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Study Meeting on Expansion and Development of the Service Industry in Asia

Study Meeting on Expansion and Development of the Service Industry in Asia. Tong thi thuy duong (Ms.) SMEs development and support centre 1 AND NGUYEN HUONG THU ( ms. ) VIETNAM DATA COMMUNICATION COMPANY. Content. Services Sector Development Status

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Study Meeting on Expansion and Development of the Service Industry in Asia

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  1. Study Meeting on Expansion and Development of the Service Industry in Asia Tong thithuyduong (Ms.) SMEs development and support centre 1 AND NGUYEN HUONG THU (ms.) VIETNAM DATA COMMUNICATION COMPANY

  2. Content • Services Sector Development Status • Strengths and weaknesses of Viet Nam’s Service Industries

  3. Services Sector Development Status • Services are growing more slowly than GDP • The reason for not meeting set targets may have been the lack of a national strategy to target key intermediate services for growth • business services (professional and business support services) and communications – both foundational intermediate services – have grown on average at a low rate

  4. Services Sector Development Status • Services are growing more slowly than GDP • The reason for not meeting set targets may have been the lack of a national strategy to target key intermediate services for growth • business services (professional and business support services) and communications – both foundational intermediate services – have grown on average at a low rate

  5. Services Sector Development Status • Service enterprises are contributing to job creation • The annual average for new job creation between 2000 and 2002 was 61 percent higher than in the five years prior to 2000, with service sector jobs increasing on average 150 percent. • Financial services has posted the strongest employment growth, followed by transport/storage/ communications.

  6. Services Sector Development Status • Services trade deficit is growing, due mainly to transport services • Viet Nam’s deficit in service trade has steadily increased, due primarily to the growing deficit in transportation services. Viet Nam’s shipping fleet has aged considerably and a growing portion of goods exports are now being carried on foreign vessels. • There has also been a modest deficit in financial services, but that gap has been closing

  7. Services Sector Development Status • Services comprise over half the enterprises and are mainly small • Over half of Viet Nam’s enterprises are already in service industries, with the highest percentage being in wholesale and retail commerce • Over 65% of service enterprises have fewer than 10 employees. Those sub-sectors showing a particular concentration of micro-and very small enterprises are wholesale and retail trade, education and training, business services, and hotels and restaurants.

  8. Services Sector Development Status • Foreign direct investment in services remains relatively low • More investment is needed in telecommunications, financial services, and education and training if rapid economic growth is to be supported.

  9. Strengths and weaknesses of Viet Nam’s Service Industries • The strengths • government’s commitment to support service sector growth and international integration • Viet Nam is fortunate in having a fully digitalized telecommunications infrastructure as telecommunications is the key conduit for trading services.

  10. Strengths and weaknesses of Viet Nam’s Service Industries • The strengths • Information and communication technologies (ICT) have been prioritized by government as critical infrastructure for sustained fast growth; • Tourism: no visa is required for short-stay visitors from major tourist markets like East Asia • There is a short term benefit for Vietnamese service suppliers in that SOEs are likely to use Vietnamese services rather than purchase from abroad

  11. Strengths and weaknesses of Viet Nam’s Service Industries • The strengths • Viet Nam has a demonstrated ability for the financial services sector to grow rapidly, which is critical in generating sufficient capital to support private sector services growth • Finally, Viet Nam has a motivated and diligent work force that is an asset in developing service industries, with particular strength in science and research that can be further developed

  12. Strengths and weaknesses of Viet Nam’s Service Industries • The weaknesses • Services continue to be over-priced for the quality received, and there is still a relatively poor understanding of customer needs and how to address them. • Viet Nam’s export strategy is really an import substitution strategy rather than an export-growth strategy.

  13. Strengths and weaknesses of Viet Nam’s Service Industries • The weaknesses • Viet Nam wishes to diversify the investment capital available but in actuality is relying more heavily on the State budget. • In services, government is potentially creating more competition in domestic markets for Vietnamese service suppliers without a strategy to help them strengthen their ability to compete.

  14. Thank you!

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