69782 draft final report Technical Assistance and Training in Integrated Provincial Planning Quang Nam Province, Vietnam The World Bank Project No.P109056 undertaken by Hansen Partnership Pty Ltd December 2008 Table of Contents Acknowledgements ..................................................................................................................................viii Executive summary ....................................................................................................................................ix 1 Introduction........................................................................................................................................1 2 New ways to plan for the future........................................................................................................3 3 Setting the Scene...............................................................................................................................9 3.1 The International Context ........................................................................................................................9 3.2 The National & Regional Context...........................................................................................................10 3.3 A snapshot of Quang Nam Province......................................................................................................12 3.3.1 Administrative and Geographic Characteristics 12 3.3.2 The people 13 3.3.3 The economy 16 3.4 How competitive is QNP? ......................................................................................................................22 3.4.1 Comparative Advantage 22 3.4.2 Competitive Advantage 22 3.4.3 Collaborative Advantage 22 3.4.4 Competitive Indexes 23 4 SWOT Analysis ................................................................................................................................25 4.1 What is SWOT Analysis?.......................................................................................................................25 4.2 SWOT for QNP ......................................................................................................................................25 4.3 Multi- Sectoral Analysis for QNP ...........................................................................................................28 4.3.1 Multi sector analysis for QNP 28 4.3.2 Analysis of Competitive Attributes 30 4.3.3 Industry Sector Competitiveness 30 5 Key Issues........................................................................................................................................33 5.1 Settlement..............................................................................................................................................33 5.1.1 Tam Ky 33 5.1.2 Da Nang 34 5.1.3 Urban Hierarchy 34 5.1.4 Linear Development 35 5.1.5 Population forecasts 36 5.2 Environment..........................................................................................................................................38 5.2.1 Natural Resources and Ecosystems 38 5.2.2 Natural Disasters 39 5.3 Economy................................................................................................................................................40 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam ii 5.3.1 Economic Sectors 40 5.3.2 Education 41 5.3.3 Capital Investment 42 5.4 Infrastructure..........................................................................................................................................43 6 Cluster Analysis...............................................................................................................................45 6.1 What is a cluster? ..................................................................................................................................45 6.2 The Cluster ScoreCard ..........................................................................................................................46 6.3 Clusters Identified in QNP .....................................................................................................................47 6.3.1 Tourism 48 6.3.2 Forestry 49 6.3.3 Creative Industries 51 6.3.4 Building and construction materials 51 6.3.5 Food Industry (especially specialty/gourmet foods) 52 6.4 The importance of ‘Best Practice’ in the development of Clusters.........................................................52 6.4.1 Collaboration within QN province 53 6.4.2 Collaboration between QNP and other provinces 53 6.4.3 Collaboration between QNP and cluster groups in other countries 54 6.4.4 Proactive investor attraction 54 6.4.5 Investment joint ventures 54 6.4.6 Investor ‘aftercare’ 56 6.4.7 Familiarisation activities 56 6.5 Action Agendas......................................................................................................................................56 6.6 Cluster Action Teams ............................................................................................................................57 6.6.1 CAT No. 1 – Gourmet/Specialty Food - Small Pigs 58 6.6.2 CAT No. 2 – Building and Construction Materials 60 6.6.3 CAT No. 3 – Tourism 62 6.6.4 CAT No. 4 – Creative Industries 65 6.6.5 CAT No. 5 – Forestry 67 7 The Vision for Quang Nam Province..............................................................................................71 7.1 What is the purpose of setting a vision for QNP? ..................................................................................71 7.2 How can the Vision Statement be realized? ..........................................................................................74 7.3 Action Plans & Targets ..........................................................................................................................77 7.4 Monitoring & Evaluation.........................................................................................................................83 8 Next steps for undertaking an Integrated Provincial Plan for QNP ...........................................85 8.1 Extending the training course ................................................................................................................85 Recommendation 1: 85 8.2 Social capital..........................................................................................................................................85 Recommendation 2: 86 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam iii 8.3 Land Administration and Management Reform .....................................................................................86 Recommendation 3: 86 8.4 Tourism Development............................................................................................................................86 Recommendation 4: 86 8.5 Economic Clusters.................................................................................................................................87 Recommendation 5: 87 8.6 The next SEDP for QNP ............................................................................................................................87 Recommendation 6: 87 Recommendation 7: 88 Recommendation 8: 88 Recommendation 9: 88 Recommendation 10: 88 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam iv Table of Figures figure 1 Steps in the Integrated Provincial Planning Process.................................................................................5 figure 2 Map of South-East Asia.............................................................................................................................9 figure 3 Central Region of Vietnam ......................................................................................................................10 figure 4 The districts of Quang Nam Province......................................................................................................13 figure 5 Total Population in the Provinces within the Central Region of Vietnam, 1995-2007 (preliminary).........13 figure 6 Annual Population Increase, 1996-2007 .................................................................................................14 figure 7 % Annual Growth in Rural and Urban Population in Quang Nam 2000-2007 .........................................15 figure 8 Quang Nam % Change in Structure of GDP 2000-2007 .........................................................................16 figure 9 Employment Sectors in Quang Nam 2007 ..............................................................................................17 figure 10 Chu Lai Open Economic Zone Master Plan ............................................................................................19 figure 11 Hoi An Ancient Town...............................................................................................................................21 figure 12 Traditional ethnic minority architecture....................................................................................................21 figure 13 Handicrafts made in QNP........................................................................................................................21 figure 14 High End Tourist Resorts near Hoi An ....................................................................................................21 figure 15 Competitiveness of Capital Assets ..........................................................................................................31 figure 16 Capital Competitiveness of Industry Sectors...........................................................................................32 figure 17 View of Tam Ky today ............................................................................................................................33 figure 18 Da Nang City ...........................................................................................................................................34 figure 19 Tourism development underway along coastline ....................................................................................35 figure 20 Agricultural Activities ...............................................................................................................................38 figure 21 Tea plantations in the highland areas of QNP.........................................................................................39 figure 22 Hoi An Ancient Town - November 12 2007 .............................................................................................39 figure 23 High End resort development, near Hoi An .............................................................................................51 figure 24 Montgomeries golf link development, near Hoi An ..................................................................................40 figure 25 Private sector industrial development estate by UID, near Hoi An ..........................................................41 figure 26 Chu Lai Port ............................................................................................................................................43 figure 27 Bridges are a critical infrastructure item in the lowland and coastal areas of QNP .................................43 figure 28 The Porter Diamond ................................................................................................................................45 figure 29 Forestry activities in QNP........................................................................................................................49 figure 30 Forestry in Planning ................................................................................................................................50 figure 31 Hoi An, Lantern Manufacture ..................................................................................................................51 figure 32 CATs hard at work...................................................................................................................................69 figure 33 CATs hard at work...................................................................................................................................58 figure 34 Small Pig – QNP Speciality .....................................................................................................................69 figure 35 Small Pig Market in Thang Binh ..............................................................................................................58 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam v figure 36 Crystal Products – Okinawa Company....................................................................................................60 