Workshop on Industrial Policy for Vietnam

Hanoi, May 8-9, 2006

(METI, MOI, AOTS, VCCI)

<Overall summary by Prof. A. Suehiro of Tokyo University>

In the last two days, we have introduced many aspects of Japanese and East Asian industrial policies, including catch-up type industrialization, an overview of Japan's industrial policy, automobile policy formulation, industrial clusters, and the experiences in Taiwan and Thailand. Our main message can be summarized in four points.

First, the purpose of Japanese industrial policy has been to fully develop private sector dynamism. It was not top-down, government-led intervention. As such, the main role of the government was to improve the business environment. I have heard that Vietnam plans to create many new enterprises in the future. The government must provide a good environment for them.

Second, Japan's industrial policy has been jointly drafted by the government and the private sector, with the latter taking the lead. In order to collect and coordinate opinions among various stakeholders (related groups), deliberation councils and industry associations were fully utilized. Their main purpose was to share information among all stakeholders.

Third, in the case of Vietnam, industrial development requires effective linkage with foreign partners. This can be achieved in two ways: (1) by absorbing FDI into Vietnam; and (2) by becoming a crucial producer of certain parts and components in the global networks of MNCs. In the latter case, foreign firms do not have to come to Vietnam. Instead, Vietnamese firms can reach out and become a player in the global supply chain. To become an effective player, local firms must always upgrade capability. Otherwise, the whole activity may shift to other countries when situations change.

Fourth, Vietnam's industrial policy must reconcile domestic targets with the need to link with regional partners. Under FTAs and WTO, production and export strategies must be designed at the regional level, not just at the national level. Whether and how Vietnam can incorporate both national and regional orientations is the key question.

<Comment by Prof. K. Ohno of VDF>

I am very happy to hear and completely agree with Prof. Suehiro's four points.

Prof. Suehiro stressed that Japan's industrial policy has been a joint work by the government and the private sector. Unfortunately, in Vietnam, industrial strategies and master plans are not produced that way. They are drafted under official initiative, and businesses can comment only after they are more or less completed. At that late stage, revisions are minor.

Japan used deliberation councils as the key instrument for private-government exchange, but there are other models--for instance, temporary councils and committees for drafting industrial master plans in Malaysia, and permanent industrial institutes for policy coordination in Thailand. Vietnam's drafting institution is still primitive and chaotic, and it is very difficult to foresee which type of institution is most suitable for Vietnam. VDF is working with MOI to find the best model for Vietnam. We visited Thailand, Malaysia and Japan for this purpose. From this year, we are trying to initiate a new way of drafting master plans in cooperation with MOI.