VDF-MOI Joint Missions to Thailand & Japan

The Vietnam Development Forum (VDF) and the Department of Planning of Vietnam's Ministry of Industry (MOI) are conducting a joint research project to study the methodology of industrial policy formulation under global integration and market orientation. We have organized two foreign missions, Bangkok (Feb.-Mar. 2005) and Tokyo (May.-Jun. 2005), to examine the experiences of other countries. The findings of the Thai mission were reported at the VDF Symposium on Industrial Policy Formulation in Hanoi on March 24, 2005 attended by MOI Minister H.E. Hoang Trung Hai and NEU Rector Prof. Nguyen Van Thuong, among others. We plan to go to Malaysia in the near future for the same purpose.

<Highlights of Thai Mission>  full report (PDF123KB)

Top-down policy making

Mr. Thaksin's current government has a top-down, business-like decision making style. This is affecting the entire working of the Thai government. Under his leadership, policies are faster and more flexible, and concerned ministries talk to each other more.

No preference for any nationality

Thailand is seriously committed to integration and FTAs. Localization requirements are already abolished, and firms of all nationalities are welcome. There is no law that requires technical transfer. On the other hand, the government also recognizes that local human resources and SMEs are weak and want to strengthen them.

Targeted industries

Thailand has slogans for targeted industries: Detroit of Asia (automobile), Kitchen of the World (food processing), Hub of Tropical Fashion (fashion), and so on. It also wants to promote high value-added services and IT. There is a shift from export orientation to domestic value and jobs.

Government-business cooperation

The private sector is deeply involved in policy design, implementation and review. The government has established industry-specific government committees and industry-specific non-profit institutes to accelerate joint policy making between government and businesses.

Comparing automobile master plans

The mission compared the auto master plans of Thailand and Vietnam (this study is still ongoing). The Thai version is longer and more detailed in action plans than the Vietnamese. The Vietnamese master plan has numerical targets for each type of cars, buses and trucks but Thailand specifies the output and export of the entire industry only.

Centralized FDI promotion

The Board of Investment (BOI) promotes FDI like MPI in Vietnam. Laws are revised every five years but always for better. BOI sets uniform FDI policy for the entire country and local governments are not allowed to offer better conditions or approve projects. FDI outside Bangkok is encouraged through the zone system. BOI's marketing activity is very effective.

<Highlights of Japan Mission>  full report (PDF171KB, Final version)

Businesses lead, government supports

The Ministry of Economy, Trade and Industry (METI) generally provides supporting  and coordinating functions while the private sector makes business strategies. This was true in the early postwar period as well as today. In the case of automobiles, for example, METI is concerned with air pollution, fuel efficiency, traffic safety and FTA negotiation but there is no master plan to guide investment or R&D.

No quantitative restriction on cars

Although Japan had road congestion, air pollution and many traffic accidents in the past, it never imposed production quotas or registration bans. METI believes that congestion and accidents are traffic control problems which should be separated from the production side.

Channels with the private sector

Like Thailand, Japan's policies are designed in close cooperation with businesses. Deliberation councils and industrial associations (JAMA, JEITA, etc) play important roles. In addition, METI contacts individual companies by phone, email and informal meetings when necessary. Prior to drafting new laws or negotiating FTAs, business opinions are always collected and summarized.

Quick implementation and revision

In the case of IT policy (e-Japan Strategy initiated in 2001), content evolves rapidly and flexibly as situations change and early results are achieved. Key targets are revised annually and new goals are introduced constantly. A special study council issued a report to significantly change policy orientation only after two years.

Vietnam in the eyes of MNCs

Japanese multinational corporations are always trying to introduce new products in each key market (global innovation chain) and achieve high-quality, low-cost and speed (global supply chain). They regard Vietnam as one of the potential production sites which work together with other factories located all over the world.

Japan & Vietnam: ideal production partners?

According to Prof. T. Fujimoto (Tokyo Univ), Japan's competitiveness is enhanced if it links up with countries which can perform "integration-based" manufacturing. This requires local capability in design and engineering and high-level human resources. If Vietnam improves its manufacturing capability, it can become a perfect partner for Japan.