figure 37 Glassware shop in Hoi An ......................................................................................................................61 figure 38 Bhá»? Hôồng village..................................................................................................................................74 figure 39 The highland area of QNP.......................................................................................................................63 figure 40 Different types of wooden handicrafts in Vietnam ...................................................................................65 figure 41 Furniture manufacturing in QNP..............................................................................................................78 figure 42 Furniture manufacturing in QNP..............................................................................................................67 Appendices appendix 1 Copy of Training Manual appendix 2 List of training program participants appendix 3 Training Evaluation Report appendix 4 Forestry in Rural Development Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam vi List of Acronyms and Abbreviations CAT Cluster Action Team CLOEZ Chu Lai Open Economic Zone DARD Department of Agriculture and Rural Development DOC Department of Construction DOF Department of Finance DOH Department of Housing DOLISA Department of Labour, Invalids and Social Affairs DONRE Department of Natural Resources & Environment DOT Department of Transport DPI Department of Planning and Investment FDI Foreign Direct Investment GDP Gross Domestic Product GSO General Statistics Office of Vietnam HCMC Ho Chi Minh City IMF International Monetary Fund IPC Ministry of Planning and Investment – Investment Promotion Centre for Central Vietnam MNE Multi National Enterprises MSA Multi – Sectoral Analysis PCI Provincial Competitive Index PPC Provincial People’s Committee QNP Quang Nam Province SEDP Social Economic Development Plan SME Small and Medium Enterprises SOE State Owned Enterprises SWOT Strengths, Weaknesses, Opportunities and Threats TA Technical Assistance TOR Terms of Reference UNDP United Nations Development Program UK United Kingdom UNESCO United Nations Educational, Scientific and Cultural Organisation USA United States of America USAID United States Agency for International Development VPCI Vietnam Provincial Competitiveness Index WB The World Bank WTO World Trade Organisation Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam vii Acknowledgements The consultant team wishes to acknowledge the hard work, enthusiasm and commitment of the participants in the training program for the WB funded project. Throughout the training all participants shared their knowledge, experience and interest in the future planning and development of Quang Nam Province. Their important contribution to this final report is appreciated by the consultant team and provides an excellent foundation to move forward in the preparation of the next generation of Socio Economic Development Plans for the Province. A special thanks to the Department of Planning and Investment in Tam Ky, QNP. The Department, under the leadership of Mr. Tran Van Tri, Director of DPI, Quang Nam Province, provided excellent training room facilities, assisted with administrative and day-to-day matters throughout the training course and, provided helpful feedback and participation during the program. The consultant team also thanks the World Bank team in Hanoi for its support and advice. Their assistance in setting up meetings with relevant Central Government agencies at the commencement of the project, coupled with their ongoing support and valuable feedback, has been greatly valued by the consultant team. Consultant team: ï‚· Professor Roz Hansen, Managing Director of Hansen Partnership Pty Ltd - Project Team Leader and Urban and Regional Planner ï‚· Professor Brian Roberts, Strategic Planning & Management Services Pty Ltd - Urban and Regional Economic Development Expert ï‚· Rod Brown, APD Consulting Ltd - Cluster and FDI Expert ï‚· Katherine Morton, Hansen Partnership Pty Ltd - Urban and Regional Planner ï‚· Kim Hong Tran - Research Assistant and Interpreter/Translater Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam viii Executive summary In August 2007 the People’s Committee of Quang Nam Province (QNP) in Central Vietnam submitted a request to the World Bank (WB) for technical assistance in the preparation of a provincial integrated development plan using alternative approaches and methods driven by the realities of Vietnam’s market economy. The current Socio-Economic Development Plan (SEDP) for QNP is due to expire at the end of 2009 whereby the provincial government of Quang Nam will need to have a new masterplan paving the way forward for development over the next 10-15 years. Following this request, and a subsequent project identification mission to QNP by World Bank officers and experts, the World Bank prepared a TOR for Project No. P109056 - Technical Assistance and Training in Provincial Planning, Quang Nam Province (QNP), Vietnam. Hansen Partnership Pty Ltd was awarded the project and the project commenced in September 2008. The project was completed by December 2008. The new economy in Asia Regions in developing countries such as Vietnam are increasingly affected by globalization and structural change. Changes to the sourcing of goods, materials and services, design, finance, production and marketing are all factors promoting greater inter-regional and international trade resulting in the development of highly specialised, highly competitive geographic clusters of industries and businesses serving national and international markets. This ‘new’ economy approach is more ‘demand-side’ where governments have a role in facilitating and supporting private sector development in response to demands generated by global market forces. Within this context, cities and regions are now the key to driving national economic development. As the responsibility for planning and delivering economic development becomes more decentralised in Asian countries such as Vietnam, it is city and provincial governments that will be expected to provide leadership and good governance practices. They will also need to become more competitive. The creation of ideas, better skilled workers, more efficient production systems, better intelligence on the way the market operates and greater acceptance of change are key factors in achieving higher economic performance at the provincial and regional levels. An overarching element in the desire for cities and regions to be more globally competitive is the formulation and implementation of development plans which are strategically oriented. Strategic planning is much less concerned with physical layout details and more focused on market demand and the long term provision of infrastructure and services. Strategic planning fosters an integrated multi sectoral, multi criteria approach to future growth and development – where policies and actions interact with one another to ensure that decisions about investment in development and infrastructure maximise the public benefit across a province or a region. More particularly, in the case of Vietnam and other Asian countries, fostering the development of industry clusters has the potential to improve the sustainability, competitiveness, liveability and productivity of their cities and regions. Clusters now form the industrial organizational basis for economic planning and development in the 21st century. They are replacing traditional sector industry plans and initiatives which are failing to drive sustainable economic development processes. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam ix Clusters comprise industries and businesses whose operations are intrinsically linked or networked with suppliers, distributors and economic infrastructure. Clusters are responsive to the requirements of industries and businesses producing goods and services that are traded in the national and global economies. Quang Nam Province Today Quang Nam Province is located in the Central Region of Vietnam which includes the South Central Coast and the Central Highlands Sub-Regions of Vietnam. The Central Region comprises 11 Provinces: Thua Thien Hue, Da Nang, Quang Nam, Quang Ngai, Kon Tum, Binh Dinh, Gia Lai, Phu Yen, Dak Lak, Khanh Hoa, Dak Nong. The region has experienced reasonably strong economic growth, particularly within its coastal and mid-land areas over recent years. The provinces within this region benefit from valuable agricultural, forest, sea/marine and mineral resources. Subsequently, significant investment has been made in oil and gas refineries and the tourism sector. The Central Region provinces are supported by larger service centres such as Da Nang City, as well as seaports and airports of varying capacity and standard. Quang Nam Province (QNP) comprises 18 districts with Tam Ky City as the Provincial Capital. These districts vary in physical area and geographic composition with the poorer districts with relatively high poverty levels and high unemployment rates in the highlands and mountainous areas to the west. From the attractive coastline which extends for 125 km, the low lying fertile river floodplains to the east, across to the vegetated hills and mountains in the west, QNP is well endowed with waterways, wetlands, lakes, forests and sandy beaches. These important natural systems will continue to be fundamental to the future development and prosperity of the province. In 2007 the population of QNP was 1.489 million compared with 1.376 million in 1996. Approximately 17% (260,100) of the population live in urban areas and 83% (1,229,169) in rural areas. Population density in 2007 was 143 persons per km2 compared with 132 persons per km2 a decade earlier. The population in QNP has been growing at an average rate of 1% per annum from 1995-2007 being slightly below the average annual growth rate for Vietnam (1.4% per annum) and Da Nang (2%) during the same period. It is noted that the current Quang Nam Socio Economic Plan (To 2015) has, as one of its specific targets, the reduction in population growth down to 1.2 – 1.25% in 2006-2010 and then 1.15-1.2% in 2011-2015. However the graph above indicates that growth rates are already well below these targets suggesting that the rate of growth may slow even further if recent growth trends persist. The two largest urban settlements in 2007 being Tam Ky (100,594 persons) and Hoi An (84,711 persons). QNP has been experiencing relatively high economic growth (an annual average growth rate of 9.3% since 2000) and yet its actual GDP per capita remains significantly lower (USD270-345, 2007 data) than the average for Vietnam (USD818). At present the economy of QNP does not offer a highly educated and skilled workforce. Skill levels of the QNP workforce are well below those of Vietnam as a whole. The poverty incidence in QNP is also very high (30.6% of total population) in comparison with the national average (19.5%). The local economy is still largely engaged in agricultural activities (67.4%). However in 2007 the Agricultural sector provided 26% of the GDP, with Industry and Services accounting for 38% and 36% of the GDP respectively. QNP receives less than 1% of the registered FDI capital in Vietnam, while Ha Noi and HCMC receive 15% and 20% respectively. On a per capita Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam x basis QNP is attracting half the FDI than for Vietnam as a whole - that is $1169.65 to $514.97 per head respectively. Most of the FDI in QNP has been in tourism and natural resource based industries such as the mining and export of sand. Over the last 10–15 years the tourism industry in QNP has expanded significantly with more than 1.5 million visitors, the majority of whom are Vietnamese but with the number of international visitors increasing. This sector is experiencing annual growth of approximately 20% being the single most important non agricultural activity in QNP. Beautiful sandy beaches, two UNESCO World Heritage Sites, waterfalls, forests and waterways are some of the attractions offered within the province. Overall, it is apparent that QNP’s economy is growing and diversifying. Nevertheless, its economic performance within the context of some of the other provinces in the Central Region of Vietnam and, in terms of the nation as a whole, is lagging. It continues to be characterised by a relatively poor, low skilled population with low levels of FDI and a continuing over- representation of GDP and workforce in the agriculture, forestry and fishing sector. In terms of factors underpinning