Expert proposes Vietnam-Myanmar railway

08/06/2015, 11:21

The director of the Vietnam Institute of Economics has suggested developing a railway linking Cai Mep-Thi Vai port complex in Ba Ria-Vung Tau Province and Da Wey Port in Myanmar to fuel Vietnam’s economic growth in general and the port complex in particular.

 

 

Tran Dinh Thien, director of the Vietnam Institute of Economics, speaks at a seminar on the impact of bilateral and multilateral trade pacts on Vietnam’s economy in Can Tho City last week - PHOTO: TRUNG CHANH

 

Tran Dinh Thien told a seminar on the impact of bilateral and multilateral trade pacts on Vietnam’s economy in Can Tho City last week that Cai Mep-Thi Vai would become a cargo transshipment point if such a railway was developed. Thien said Cai Mep-Thi Vai is now operating at 14-15% capacity and could not reach its full capacity due to competition with ports in HCMC. “However, Cai Mep-Thi Vai will have the opportunity to become a busy transshipment port complex if there is a railway connecting it to Da Wey Port,” Thien said. Da Wey Port has been linked to ports in India, which is a booming economy. In addition, the railway, if in place, will form connections with ports in Laos, Cambodia and Thailand. Firms will save much money if they have cargo transported by railway, which is 2,500 kilometers shorter than the current sea route between Vietnam and Myanmar. The railway will enable Vietnam’s logistics sector to better integrate into that of ASEAN. Besides, demand for cargo transport between the countries is forecast to surge in the coming years. As Cai Mep-Thi Vai is envisaged having road links with an international airport planned to go up in Long Thanh District, Dong Nai Province, the port complex will fuel the development of the airport if it becomes a bustling transshipment port complex. On the regional front, the railway would give a boost to the economic development of Cambodia, Laos, Myanmar and Vietnam, the four less developed economies compared to other ASEAN nations. But Thien said the four countries are located in a strategic location connected to the world’s two major economies, China and India, and further economic growth of these four countries would help result in new growth momentum for the bloc. Thien said there have been railways linking China and Cambodia, Thailand and Vietnam, and a new railway along the East-West corridor from Cai Mep-Thi Vai to Da Wey will help set up a complete railway network connecting to ports in India. If this railway network is established, it would woo many more foreign investors to the four countries and help them create economic breakthroughs. Commenting on Vietnam’s economy, Thien said it has grown lower than expected since the Government launched a reform drive. He explained since 1986 a huge wave of foreign investment has gone to Vietnam but the economy has grown slower than other many regional economies due to the inefficient use of resources. Thien pointed out that the local economy has not benefited much from foreign direct investment (FDI) as the country had focused on the number of FDI projects for many years and there have not been strong linkages between FDI and domestic enterprises. This means local firms have not made the most of opportunities and resources to contribute more to the country’s economic growth. Thien said in the past years FDI have been used to expand gross domestic product (GDP) rather than improve the state of Vietnam’s economy while this sector has enjoyed many incentives related to taxes and land. Thien gave an example that Samsung has invested heavily in the country and imported a lot but the added value of its products is not high. The FDI sector accounts for nearly 70% of Vietnam’s total exports and more than 50% of total imports. The export contribution of the FDI sector is on the rise and this heavy reliance is a big problem for an export-oriented economy like Vietnam. Thien called for Vietnam to make changes in attracting foreign investments and backing the development of domestic enterprises. He underscored the importance of attending to the quality of FDI, building a strong bridge between FDI and local business sectors, and issuing more incentives for domestic enterprises as they are the key driver for the country’s growth. Corruption concerning official development assistance loans is among the major barriers to the country’s growth, according to Thien. Therefore, it is important to have an effective mechanism for ODA allocation to replace the ask-given mechanism for the source of low-interest loans in the past years.

Source: SGT