Domestic trade contributes to 13.5-14 per cent of the national GDP, ranking third only after the processing industry with some 20 per cent and agriculture with 18 per cent. However, the Ministry of Trade said that domestic trade still lacks a sustainable development plan and its role in the national economy has not been brought into full play.
Rudimentary, asynchronous distribution channel
According to the evaluation of the Ministry of Trade, the distribution system is developed spontaneously and lacks sustainability. Almost all Vietnamese traditional shops have small display spaces, about 11.8 square metres each with simple equipment, and mainly rely on manual labour. Commercial centres and supermarkets have mainly been developed in Hanoi and Ho Chi Minh City but they are not very big and the technology, equipment and business management methodology has not reached international standard.
In addition, the logistics network (ports, warehouse and transportation) is weak and asynchronous, failing to support and serve the wholesales and retail networks. For example, an overland transportation in the world employs mainly lorries with loads of 10 tonnes, 14 tonnes and even 32 tonnes but Vietnam widely uses trucks with loads of less than 7 tonnes. A medium enterprise in regional countries operates some 2,000 vehicles while the largest transport firm in Vietnam has around 200 vehicles.
Although the business community in Vietnam is large in size, it is not strong. They are mainly enterprises with small sizes and slow growth rates. Vietnam lacks leading enterprises to pull up, guide and join with others to set up a modern distribution system. The small size and capital shortage leads to multi-layered and overlapped trading and slow payment, and sales agents still dominate the distribution network. Modern business methods like chain association, franchise, trading floor, bidding centre and cyber market are is in its infancy.
The pressure of opening up the distribution service market is increasingly higher, more so after Vietnam officially joins the WTO. The presence of foreign professional distributors will put high pressure on competition of domestic distributors, especially more than one million business households and small enterprises. This will require huge efforts from the business community for common development in the future, notably in the 2006-2010 period.
Eliminating management weakness
The shortcoming in the organisation of the domestic market in recent years is possibly the absence of an efficient management apparatus and a market-controlling distribution system to check the fluctuation of key and specific commodities on the market.
According to the Ministry of Trade, to overcome these shortcomings, in the early years of the 2006-10 period, State management authorities will cooperate with commodity associations to check and reassess the existing management mechanism on key commodities like petroleum, steel, fertiliser and drug as well as particular commodities like wine and tobacco.
Together with the completion of the management apparatus and the construction of circulation form for key or particular commodities, it is essential to set up a close interlink in each circulation process from production, import-export to wholesales and retail vi the direct relation system or dealership relations.
Domestic trade development objectives in 2006- 2010:
- Annual GDP contribution: 15-16 per cent until 2010, 16-18 per cent until 2015 and 20 per cent until 2020
- Annual retail growth: 15 per cent in 2006-2010 and over 10 per cent in following years. Revenues: over 900,000 billion (US$56.35 billion) by 2010 and some VND2,000,000 billion (US$125 billion) by 2020
- Proportion of goods retail via commercial centres, super markets and convenience shops: 20 per cent in 2010; 40per cent in 2015 (equivalent to China in 2005), and 60 per cent by 2020 (equivalent to Thailand in 2005).
Nguyen Trung
Vietnamese
