Removing bottlenecks of border infrastructure creates momentum for exporting goods

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Infrastructure development creates momentum for exports to Infrastructure development creates momentum for exports to “neighboring” markets
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Removing bottlenecks of border infrastructure creates momentum for exporting goods
Import-export activities through Huu Nghi International Border Gate (Lang Son). Photo: VNA

Border gates – the driving force for local economic development

In order to promote trade in goods and services across the land border, the Government of Vietnam has signed Border Trade Agreements with the Governments of China, Laos, Cambodia and signed other important related agreements and commitments on quarantine, goods quality, payment…

Although the scale of goods exchange through all land border gates is constantly growing, border trade activities have many difficulties and are not commensurate with the potential.

Ms. Nguyen Thi Mai Linh, Head of Trade Facilitation Department, Department of Import and Export (Ministry of Industry and Trade) said that border trade across the land border still has many difficulties.

Although infrastructure in border gate areas of border provinces has received investment attention, especially transportation infrastructure, the logistics system still has some problems such as difficulties in exploitation of railway with China due to lack of uniformity in rail gauge; steep river system with many reefs when exploiting for transportation; there is no logic center with full basic functions. Therefore, the cost of logistics services remains high, and the connectivity between regions and businesses faces many limitations. On the border with Laos, infrastructure development, especially the construction of roads connecting to border gates and inter-district roads in some areas, is still slow and not commensurate with each other, not meeting the potential and needs of trading, exchange and circulation of goods in border areas.

Lao Cai, a province with many advantages in terms of location, is a gateway and bridge for international economic trade. According to the People’s Committee of Lao Cai province, in recent years, the province has made efforts to invest in infrastructure, especially traffic infrastructure and border gate economic zone infrastructure. Currently, the province basically meets the needs of transporting import and export goods. Lao Cai’s ability to connect trade and develop the border gate economy has been having certain successes.

In the period 2015-2022, the province’s import and export value will have strong and stable growth, averaging nearly 16.5 percent per year. In particular, in 2019 the value of imported and exported goods through border gates reached US$3.81 billion, an increase of 71 percent compared to 2015. By 2023, the value of import and export through Lao Cai province will reach over US$2.1 billion. The first three months of 2024 are estimated to reach nearly US$600 million, an increase of over 28 percent compared to the same period in 2023.

According to the Summary Report on the Planning of the Northern Midlands and Mountainous Region, period 2021-2023, vision to 2050 of the Ministry of Planning and Investment, the development directions for border gate economic zones are as follows:

Continue to develop the system of five border gate economic zones in the area including: Thanh Thuy border gate economic zone, Ha Giang province; Cao Bang border gate economic zone, Cao Bang province; Dong Dang – Lang Son border gate economic zone, Lang Son province; Ma Lu Thang border gate economic zone, Lai Chau province; Lao Cai border gate economic zone, Lao Cai province. In particular, priority is given to investing, completing and modernizing infrastructure in Cao Bang province border gate economic zone, Dong Dang – Lang Son border gate economic zone, and Lao Cai border gate economic zone.

Developing three border gates applying the border economic zone mechanism including: Long Sap border gate, Son La province; Chieng Khuong border gate, Son La province; Tay Trang border gate, Dien Bien province. Upgrade and develop a number of border gates to ensure they meet regulatory requirements. Research the possibility of forming border economic zones at some border gates such as: U Ma Tu Khoong border gate, Lai Chau province.

Develop economic zones in a multi-industry and multi-sector direction, becoming trade and service centers and logistics centers with synchronous and modern infrastructure, with a favorable business and investment environment, with encouraging and preferential policy mechanisms contribute to promoting local and regional socio-economic development, protecting sovereignty and border security.

In recent years, Lao Cai border gate has attracted the export of a large amount of key agricultural products and fruits, ensuring sustainable stability in export growth and increasing trade surplus. If in 2015 the trade deficit through Lao Cai border gate was nearly US$300 million, by 2023 the trade surplus would reach over US$360 million. Besides, import-export services are developing diversely and the quality is increasingly improved.

Although gaining many achievements in connecting economic trade between regions, ASEAN and Southwest – China, these results is considered not commensurate with the potential and demand for trade and commerce between regions. Commercial infrastructure, roads, and ports have approached maximum capacity but still lack modern logistics centers to coordinate import and export activities.

Lao Cai has not yet formed continuous logistics centers, ensuring conditions in the production and circulation chain. A number of large, modern, pervasive infrastructure projects serve logistics development such as: Sa Pa Airport; Ban Vuoc bridge (Bat Xat), Noi Bai – Lao Cai highway to Sa Pa town; Noi Bai – Lao Cai highway phase 2 (expanding the Yen Bai – Lao Cai section to 4 lanes); railway connections between Vietnam’s Lao Cai Station and China’s North Hekou Station; inland waterways from Yen Bai to Nam Thi junction (Lao Cai City), dry ports… have not been fully invested, reducing connectivity, transportation, service provision capacity, competitiveness and limited logistics connection capacity between Lao Cai with domestic provinces and with China.

Similarly, Lang Son is also a key area in border trade development.