a competitive economy, QNP is performing well on the implementation of Central Government policies and proactive leadership but is a poor performer on Access to Land, Transparency and Access to Information and Informal Charges. These are critical factors impacting on investment opportunities especially FDI. SWOT Analysis of QNP SWOT analysis primarily involves recording quantitative and qualitative information about the strengths, weaknesses, opportunities and threats affecting a region’s or province’s economy. The purpose of the analysis is to form an overall position and direction for the management of economic development. It is used extensively as part of strategic planning analysis for business, organizational, regional and other forms of planning for development. Strengths of QNP which were often mentioned throughout the training program include: ï‚· The province is made up of hard working people; ï‚· It contains Hoi An - a popular destination for both investors and visitors to Vietnam; ï‚· QNP is in close proximity to the very progressive Da Nang – the third largest city in Vietnam; ï‚· The province offers spectacular scenery with limestone outcrops, a sandy coastline and lush farmland set against a mountainous forested backdrop; ï‚· Offers National Highway No. 1 and main rail access as well as access to various seaports and airports. Some Weaknesses of QNP include: ï‚· Poorly developed hard and soft infrastructure; ï‚· No collaboration between entrepreneurs; ï‚· Agricultural products are generally of low value; ï‚· Lack of value adding on supply chains; ï‚· An over reliance on Central Government investment, particularly for infrastructure improvements; Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam xi ï‚· Limited FDI attraction to date; ï‚· Outward migration of people seeking jobs and a higher standard of living. Quang Nam’s Opportunities are numerous and include the following: ï‚· WTO membership creating new trade and investment opportunities; ï‚· Economic zones can be developed as have ample serviced land; ï‚· Further development of the tourist sector as province is well endowed with natural and cultural features; ï‚· Forests and natural resources have potential to be further developed; ï‚· Opportunities to develop the energy sector due to mountainous terrain and availability of water. Threats for the province relate to: ï‚· A slowing down in much needed reforms in the administration and management of urban and rural land; ï‚· The need to avoid epidemics such as avian flu; ï‚· The need for better environmental protection and management practices as a key to building a sustainable economy; ï‚· Natural disasters deterring investment; ï‚· Continued outward movement of skilled workforce – the brain drain syndrome. Global threats were not mentioned by the participants other than the issue of competition from global players. However, real threats include instability of world markets, and the impact of climate change. A multi-sector analysis (MSA) was also undertaken by the participants of Quang Nam Province to assess the competitiveness of the province’s capital stocks (finance, resources, ethnology and infrastructure) which support activities in a local economy. The results identified areas of weak capital stock formation which are constraining the development of the province’s economy – especially the growth of new industry clusters. The multi-sector analysis of competitive attributes indicated significant weaknesses in some elements of the province’s capital stock. Of the 25 attributes of competitiveness measured by the group in the MSA only four (market development, the availability of public facilities, business networks, research and development) ranked as being nationally competitive. Several attributes - revenue raising capacity, access to skilled labour and entrepreneurship - are weak. The competitiveness of these capital attributes is important, and significant effort will be required by the provincial government and local firms working in partnership to improve these elements. The analysis suggests the capital strength in sectors such as trading, business services and transport need improvement to develop a nationally competitive export sector for agriculture, forestry and fishing. Other key issues to address in the future Settlement patterns – two main urban centres (Tam Ky and Hoi An) with the remaining centres either randomly dispersed in the lowland and mountainous areas or concentrated along the National Highway No.1 creating functionality and safety issues Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam xii for this major transport corridor. There is an imbalance in the urban hierarchy in terms of more medium sized centres with potential for designating growth centres as destinations for investment. Out migration of skilled workforce is also an issue. Natural environment and ecosystems – need for better environmental management practices given that tourism is reliant upon a high quality environment; potential to value add on the large supply of good quality silica sands; need to better manage the impacts of natural disasters. Economy – Service sector, especially in the tourist sector, requires improved facilities and services, a highly trained workforce in the tourism, hospitality and leisure industries; further consolidation of the manufacturing and industrial base is needed as currently underdeveloped and lacking foreign investment interest; fragmented agriculture land ownership pattern is hindering economic development especially the establishment of SMEs. Education – mismatch between higher education and training programs and the skills needed to create a more robust and competitive economy focusing on key economic clusters. Capital investment - QNP needs to attract significant FDI in manufacturing; access to micro credit and business services is also needed; lack of proactive investor targeting by provincial authorities in QNP. Infrastructure - under-developed hard and soft infrastructure (especially in higher education); improvements needed in IT and Telecommunication infrastructure especially if the province is to do business in a global market. Clusters in QNP A cluster is a concentration of like-minded firms, talent and support institutions. They have located together (perhaps unconsciously) to do business, utilise a resource and achieve synergies. Some of the players may be fiercely independent and competitive, but they have enough in common to work together to achieve bigger and better outcomes. Clusters are about collaboration between organisations – to achieve outcomes not possible through individual effort. A cluster is more than simply a network of companies. Clusters have the potential to: ï‚· Build critical mass and lower the cost of doing business (generate location economies); ï‚· Provide a beacon for investors; ï‚· Build collaborative behaviour and thus facilitate joint problem-solving; ï‚· Provide a system of connection between companies, technologies and competencies; ï‚· Assist in building innovation systems and industrial capability; and ï‚· Help address market failure e.g. lack of information, co-ordination failure, managerial myopia. Five potential clusters were identified during the training program based on four criteria: ï‚· Good factor conditions taking into consideration the factors in the Porter Diamond and Cluster ScoreCard attributes; ï‚· Export potential; ï‚· Significant short-term outcomes; and Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam xiii ï‚· Likely to generate widespread interest by investors. The five clusters for QNP are: ï‚· Tourism ï‚· Forestry ï‚· Creative Industries ï‚· Construction materials ï‚· Gourmet/ specialty food products Tourism cluster The QN tourism industry has potential to become a key economic activity for QNP. The province’s competitive advantages include its two world heritage sites (total of six in Vietnam), attractive beaches, river estuaries and highland forested areas. Major international investors are beginning to establish ‘high end’ luxury resorts in the coastal belt adjacent to Hoi An. Its main competitive disadvantages are the risk of flooding during the monsoon season and typhoons. Hence tourist numbers generally decline during November to February. Aspects of the tourist industry which are underdeveloped include: ï‚· A lack of international standard tourism accommodation in most of the province – Hoi An is the exception and even then middle price range accommodation is deficient; ï‚· Few good quality restaurants and cafés with limited choice in cuisine and dining atmosphere; ï‚· A basic level of trained staff, with limited foreign language skills, despite the potential to attract a diverse range of tourists from across the world; ï‚· A lack of sophistication in the tourist experiences on offer, despite the potential to appeal to different tourist market segments e.g. backpackers and adventure seekers, families, retirees, group travellers, or those seeking a luxury and wellbeing experience; ï‚· Poor interpretive information about the cultural heritage of the province; ï‚· The lack of integrated tourism packages whereby visitors can experience a suite of related or themed experiences e.g. culture, sports, environment; ï‚· Very few ecotourism activities which could be linked in with spa resorts, hiking and bush walking etc; ï‚· Absence of certain tourism infrastructure e.g. information centres, signage, public amenities. A cluster program would be very effective in addressing these and other deficiencies. There is considerable scope to strengthen the branding and packaging of the different tourism products around environmental and cultural experiences. Related initiatives include a network of well equipped interpretive/information centres, a world class tourism training college with specific emphasis on promoting and marketing both QNP and the Central Region to domestic and international visitors, Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam xiv international convention centres, improved brochures and maps and other services and facilities which discerning tourists seek. Forestry cluster Over the last 8 to 10 years Vietnam has increased its exports in manufactured wood products. In 2001 manufactured wood exports from Vietnam was valued at USD460 million and yet by 2008 it is estimated that these exports are worth USD 5,378 million. The annual increase in manufactured wood exports is estimated to be 40% per annum over the last four years. In terms of timber imports (logs and sawn timber) to Vietnam, the trend has been a marked increase since 2001 to an estimated value of USD 1,574 million in 2008 and a stable annual increase in such imports over the last fours years in the order of 35% per annum. At present forestry in QNP is considered by many farmers in the highland and mountainous areas of the province to be an important economic opportunity – based mainly on producing pulp wood and quality timber. It is acknowledged that the QNP forestry industry has competitive advantages in respect of its readily accessible and significant supplies of quality timber and ‘know how’ with timber plantations, harvesting etc. Timber furniture is a mainstay of Vietnamese industrial production and its low labour costs should underpin export development. Exports of woodchips to China and RO Korea are significant, and the locals take pride in their furniture manufacture, although the export performance is modest. Low labour costs should provide strong cost competitiveness for furniture exports. The main disadvantages are the rudimentary nature of much of the milling and transport equipment, and the lack of international supply chains in high value timber products. Creative Industries cluster Currently the potential of the QNP creative industries is not widely appreciated. The province appears to have competitive advantages in architecture, arts and antiques, crafts, and design. These could conceivably be extended to fashion and performing arts and then integrated into its international tourism product range. Creative industries have the potential to generate jobs in the rural villages and small urban centres of QNP, as well as in tourist destinations such as Hoi An. Micro credit schemes providing ‘start up’ funds for rural communities (especially the ethnic minority groups) may be needed to establish small factories and businesses close to home accompanied by appropriate training etc. People will need to be properly trained in these industries requiring specific skills and expertise in such ventures as the making of traditional handicrafts to the designing of high fashion garments, ceramics etc. The creative industry sector also relies upon the generation