DIRECTIVE No. 47/2004/CT-TTg OF DECEMBER 22, 2004 ON SOLUTIONS TO RAISING THE COMPETITIVENESS OF EXPORT INDUSTRIAL PRODUCTS

Implementing the 2001-2005 five-year plan, the whole country’s import-export activities in general and the export of industrial products in particular have gained encouraging results. The export turnover has increased year after year; the commodity export turnover soars; exports, especially from industrial production branches, have been actively contributing to the annual GDP growth.

However, to successfully achieve the targets set in the Resolution of the IXth Party Congress, the country’s export activities in general and industrial commodity export in particular are facing numerous challenges. The export of industrial commodities has revealed a number of weaknesses such as the low percentage of processed and manufactured products, compared with many regional countries; the low added value and competitiveness of many products; and the less diversified categories of commodity, with much attention still paid to the quota-regulated commodities, etc. In the context of more and more intensive and extensive international economic integration and fiercer and fiercer competition in the world market, the competitiveness of commodities has become one of the decisive factors to the success of enterprises on their way to approach the overseas markets. The competitive edges of Vietnam’s industrial commodities based on cheap labor sources and availability of natural resources…, meanwhile, tend to decrease quickly. Hence, it is imperative to promptly and actively seek and map out new and appropriate solutions and policies in order to raise the competitiveness of exports, especially of industrial products with high export capacity or potential.

In order to raise the competitiveness of industrial products with high exportability, the Prime Minister requests the ministries, branches, People’s Committees of the provinces and centrally-run cities (hereinafter referred collectively to as provinces), enterprises producing, importing and/or exporting industrial products and concerned agencies to firmly grasp the principal contents and perform the tasks below:

1. To implement synchronous solutions with a view to raising the competitiveness of industrial exports in all aspects, including production capacity, commodity structure, prices, quality and distribution modes, etc.

a/ The Ministry of Industry:

- To continue directing the acceleration of the restructuring of industrial products. To exploit to the utmost production and export capacity of such competitive products as garments, footwear and concurrently to prioritize the development of products with high export potential and high added value such as mechanical engineering products (motorcycles, bicycles, prime movers, agricultural machines, ship and boat building and repair…), electric-electronic and computer equipment, software, products of information technology, plastic and wood products, and processed foodstuff… so as to soon create new key and spearhead exports. To restructure the industrial exports along the direction of increasing processed and manufactured items, attaching importance to the items of high technological and intellectual contents. To strive to raise the percentage of processed and manufactured industrial exports over the total export turnover from current 50% to 70-75% by 2010. Besides, to pay attention to exploiting commodities involving the use of local raw materials and intensive labor such as agricultural-forestry-fishery product processing, fine-art crafts, etc.

- To direct corporations, companies and enterprise associations to step up the implementation of programs on reducing production costs, raising labor productivity and lowering the cost prices, striving to make prices of Vietnam’s industrial products equal to or lower than the prices of products of the same kinds in the region.

- To assume the prime responsibility for, and coordinate with the concerned ministries and branches in, determining industrial products with high exportability in each period, thereby directing corporations, companies and enterprise associations of different industries to elaborate their respective production, business and export strategies for the period from now till 2010, which are suitable to the world and regional trend of economic development and integration.

- Based on the elaborated export strategies, to direct corporations and enterprise associations, to work out targeted export programs and projects, specifically identifying the competitive exports as well as export markets and modes of competition. The targeted export programs and projects, if being deemed fruitful after being approved by competent authorities and put into operation, shall be supported by the State through investment, financial, credit and/or land preferential policies.

- To boost the application of scientific and technological advances and management systems such as the quality management system (ISO 9000), the environment management system (ISO 14000)…, to production and business so as to raise the products’ quality, build up prestige, brands and trademarks for Vietnamese commodities. To assess the scientific and technological levels of all industries, particularly those with high export capacity, thereby to suggest solutions to raising the common technological level of all industries.

- To speed up the reform of State enterprises; reorganize and restructure the loss-making and inefficient ones; renew modes of management with a view to raising the competitiveness of industrial enterprises.

b/ The Ministry of Planning and Investment:

- To assume the prime responsibility for revising the current mechanisms and policies while suggesting new ones on promotion of investment, goods production and export, focusing on industrial commodities, and report them to the Government in the first quarter of 2005.

