Vietnam urges to remove obstacles in infrastructure

In the next five to ten years, Vietnam will need around US$70-80 billion to upgrade its infrastructure which is considered one of the main tasks to improve its competitive edge in the region and to further integrate into the international economy.

In 2010, Vietnam has been successful in transitioning from a low-income country to a middle-income country by fullly tapping domestic advantages and improving business environment for both local and international investors. However, Vietnam still faces challenges in terms of infrastructure, which has a negative impact on businesses’ operations.

Hank Tomlinson, President of the American Chamber of Commerce in Vietnam said that there were still shortcomings to the development of Vietnam’s infrastructure, especially in building roads linking to provinces and cities, bridges as well as strategic roads near seaports. This has negative impact on direct foreign investment in the country as these limitations are the reason why many US investors do not want to invest in Vietnam due to these limitations.

One specific limitation is high transportation costs. According to businesses, transportation costs in Vietnam now accounts for a higher proportion of GDP than in other nations in the region. For example, these costs make up 13 percent of GDP in Indonesia and Malaysia, 18 percent in China while it is 25 percent in Vietnam.

Maersk Line Vietnam & Cambodia General Director Peter Smidt-Nielsen said that there are many reasons why transportation costs in Vietnam are higher. However, it is obvious that poor infrastructure is an important factor including traffic jams, lack of transparency and forecast, and backward means of transportation which often do not meet the regulations on weight limit.

To solve these issues, Vice President of the Australian Chamber of Commerce, Brian O’Reilly said that Vietnam should pay attention to the Public-Private Partnership model which will make important contribution to improving infrastructure in Vietnam. In addition, it is necessary to improve administrative formalities, especially those related to infrastructure projects and contracts.

Vietnam has been successful in improving access to infrastructure services over the past 20 years. However, many things need to be done to improve the country’s competitive edge and remove obstacles to the further growth of the national economy. As Vietnam continues to make progress in developing its economy, it is also necessary to continue to adjust policies and institutions accordingly, said deputy minister of Planning and Investment Dang Huy Dong.

According to international surveys, although Vietnam has made major development achievements, it has not resolved issues of infrastructure effectively. This has become the biggest hindrance in improving Vietnam’s business environment. Removing this obstacle will allow Vietnam to continue toward a positive and sustainable economic growth rate and the realization of its goals in the next decade. – VOV

Tags: Vietnam Infrastructure