GENERAL EVALUATIONS OF MAIN ADVANTAGES, DISADVANTAGES, OPORTUNITIES AND CHALLENGES OF VINH PHUC SOCIO-ECONOMIC DEVELOPMENT TILL 2020
Comparative advantages
Favorable geographical location is an important advantage of Vinh Phuc as it is:
Located in the Northern Vietnam key economic region, one of the two most developing regions in Viet nam;
Bordering with Hanoi City grants Vinh Phuc many advantages in commodity trading, technology, and labor;
Located inside international cooperation corridors (development cooperation strategy: two corridors, one between Vietnam and China), and connected to Greater Mekong Subregions;
A starting location with necessary conditions to become development centre of Northwest provinces in the northeast of Tonkin region.
Located in midland region, borders with delta region, Vinh phuc possesses many advantages of land for development of non-agriculture fields and domains in large scale.
Vinh phuc has much potential for tourism development with many historical and cultural monuments. Bordering with Hanoi grants the province a comparative advantage in providing the capital citizens (a large tourism market) with entertaiment and relaxing services.
Vinh phuc people and provincial Communist Party Committee hold traditions in revolution and union, an innovating and creative spirit, and are capable of fullfiling development requirements in the future.
Disadvantages:
The socio-economic development of Vinh Phuc in the future may benefit from comparative advantages; however, there are still many awaiting disadvanges:
Though the economy grows fast, provincial economic scale is still small (GDP of around USD 1.25 billion for a population of one million), the market (particularly) has a limitted purchasing power, domestic saving is in a high ratio but in a small scale.
Currently, balances are lost in many aspects. The economic development has not balanced with potential; industrial zones are developing fast; however, service sectors are still limited; labor force is redundant but lack of high skilled workers, lack of information, etc.
Provincial infrastructure systems are well developed; however, infrastructure in many centralized industrial parks is not fully completed, which can not satisfy the investors. In order to become a developed province with high level of industrialization and modernization by 2020, infrastructure need to be invested in more to improve service quality, and meet necessary development requirements.
Compared to Hanoi City, Vinh Phuc province has disadvantages in encouraging light industries, consumer good, high-tech industries and attracting high skilled labor and investments in service sectors (banking, finance, insurance, commerce, etc.)
Being a part of Kunming (China) – Lao Cai – Ha Noi – Hai Phong Corridor with almost all lifeline transportation roads run across (main routes of the Northern key economic region), Vinh phuc development depends much on the integration and the capability of infrastructure system in key economic regions.
Due to high land compensation, changes in price, and increases investment proportion per area unit, which cause leasing price for land with infrastructure goes up. Also, governmental incentive policies (ie: corporate income tax) for industrial parks no longer exist, moreover, by 2015 Vietnam shall have to comply with free trade commitments according to frameworks of signed agreements. Import tax rate shall drop to 0%, leaving great difficulties to dosmestic manufacturers in severe competitions of FDI attraction with regional nations.
However, those above comparative advantages and disadvantages are only relative. If the advantages are not made full use of or in a wrong way, they will turn into difficulties. On the contrary, disadvantages are only temporary. Once the difficulties are overcome, these disadvantages could become advantages for further development.
Opportunities for development
Outdoor resources creates a development of foreign transporting system (Trans-Asia Corridor: Kunming – Lao Cai – Ha Noi – Hai Phong, Corridor IV, Corridor V of Ha noi Capital, etc, were and are being constructed), brings lots of opportunities to Vinh Phuc to broaden trade relationships with foreign countries.
Ha noi capital's quick development will soon spread to the Northern (forming North Thang Long new urban area, Thang Long Industrial park, Soc Son Industrial park, etc.). This is a good opportunity for Vinh Phuc to receive the spreading of capital, technology, science and to develop supporting industries and service for Ha noi.
New State and provincial mechanism and policies, together with the creativeness and activeness of the leaders, managers and specialists are continuously giving the province reputation and attractiveness to foreign and domestic investors.
The global economic integration provides a great opportunity to attract foreign investment.
Challenges from now to 2020 and the following years.
In a period from now to 2020, main challenges to the development of Vinh Phuc socio-economy shall be among following aspects:
Advantages and potential for large scale industries development in the same space result in contradictions in many sectors, especially:
Contradiction in key industries development, such as industries, tourism, and service. Fast industry development would leave bad effects on the development of tourism and service.
Contradiction in managing and using limited land pool.
Solution for these contradictions in the future requires considerations and choice of divisional structure, management of space, creates sustainable development for right decision-making.
The capacity of space, economy and society is limited while there are huge requirements for further development. This may cause an overload if there are no compatible solutions.
In order to become a developed and industrialized province, and high urbanization in long term, the greatest challenge is to create a harmonious and sustainable development, promoting the development of rural areas, especially in the Northeast and Northsouth of the province.
The growth of nearby regions gives many opportunities to expand market; however, it also brings many challenges in attracting resources for socio-economy development of Vinh Phuc.
Together with the socio-economy development, other dark sides of the market economy shall rise and growth fast, such as the unequality between urban and rural areas, the gap between the richs and the poors shall increase day by day. There might be high possibility of risks and threats to the environment.
These shall be the most difficult challenges to the development of Vĩnh Phuc Province.