- To assume the prime responsibility for, and coordinate with the Finance Ministry, Vietnam State Bank and the Development Assistance Fund in, arranging State credit capital plans for industrial commodity production and export programs and projects; ensuring that domestic enterprises producing and supplying raw materials for exports production shall enjoy the same preferences as exports-producing enterprises.

- To assume the prime responsibility for, and coordinate with the Ministry of Industry and relevant ministries and branches in, boosting the attraction of foreign direct investment capital into industries, prioritizing the investment in industrial commodity production branches with high export capacity, investment involving modern technology application and investment in wholesale, retail and distribution domains so as to step by step engage domestic enterprises in production-business-distribution stages of transnational conglomerates.

c/ The Ministry of Finance:

- To assume the prime responsibility for studying and elaborating an export insurance mechanism and scheme on the establishment of an Import-Export Bank with exclusive function of providing credits and guarantees for import-export activities, covering also the industrial products with high exportability, for submission to the Prime Minister in the first quarter of 2005.

- To study and submit to the Government a mechanism for creation of capital sources to support the development and application of advanced technologies and techniques to industrial production, capital sources to support the training of high-level human resources, meeting the requirements of production as well as scientific and technological development.

- To assume the prime responsibility for, and coordinate with the Ministry of Post and Telematics, the Ministry of Transport and competent local administrations in, directing the revision of assorted charges, studying and accelerating the process of reducing telecommunications charge rates, seaport and wharf charges… thus helping lower production and business costs to a level equal to that of the regional countries by 2004 and raising the products’ competitiveness.

- To study and propose adjustments on reduction of import tax rates, abolition of price difference collection and calculation of minimum prices of production input raw materials which cannot be produced at home yet or the domestic production of which has not yet met the demand. To continue and further boost the improvement of customs procedures and process, simplifying tax collection, tax reimbursement and customs inspection procedures. To enhance and rectify post-tax and -customs operation inspection work; increase the number of export items exempt from inspection so as to shorten the time and reduce the costs of completion of customs procedures to the same levels of the regional countries.

d/ Vietnam State Bank:

- To direct the system of commercial banks to further improve the mortgage and lending process and procedures, create favorable conditions for enterprises, especially enterprises producing industrial exports, to get access to capital sources for investment, production, technology renovation and human resource training; particularly, to increase medium- and long-term loans for the targeted export programs and projects.

- To coordinate with the Finance Ministry in perfecting and diversifying financial and banking services, meeting the enterprises’ demands.

e/ The Ministry of Post and Telematics:

- To work out a scheme on raising the competitiveness and boosting the export of electronic-informatic-telecommunication products and submit it to the Prime Minister in the first quarter of 2005.

- To assume the prime responsibility for directing the acceleration of the application of information technology to production and business activities, especially to import and export.

f/ The Ministry of Science and Technology:

- To boost operations of the National Fund for Scientific and Technological Development and raise their efficiency with a view to supporting enterprises and unit in the application of scientific and technological advances to production, especially production of exports and raw materials, accessories and spare parts for production of industrial commodities.

- To accelerate and raise the efficiency of the standardization work, covering also the formulation of national quality standards for import raw materials, supplies, semi-finished products and finished products as well as standards for exports, in harmonization and compliance with international standard system and practices.

- To guide, manage and simplify procedures for registration of commodity brands and trademarks, industrial property and product quality standards. To guide enterprises in registering trademarks and observing law provisions on industrial property protection on export markets.

g/ The Ministry of Education and Training: To assume the prime responsibility for, and coordinate with the relevant ministries and branches in, studying, elaborating and implementing programs on support for enterprises to train and retrain highly disciplinary and qualified human resources, meeting the requirements of international economic integration, particularly the human resource requirement of the industries with high export capacity.

h/ The Ministry of Labor, War Invalids and Social Affairs: To enhance the work of inspection, examination, propagation and dissemination of labor legislation, thereby helping Vietnamese laborers and enterprises satisfy international customers’  requirements on labor standards.

i/ The provincial/municipal People’s Committees:

- Basing themselves on the approved socio-economic development planning, to work out and publicize plannings on land use, urban development and development of industrial parks and raw material areas, taking into account the research and development of hi-tech parks to attract investment in high technologies. To attach importance to reserving a land fund for small- and medium-sized industrial parks and clusters, supporting the relocation of polluting production establishments from inner cities or those establishments which must be relocated. To publicize widely the ground clearance compensation undertakings and policies before the execution of investment projects.

