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Activating services export potential (8/18/2014)

(VEN) - Vietnam’s export value reached US$132 billion in 2013 and US$83.5 billion in the first seven months of 2014. These included inconsiderable export value of services. Economists and trade promotion organizations are seeking solutions to promote services exports in order to increase the country’s total export value.

Big advantages
In the National Export Potential Assessment Report recently announced by the Ministry of Industry and Trade, many kinds of services in the fields of tourism and labor export were listed among goods and services of high export potential; transportation and software services were listed among goods and services of medium export potential. In the opinion of Alain Chevalier, senior technical advisor of the Decentralized Trade Support Services for Strengthening the International Competitiveness of Vietnamese Small and Medium Enterprises (SMEs) program, services exports are important, bringing big revenue and showing the export potential of a country. “To assess the export potential of a country, it is necessary to assess the export potential of its services. Actually, Vietnam is developing below its potential in this field with the export value of services reaching a mere US$10 billion. Meanwhile, other countries such as Thailand, Malaysia and Indonesia have earned much higher revenue from services exports, US$35 billion, US$32 billion and US$20 billion respectively. Therefore, Vietnam must pay more attention to promoting services exports,” he said.
In fact, the export potential of tourism services is very high. In the period from 2008-2012, the export value of the Vietnamese tourism sector grew 17.85 percent - this was an impressive growth rate. Economists predicted that the export potential of the tourism sector would continue to increase in the time to come because along with traditional types of tourism such as shopping and sea bathing, Vietnam also attracted tourists through other types of tourism such as MICE (Meetings, Incentives, Conventions and Exhibitions), cultural tourism, relaxation and spiritual tourism. Last year, the World Economic Forum listed Vietnam at the 80th position among 140 countries in the world and the 16th position among 25 countries in the Asia-Pacific region in terms of Travel and Tourism Competitiveness Index.
Labor export is another field where services are said to be of high export potential. Overseas remittance-related data from the World Bank show that Vietnam currently accounts for about 1.8 percent of the US$480 billion global overseas remittance market; and about 500,000 Vietnamese people currently work in 40 countries and territories. Vietnam currently exports labor mostly in simple fields such as construction, engineering, textiles and garments, seafood processing and transportation. With its highly qualified human resources in fields where high expertise is required such as information technology and finance, Vietnam still has great potential to boost labor exports.
Other fields where services are said to be of export potential include transportation, logistics and software. Economists said that thanks to its software export advantages, Vietnam was ranked eighth in the world in terms of software outsourcing capability. Last year, Ho Chi Minh City and Hanoi stood among the top 100 attractive cities in the field of software outsourcing (Ho Chi Minh City ranked 16th and Hanoi 23rd).
Labor productivity, labor costs and production costs are factors for which Vietnam has advantages. The country also has other advantages thanks to improvements in terms of technological level and infrastructure.
The export value of transportation and logistics services reached a mere over US$2 billion in 2012, accounting for a 0.24 percent share of the world market. Today, however, most world famous logistics firms are present in Vietnam, sharing the domestic market with more than 1,000 private businesses in the sector. Therefore, the export potential of this sector will increase if the linkage between businesses is maintained.
Solutions to increase services exports
Nguyen Thi Thu Hang, Chief Consultant to the Export Potential Assessment Project, highly appreciated the export potential of tourism services. In her opinion, to increase the export value of tourism services in the time to come, Vietnam must pay more attention to global trends of health tourism because provinces, regions and the whole country have yet to pay adequate attention to these trends when making tourism development strategies. Furthermore, tourism businesses and tourism promotion organizations must improve their market access capability through the use of mobile and social networks such as Twitter.
To promote the export of transportation and logistics services, in the opinion of economists, it is necessary to gather up ship chandlers to prevent competition among them, and improve truck groups used in overland transportation. In addition, it is necessary to upgrade storage and logistics facilities. In the field of software, human resources must be developed in terms of quantity and quality, especially project administrators. Software businesses must take the initiative in undertaking market research and learning about new product and technology trends rather than concentrating on outsourcing./.

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