained by rapid economic growth, remains a major challenge for the country despite some improvement in recent years, with particular concerns about the quality of roads (123rd) and ports (111th)."

Our Comments:

    • Airports: The government has tried to inprove infrastructure.  As seen in recent news, a second terminal is under construction in Hanoi to ease overcrowding at the only airport in Hanoi, the nation’s capital.  A four-storey facility which is being funded by more than 75 billion yen ($961 million) in Japanese aid, is expected to be completed by the end of 2014.  The new airport was designed to handle 10 million passengers per year (the existing terminal handled some 9.5 million passengers in 2010, exceeding its capacity of six million), reported Vietnam News.  In addition to the Terminal 2 project, Japan is funding an expressway and bridge link to the airport. However, <> the country needs to spend far more on airports other than in Hanoi or Ho Chi Minh City and other key infrastructure in order to compete with aviation hubs like Bangkok or Singapore. At a World Bank-backed forum recently, the American Chamber of Commerce in Vietnam said the country continues to face ‘‘deficiencies and delays’’ in developing key infrastructure including approach roads, bridges, power plants, seaports and light rail.

    • Infrastructure has not been the top problem (see our report: the most problematic factors for doing business in Vietnam 2011 compared to 2009), but much more needs to be done to improve infrastructure in a systematic way that doesn't just spread the money but focusses better on return on investment.  Areas like Ho Chi Minh City, the Southern Key Economic Zone, the area near Danang and cerain areas around Hanoi that already have received investment need a greater focus on meeting their infrastructure requirements.  More remote provinces will have to wait for additional investment.  Port investment as we have noted previously has been parcelled out in a way that didn't optimize the investment.  Vietnam doesn't need a host of poorly conceived ports that don't meet international standards.  What is needed is a well conceived and funded port for Ho Chi Minh City and the Southern Key Economic Zone, upgrade of Danang port in the center, upgrade of Cam Ranh Bay and upgrade of Haiphong in the North.  Parcelling money out to additional provinces just doesn't make sense given Vietnam's relatively limited investment options.

More detailed analysis of the report:

The Global Competitiveness Index measures the set of institutions, policies, and factors that set the sustainable current and medium-term levels of economic prosperity, depending on how productively a country uses available resources.

Vietnam: Institutions          
Property rights, Intellectual property protection, Irregular payments and bribes, Favoritism in decisions of government officials, Wastefulness of government spending, Burden of government regulation, Efficiency of legal framework in settling disputes, Transparency of government policymaking, Business costs of terrorism, Business costs of crime and violence, Strength of investor protection

Vietnam: Infrastructure & Technological readiness
Quality of overall infrastructure (road, port, airport), Quality of electricity supply, Fixed telephone lines/100 pop, Mobile telephone subscriptions, Availability of latest technologies, DI and technology transfer, Internet users, Broadband Internet subscriptions, Internet bandwidth

Vietnam: Inflation
annual % change

Vietnam: Education and Training
Quality of primary education, Primary education enrollment, Secondary education enrollment, Quality of the educational system, Quality of math and science education, Quality of management schools, Internet access in schools, Availability of research and training services, Extent of staff training

Vietnam: Goods market efficiency
Intensity of local competition, Extent of market dominance, Extent and effect of taxation, Total tax rate, No. procedures and days to start a business, Business impact of rules on FDI,  Buyer sophistication

Vietnam: Labor market efficiency
Cooperation in labor-employer relations, Rigidity of employment, Brain drain

Vietnam: Market size
Domestic market size, Foreign market size

Vietnam: Business sophistication & Innovation
Local supplier quantity, Local supplier quality, State of cluster development, Extent of marketing.
Capacity for innovation, Quality of scientific research institutions, vailability of scientists and engineers

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