- To coordinate with the Ministry of Industry, the relevant ministries and branches as well as enterprises in studying and considering, on the basis of selection of competitive industrial products with high exportability, adjustments and supplements to the socio-economic development strategies and plannings as well as land-use plannings of their respective localities; adopting appropriate mechanisms and policies to encourage and facilitate production and business activities of local enterprises.

- To further promote the intra- and inter-economic region associations on the principle of mutual assistance and supplement, thus avoiding overlapping and coincidence in production and business planning or unfair competition among localities, between local enterprises and central enterprises and other economic sectors.

j/ The Development Assistance Fund is tasked to base itself on the Government’s export support credit sources to propose incentives for enterprises to develop exports production and trading according to the export promotion policy.

2. To concentrate on developing supportive industries so as to strengthen the capacity of supplying local input raw materials and materials, semi-finished products and accessories for industrial exports production and accelerate the inter-branch supportive relations between industries, raising the initiative in terms of input raw materials and materials with a view to minimizing outside impacts, reducing production costs and increasing the added value of exports:

a/ The Ministry of Industry:

- To assume the prime responsibility for, and coordinate with the relevant ministries, branches and localities in, elaborating a scheme on development of supportive industries, that consists of priority mechanisms and policies for development of supportive industries, and submitting it to the Government for decision in the second quarter of 2005. In the immediate future, the scheme should focus on developing the production of raw materials and accessories for textile, garment and footwear industries; accessories and spare parts for mechanical engineering, electric and electronic equipment… and should be in line with the development plannings of branches and localities.

- To direct corporations, companies and enterprise associations to study and elaborate a scheme on the establishment of raw material and accessories production and trading centers in service of exports production, focusing first of all on such key export lines as textiles, garments, footwear, processed agricultural-forestry and fishery products…, to be placed at the major production and business centers, including Ho Chi Minh city, Hanoi, Binh Duong, Dong Nai, etc.

- To coordinate with the Ministry of Agriculture and Rural Development in elaborating, finalizing and implementing plannings on development of raw material areas in service of industrial production on the principle of harmonization of the interests of peasants with those of enterprises and the State.

b/ The Ministries of: Planning and Investment; Finance; Trade and specialized ministries: To study the formulation and perfection of policies and mechanisms on the import of input raw materials in service of production and export on the principle of facilitating the import of input raw materials for the manufacturing of products which cannot yet be made domestically or which can be produced at home but fail to meet the quantitative and qualitative requirements (tax reduction and exemption, simplification of procedures…) while restricting the import of products which can be qualitatively made at home, meeting national or international standards. The said ministries shall study and promulgate lists of input raw materials allowed for import and eligible for import preferences in service of production in each period.

3. To boost and raise the efficiency of marketing and trade promotion in service of the export of industrial commodities:

a/ The Ministry of Trade:

- To assume the prime responsibility for, and coordinate with the Ministry of Industry and the concerned ministries and branches in, further studying and perfecting mechanisms and policies to support and create favorable conditions for enterprises to increase the export turnovers. In February 2005, to finalize and promulgate lists of industrial products entitled to export rewards or export credit preferences, giving more priorities to products with high export turnover growth rate, high manufacturing content and high added value.

- To boost and quickly develop domestic distribution enterprises so as to associate production with circulation, establish a system of general agents and distributors to help manufacturing enterprises introduce their products to the regional and world markets; at the same time, to support them to establish relations with large and prestigious overseas distribution conglomerates for the consumption of products.

- To raise the efficiency of international trade activities, adopt measures to expand and diversify export markets, accelerate the application and development of e-commerce. To attach special importance to ensuring that the marketing and trade promotion work is in line with the development strategy and planning of each industry and of the whole industrial branch, especially the key trade promotion programs and major export development projects. To boost and raise the efficiency of participation in overseas trade fairs and exhibitions. Annually and biannually, to organize assessment of the efficiency of, and draw experiences from, activities of trade promotion for industrial products.

- To accelerate international economic integration process, including bilateral and multilateral negotiations with a view to creating a legal corridor and opening markets to Vietnam’s exports. To implement the scheme on study and statistics of international trade barriers for Vietnam’s industrial exports and study to formulate Vietnam’s technical barriers for foreign imports, to be submitted to the Government in the first quarter of 2005. To attach importance to mapping out solutions to overcoming foreign barriers, especially for the key industrial exports, working out plans to cope with and promptly handle commercial disputes arising in relation to Vietnam’s exports.