In recent years, the province has had many guidelines, resolutions, mechanisms and policies on the development of border gate economic zones.

In the period 2008-2023, the state budget has allocated over VND12,000 billion to focus on investing in construction and completion of key socio-economic infrastructure development projects, especially infrastructure serving state management activities, import and export activities in border gate areas.

In addition, Lang Son province also focuses on developing the logistics service industry associated with the development of the border gate economic zone, focusing on building Huu Nghi international border gate to become one of the advanced and modern model border gates; Cooperate with Guangxi to open specialized routes for import and export of goods to become customs clearance routes at Huu Nghi international border gate.

The province also focuses on preparing planning conditions and attracting investment for a number of key infrastructure projects to serve connecting logistics services in the area such as the goods transit area project. When the project comes into operation, it will be a place to store and preserve import and export goods in line with international standards and quality, shorten customs clearance time, and facilitate import and export activities of goods. At the same time, urge investors to quickly invest and build a number of other functional areas in the border gate economic zone such as: export processing zone 1, technical infrastructure and Phuc Khang factory in the non-tariff zone… These are all large projects, having an important impact on logistics activities in the area.

According to Lang Son Provincial People’s Committee, the border gate economic zone has made an important contribution to the development and overall economic growth of the entire province, positively impacting the development of other areas; Promote import and export activities of goods in the country in general, especially export of agricultural products.

In 2023, the total turnover of import and export goods through the province of all types of import and export will reach over US$52 billion, an increase of 85.12 percent compared to 2022; In the first quarter of 2024, the total turnover of import and export goods through the province will reach nearly US$11 billion, an increase of 24 percent compared to 2023.

However, the construction of the border gate economic zone and the modernization of logistics activities to support exports in Lang Son province still have many limitations such as: construction planning is still inadequate and not synchronized, the planning forecast targets are not close to reality and not consistent with the socio-economic development situation in the current period; the technical and social infrastructure system in the border gate area is not synchronous and does not meet the requirements of socio-economic development in the new period.

In addition, mechanisms, policies, and investment incentives in border economic zones and border gate areas are not unique, outstanding, and not really attractive to investors; capital resources for infrastructure investment and key projects are limited.

There needs to be groundbreaking incentive mechanisms and policies

In order to promote the development of border trade, the Department of Industry and Trade of Nghe An believes that it is necessary to have a roadmap and increase investment in infrastructure development in border areas, especially in areas where border gates have development conditions to promote Vietnam – Laos border trade. At the same time, concretize and diversify trade promotion and export promotion support activities. Currently, the Vietnam – Laos Border Trade Agreement encourages trade promotion activities at the Vietnam – Laos border. In the coming time, it is necessary to diversify types of trade promotion to Laos such as: organizing Vietnamese goods markets in Laos; conference connecting supply and demand; provide financial support for provinces to organize trade promotion activities with Laos and Thailand.

Limitations in developing the logistics system are also barriers to developing import and export in the Central Highlands. Although the Central Highlands is a major agricultural production center of the country, currently agricultural logistics services are not developed, there is no logistics center and there is a lack of a wharf system. Currently, businesses in some localities such as Dak Lak, Gia Lai are having to rent and build warehouses in provinces/cities such as Dong Nai, Ho Chi Minh City… to gather goods, leading to high product prices, difficult to compete.

In order to promote the development of import and export, buying, selling and exchanging goods through border gates throughout the land border, according to the Import and Export Department, it is necessary to review, research and propose groundbreaking and attractive incentive mechanisms and policies to attract capital investment in infrastructure in border gate economic zones, in production, processing and trade activities in border areas.

Next, forcusing on attracting investment to build, expand and upgrade regional infrastructure, especially the Lao Cai – Hanoi – Hai Phong – Quang Ninh railway according to planning, creating a railway network connecting from Ha Khau (China) – Lao Cai – Hanoi – Hai Phong – Ha Long – Mong Cai – Dong Hung (China) to increase two-way import and export turnover through border gates, to diversify transportation methods by road, air, sea and rail, reducing logistics costs.

At the same time, there is a policy to attract investment to build a large-scale, modern logistics center with full functions such as transportation, warehousing, customs agents, legal consulting, testing, etc. quarantine… towards quality, civilization and modernity, in order to save time and costs for businesses and traders participating in import and export activities through the area…

For the Central Highlands region, it is necessary to attract investment to develop logistics centers, especially logistics centers serving agricultural products, meeting the needs of goods circulation, promote transshipment, import and export of goods; connecting goods from production areas to seaports and international border gates; acting as trade connection hubs with Laos, Cambodia, the East – West Economic Corridor, and the Mekong Subregion.

According to statistics from the General Department of Customs, in 2023, Vietnam’s total import-export turnover through land border gates to the three markets of China, Laos and Cambodia will reach US$50.38 billion, an increase of US$52 billion, equivalent to an increase of 2 percent compared to 2022, accounting for 27.68 percent of the total bilateral import-export turnover with 3 markets. Import-export turnover through land border gates in the first two months of 2024 is US$8.44 billion, up 28.5 percent compared to the same period in 2023, accounting for 28.88 percent of the total bilateral import-export turnover with 3 markets.
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