II. By Country
6. Conclusions and Policy Implications
The Lao Bao SECA has been established in a quest to create an attractive investment environment, to expand markets and strengthen economic and commercial cooperation with neighbouring countries, and ultimately to boost socio-economic development in the Central region of Vietnam. With strong support from both the Central and local government, after five years of operation the Lao Bao SECA has brought many changes to the local economy of Quang Tri, and has served as a demonstration model of the new management mechanisms needed to boost social and economic development.
It can be said that during its inception stage, Lao Bao SECA has achieved its objectives. From being a very poor and remote mountainous district, Huong Hoa has drawn the attention of many investors as well as visitors from around the country and abroad. The total capital invested in the SECA has increased over the years, contributing to an increase in the growth of provincial GDP. The Huong Hoa economy has been changed from a purely agriculture-based one, to an active center of trade, services and industrial development, one that contributes significantly to an improvement in the living standards of local people, as well as the socio-economic development of Quang Tri Province as a whole.
In terms of business, the SECA has clearly opened up new opportunities for investment in manufacturing, trade and services. After the first five years of operation and despite many difficulties, the businesses have proved to have profit potential. Given that the project is still in its inception stage has only operated for a short time, no data has been released on the remittances produced by, and capitalization of enterprises to date. However, the data that does exit shows that the new businesses have made a significant contribution to government tax revenue and employment, especially domestic enterprises.
For local people in Lao Bao, the SECA has had a positive impact on their livelihoods, which have changed from farm to non-farm and service based activities, and this has improved their household income and living standards. It may take more time for the local people to enhance their capacity in order to take greater advantage of the opportunities created by the SECA, and to improve their well-being, especially those living around the SECA. More important, the data provides strong evidence of income inequality existing in
Lao Bao among and between ethnic groups, both inside and outside LaoBao, where thre are fewer opportunities for those from ethnic minorities. This raises a further policy concern about the Government’s role in supporting and enabling the participation of ethnic groups in economic development in general, and in the SECA in particular.
The operation and management of the Lao Bao SECA has highlighted many problems, including a poor infrastructure, a shortage of high quality labor, bureaucratic problems, weak investment promotion and marketing, and smuggling. Some of these problems may require more effective policy intervention from Central Government if they are to be rectified; however, other problems call for the attention of local government, for cooperation from the business community, and for local people to create a synergy for development.
To achieve the objectives of the Lao Bao SECA, I put forward the following recommendations, in order of priority:
- Improve policy implementation and regulation enforcement; introduce administrative reform – with clear procedures, responsibilities and accountability within the local authorities and related government agencies, including the customs office; an improvement in legal consultancy services and guidance on investment; building capacity among local officials; changing the work and business culture.
- Human resource development: different forms and levels of training are needed to meet the increasing demand for high quality labor in the Lao Bao SECA in particular, as well as in the Province. At the same time, the Government should introduce suitable labor policies, wages and other incentives for laborers working in remote and mountainous SEZs like Lao Bao; preferential policies on issues such as tax, credit and land rent should be given to enterprises which employ more local labor.
- Improved infrastructure and marketing: greater planning and development of infrastructure, both inside and outside the SECA, plus public support services, is needed to facilitate investment projects in the SECA. The Government should work closely with the enterprises to market products and services produced in the SECA, as well as local products and handicrafts, products which are the area’s strength, but have not yet been exploited in full. This will help to make better use of local resources, create more jobs for local people - diversifying their livelihoods towards non-farm and off-farm activities, and reducing the risks and uncertainties resulting from a high dependence on agriculture.
- Other support: More Government intervention is needed to attract further investment and promote the positive impacts of the SECA on socio-economic development in the
region, including transparent policies on investment, taxation, credit, land, marketing and promotion, and security.
- At the household level: A change in household economic activities from farm to non- farm based is the best alternative for alleviating poverty. Supports from the local government and development agencies in the form of credits/loans, training and extension services, will help to enhance local peoples’ capacity to take advantage of market opportunities and regional integration; diversifying their livelihoods and improving living standard. In addition, a family planning program introduced to control population growth will be essential to alleviate local poverty.
REFERENCES
Bui, T. T. et al. 2005. ‘Trade Liberalization and Employment in Agriculture - the Case of Central Region, Vietnam’. VERN Research Report. IDRC: Canada.
Bui, T. T. 2003. Labor Market and Employment Study in Hue. Research Report No. 4-2003.
A report for the Asia Urbs Project VNM005 (Urban Poverty Alleviation in Hue in Connection with Heritage Preservation), co-financed by the European Union.
Pham Thang. 2006. General Report on 15 Years of the Establishment and Development of Industrial Zones and Economic Zones. Ministry of Planing and Investment of Vietnam (in Vietnamese). Website: www.tapchicongsan.org.vn.
Prime Minister of Vietnam. August 13, 2004. Decision no. 148/2004/QD-TTg. Strategy for Socio-economic Development in the Key Economic Regions of Central Vietnam to 2010, and Vision to 2020.
Prime Minister of Vietnam. January 12, 2005. Decision no. 11/2005/QD-TTg. Management Regulation for Lao Bao Special Economic and Commercial Zone, Quang Tri Province.
Ravallion, Martin & Dominique van de Walle. 2001. Breaking up the Collective Farm: Welfare Outcomes of Vietnam’s Massive Land Privatization. Policy Research Working Paper 2710. Washington, DC: Word Bank.
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Winters, L.A. 2000d. ‘Trade, Trade Policy and Poverty: What are the Links’ In The World Economy 25. pp. 1339 - 1367.
APPENDICES