Economic outlook still ‘modest,' says Maersk report

Thien Thanh Sanitaryware joint company

Economic outlook still ‘modest,' says Maersk report

"Viet Nam has been benefitting from a growing influx of young workers which has provided the country with a competitive advantage in labour costs."

HCM CITY (VNS) — Viet Nam's economic outlook remains modest in the face of challenges to its competitiveness, according to the first report in 2014 released by shipping firm Maersk Line Vietnam yesterday.

In spite of declining foreign direct investment, the country still enjoys macroeconomic stability with inflation on target, a steady exchange rate, and a strong export sector posting a surplus, it said.

However, with regard to long-term growth, Viet Nam continues to experience constraints and obstacles to its global competitiveness.

Despite boasting a trade surplus all year and a booming production sector, Viet Nam's competitiveness within the region is on the decline.

The country's logistics costs represent 25 per cent of its GDP, which is higher than most of its competitors in the region.

This is partly due to vague government regulations that result in additional operational costs and lower productivity for enterprises.

It is estimated that Viet Nam's shipping companies spend US$100 million annually on costs related to import-export clearance delays, which could increase to $180 million by 2020.

Furthermore, although Viet Nam has been enjoying a trade surplus, the goods being exported tend to be low value-added products that are labour-intensive and require little technical skills or technological inputs.

Bich Nguyen, general director of Maersk Line Vietnam & Cambodia, said: "The market growth that we have experienced in the first quarter of the year mirrors the trends in Viet Nam's overall trade balance.

"The domestic economy may continue to be hampered by the slow pace of structural reforms of state-owned enterprises and the banking sector, but its heart – manufacturing and production – still remains robust

"Viet Nam has been benefitting from a growing influx of young workers which has provided the country with a competitive advantage in labour costs.

"However it is critical to increase our labour productivity to convince more investors to set up their factories here, and one of the ways we can have significant productivity gains is through technological transfer."

Many challenges facing enterprises can be addressed by focusing on productivity improvements through implementing e-solutions. Automating systems and transactions are the key to increasing productivity, accuracy, transparency, and visibility of data and reducing costs.

Maersk Line recently did a survey of its customers in Viet Nam, which found that 7 out of 10 find e-commerce important to their business.

Bich said: "E-solutions mean less time, less mistakes and less, if not, zero additional cost being incurred due to documentation errors.".