Tien Giang Industry Strives for Regional Integration
Vietnam is scheduled to receive full membership status of AFTA in 2006, which means an increase of new business opportunities, an expansion of the market, an enhancement in cross-border cooperation and a growth of foreign capital inflow. This, however, will also make the competition fiercer as the trade protection barrier will be removed (in the AFTA bloc). It is evident that the country’s industry in general and the Tien Giang’s in particular must have proper strategies to maintain a stable and firm position.
Processing industry has an edge
Processing accounts for 94% of the province’s total industrial production value. Industries with advanced technologies are mainly in vegetables, seafood, animal feed processing, garments and pharmaceutical chemistry, while the rest get by with medium and outdated equipment and machinery. As a result, most of the products are in of low value and high price which consequently leads to low competitiveness.
This can be seen clearly through a recent survey by the Tien Giang Industry Service (TIS) which indicated that a majority of enterprises in the seafood processing industry have met HACCP requirements and Code for direct export to EU and U.S markets (the industry’s export revenue reached US$22 million in 2004). However, they keep using outdated technologies and unstable material supply sources. The industry provides 40-50 percent of the province’s combined seafood output. In the meantime, the technologies and equipment of enterprises in the garment industry are of much lower quality. Few products are eligible for export to the EU and U.S markets, such as vests, blouses and dresses.
The date for AFTA membership is approaching but the pace of renovation in local enterprises remains slow, as a consequence of capital shortfall and limited awareness.
The overall target of technology renovation which has been built by TIS, is to “construct advantageous industries capable of providing sustainable development upon full participation in AFTA in 2006 as well as in APEC and the WTO.” The road to renovation has been divided into two stages: the 2003-2006 period which has been billed for the renovation of technology to establish and strengthen trademarks in the market, while the second one, 2006-2010, has been earmarked for the development and enhancement of competitiveness of products of the same category as those of other countries to actively join in AFTA.
However, this should be decided by enterprises themselves, admitted Dang Thanh Liem, Director of TIS. There is no common renovation solution for every industry. Knowledge innovation often comes in three methods: renovation, and modernization of traditional know-how; self-study and development of a new one; and import and transfer of technologies. The second method is generally hard to follow as most enterprises are financially incapable of this. The first and the third ones seem relatively proper, of which the last one is considered the fastest and most effective.
Accordingly, successful technology renovation in enterprise could be reached only when three measures are conducted synchronously, including: 1) Mobilizing and effectively using renovation funds sourced from within the enterprise, financial leasing companies, bank loans and the State Budget; 2) Strengthening the capacity and role of business managers as well as technicians and labourers; and 3) Setting up and realizing assistance policies for know-how renovation such as soft loans, post-investment interest rate support, or part capital support.
Most notable for future participation in AFTA is the removal of trade barriers (mainly tariff barriers), through the lowering of import taxes. Over 1,000 items are to be reduced or exempted from import tax during this process. Therefore, the competitive capacity of local producers should be the top factor for consideration, in which technology plays a decisive role.