Positioning Vietnam in global supply chain

In the world, globalization is taking place strongly with the development of the market economy and the era of the 4th industrial revolution. Nowadays, people are not only talking about the natural law of " “universal gravitation” but it’s also about the artificial law of "universal connection" (Internet of things).

Emerging technologies combined with the world climate emergency and growing trade tensions are holding advanced economies back along with supply chain disruptions, the impact on global economic activity plummets with two-thirds of world trade now taking place in global value chains - international operating systems for production and provide goods and services. But what happens to these systems when these risks start to affect the supply chain? According to the World Economic Forum, the absence of effective solutions to global supply chain disruptions can lead to losses of up to 30% across the entire value chain.

Vietnam is an open, fast-growing economy and has bilateral economic relations with more than 230 countries and territories, multilateral relations including 16 FTAs ​​(free trade agreements) with 60 economies. . In general, in 2021, the total export and import turnover of goods nationwide will reach 670 billion USD, nearly twice the gross domestic product GDP. According to the latest Global Economic Forecast Report of the Institute of Chartered Accountants of England and Wales (ICAEW) and Oxford Economics published in June 2022, Vietnam is forecasted to be a country with high growth prospects. 

In the region, at over 6.5% in 2022. Vietnam is also in the focus area of ​​ASEAN that has undergone 55 years of formation and development and is moving towards the ASEAN economic community (AEC). Especially when ASEAN is located in an important geopolitical position in the supply chain of the Indian Ocean and Pacific region with the formation of the IPEF Initiative and the idea of ​​​​building the Kra canal in Thailand. 

The Kra Canal is a major project providing a new maritime route connecting the Gulf of Thailand and the Andaman Sea, connecting the Indian Ocean and the Pacific Ocean with advantages such as great cost savings, high level of safety and security. shortening the distance and time compared to the journey through the Strait of Malacca.

It can be said that, with regional and global change, there are two areas of greatest focus set forth in global trade: Standards and product supply chains. In particular, for Vietnam, this is a great opportunity to actively build a strategy for economic development of the country in the shift of the global supply chain, in other words, positioning Vietnam in the product supply chain linkage of multinational corporations starting from raw material production and ending when providing products to consumers. 

Vietnam's position in the supply chain must ensure cost optimization and more efficient production cycles so that multinational corporations can reduce costs and remain competitive because when businesses grow and expand (regionally or globally), they become more depend on efficiently organized supply chains, including complex logistics. This element of the supply chain is not only important in growing large enterprises, but also in terms of improving efficiency and profitability for small and medium enterprises as well as individual investors.

With the development of digital technology, Logistics plays an increasingly central role in the supply chain not only because of the large investment costs (Logistics accounts for about 5% GDP on average, and 20% of the final price of the goods) but it also determines the quality of international trade when regardless of distance, each customer wants their products to be delivered quickly and perfectly. The OECD estimates the potential benefit of ASEAN (including Vietnam) from reducing freight costs between countries in the region, which will increase competition and trade to $4.5 billion yearly, but if this area is proactive, direct impact can push that number much higher. ASEAN is built on trade relationships and that is the main engine of the region's phenomenal growth and Logistics is the bottom of the pyramid necessary for all that trade.

However, Vietnam as well as other countries in the region have many shortcomings in logistics development and improvement strategies such as: Legal environment, investment capital as well as grasping the trend of shifting the global supply chain, especially in the field of logistics. differentiated from high-tech products, energy and consumer markets…

According to the World Bank in 2018, Vietnam is ranked Vietnam is ranked 39 out of 160 surveyed countries in emerging markets and highest in the group of low-middle-income countries. However, to make good use of the opportunities in the development of world trade and the important geographical position in the region, we need a strategy to position Vietnam in the global supply chain with 3 main contents:

Firstly, develop economic integration in ASEAN and consider it as the focus for international negotiations and develop a national supply chain strategy to ensure Vietnam's important position in the region. In particular, special attention is paid to the Kra canal construction project because it will certainly change the landscape of the ASEAN maritime industry and international transport, especially commercial ships on the Indo-Pacific route. 

The new canal is beneficial to Vietnam in all aspects (especially the southern provinces and cities), in terms of economic factors. The natural strengths of the project's geographical characteristics are the reason for economic strategists to seriously study and propose a maritime business plan to reposition Vietnam's supply chain in the national master plan for the period of 2021 - 2030 and vision to 2050.

Secondly, actively integrate Vietnam to participate in programs of major markets in the region such as RCEP, ASEAN-India, IPEF, CP TPP... to capture and connect trends. market development, technology and transformation of the supply chain of products and services.

Thirdly, it is necessary to focus on the position of the East Sea in the synchronous development strategy of technical infrastructure in general and the country's transportation in particular, including:

Researching, forming and developing seaport connections, post-seaport support service system with air, road, railway and inland waterways such as: Implementing solutions to attract and differentiate goods to effectively exploit the international gateway port of Hai Phong (Lach Huyen), Cai Mep - Thi Vai port, Van Phong port (Khanh Hoa), Quy Nhon port (Binh Dinh), Cai Lan port (Quang Ninh), port Saigon, Cua Lo port (Nghe An), Dung Quat port (Quang Ngai)...

Source: https://baochinhphu.vn/dinh-vi-chuoi-cung-ung-viet-102221017154001627.htm

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