What makes it hard for Vietnam to grow quickly?

DNHN - Even though there have been a lot of talks about building global supply chains, it has taken a long time to get technology products made in Vietnam. So, where is the problem? Bloomberg talked about the problem that is stopping Vietnam from growing faster than 7%.

The infrastructure is what is holding things up. Vietnam still relies a lot on its roads, which are often crowded and in bad shape, to move goods and people. Statistics show that roads are involved in three-quarters of the total amount of goods and 90% of people's travel needs. Also, not all of our seaports can handle ships with a lot of tons.

One of Vietnam's top goals is to update its road system, but progress is slow. The North-South Expressway, which is supposed to be the future backbone of traffic, has been in the works for a long time. One reason is that the cost of raw materials has gone up, which has led to investments in capital.

There are also delays in a lot of other important transportation projects. In Ho Chi Minh City, the first urban railway line (Metro Ben Thanh - Suoi Tien), which has been under construction since 2012 and was supposed to open in 2018, has had to be pushed back to 2023.

This project will cost about $1.3 billion, which is more than what was originally thought. The National Assembly of Vietnam needs to approve it.

Many other city projects, like ring roads, have been planned for more than ten years, but construction hasn't been able to start because of many delays.

In Vietnam, just over 34% of public investment capital was spent in the first seven months of 2022. At the moment, the State budget pays for about 90% of the money used to improve infrastructure. If the process of paying out money takes too long, projects and works will also move more slowly.

You can't deny that the government is trying to make things better. The public-private partnership investment law, which goes into effect in 2021, is a big step forward. But there are still a lot of problems that need to be solved fully.

For example, contractors often rely on risk-sharing agreements with the state and have little interest in projects with a one-time settlement at the end. Because of this, many projects to build infrastructure are behind schedule. As of February, only 1.5% of a section of the 50-kilometre North-South Expressway that was built with private money had been finished.

Bloomberg thinks that Vietnam has a lot going for it, from its location in the world to its labour resources. The problem that needs to be fixed is that policies need to be changed so that infrastructure projects can move along faster.

An Anh