VCCI Announces Annual Report - Vietnam Business 2007

The Vietnam Chamber of Commerce and Industry (VCCI) on July 1 released the Annual Report - Vietnam Business 2007 in Hanoi. Themed &ldquoLabour and Humans Resource Development,&rdquo led by Dr Pham Thi Thu Hang, director of Enterprise Development Institute, the report focuses on the improvement of Vietnam&rsquos business environment in 2007 - a year with big changes in record foreign direct investment capital attraction, import and export revenue equalling 160 per cent of GDP and the high growth of enterprises.

The focus is on the appraisal of Vietnamese labour market and human resource quality in several important sectors like food, garment, construction, tourism, banking, insurance and the foreign investment sectors.

Dr. Vu Tien Loc, Chairman of VCCI, said: Main contributors to the report are the competence of Vietnamese businesses from 2000 to 2006 in the five major areas of labour, finance, technology, market access and foreign direct investment, the analysis of labour situation and human resource development compared with labour impacts on important sectors and the introduction of strategic solutions to develop human resources. These are valuable not only for enterprises but also for policymakers. This is the first time the labour issue in foreign-invested sector has been tematically studied to point out the importance of labour and human resource development.

Vietnam has a strong labour force. According to the employment and unemployment survey in 2006, Vietnam had 45.6 million working people, a rise of 1.03 per cent against 2005. Of this sum, people at the working age of 15-55 years old for women and 15-60 years old for men, accounted for 94.2 per cent and people at the age of 15-34 made up for 45.46 per cent. In general, Vietnamese workers still live in rural areas. Urban labourers took up only 25.37 per cent. One of the worst points was the unsui labour structure.

According to this report, the Vietnamese garment and textile industry held a great competitive advantage with its low-paid labour force. However, workers in this sector were short of working ss and were incapable to work in high competing environment. The allocation of technicians, commercial officials and business managers was irrational. There was a wide divide in salaries and working conditions. Labour disputes were quite serious and productivity was generally lower than rival countries.

The workforce in the construction sector was constituted by more than 2.1 million people in 2005, accounting for nearly 5 per cent of the total labour force. Weak mechanisation was attribu to the labour structure. Workers were unfamiliar with modern equipment and vulnerable to workplace accidents. The roles of career associations are not satisfactorily promoted.

Tourism is an interdisciplinary sector thus, workers must be trained in both tourism knowledge and other fields such as culture, language, economics, finance, architecture, geography, driving, reporting. According to the report, there was a clear imbalance in allocating the tourism labour force. The southern region keeps 50 per cent, the north 40 per cent and the central region 10 per cent. Meanwhile, the central region has many world cultural heritages, beautiful beaches and mountains together with a diverse cultural tradition.

In the banking sector, the establishment of new banks caused a labour war. The drainage of governance talent was a threat to the operation of credit organisations. Lers lacked capable officials in management positions.

The very rapid development of the insurance sector scaled up the demand for labour. The report showed that improvement in the quality of labour was an urgent requirement to ensure the development of new insurance products and services and the sustainable development of the insurance market.

Mr Pham Quang Ngoc from VCCI said that during the 2004-2007 period the expanding presence of foreign investors in Vietnam. Although pledged foreign capital has increased strongly in recent years, these results came from the increased trust of foreign investors in Vietnam. &ldquoFDI capital disbursement showed worrying signals for Vietnams ability to attract capital. The divide between pledged capital and disbursed capital was getting wider and wider. The growth rate of FDI capital disbursement is thus much lower than that of pledged FDI capital. The disbursement growth was 8 per cent in 2004), 16 per cent in 2005 and 20 per cent in 2006,&rdquo Ngoc said.

One of the important reasons for the weak absorption of FDI capital is the quality of human resources in Vietnam. Most FDI capital is injected into production, real estate development and service sectors like banking, insurance and tourism, not much in health and education.

Mr. Ngoc said that foreign garment companies need more labours. The workforce in food companies was also large but the demand would slow down in the coming years. The construction and tourism sectors seemed unattractive to foreign investors. Thus, most jobs in these sectors were d by private and state-owned enterprises.

If workers in the processing industries are not necessarily well-trained, the training is decisive factor in service sectors like banking. &ldquoThe demand for high quality labour will increase quickly in FDI service companies, especially the banks,&rdquo Ngoc foreed.

Although jobs d by FDI insurance companies reduced significantly, the amount of workers in FDI companies was not smaller than those in private and state-owned enterprises. The demand for high-quality labour will increase in the coming year as FDI firms are needed. Arguably, financial companies and banks attracted labourers from insurance companies because the former ensured higher incomes for them.

In general, FDI companies require labours of higher quality than state-owned and private enterprises. This made FDI companies difficult to attract desired labourers because those from state-owned and private enterprises are not on their targets.

At present, the labour supply to FDI companies in places where FDI projects are of majority is difficult, especially in labour-intensive sectors (garment and seafood). Additionally, many workers at FDI companies in Mekong Delta are moving to work for private companies who offer higher working positions while the supplement seems beyond the demand.

With the government&rsquos effort to a business environment attractive to foreign investors, Vietnam is now in the top list of countries with the largest FDI capital. With the current FDI disbursement, foreign companies will not be able to find sui workers if the country cannot train capable workers.