of new ideas – contact with international design companies and entrepreneurs, trade fairs and exhibitions, marketing and promotion, as well as business development planning, are all integral to the success or otherwise of industries founded on creativity and innovative ideas. Building and construction materials cluster The QNP building and construction materials industry is well positioned given the substantial local demand associated with Vietnam’s industrialisation and rapid construction phase. QNP and surrounding provinces could conceivably become a Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam xv significant world supplier of building and construction materials if processing and product technology can be used to upgrade quality. Southern China serves as a model. QNP appears to have a competitive advantage in the availability of raw materials such as good quality silica sand, iron ore, clay and timber. Its well-established ceramic tile capability provides a good platform for international joint ventures. However, the lack of sophisticated local customers and processing technology need to be addressed in order to access western markets in glassware, tap ware, bathroom fittings etc as well as supply the quickly expanding domestic market. Food cluster The food industry in QNP currently covers the main staples such as aquaculture, rice, cassava, maize, poultry, spices, pigs etc. However QNP appears to have a competitive advantage in the further processing of these products due to the capacity available in the economic zones, seaports, airports etc. Local foods also have the potential to significantly reinforce the QNP tourism product. The main disadvantages at present appear to be the basic nature of food processing technology and equipment, the lack of hygiene and quality control, and the lack of access to international supermarket chains. The province is also a potential ‘hot spot’ for avian flu and further outbreaks could damage any regional food brand it might develop. Essentially the best practice initiatives for each of these five clusters and any additional clusters involve: ï‚· Collaboration within QN province; ï‚· Collaboration between QN and other provinces; ï‚· Collaboration between QN and cluster groups in other countries; ï‚· Proactive investor attraction; ï‚· Investment joint ventures; ï‚· Investor aftercare; and ï‚· Familiarisation activities. As part of the training program five Cluster Action Teams (CATs) were formed with each group assigned a potential cluster in QNP: ï‚· CAT No. 1 - Gourmet Food: investigated raising Small Pigs, a speciality food in QNP and other parts of Vietnam. ï‚· CAT No. 2 - Building and Construction Materials: investigated the use of silica sands for glass products, particularly glassware. ï‚· CAT No. 3 - Tourism: investigated expanding the cultural heritage and ecotourism sector in QNP. ï‚· CAT No. 4 - Creative Industries: investigated development of handicrafts made of timber. ï‚· CAT No. 5 - Forestry: investigated furniture manufacturing opportunities in QNP. The key tasks completed by each CAT were: Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam xvi ï‚· Collection and analysis of data about their cluster including contacting existing businesses in that sector to enquire about the nature of current production, issues that they face in growing and expanding their business and opportunities for growth; ï‚· Undertake a SWOT analysis of the cluster and identify key issues emerging from this analysis; ï‚· Prepare a Cluster Map; ï‚· Apply the Cluster ScoreCard attributes to the cluster; ï‚· Identify three Action Agendas to be implemented for the cluster. An Action Agenda is a technique to focus on the key elements of a new project. It is essentially a one page document that can be used as a briefing paper to give to senior government officials or company executives and provides the key information required to promote a project. It aims to get you thinking about: What is the cluster going to achieve?; Where is the cluster going to locate? Why is this cluster being developed? When will the cluster action be implemented? Who will be responsible for implementation? How much will it cost to implement the action? ï‚· Prepare a powerpoint presentation of the team findings and recommendations. The work undertaken by the CATs was of a very good standard and certainly establishes a sound basis upon which to pursue the development of these five clusters in the next SEDP. Each team demonstrated a sound understanding and application of the SWOT analysis, the application of the Cluster ScoreCard and the formulation of Action Agendas for each cluster. Setting a Vision for the Future of QNP Visioning has been widely used in a planning context, and internationally accepted by the planning profession as legitimate exercises from the mid-1990s onwards. Visioning has emerged as a general requirement of integrated regional planning in many countries, including but not limited to the United Kingdom, Australia, Canada and the United States. There are many benefits in undergoing a visioning process including: ï‚· Focusing on core values and long term outcomes. The vision-making process can help break through barriers between different interest groups or local authority departments; ï‚· Involving a broad range of people in discussions about their vision for the future. This can lead to development of important networks across the community and the local authority and give people a sense of ownership; ï‚· Allowing an evaluation of past approaches and encouraging new ways of looking at the future; ï‚· Getting people to think about the long term well being of the community. The Vision Statement for QNP needs to put aside past development trends and aim to consolidate the strengths of the province and maximize its opportunities for creating a more sustainable and competitive economy. There is no specific formula for what a vision should look like. A Vision Statement can be a short statement or a more comprehensive explanation of the preferred future. The Vision Statement to be prepared for the next Socio Economic Development Plan for QNP should: Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam xvii ï‚· Be positive and use present tense language. ï‚· Be capable of attracting commitment and energizing people. ï‚· Be idealistic, ambitious and visionary, but realistic and attainable for Quang Nam Province. ï‚· Allow the reader to gain a sense of Quang Nam’s uniqueness. The vision should describe local characteristics, such as the natural environmental features that make the Province distinctive. ï‚· Incorporate beliefs and values held collectively by citizens of QNP. ï‚· Provide a focus on people and quality of life to ensure that residents of QNP have access to a range of services and infrastructure. ï‚· Look long term (10-20 years or more) but motivate short term action. It should also apply to a stated period of time. ï‚· Be easy to understand and even memorise. ï‚· Be inclusionary and indicate roles for many key stakeholders, not just the Provincial Government. The participants brain-stormed potential brands/slogans and Vision Statements for QNP. Ideas from the participants included the following: ï‚· Quang Nam – Dynamic, Creative and Reaching to the Sky ï‚· The Benefit of Investors is Quang Nam’s Benefit ï‚· Quang Nam – Enjoying the Difference ï‚· Quang Nam – Passion to Live ï‚· Quang Nam – Harmony and Friendly ï‚· Quang Nam – The Gateway of Vietnam to the World ï‚· To develop Quang Nam tourism in 2030 to become a tourism centre of the nation and the region, contributing to wealthier living, protecting the environment, conserving and developing its cultural values, ensuring social safety and security, and creating a good relationship with friends throughout the world ï‚· Quang Nam is a dynamic province with harmonious growth and development undertaken in a friendly way. People live in a safe and comfortable environment. Quang Nam develops but also preserves its cultural character and world heritage places. ï‚· Quang Nam to 2030 will become a province with strongly developed services, a dynamic and diversified economy to attract investors. Quang Nam will be the ideal destination for tourists and manage and preserve its cultural heritage and natural resource. Quang Nam will create living and working environments in a harmony with one another and in a sustainable manner. ï‚· Quang Nam is open for business! In the centre of Vietnam where people have a passion for living and working; Quang Nam is a special place where the mountains meet the sea; where lifestyles are shaped by a rich culture and heritage; and investment opportunities are diverse and dynamic. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam xviii From Vision to Reality There are various planning tools used to facilitate the achievement of a Vision Statement for a province or region. They are: ï‚· Objectives represent the desired outcome on specific issues – they are statements of intent; ï‚· Policies establish a deliberate plan of action to guide decisions and achieve a desired outcome e.g. housing policy; and ï‚· Actions clearly identify all actions necessary to achieve specified targets. In the context of QNP participants in the training program prepared a set of economic, social, environmental and governance objectives based on the ideas and suggestions discussed for a Vision Statement for the province. Objectives included: ï‚· Develop a strong, diverse, sustainable and highly competitive economy with prioritized actions. ï‚· Upgrade the quality of services and tourism. ï‚· Enhance and develop sustainable development for agriculture. ï‚· Proactively attract investment and entrepreneurs. ï‚· Train and upgrade the quality of human resources. ï‚· Strive for reducing poverty and increasing quality of life. ï‚· Reduce poverty in a sustainable manner, stabilize people’s living standards and achieve gender equity. ï‚· Promote fairness, democracy and civil society. ï‚· Create a green, clean, beautiful and sustainable environment. ï‚· Minimize industrial waste. ï‚· Increase forest coverage. ï‚· Reduce pollution of water sources. ï‚· Minimize the impacts of natural disasters and disease. ï‚· Ensure government authorities collaborate with the people. ï‚· Improve the management capacity of government agencies. ï‚· Foster a high level of political determination and leadership. ï‚· Create a dynamic, quickly responsive government sector which shows a high level of responsibility to the community. ï‚· Implement transparent governance systems, procedures and practices. The term ‘road map’ is often used in the preparation of integrated regional or provincial plans. It is a term which is also used by world leaders when thinking strategically about how to solve major national or international problems. A road map sets the way forward for implementing Actions. It seeks to: ï‚· prioritize actions; ï‚· identify key stakeholders responsible for implementing the action; ï‚· determine how the action can be funded; and Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam xix ï‚· set realistic timelines. Because planning and development involves a wide range of stakeholders including the local community, business people and investors, as well as the public and private sector workers/employees, actions will call upon these stakeholder groups to assist in the implementation of the plan. Furthermore, the prioritization of actions is critical for an Integrated Provincial Plan as it: ï‚· Allows for a more co-ordinated and efficient way of implementing actions ï‚· Guides both the public and private sectors to more effectively channel resources (capital, human, physical etc) into specific projects. ï‚· Provides certainty for both the public and private sectors in terms of the order of implementing actions so that they can budget for these actions as well as focus on other managerial, financial and resourcing efforts needed to accompany these actions. ï‚· Minimizes any potential conflicts between competing social, environmental and economic objectives, as this prioritization will indicate how these potential conflicts should be resolved. Each CAT prepared a table of actions, prioritized the actions on a scale of 1 to 5, identified who is responsible for implementing the actions and the timelines for implementation. Some groups had difficulty in prioritizing actions preferring to have most actions as a high priority. Similarly some groups could not determine which actions should be implemented first and hence the timelines for many actions had a short term horizon rather than selecting actions of highest priority as those most eligible for action in the first 5 years of an implementation program. QNP has an excellent opportunity through its upcoming planning process to position itself in the global economy, and establish a strong brand and image e.g. that QNP is really OPEN FOR BUSINESS. Clustering concepts can provide a framework for building a sustainable and competitive economy in the province. The involvement of quality MNEs in the local economy is recommended as they can provide a very effective conduit for technology transfer, as well as supply chains to global markets. QNP should explore best practice initiatives wherever possible e.g. the establishment of an international university, an east- west transport system, and eco-tourism projects in the hinterland. Each of these would reinforce the image of being open for business. There is strong international interest in facilitating Vietnam's opening out, and QNP should tap into this sentiment as much as possible - a mechanism should thus be developed to link with cluster groups in other countries in order to facilitate the growth of QNP's key industries. The course participants demonstrated a genuine aptitude for planning and clustering concepts - they have a critical role in realising the opportunities identified in this report. However virtually none has any experience of a foreign economy or culture - this is a significant constraint. It is therefore recommended that the QNP and national authorities, as well as aid agencies, consider how they might assist in ensuring each of the course participants gets such an opportunity in the next 4-5 years. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam xx A Manual on ‘How to Prepare an Integrated Provincial Plan in Vietnam’ has been prepared as a key output of this TA. The Manual builds on the work prepared in the Training Manual - Technical Assistance and Training in Provincial Planning, Quang Nam Province, Vietnam and provides further support and guidance to provincial agencies responsible for preparing the next generation of Socio Economic Development Plans (SEDP) for QNP. RECOMMENDATIONS The TA project identifies the following recommendations as a result of the work undertaken by the consultant team including the training program in Integrated Provincial Planning concepts, tools and techniques for Quang Nam Province, Vietnam. Recommendation 1: Extending the training course Undertake the training course in Integrated Provincial Planning in other provinces within the Central Region as a key component of capacity building within the provincial government sector. The course would be adapted to reflect the specific circumstances of each province and establish the foundations for an overall regional plan for the Central Region based on the concepts, tools and techniques introduced in the course as well as other planning and development concepts applicable at a regional level. Recommendation 2: Social capital The Provincial People’s Committee allocate adequate funds to undertake a detailed demographic study focused on enhancing the social capital of the province and, in so doing then prepare and implement an education and training strategy for the province. Recommendation 3: Land Administration and Management Reform The Provincial People’s Committee lobby Central Government to fast track the land administration and management reforms in QNP given that this is a very high priority in the economic development of what is currently a poor, underperforming central region province. Recommendation 4: Tourism Development A Tourism Strategy be prepared for QNP with the potential for this strategy to be expanded over time to cover the Central Region of Vietnam. The strategy is to be developed based on best practice concepts and techniques, involve a range of local, national and international businesses involved in tourism and the hospitality and leisure sectors and, outline an implementation program for improving all facets of tourism including funding sources, timelines for implementation and administrative structures. Recommendation 5: Economic Clusters Provincial People’s Committee to appoint a provincial cluster facilitator for a minimum of 3 years to foster the development of industry clusters in QNP. The facilitator would encourage inter firm industry cooperation, help develop the capacity of Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam xxi clusters to collaborate on marketing, information and business development and, provide advice on building business networks with clusters in other parts of Vietnam and the Asia Pacific Region. Recommendation 6: SEDP Team Establish a team of government professionals (some of whom were participants in the Training Program funded by the WB) responsible for preparing the next SEDP for QNP based on best practice methodologies, concepts, tools and techniques applied to integrated provincial planning. This team would be responsible for preparing the next plan by November 2009 and hence would spend 100% of their work time solely on this project. A team leader would be nominated to organise and manage the project with appropriate administrative assistance and staff resources, as required. Recommendation 7: Continued Foreign Consultant assistance in the new SEDP Engage appropriate foreign consultants to assist with the preparation of the next SEDP for QNP but only in the capacity of guiding the provincial team through the steps in the preparation of the new plan so as to achieve key milestones in that process. The consultants would not prepare the plan but rather advise the provincial team at various stages in the plan preparation. The consultants would ensure that the provincial team are implementing the steps in the plan preparation process in a competent and expeditious manner and, provide expert advice when needed. Recommendation 8: Work Program and Budget for preparing the next SEDP The provincial team is to prepare a draft work schedule and budget for the preparation of the new SEDP for discussion with the PPC of QNP and the foreign consultants. The work schedule will identify key tasks to be completed and timing, key milestones to be achieved and dates, formulation of a consultation program involving key stakeholder participation in the plan preparation and other details as discussed. A budget would be established for this important project and funding secured as a very high priority. Recommendation 9: Secure funds for next SEDP Secure funds for the preparation of the next SEDP from Central and provincial government sources and, possibly an international donor agency. Recommendation 10: Government agency collaborations Seek the full co-operation and collaboration from relevant government agencies (Central and QNP) in the collection of data and information as required by the provincial team responsible for preparing the next SEDP. The collection of data etc would be given the highest priority by these agencies given the time constraints involved in the preparation of the next SEDP which needs to be approved by Central and Provincial Government by the end of 2009. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam xxii 1 Introduction Traditionally both national and regional development planning in Vietnam has been driven by ‘top-down’ Central Government social and economic targets based on limited analytical investigation. However, with the advent of the free market economy in Vietnam since the late 1980s, vigorous global economic competitiveness and Vietnam’s membership to the World Trade Organisation (WTO), changes in national policy in Vietnam have now required a more decentralised approach to development planning based on the preparation of integrated regional development strategies. This change in policy direction requires the application of new and innovative approaches to development planning underpinned by ‘best practice’ tools and techniques. This new way of planning will more effectively manage current and future investment opportunities at the provincial and regional levels in Vietnam. In August 2007 the People’s Committee of Quang Nam Province (QNP) in Central Vietnam submitted a request to the World Bank (WB) for technical assistance in the preparation of a provincial integrated development plan using alternative approaches and methods driven by the realities of Vietnam’s market economy. The current Socio-Economic Development Plan (SEDP) for QNP is due to expire at the end of 2009 whereby the provincial government of Quang Nam will need to have a new masterplan paving the way forward for development over the next 10-15 years. Following this request, and a subsequent project identification mission to QNP by World Bank officers and experts, the World Bank prepared a TOR for Project No. P109056 - Technical Assistance and Training in Provincial Planning, Quang Nam Province (QNP), Vietnam. A copy of the TOR is attached in Appendix 1. As stated in the Aide-Memoire from the WB mission to QNP: ‘Strategic planning will allow Quang Nam’s provincial planners to assess the province’s strengths, weaknesses, threats and opportunities (SWOT Analysis). It will also enable them to articulate an economic vision for the overall development of the province that will serve as a compass for guiding regional development activities. Cluster analysis will provide the tools for provincial planners to systematically identify current industrial, agricultural and service sector specializations, and to identify emerging economic specializations. Together the SWOT analysis, the visioning and the cluster analysis will enable the province to define the appropriate set of investments, policy activities and initiatives to design an effective integrated regional development plan. Hansen Partnership Pty Ltd was awarded the project whereupon an Inception Report was completed by the consultant team in September 2008 and the training program undertaken in two stages during October and November 2008. This report is the culmination of the findings and recommendations of the project over this 3 month period noting that the training program itself involved a total of 45 participants from relevant provincial government and district level authorities in Quang Nam Province (QNP). Appendix 2 is a list of participants. It is emphasized that the method of training adopted in this Technical Assistance project was very interactive – it required individual and group tasks to be completed by participants based on the organisation of participants into five teams, nomination of a team leader for each team and regular Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 1 presentations of team activities to the whole group throughout the training program. The program ran for a total of seven days (7-9 October 2008 and 4-6 November 2008) with a ‘report back’ workshop session of all participants and other provincial government officials on 7 November 2008. The training manual, which was prepared in both English and Vietnamese, is enclosed in the form of a CD in the back cover of this report. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 2 2 New ways to plan for the future The role of regions in national economies has changed significantly in recent times as a result of globalization and economic reform. From the 1950s through to the 1970s national and provincial governments played a leading role in the development of regional and local economies. The establishment of Economic Enterprise Zones, Open Economic Zones and the like in countries such as China, Korea, Japan, Thailand and more recently in Vietnam, sought to attract foreign direct investment (FDI). The approach was largely driven by supply-side economic ideas in the belief that if governments constructed the necessary infrastructure, provided cheap industrial land and applied other fiscal/tax benefits, that companies and, especially international companies, would be attracted to regional and provincial centres. Quang Nam Province is currently implementing such an approach in its efforts to attract investment, create jobs and improve its community’s living standards. However, regions in developing countries such as Vietnam are increasingly affected by globalization and structural change. Changes to the sourcing of goods, materials and services, design, finance, production and marketing are all factors promoting greater inter-regional and international trade resulting in the development of highly specialised, highly competitive geographic clusters of industries and businesses serving national and international markets. This ‘new’ economy approach is more ‘demand-side’ where governments have a role in facilitating and supporting private sector development in response to demands generated by global market forces. Cities and regions are now the key to driving national economic development. As the responsibility for planning and delivering economic development becomes more decentralised in Asian countries such as Vietnam, it is city and provincial governments that will be expected to provide leadership and good governance practices. They will also need to become more competitive. By achieving the lowest possible transaction costs for the optimal structure of the economy now and in the future, as well as seizing opportunities to create value chains in its production of goods and services and, attract FDI as an important ingredient of stimulating economic activity, provinces like QNP will be on the path to building a more sustainable and competitive economy. An important component of becoming a more competitive province or region is building strategic infrastructure. This is not just the provision of ‘hard’ infrastructure such as roads, airports, seaports, railways, hydro power stations etc. It includes the ‘soft infrastructure’ such as higher education and research facilities, IT services, logistics management, innovation, strong capital markets etc. ‘Soft Infrastructure’ however is more than just providing higher education facilities and the like. It involves enhancing the capacity in education and training, introducing new technologies and the development of social capital through business networks and partnerships. Within this context, knowledge has become one of the most important factors needed to support economic development in open market economies. The creation of ideas, better skilled workers, more efficient production systems, better intelligence on the way the market operates and greater acceptance of change are key factors in achieving higher economic performance at the provincial and regional levels. Knowledge is developed through formal learning and through networks. For example, improved foreign language skills, information exchange and international business development are particularly relevant to the development of regional tourism – an economic development potential which provinces such as Quang Nam and other Central Region provinces are well endowed to take advantage of in terms of tourist attractions and experiences. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 3 Clearly strong and sustainable economies require a critical mix of hard and soft infrastructure if regions are to become competitive places for trade and investment. An overarching element in the desire for cities and regions to be more globally competitive is the formulation and implementation of development plans which are strategically oriented. Strategic planning is much less concerned with physical layout details and more focused on market demand and the long term provision of infrastructure and services. Strategic planning fosters an integrated multi sectoral, multi criteria approach to future growth and development – where policies and actions interact with one another to ensure that decisions about investment in development and infrastructure maximise the public benefit across a province or a region. Governments and Multinational Enterprises (MNEs) are now paying much greater attention to the need for sustainable development and cleaner industrial production systems accompanied by improved social conditions, minimal adverse environmental impacts and the use of better economic management practices. Regions that do not adopt sustainable development practices are unlikely to attract investment from foreign companies because they will not be able to sell their goods into developed economy markets unless they are certified as produced sustainably. In the case of Vietnam and other Asian countries, fostering the development of industry clusters has the potential to improve the sustainability, competitiveness, liveability and productivity of their cities and regions. Clusters now form the industrial organizational basis for economic planning and development in the 21st century. They are replacing traditional sector industry plans and initiatives which are failing to drive sustainable economic development processes. Clusters comprise industries and businesses whose operations are intrinsically linked or networked with suppliers, distributors and economic infrastructure. Clusters are responsive to the requirements of industries and businesses producing goods and services that are traded in the national and global economies. The World Bank project on Technical Assistance and Training in Provincial Planning for Quang Nam Province, Vietnam has adopted a strategic cluster based approach to development planning for the province. The training course provided many of the professionals responsible for preparing the new integrated provincial plan for Quang Nam Province with ‘best practice’ concepts, tools and techniques now applied in strategic and cluster based development planning. Figure 1 outlines the steps in the integrated provincial planning process which were encapsulated in the training program for this project. More specifically, the training program covered the following topics with a specific focus on QNP: ï‚· Training Session 1: Integrated strategic planning in a Market Economy ï‚· Training Session 2: SWOT Analysis as a tool in provincial planning ï‚· Training Sessions 3 and 4: Industry Clusters – from theory to practice ï‚· Training Session 5: QNP Cluster Action Teams (Report Back of action team findings, action agendas etc) ï‚· Training Session 6: Formulating a Vision for Quang Nam Province ï‚· Training Session 7: Formulating Objectives and Actions to achieve the Vision for QNP Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 4 figure 1 Steps in the Integrated Provincial Planning Process Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 5 It is emphasized that the TA project was not intended to be a full strategic planning exercise. Rather, the project focused on undertaking initial data analysis, the development of a rapid SWOT analysis, cluster analysis and visioning exercise for QNP. It aimed at training provincial and district agencies in how to apply contemporary planning methodology, tools and techniques for preparing an integrated provincial plan so that in 2009 these agencies can apply what they have learnt during the program in the completion of the next SEDP for QNP. To assist government agencies in incorporating the elements often addressed in the preparation of an integrated provincial development plan, and having due regard to Decree 92 which sets out the requirements for such plans, Table 1 provides guidance as to additional factors which should now be considered in this important strategic process. The next generation of SEDPs for QNP will mark a significant change in direction in how to plan for the future in a more sustainable, competitive and integrated manner. Based on the process of integrated provincial planning outlined in the training program, the next provincial development plan for QNP will also better respond to the demands and pressures of a global market economy where the ‘strengths’ of the province are consolidated, the ‘weaknesses’ are overcome, the ‘opportunities’ are realised and the ‘threats’ to these opportunities being realised are diminished. table 1 Incorporation of Integrated Provincial Planning Process into the next Socio Economic Development Plan for QNP Decree 92 - Requirements for Socio- Economic Links between SEDP and Integrated Provincial Development Plan Development Plan 1. The identification of issues to be studied and analysed, as well In relation to this first item, there are reasonably strong links as evaluating and making predictions about these issues. between the SEDP and an Integrated Provincial Plan. However, The following matters should be considered: the following is noted: ï‚· The possibility of leveraging natural and socio-economic ï‚· This first item could incorporate a vision statement, as has elements consistent with national development targets. been developed for QNP. ï‚· Forecasting the possibility of exploitation and protection of ï‚· It is important that QNP contributes to the national economy natural conditions and resources. however an Integrated Plan is less ‘targets’ based and generally seeks to develop broader principles for socio- ï‚· Forecasting population growth and distribution in association economic growth. with the requirements for socio-economic development and cultural values. ï‚· As required by the SEDP, it is very important to gain an understanding of the Province’s natural conditions and ï‚· Infrastructure systems compatible with the requirements of a resources and consider how these will be managed. higher level of development. ï‚· In addition to forecasting, data can be utilised to highlight ï‚· Current status of socio-economic development of the country trends, measure changes overtime and provide a context for and territorial regions. QNP by making comparisons between similar regions across ï‚· Impacts of local and international factors. Viet Nam. ï‚· Comparative advantages, weaknesses, opportunities and ï‚· To identify key issues an Integrated Plan will undertake a threats available and posed to the development of the country SWOT analysis to give greater consideration to the unique in the planning period. features which comprise Quang Nam. This includes considering comparative advantages, as well as the impacts of local and international factors. 2. Factual justifications of objectives, viewpoints and directions for In relation to this second item, there are reasonably strong links socio-economic development which are in alignment with the between the SEDP and an Integrated Provincial Plan. The national socio-economic development strategy. These should following is noted: include: ï‚· An Integrated Plan seeks to create objectives to support the ï‚· Economic objectives: GDP growth, total GDP, export turnover agreed vision statement for QNP. and the share of regional contribution in total GDP of the ï‚· These objectives can broadly support economic, social and country, GDP per capita, budget revenue, productivity and environment goals. The objectives can also support national competitiveness. security goals, yet that objectives do not just relate to the ï‚· Social objectives: employment growth, reduction in national agenda but are tailored to reflect the unique conditions unemployment, poverty alleviation, educational within QNP. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 6 Decree 92 - Requirements for Socio- Economic Links between SEDP and Integrated Provincial Development Plan Development Plan universalisation, population growth, proportion of skilled ï‚· The setting of objectives is also informed by data and analysis labourers in total labour force, reduction in diseases and social in and Integrated Plan. evils. ï‚· Objectives should form the basis and essentially be translated ï‚· Environmental objectives: ensuring a clean environment and into local policies. reduced environmental pollution. ï‚· National defence and security objectives: political stability, social security and order, economic development in association with national defence and security. 3. The identification of specific tasks designed to achieve ï‚· This item could incorporate the creation of action agendas. objectives set in the socio-economic development master plan. ï‚· When developing these agendas it is important to include This includes the identification of development directions for key information in relation to responsibilities, timing etc. sectors and products, with responsibilities and tasks for action defined. 4. Factual justifications for: In relation to this fourth item, there are reasonably strong links ï‚· Location of urban areas and industrial zones. between the SEDP and an Integrated Provincial Plan. The following is noted: ï‚· Development directions for rural areas. ï‚· When developing an Integrated Plan, it is critical that planners ï‚· Defining development directions for less developed socio- think strategically about planning and land use issues and economic regions and territories, and territories acting as an consider growth in an integrated way. All land decisions should engine of growth. be supported by rigorous strategic justification and analysis. ï‚· Defining solutions for narrowing down the development and ï‚· Planning could incorporate concepts relating to growing living standard gaps between regions, urban areas and rural clusters to ensure ‘best practice’ economic development in areas, and social strata. QNP. 5. An Infrastructure development plan with immediate and long- The prioritisation of infrastructure development is also a critical term requirements for socio-economic activities to take place: element of an Integrated Provincial Plan. It is important to provide ï‚· The most feasible alternative for both hard and soft infrastructure within QNP which responds to identified development and investment opportunities. This will - transportation network development include the provision of infrastructure to meet the needs of specific - telecommunication development economic clusters targeted for growth in QNP. - power transmission network and power source development - irrigation and water supply development - public welfare and social infrastructure development 6. Direction for land use planning (working out different land use To achieve an Integrated Plan it is important to ensure that scenarios based on directions for sectoral development). planners are thinking strategically about matters and considering issues in an integrated way. 7. Justifications for the list of priority projects awaiting investment The development of Economic Clusters accompanied by Action funds. Agendas could assist in providing justification for priority projects. 