Trade Promotion: Sluggish Fund Disbursement

 

According to the Trade Promotion Agency under the Ministry of Trade, 155 national-scale trade promotion programmes were organised by 27 units in 2006 with a total approved expenditure of VND144.77 billion (US$9 million). However, only 131 programmes were carried out, or 85 per cent of the total ratified programmes. In 2007, a total of 159 national trade promotion programmes are approved to be conducted by 28 units with total funding over VND176 billion (US$11 million). Nonetheless, only 34 programmes have been implemented.

 

Therefore, former Trade Minister Truong Dinh Tuyen expressed worry over the lack of efficiency in trade promotion programmes, especially national-scale ones. He emphasised that Vietnamese enterprises have taken part in the global market and the global market has been opened for Vietnamese commodities, but successful market penetration depends on various factors. The first is the creation of high-quality goods with reasonable prices. The second is the approach of customers to those products. Here, trade promotion plays a vital role. The door has been opened, but the sluggish penetration of goods results from poor quality, high prices and poor marketing.

 

Mr Tuyen said the national trade promotional programmes failed to generate expected results for several reasons. The first is ineffective programme procedures and the second is cumbersome administrative procedure in approving the programme. “The more important reason leading to inefficient trade promotion is the simplicity and lack of creativity in trade promotion. Trade promotion activities organised by localities lack accessibility. They lack systematic and well-organised preparations and activities at trade fairs and exhibitions; thus, commodity models and designs are unattractive to customers. Professionalism in trade fair and exhibition organisation is very weak,” Tuyen said.

 

Mr Do Thang Hai, director of Trade Promotion Agency, said the organisational capacity showed a lot of shortcomings. At present, trade promotion programmes only focus on short-term purposes such as surveying, trade fairs and information, not long-term and comprehensive goals. Many units lack professional organisational ability, resulting in many licensed programmes being left inactive. For example, the Vietnam Food Association only carried out half its licensed programmes and the Vegetable and Fruit Corporation was able to implement only 40 per cent.

 

Besides, many programme organisers do not pay attention to planning carefully, leaving events poorly-arranged, careless, uninformative, unpersuasive and impractical for enterprises. They also fail to coordinate with Vietnamese chambers of commerce in other countries before setting up programmes. Consequently, they have to add, modify or reorganise the programme during the implementation. For example, in 2006, Vietnamese units proposed 296 programmes but only 155 qualified. In 2007, they submitted 262 programmes but only 159 are approved. Besides, many units have to modify their programmes during implementation.

So, how do we improve the quality of key national trade promotion programmes? Mr Tuyen said key trade promotion programmes rarely pay attention to small and medium enterprises, while companies with rich experience and strong financial capacity do not actually need assistance. Thus, we need to clarify the beneficiaries and reject programmes not addressing this group.

 

Mr Tuyen also proposed the establishment of a financial mechanism and source for trade promotion activities. Funds extracted from contracts signed through the assistance of trade promotion programmes will increase the programme’s vitality and strengthen the association among concerned entities. “The Ministry of Trade is ready to ask the Government for an official decision on this issue,” the former minister said.

 

 

Objects with actual high demand are small and medium-sized enterprises, newly established enterprises, enterprises led by women, cooperatives and business households. These enterprises are in need of assistance, training and seminars on trade promotion activities and the organisation of overseas market surveys. Meanwhile, giant corporations are capable of setting up their own representative offices in other countries but they still need assistance from key trade promotion programmes, mainly for polishing their images and joining global value chains.

 

One of the weak points of national trade promotion programmes is the limited capability, personnel and finance of the organisers (associations or corporations).