Border Trade Development: Forming Cross-border Business Association

A report from the Ministry of Industry and Trade showed that cross-border trade turnover was estimated at US$27.56 billion in 2015, up 27 per cent over 2014, although shipment volumes dropped on all three borderlines. Particularly, exports to China fell 12.1 per cent, to Laos by 9 per cent and to Cambodia by 4.8 per cent.

 

Mr Nguyen Cam Tu, Deputy Minister of Industry and Trade, said that “The Government has provided many mechanisms and incentives for border-sharing provinces, mountainous provinces, remote areas and islands. However, due to geographical distance and hard transportation, trading activity is quite different between mountainous provinces with delta provinces.”

 

He said that, with the support of the Government, Vietnam is seeing a lot of favourable conditions when the Trans-Pacific Partnership (TPP) is likely to be ratified by parliaments of 12 joining countries in early 2016 and the formation of the ASEAN Economic Community (AEC) will facilitate internal trade, investment and employment development. In particular, its amended border trade agreements with border-sharing countries will gradually improve livelihoods of border residents and connect Vietnam with China, Laos and Cambodia. These are favourable conditions, opportunities and challenges that ministries, border mountainous provinces, remote areas, ethnic minority regions and islands should seize to overcome difficulties to promote trade development.

 

According to a report by the Ministry of Industry and Trade, 6,596 rural markets were renovated or built as of December 2015, accounting for 76.98 per cent of total markets nationwide. In addition, 135 trade promotion projects for remote, mountainous, border-sharing, island and ethnic minority areas have been introduced to boost trade and improve livelihoods of people.

 

Border trade development is still below development potential and advantages. Representatives of Lai Chau, Dien Bien, Cao Bang and Ha Giang provinces affirmed that the biggest difficulty in cross-border trade operations is tough traffic systems. Besides, technical infrastructure such as commercial centres, supermarkets, border gate markets, warehouses and storage yards have not yet received investment.

 

On the western borderline, Vietnamese goods are facing stiff competition from Thai and Chinese goods. Besides, operations at border-gate economic zones are difficult and tourist arrivals dropped as the Government abolished tax exemptions for alcohol and tobacco. Import tax policies of Cambodia hurt many businesses. In 2015, many small and medium exporters to Cambodia went to the wall.

 

Infrastructure improvements will help develop cross-border trade because there are many related activities like commodity export and import, and trade support services like customs declaration, quarantine, warehousing, packaging, stevedoring, transport, finance, insurance, electricity and water supply, waste collection, employment services, research, and market entry consulting.

 

Mr Vo Van Son, Director of the Department of Industry and Trade of Kon Tum province, suggested the Government allow collecting and using cross-border trade fees for reinvestment. “Currently, localities can retain only 50 per cent of incomes from border gate economic zones, resulting in mounting difficulties in upgrading and constructing infrastructure. Therefore, we propose the government allow keeping all incomes from border gate economic zones for reinvestment. By doing so, poor border provinces will have conditions for development and diminish reliance on State budgetary support.”

 

According to a representative from Dien Bien province, opening new border gates and new border crossings along borderlines Laos and China is essential to further develop border trade. A representative from Lang Son province proposed piloting the import of cars with less than nine seats from China through border gates. A representative from the High Command of Border Guard also suggested the Ministry of Industry and Trade work with localities to work out long-term stable policies to facilitate businesses to develop.

 

The Ministry of Industry and Trade will also consider establishing a Cross-border Business Association to ensure benefits for Vietnamese traders trading with China and other neighbouring countries and limit losses in trade with China. Notably, Vietnam will proceed to conclude the Vietnam - China border trade agreement in 2016 to replace the 1998 Agreement and specify cooperation policies in order to effectively carry out the Vietnam - Laos Border Trade Agreement and Vietnam - Laos Bilateral Trade Agreement in 2016.