Vietnam-China Economic Corridor Taking Shape

Vietnam-China Economic Corridor Taking Shape

Under the guidance of the Vietnamese government, the capital city of Hanoi, the northern port city of Hai Phong and the two northern provinces of Quang Ninh and Lao Cai are making great efforts to construct the economic corridor of Kunming-Lao Cai-Hanoi-Hai Phong-Quang Ninh to strengthen the economic ties between Vietnam and China. Their cooperative ventures mainly lie in the fields of infrastructure, trade facilitation and customs procedure simplification.

Top leaders of the four Vietnamese localities, in a meeting in mid-August 2004, thoroughly discussed measures on raising the transport capacity of the Lao Cai-Hanoi-Hai Phong railway and the road route of Lao Cai-Hanoi-Quang Ninh to meet the increasing demand for transporting goods, especially goods from the ports of Hai Phong and Cai Lan to China via the Lao Cai International Border Gate and in the reverse direction. Their discussions focused on two projects: upgrading the existing railway to increase its annual transport capacity to 3.5 million tonnes of cargo in 2005 from the current 1.13 million tonnes and building a new railway. Investment for the expected construction of the new route will come from government bonds, local enterprises and Chinese-Vietnamese joint ventures.

By 2007, some 1.3 million tonnes of apatite, 500,000 tonnes of coke and 500,000 tonnes of iron ore will be transported from Lao Cai every year. Demand for goods transported from the Chinese province of Yunnan will increase considerably. In a working session with Lao Cai authorities in January, Chinese ambassador to Vietnam, Qi Jianguo, said the Chinese annual transport demand on the Kunming-Hai Phong railway will rise to 3-4 million tonnes of cargo by 2005 and 7-8 million tonnes by 2010.

Vietnamese and Chinese relevant agencies and localities have discussed the possibility of allowing Vietnamese automobiles carrying fresh vegetables, fruits and frozen seafood to travel deep into Yunnan (300-460 kilometres from Lao Cai). This will help cut costs for local exporters. Furthermore, Lao Cai is scheduled to start building a bridge to link its trade area with Yunnan late this year, and put into operation an inland container depot with a daily capacity of 1,000 containers in January 2005.

Regarding trade facilitation, the authorities of Hanoi, Hai Phong, Quang Ninh and Lao Cai will propose the State Bank of Vietnam to permit commercial banks in the localities to cooperate with commercial banks in Yunnan on international payment in the mode of letters of credit (L/C) in local currencies. Commercial banks in Lao Cai and their partners in Yunnan started issuing L/C in Vietnam dong or yuan on December 31, 2003, facilitating and securing transactions between Vietnamese and Chinese businesses. Lao Cai is now the only locality in Vietnam to have applied this kind of payment mode. In the coming time, the Vietnamese Ministry of Trade is expected to put forth new measures to boost Vietnam-China trade via the Lao Cai International Border Gate, such as the establishment of trade centres and supermarkets near borders, the exchange of trade information, and the organisation of forums and fairs.

The border gate, which has rail, road and river transport means and the possibility of air transportation, is the most important buffer zone in the development of a free trade area between ASEAN and China in the next few years, said Bui Quang Vinh, Chairman of the People's Committee of northern Lao Cai Province. Lao Cai has also offered great tax incentives to investors in its four major economic zones, namely the Lao Cai International Border Gate Area, the Kim Thanh Trade Area, and the two industrial complexes of Bac Duyen Hai and Dong Pho Moi. Domestic and foreign investors are exempt from land rentals, and offered financial assistance worth 50-100 percent of their site clearance costs, he said.   

Concerning customs and entry-exit procedures, the province has proposed the Vietnam Department General of Customs implement the "one-time" inspection of goods at the border gate, under which Vietnamese and Chinese customs will jointly check the goods at the same time and jointly sign the inspection results. Furthermore, it will start granting visas to Chinese tourists at the border gate in September. In a broader move, Hanoi, Hai Phong, Quang Ninh and Lao Cai will cooperate with Chinese partners to launch tourism routes linking Chinese localities such as Beijing and Yunnan with Vietnam, Laos, Myanmar and Thailand. 

The economic and trade ties between Vietnam and China have strongly developed in recent years. Their bilateral trade stood at US$4.8 billion last year, and is expected to reach 5 billion this year. The two countries have set a target of US$10 billion dollars in revenue in 2010.

• Dong Phong