- To improve the market information work, raising the capacity of forecasting market demands and prices as well as law provisions and barriers of export markets. To expand market information channels to enterprises so as to act as the major agency in providing information to, advising and supporting enterprises (by establishing a market advising center, a website providing market information and via mass media means and publications…).

- To further study and expand the network of trade promotion centers for industrial products on major markets and highly potential markets. To enhance and raise the role as well as efficiency of operations of the system of Vietnam’s trade representative offices overseas.

- To coordinate with the concerned ministries and branches in enhancing the market management work, combating trade frauds as well as production and trading of fake goods and imitatively-labeled goods; to strictly handle violations and trade frauds according to law provisions so as to protect the legitimate rights and interests of enterprises.

b/ The Ministry of Industry:

- To coordinate with the Trade Ministry and the concerned ministries and branches in directing corporations, companies, enterprises and enterprise associations, that produce and export industrial products, to work out strategies on export markets, clearly determining the targeted market for each product in each period, the markets’ characteristics and accession barriers as well as the modes of approaching and occupying the markets; to attach importance to the training and fostering of marketing and trade promotion personnel with adequate professional qualifications and capability; to take initiative in seeking, gathering, analyzing and processing market information, including information on the market’s legal system, business practices, characteristics and prices…

- To direct enterprises to take initiative in studying, elaborating and implementing key trade promotion schemes and commodity branding schemes; to boost trade promotion through participation in trade fairs and exhibitions, building of websites, advertisements, introduction of enterprises and products, opening of representative offices and product-display centers in foreign countries, first of all in such key markets as the US, EU, Japan, ASEAN, Russia…, with partial support from the State budget.

- To coordinate with the concerned ministries and branches in encouraging and creating conditions for enterprises to set up and join in domestic commodity associations; to formulate mechanisms of support for domestic enterprise associations to join in international commercial associations or agreements with a view to protecting interests of Vietnamese exporters in the world market.

c/ The Ministry of Foreign Affairs

- To direct overseas representative offices to take initiative in promptly providing information on markets, laws and business practices of foreign countries for domestic enterprises, enterprise associations and localities; to support enterprises in establishing economic and trade relations and conducting trade and investment promotion activities as well as other cooperative activities with foreign parties.

- To coordinate with the Ministries of: Planning and Investment; Trade; and Industry; other specialized managing ministries and Vietnam Chamber of Commerce and Industry in organizing overseas trade and investment promotion delegations; to coordinate with the Ministry of Public Security in supporting and creating conditions for enterprises to complete entry-exit procedures in order to boost trade and investment promotion work.

d/ Vietnam Chamber of Commerce and Industry: To coordinate with the Ministry of Trade and the Ministry of Foreign Affairs in boosting and raising the efficiency of trade promotion and market information work; to protect the legitimate rights and interests of Vietnamese enterprises; to enhance harmonious labor relations at enterprises; to improve and raise the efficiency while ensuring the accuracy and transparency of the grant of certificates of origin to exports.

4. A number of other measures:

- To raise the quality and efficiency of the import-export statistical work. The Ministry of Finance shall direct the General Department of Customs to acquire detailed statistics on export turnovers and markets with regard to industrial exports and input raw materials as well as industrial imports, that attain an annual turnover of USD 1 million or more each. The said commercial statistical data shall be supplied to the Ministries of: Planning and Investment; Trade; and Industry as well as the General Department of Statistics on the monthly, quarterly and annual basis for the statistical purposes, for mapping out commodity and market orientations and for elaborating import and export mechanisms and policies.

- Vietnam State Bank shall assume the prime responsibility for, and coordinate with the Finance Ministry and the concerned ministries and branches in, organizing the monitoring and control of foreign exchange rates according to floating mechanism with flexible regulation, contributing to promoting export and controlling import; studying for promulgation regulations to create conditions for enterprises to take part in monetary risk insurance such as term transactions, swap transactions and the right to choose currencies and interest rates.

- The ministries, branches and localities should regularly organize meetings and exchange of opinions with enterprises and enterprise associations; sum up enterprises’ proposals and problems for handling according to their respective competence or reporting to the Prime Minister for decision.

The Prime Minister requests the ministries, the heads of the ministerial-level agencies, the heads of the Government-attached agencies, the presidents of the provincial-level People’s Committees, the enterprise managers and the heads of the concerned units and agencies in organizing the accomplishment of the tasks mentioned in this Directive.

For the Prime Minister
Deputy Prime Minister
NGUYEN TAN DUNG