Linking North Central Coast Economic Region

11:53:37 AM | 6/11/2019

The North Central Coast economic region is seeing a great opportunity for sustainable economic development and growth, boosted by the formation of a synchronous industrial production and distribution network of goods, aiming at industries of competitive advantages and turning export, services and tourism into spearhead sectors.

Setting up regional cooperation council

At the Forum “Business Role in Economic Development in North Central Coast” recently held in Hanoi by the Vietnam Chamber of Commerce and Industry (VCCI) and the Business Forum Newspaper, VCCI President Vu Tien Loc said that the Government has already decided on North Central Coast development planning, admitting that, without the cooperation of all walks of life, and business playing a central role, it will be very hard to achieve success.

The North Central Coast plays an important role in Vietnam's economy. This culture-rich sub-region has many wonders of Vietnam and the world. In terms of geopolitical position, it links Vietnam with Laos and Cambodia.

However, its economy is still less developed than other regions of the country although it is home to gigantic projects such as Nghi Son refinery and TH True Milk agricultural project together with about 40,000 companies and 300,000 business households.

The North Central Coast accounts for 15% of the country's population but its business entities account for only 5.5%, only a third of the national average. This is a bottleneck in this region’s development.

Dr. Loc said, facing this reality, the business community is looking forward to a second wave of reforms.

“For many years, we have removed difficulties and obstacles against businesses but institutions are still overlapping. Therefore, this is no longer a settlement phase but a period of development orientation. The Government should lead and support businesses to grow. It needs to direct the development of industries and fields and call on private enterprises to develop these central tasks because our current troubles with new business models need to be resolved,” he said.

Thus, he suggested business associations in the North Central Coast to work together and establish a Regional Connectivity Council which will guide the regional ecosystem strategy and support strong regional development. Every year, it can organize regional economic forums, discuss in-depth business policies and lessons and ways to improve the Provincial Competitiveness Index (PCI).

Four pillars of development

The economy has shifted in a positive pattern, featuring a rising share of industry and service. Fiscal revenue of regional provinces and cities reached, or even exceeded, their yearly estimates in 2016-2018. However, basically, the North Central Coast did not achieve goals and directions stated in Decision 1114/QD-TTg.

Ms. Nguyen Thi Hoang Diep from the Development Strategy Institute under the Ministry of Planning and Investment said the North Central Coast has nine airports, including five international airports; 14 deep-water seaports, including eight national general seaports; and 11 coastal economic zones (out of 17 in the country), thus meeting the country's large freight demands and functioning as international trade hubs for other regions and localities. Industrial and economic zones in the sub-region are operating effectively, especially those in the central key economic region.

The North Central Coast (from Thanh Hoa to Thua Thien Hue) contributed 47% in 2015 and 44.5% in 2018 to the central region's economic size. Its economic growth was lower than that of the central region (5.63% versus 9.32%) and its economy contributed 53.3% to the region's growth.

The North Central Coast plays a significant role in economic restructuring driven by the modernized service sector and agriculture. However, its per capita income is lower than that of the central region, reaching VND42 million in 2018.

On urbanization speed, the central region has the lowest urbanization rate among six socioeconomic regions. In 2018, its urbanization rate reached 11.39%.

Although many projects have been invested by non-State funds in the region, funding mobilization for construction investment has not met expectations and development targets due to its unattractive economic prospects, she said. Urban infrastructure has not met development requirements. Unemployment rate remains high as compared to the country, particularly in development-enabled localities like Ha Tinh, Quang Binh, Quang Tri, Thua Thien Hue, Da Nang and Binh Dinh. The quality of human resources has improved but this movement remains slow against the challenges of the Fourth Industrial Revolution.

In addition, the region’s growth momentum in general and the role of the industry in particular are weak and unsustainable. The region lacks many big business projects and industrial projects, especially processing and manufacturing. Many localities have still slowly restructured their economies, with unclear priorities in sector development strategies.

Notably, institutional factors for regional and local economic development are lacking or inconsistent, especially decentralized institutions, economic management and regional connectivity institutions.

According to Ms. Diep, four key pillars are needed to develop the North Central Coast: Developing synchronous and modern infrastructure, focusing on upgrading intra-regional and rural roads to enhance intraregional and interregional connectivity; developing tourism, especially marine tourism combined with humanistic tourism - the strength of the North Central Coast sub-region, forming and developing tourism clusters; accelerating the development of economic zones and industrial parks, with a focus placed on developing deep-water ports in Vung Ang Economic Zone with logistics services; and developing hi-tech agriculture, focusing on fishery development, commercial fishing, aquaculture and seafood processing.

In addition, she proposed the Government have new disruptive, specific mechanisms and policies for the North Central Coast and effective regional coordination mechanisms.

To inspire strong growth aspirations of the whole region and its localities, it is necessary to change the thinking and identify important groundbreaking factors for accelerating regional and local economic development in 2021-2030. At the same time, it is important to promote regional connectivity by strengthening intra-regional connectivity to boost regional and local potential strengths.

Mr. Nguyen Dung, Vice Chairman of Thua Thien Hue Provincial People's Committee

In order to match local businesses for sustainably and effectively tapping local potential and advantages, provincial governments in the North Central Coast must first solve infrastructure problems by further building coastal traffic systems in northern central provinces to serve tourism development companies and develop coastal urban areas. At the same time, they also need to upgrade and develop logistics networks at seaports to support exporting activity and helping local businesses to reduce costs.

