Cluster development and industrial policy:

including the refinance rate and the discount rate, which were increased 100 basis points at the end of April to 14 percent and 13 percent respectively, the State Bank of Vietnam's website indicated. Consumer price inflation in Vietnam has skyrocketed since late last year, propelled largely by high domestic credit growth but also rising food, fuel and electricity prices. In April, the consumer price index was up 17.51 percent from the same month last year -- the highest level since December 2008 -- while the index leapt 3.32 percent from March. The government's General Statistics Office is expected to release May's inflation data next week, and a deputy director of the office was quoted on May 7 as saying the month-on-month rise would be 2-2.5 percent.



Economists say annual inflation is likely to keep rising before easing in the third quarter. Lending rates in Vietnam remain several percentage points above policy rates, ranging as high as 20 percent.





Vietnam still has a long road ahead

Bangkok Post 18 May 2011

Vietnam has been one of the world's most impressive growth stories over the last two decades. Over the last 10 years in particular it has integrated into the global economy, becoming an attractive business location. Yet the economy faces internal weaknesses and challenges, reflected in low competitiveness in different aspects. Moreover, rapid and complex external changes are affecting Vietnam's open economy in increasingly significant ways. While much has been achieved, there is an acute awareness that Vietnam still has a long road ahead.

Key supply chain issues: The Vietnam Competitiveness Review provides a detailed assessment of the country's strengths and weaknesses. Published recently by experts of the Asia Competitiveness Institute (Singapore) and the Central Institute for Economic Management (Vietnam), under the technical guidance of Prof Michael Porter of the Harvard Business School, it identifies the key structural and supply chain issues the country needs to address. Since economic reforms began in the second half of the 1980s, Vietnam's GDP per capita has grown at an annual rate of almost 6%, lifting millions out of poverty. The key driver, says the Review, has been improved labour productivity. However, despite the recent gains, Vietnam still remains behind many other countries in infrastructure development, supply chain maturity and national business policy framework.



Cluster development and industrial policy: Higher competitiveness requires specialisation in areas where the presence of related and supporting activities can support a level of productivity that an individual company could not achieve. The current approach is based on creating national champions from state-owned enterprises, providing cheap credit to individual companies, and creating dedicated infrastructure. There are limited growth strategies for private business sectors. Government efforts should enable companies in clusters to compete on a higher level, not shelter them from competition.
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