8. Justifications for environmental protection; identification of An Integrated Provincial Plan closely considers environmental seriously polluted territories, environmentally sensitive territories, protection as it is critical to long term economic growth. Planners and proposed solutions to protect or utilise these territories. should consider environmental problems both locally and regionally when determining appropriate management of these issues. 9. Definition of policy measures to achieve planned objectives; ï‚· An Integrated Provincial Plan will seek to highlight costs proposals of core investment projects or programmes taking into associated with projects and infrastructure and seek to find account available budget for project/programme implementation, realistic funding sources. justifications for implementation steps; proposed alternatives for ï‚· It is important that all projects are prioritised so that funding can implementation arrangement in terms of: be maximised and channelled to particular projects. ï‚· Solutions for mobilisation of investment capital. ï‚· As per the requirements of the SEDP, projects should be ï‚· Solutions for human resource training. developed that seek to mobilise investment, encourage human ï‚· Solutions for science, technology and environment issues. resource training, and develop science and technology Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 7 Decree 92 - Requirements for Socio- Economic Links between SEDP and Integrated Provincial Development Plan Development Plan ï‚· Policy solutions. solutions. ï‚· Solutions for implementation arrangement. 10. Demonstration of the socio-economic development master It is always important to promote the use of graphics and maps in plan on a map which has scale of 1/1,000,000 and scale of planning to ensure that the plan is easy to explain. 1/500,000 for key areas. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 8 3 Setting the Scene 3.1 The International Context Positioned in the South East Asian Region, Vietnam is becoming one of the key players in the growth and prosperity of this Region. The process of reform and change triggered by Doi Moi in the late 1980s has been instrumental in the emergence of Vietnam as one of the Region’s fastest developing nations. From 1990 to 1997 Vietnam experienced approximately 8% annual GDP growth and has continued this trend at around 7% from 2000 to 2005 making it the second fastest growing economy in the world at that time. The International Monetary Fund (IMF) recently projected that the Vietnamese economy would enjoy a growth rate in GDP of around 6.3% in 2008 and 5.4% in 2009. Vietnam’s economic growth is likely to be based on continued export performance, as well as strong domestic demand. The South East Asian Region, Pacific Region and Southern Region of China all play an integral role in the prosperity and modernisation of Vietnam. With acceptance into the World Trade Organization (WTO) in November 2006, Vietnam is strategically well positioned to consolidate, expand and diversify its trade activities within a global economy. figure 2 Map of South-East Asia Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 9 3.2 The National & Regional Context Quang Nam Province is located in the Central Region of Vietnam which includes the South Central Coast and the Central Highlands Sub-Regions of Vietnam. The Central Region comprises 11 Provinces: Thua Thien Hue, Da Nang, Quang Nam, Quang Ngai, Kon Tum, Binh Dinh, Gia Lai, Phu Yen, Dak Lak, Khanh Hoa, Dak Nong as shown in Figure 3. Quang Nam Province figure 3 Central Region of Vietnam The Central Region has experienced reasonably strong economic growth, particularly within its coastal and mid-land areas over recent years. The provinces within this region benefit from valuable agricultural, forest, sea/marine and mineral resources. Subsequently, significant investment has been made in oil and gas refineries and the tourism sector. The Central Region provinces are supported by larger service centres such as Da Nang City, as well as seaports and airports of varying capacity and standard. The nation’s main highway (Highway No.1) and national rail line run north south through this region with plans to duplicate the highway as an expressway under serious consideration by the central government. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 10 The Central Region provinces, whilst not enjoying the same strategic proximity to very large national markets such as in the northern and southern parts of Vietnam (that is, proximity to Hanoi and Ho Chi Minh City), will still continue to play an important role in the future development of the nation. It is anticipated that this role will strengthen and diversify in years to come. 3.2.2 Some facts about the Central Region of Vietnam ï‚· Total land area of 74,176 sq.km (23% of the whole country); ï‚· Total population of 11.8 million (14% of the whole country) in 2007; ï‚· Economic structure that is largely comprised of agriculture, forestry and aquaculture (31.6%), industry (31%) and service (37.2%)1; ï‚· Attracted approximately 10% of total FDI in Vietnam (excluding petroleum and gas projects)2 in 1988 -2007; ï‚· A diverse physiography which includes coastal seaboard frontage, flat lowlands and river estuaries, highlands and mountainous terrain; ï‚· A number of cultural heritage sites including UNESCO World Heritage Sites/Places such as Hue, Hoi An and My Son; ï‚· National borders of Laos and Cambodia and within the East-West Economic Corridor. The Investment Promotion Centre for Central Vietnam (IPC) states that the Central Region is ‘at the cross path of the country’s transportation networks.’ Whilst this may be construed to be a strategic strength of the region, it may also mean that rail and road freight travels through the region rather than generating direct economic benefits to the region itself. Conversely, this location characteristic may attract investment capital and development seeking good access to the national rail and road network. It is unclear whether or not the proximity to these transport corridors is actually a ‘value adding’ factor for the region as such, noting that several provinces outside the Central Region also offer this level of ‘accessibility’ so the competitive edge is weakened. Furthermore, the IPC identifies other features of the Central Region as attractive to investment such as: ï‚· A good balance in the economic structure of the region i.e. between agriculture, forestry and aquaculture; industry and services; ï‚· Da Nang airport being one of the three largest international airports in Vietnam, alongside several other small airports such as Ky Ha in QNP; ï‚· Many important seaports which also provide cross-sea routes for regional and international transhipment; 1 Central Vietnam – A Growing Region for Investment, Investment Promotion Centre for Central Vietnam, 2006 2 General Statistics Office of Vietnam http://www.gso.gov.vn/default_en.aspx?tabid=491 (30 Oct 2008) Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 11 ï‚· Many industrial and economic zones including Open Economic Zones such as at Chu Lai in QNP and the Dung Quat Economic Zone in Quang Ngai Province to the south; ï‚· Rich natural resources including high value seafood, silica sands, bauxite, gold, titanium, limestone, kaolin, oil and gas, as well as valuable agricultural and forest resources; ï‚· Well known tourist sites including beautiful beaches such as Nha Trang Bay, mineral water sources, and cultural heritage places; ï‚· An abundant young labour force with a 91.9% literacy rate in the Central Coastal Region. Clearly throughout the Central Region of Vietnam there are variations in the quality of infrastructure, endowment of natural resources and percentage of population engaged in the different economic sectors. These variations are probably most pronounced in the highland and mountainous areas where many of the ethnic minority communities reside and, where the livelihood is subsistence based and solely reliant on the farming of the land. Furthermore, the quality of the airports and seaports varies significantly with some of this infrastructure of limited and questionable economic value in terms of acting as key attractors to investors. The Central Region, like other regions in Vietnam, is suffering from the dilemma of too many provinces (particularly those with seaboard frontage) wanting all of the major infrastructure facilities (e.g. airports, seaports etc) in their own ‘backyard’. This dispersal of capital to construct, operate and manage these higher order facilities detracts from the provision of fewer, high quality facilities operating in the best strategic locations from the perspective of industry and investor needs. It also creates a legacy of infrastructure which is expensive to maintain and yet economically non viable to operate. These are matters which will be explored further in the SWOT and Key Issues sections of this report. 3.3 A snapshot of Quang Nam Province 3.3.1 Administrative and Geographic Characteristics QNP comprises 18 districts with Tam Ky City as the Provincial Capital. As shown in Figure 4, these districts vary in physical area and geographic composition with the poorer districts with relatively high poverty levels and high unemployment rates in the highlands and mountainous areas to the west. A total of 7 districts have direct access to National Highway No.1 and the national rail service. It is also a province of geographic contrasts. From the attractive coastline which extends for 125 km, the low lying fertile river floodplains to the east, across to the vegetated hills and mountains in the west, QNP is well endowed with waterways, wetlands, lakes, forests and sandy beaches. These important natural systems will continue to be fundamental to the future development and prosperity of the province. Accordingly, they will require good environmental management practices to ensure the protection of these attractive features which are integral to the identity of the province and its ‘sense of place.’ Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 12 Tam Ky City figure 4 The districts of Quang Nam Province 3.3.2 The people In 2007 the population of QNP was 1.489 million compared with 1.376 million in 1996. Of this total, 17% (260,100) of the population live in urban areas and 83% (1,229,169) in rural areas. Population density in 2007 was 143 persons per km2 compared with 132 persons per km2 a decade earlier. Figure 5 shows the total population levels in QNP from 1995 to 2007 (preliminary data) compared with other provinces within the Central Region. All provinces, with the exception of Dak Lak, are undergoing gradual but relatively slow growth with QNP the third largest province in terms of population during this time. figure 5 Total Population in the Provinces within the Central Region of Vietnam, 1995-2007 (preliminary) 2500.0 Ä?à Nẵng Population Growth in Central Region Provinces Quảng Nam 2000.0 Quảng Ngãi Bình Ä?ịnh Population ('000) 1500.0 Phú Yên Khánh Hoà 1000.0 Kon Tum Gia Lai 500.0 Ä?ắk Lắk Ä?ắk Nông Lâm Ä?