With respect to policy solutions, the region introduces incentive mechanisms for the development of industry clusters and value chains. Accordingly, each province proposes 3-5 industrial clusters and products it has advantages to join cluster chains and call for investment.

In particular, the Conference on Business Dialogues, held twice a year by six North Central Coast provinces, has helped seek solutions to difficulties and obstacles faced by local enterprises and seek their constructive ideas for regional economic development.

On human resources, the region needs to enhance training and retraining of management skills for entrepreneurs and cultivate professional, ethical, responsible and competent entrepreneurs to adapt to Industry 4.0 era.

For their part, businesses need to actively join with local companies, with the bigger leading the smaller, to develop smart supply chains, and focus on innovation to increase product value.

Mr. Nguyen Xuan Quang, Permanent Vice Chairman of Quang Binh People's Committee

To draw more investment resources for economic development of Quang Binh province in particular and the North Central Coast as a whole, in the coming time, it is necessary to make public plans, projects and data to enable businesses to access information and investment opportunities, carry out regional plans, expand regional and sub-regional connectivity to unlock potential and strengths and mobilize resources.

In addition, provinces in the sub-region need to actively coordinate with each other to stimulate investment, contact potential investors, and popularize information about regional and provincial potential and strengths on reputable means and information channels, especially potential for tourism development, construction material production, high technology and renewable energy, in order to attract investment capital and create motivations to accelerate industrialization and modernization.

In particular, they essentially work with each other to develop a common comprehensive investment incentive policy for the whole region in which nuclear points need to be clearly identified and concentrated to advise the Government to ask the National Assembly to issue a resolution on tourism, social and economic development mechanisms and policies for North Central Coast and Central Coastal provinces. Each province will adapt its investment incentive policies to match its actual conditions so as to share and resolve hardships to facilitate businesses.

Mr. Le Minh Nghia, Deputy Director of the Department of Planning and Investment of Thanh Hoa province

For regional economic development, the forefront must be the institution enabling regional connectivity for development. There should be a common resolution for the whole region that focuses on tourism infrastructure development together with urbanization development, industrial development together with urbanization development, ocean shipping development together with logistics development, and fishery development together with tourism development.

Marine traffic and ground traffic infrastructure, particularly expressways, need to be further invested to effectively operate deep-water ports because this is a huge regional potential.

Endowed with a long coastline, the North Central Coast has caught the interest of many foreign investors. Therefore, it is time for concerned provinces to sit down, discuss and exchange information soon to create more favorable conditions for development, and attract and control investment fund.

Mr. Tran Huu Hung, Deputy Director of Department of Planning and Investment of Quang Tri province

To effectively increase regional integration, logistics development must be concentrated. At present, there is no mechanism for sectors and localities to develop logistics owing to the lack of mechanisms, policies, people and infrastructure.

For example, human resources for this sector is a cause of concern because the University of Transport has taught logistics for just three years. As for infrastructure, logistics infrastructure will have to be associated with transport infrastructure.

Therefore, each province must successfully build a logistics coordination center and all provinces must interconnect their logistics centers to produce best performance outcomes.

Ms. Nguyen Thuy Hien, Deputy Director of Planning Department, Ministry of Industry and Trade

In recent years, the development pace of the North Central Coast is relatively high as compared to the country’s average. However, the region’s industrial growth is uneven among provinces. In particular, Thanh Hoa and Ha Tinh have grown rapidly and contributed significantly to regional and national industrial development as they are home to colossal projects such as Nghi Son oil refinery and Formosa steel mill.

While some provinces have gargantuan industrial projects that hire large labor forces and contribute significantly to provincial and regional development, others have lower industrial development levels than the national average such as Quang Binh and Quang Tri (few projects are large enough to push up industrial development).

With orientations shaped for in the coming time, the Ministry of Industry and Trade approved the industrial development planning for the northern key economic zone and the central region to 2025, with a vision to 2035. The plan specifies regional development directions and focuses on the region’s strong sectors: Seafood processing; steel and metallurgy, petrochemical; steel and cement. The regional industrial development planning figures out surrounding factories and develops steelmakers and petrochemical processors.

The ministry has announced a broad plan with clear orientations. Thereby, the Departments of Industry and Trade and the provinces have cooperated with each other to draw investment funds as per the above directions.

Mr. Dau Anh Tuan, Director of VCCI Legal Department

North Central Coastal provinces recorded better PCI than three or four years ago. But, their differentials are insignificant, especially when compared to good performers in the Mekong River Delta and to underperformers.

Market entry procedures are good but not enough in the region. Its market entry score is highest in the whole country. Nevertheless, some provinces still believe that business licensing is a good point but investors think more about what is after they get licensed.

In addition, the North Central Coast is deemed relatively desirable for investors. Its land access index is good, the most improved indicator in the past year as compared with other regions. Its information access index is relatively good. Provincial business associations are relatively active. Business support services are quite good but private consultants are few due to the small market size. Human resources are good in quality and qualified for working for key economic hubs such as Hanoi and Ho Chi Minh City.

But, the North Central Coast still have some aspects needed to be improved. Administrative procedures are not actually favorable. Inspections are too frequent. Informal costs are highest, by region, and tend to be worse than other regions. 61% of local enterprises complained about abusive bureaucracy in administrative procedure settlement.

On the other hand, the business environment is not actually fair for when discrimination still exists between State-owned enterprises and privately held enterprises, or between private enterprises and foreign-invested enterprises or enterprises having acquaintance with officials.

Anh Mai