The paradox in Vietnam’s trade promotion

While the export turnover has been increasing steadily, the budget for trade promotion has been cut down gradually.

The budget is just equal to 1/30 of the world

Ta Hoang Linh, Deputy Head of the Vietnam Trade Promotion Agency (Vietrade), said that the budget allocated to support enterprises to boost exports through the national trade promotion program in 2011 was too small if compared with businesses’ demand.

In 2011, the Ministry of Industry and Trade received 272 trade promotion projects compiled by 72 units which cost 405.6 billion dong. However, the budget for the national trade promotion program in 2011 only had 55 billion dong, which was equal to 31.97 percent of that of 2009 (172 billion dong), and 45.83 percent of that in 2010 (120 billion dong).

Linh said that it was very difficult for Vietrade to allocate budget to trade promotion projects. “I know many good and feasible projects. However, due to the small budget, they were not approved,” he said

“The small budget for trade promotion, in the long term, will badly affect the implementation of the programs to boost exports, expand the domestic market,” Linh said.

“Export Promotion Agencies: What Works and What Doesn’t”, a research work of the World Bank, has pointed out that the countries in the world allocate 0.11 percent of the export turnover for trade promotion activities. Meanwhile, with 55 billion dong allocated in 2011, the proportion for Vietnam was just 0.0036 percent of the total export turnover, which was just equal to 1/30 of the average level in the world.

The figure was just equal to 1/5 of Bangladesh, ½ of the Philippines, 1/12 of Thailand, while it can only satisfy 13.6 percent of the demand.

Where are the problems?

While the budget for trade promotion program is modest, the procedures to get money disbursed are really complicated, which makes money stuck before reaching out to enterprises.

Vietrade has pointed out that there are too many problems in the Circular No 88 released by the Ministry of Finance–guiding the financial support for the national trade promotion program.

The circular stipulates that the maximum sum of money to be allocated to trade promotion programs is 6 million dong for every enterprise which attends export-oriented trade fair in Vietnam. Meanwhile, according to enterprises, the sum of money is just big enough to rent half a stall at the trade fairs held in Hanoi or HCM City.

The Circular 88 also stipulates that an enterprise would receive no more than 700,000 dong to register and receive information about trade, market survey and export market database.

Businesses all say that the norms set up by the Ministry of Finance are unfeasible. 700,000 dong is just enough to get general and cursory information which in no way can help enterprises set up their business plans.

Another provision stipulated in the Circular 88, which is considered unreasonable, is that the prop-up sum of money must not be higher than 40 million dong for every enterprise which joins the groups of businessmen going abroad to carry out trade promotion activities.

Businessmen said that if they want to boost exports to Europe, Africa or America, the sum of money is even not enough to pay for the return tickets.

Especially, according to Do Thang Hai, Head of Vietrade, only by mid 2011, had the budget of 55 billion dong been approved, and the sum of money was disbursed only in late 2011.

To date, Vietrade has received 236 trade promotion projects worth 316 billion dong for 2012.

Source: TBKTVN

Tags: Vietnam exports, Vietnam exports 2012, Vietnam trade