ồng 0.0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Prel. 2007 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 13 The loss of population in Da Lak Province in 2002-2003 may be due to administrative boundary changes. The population in QNP has been growing at an average rate of 1% per annum from 1995-2007 being slightly below the average annual growth rate for Vietnam (1.4% per annum) and Da Nang (2%) during the same period3. Growth in population is due to factors such as birth rates, death rates, in and out migration movements etc. It is noted that although QNP birth and death rates are similar to those for Vietnam as a whole, ‘Quang Nam’s 1 percent annual population growth implies that 30 percent of the province’s potential population growth has moved.’4 If this is the case then QNP has a significant challenge ahead to reverse this trend. An associated concern with this situation is the potential for QNP to experience the ‘brain drain’ syndrome – where young people leave the province to seek higher education and/or higher paid jobs in other areas outside their province of birth. This highlights the need to ensure that higher education courses offered in the universities, vocational and training colleges in QNP are focused on current and future employment opportunities within the province itself. As shown in Figure 6, the annual population growth in QNP was relatively stable for the period 1995-2001, and then experienced a slight increase in average growth rates to then undergo a gradual overall decrease in growth rates since 2004. If this trend continues it could result in a negative growth rate for the province – an outcome which may adversely impact on the ability to attract investment, create more jobs and justify the necessary infrastructure underpinning development prospects and a more competitive economy. figure 6 Annual Population Increase, 1996-2007 3.5 Annual Population Increase 1996-2007 Qang Nam % Annual Increase 3.1 Viet Nam % Annual Increase 3 Da Nang % Annual Increase 2.5 2.3 2.3 1.9 1.9 2 1.8 1.9 1.9 Percentage 1.6 1.6 1.6 1.6 1.5 1.5 1.5 1.5 1.5 1.3 1.3 1.4 1.3 1.3 1.2 1.2 1.3 1.2 1.2 1.0 1.0 1.0 1.0 0.9 0.9 0.9 1 0.8 0.8 0.7 0.5 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Prel. 2007 Source: Average Population by Province, General Statistics Office of Vietnam Webpage, accessed 26 September 2008 3 On January 1, 1997, Ä?à Nẵng was separated from Quảng Nam province to become a separate municipality of Vietnam. 4 Eli Mazur, David Dapice, Vu Thanh Tu Anh, “The Chu Lai Open Economic Zone and Rural Development: Central Planning’s Laboratory for Policy and Institutional Innovationâ€?, UNDP Policy Dialogue Paper 2008/2, Ha Noi, July 2008 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 14 It is noted that the current Quang Nam Socio Economic Plan (To 2015) has, as one of its specific targets, the reduction in population growth down to 1.2 – 1.25% in 2006-2010 and then 1.15-1.2% in 2011-2015. However the graph above indicates that growth rates are already well below these targets suggesting that the rate of growth may slow even further if recent growth trends persist. As part of the preparation of the next SEDP for QNP a closer examination of the population levels is required to determine the factors influencing this slowing down in population growth and, particularly, how much of this trend is due to out-migration of people to other provinces such as Da Nang, Hanoi, HCMC etc. Whilst by far the majority of people in QNP are living in rural areas, it is anticipated that the rate of urbanisation in the province will increase as more people from the surrounding rural and mountainous areas seek jobs in nearby towns and cities. Figure 7 confirms the annual percentage growth in urban population in QNP, as well as signalling a marked reduction in this rate of growth since 2004. At present the province contains a dispersed pattern of urban centres with the two largest urban settlements in 2007 being Tam Ky (100,594 persons) and Hoi An (84,711 persons). Just as the national trend in Vietnam is for increased rates of urbanisation, it is anticipated that QNP will continue to experience pressures on its larger towns and cities to grow both physically and, in terms of total population levels. figure 7 % Annual Growth in Rural and Urban Population in Quang Nam 2000-2007 10 Urban 8.7 Rural 8 6 Percentage 4.7 4 2.4 2.1 2 1.5 1.2 1.2 1.0 0.8 0.8 0.7 0.5 0.3 -0.6 0 2000 2001 2002 2003 2004 2005 2006 Prel. 2007 -2 Source: Average Population by Residence, Quang Nam Statistical Year Book 2007 It is evident from visits to QNP that the urbanisation process is strongly favouring the coastal strip extending from the Chu Lai Open Economic Zone in the south to Hoi An to the north with National Highway No.1 operating as the major transport corridor servicing this coastal area, as well as connecting people and goods to the neighbouring provinces. This overwhelming linear pattern of urban development straddling the highway is clearly impacting on the functionality, efficiency and safety of this important road link, as well as accommodating increased numbers of people and businesses within land which is subject to flooding, as well as prone to typhoons off the South China Sea. As importantly, this strong preference for development to concentrate within the coastal strip is detracting from much needed urban growth in the smaller towns in the hinterland. The coastal strip is pulling investment opportunities away from the Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 15 midland and highland areas causing further disparities in income levels, access to jobs and improved living conditions. Potential exists for small towns in these inland areas to function as ‘satellite’ locations for new economic development and business investment linked to agriculture, forestry and aquaculture sectors, as well as other sectors which are relatively ‘foot- loose’ but which would generate jobs close to rural communities. Overall, some key challenges for QNP to be addressed in the next SEDP will be specific policies and programs ensuring that positive population growth is maintained, accompanied by increased rates of urbanisation, reduced population levels in the rural areas and growth in all urban centres, including the smaller centres in the coastal hinterland. It will be particularly critical for QNP to retain, educate and attract human capital able to contribute to the Province’s growing economy. 3.3.3 The economy QNP has been experiencing relatively high economic growth (an annual average growth rate of 9.3% since 2000) and yet its actual GDP per capita remains significantly lower (USD270-345, 2007 data) than the average for Vietnam (USD818). The poverty incidence in QNP is also very high (30.6% of total population) in comparison with the national average (19.5%). As shown in Figure 8, the local economy of Quang Nam is still largely engaged in agricultural activities (67.4%). However in 2007 the Agricultural sector provided 26% of the GDP, with Industry and Services accounting for 38% and 36% of the GDP respectively. figure 8 Quang Nam % Change in Structure of GDP 2000-2007 Agriculture, forestry and fishing 45 Industry and construction 42 40 Services 40 38 38 36 35 36 35 36 34 35 34 35 33 33 33 33 Percentage 32 30 31 30 28 29 27 26 25 25 20 15 10 5 0 2000 2001 2002 2003 2004 2005 2006 Prel. 2007 It will be important that the economy of QNP can continue to diversify and expand and, an increasing number of persons can be employed within the industry, construction sectors as well as the very important service sector. The management of Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 16 this transition from an agrarian economy to a more post industrialised economy will be a critical challenge for QNP, and it will be important for the province to offer a skilled labour force to meet the needs of this changing economy in the years ahead. As indicated in Figure 9, a high proportion of the existing workforce is in the agriculture, forestry and fishing sector and conversely, the very low proportion in the service sector. figure 9 Employment Sectors in Quang Nam 2007 Employment Sectors in Quang Nam 2007 80 70 67.4 60 50 Percentage 40 30 20 9.1 10 7.2 3.0 3.2 3.2 0.5 1.5 2.0 0.3 0.9 0.6 0.1 0 Agriculture Forestry and Fishing Mining Manufacturing Production Distribution and electricity, gas hot water, steam and air conditioner Water supply, management and treatment of garbage and waste water Construction Wholesale, retail trade and motor cycles Transport, storage and communications Stay and living services Information and communications Finance and banking insurance activities Property Business Science and technology Administrative activities and support services Public administration and defence compulsory social security Education and training Health and social work Recreational, culture and sporting activities Other services Private households with employed persons Activities of international organisation bodies At present the economy of QNP does not offer a highly educated and skilled workforce. As indicated in Table 2, QNP is similar to all of Viet Nam in the three lowest skill levels, however its proportion of workers within the three highest skill levels are below the national figures and well below those of Da Nang. In QNP only 13% of workers finished high school compared with 18% in Viet Nam and 38% in Da Nang. Skill levels of the QNP workforce are well below those of Vietnam as a whole. Interestingly, QNP secondary school enrolments relative to total population are about the same as in Da Nang (3.8% and Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 17 3.6% respectively). Factors such as low demand for jobs and higher paid and better quality jobs being offered outside the province may explain the lack of skilled workers in the current labour force. This will be a key challenge for QNP as an educated population is generally associated with economic growth and sustained prosperity. table 2 Qualifications of the workforce in Quang Nam, Vietnam and Da Nang Qualifications Quang Nam Viet Nam Da Nang College/University 3% 4% 14% Vocational Secondary 3% 4% 5% Skilled w/ certificate 1% 3% 7% Skilled w/o certificate 3% 3% 2% Elementary Apprentice 7% 7% 14% Unskilled worker 83% 79% 58% Source: The Chu Lai Open Economic Zone and Rural Development: Central Planning's Laboratory for Policy and Institutional Innovation, UNDP Policy Dialogue Paper 2008/2 Ha Noi, July 2008, Page 26 As part of continuing reforms initiated by the central government, QNP was awarded the first Open Economic Zone (Chu Lai Open Economic Zone – CLOEZ)) in Vietnam in 2003. With an area of 32,400 hectares, the CLOEZ was established as ‘Vietnam’s 21st century laboratory of policy experimentation and institutional innovation.’ The masterplan for Chu Lai is shown in Figure 10. To date, this Open Economic Zone has not attracted the levels of Foreign Direct Investment (FDI) that were anticipated. Despite the generous incentives offered to investors to locate manufacturing and other industrial activities, no large scale international investments have yet been established in the Zone. The relatively few factories that have located in the zone have generated just over 1,000 jobs and around USD1.8 billion in total investment. Chu Lai Truong Hai Automobile complex is the single largest industry in the zone producing trucks, buses and cars mainly for the domestic market. Recent evaluations of the CLOEZ by international and national experts have highlighted a range of problems hindering the ability of this zone to attract both domestic and international industries and businesses5. These include factors pertaining to the size and composition of the management board (including its advisory role to the central government), the pre- occupation with infrastructure investment, the burdens of informal charges, a lack of transparency in administrative decisions, a lack of skilled labour, and the exclusive focus on attracting foreign investment rather than also seeking to attract domestic investment. The lack of a foreign strategic partner to facilitate land development, governance and marketing of the CLOEZ has also been identified as impacting on the economic performance of the zone. 5 Ibid, Eli Mazur, David Dapice, Vu Thanh Tu Anh Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 18 figure 10 Chu Lai Open Economic Zone Master Plan Source: Chu Lai Open Economic Zone Brochure prepared by the COEZ Authority Table 3 shows that QNP receives less than 1% of the registered FDI capital in Vietnam, while Ha Noi and HCMC receive 15% and 20% respectively. On a per capita basis QNP is attracting half the FDI than for Vietnam as a whole - that is $1169.65 to $514.97 per head respectively. Most of the FDI in QNP has been in tourism and natural resource based industries such as the mining and export of sand. However, it is becoming increasingly evident in provinces such as Quang Nam that its future economic prosperity and wellbeing will not be driven solely by FDI. As acknowledged in the UNDP policy dialogue paper prepared by Eli Mazur et al: ‘The geography of Quang Nam makes it harder for the province to serve as a supplier of major local markets, and shipping out of Da Nang or the provincial port is expensive compared to freight out of HCMC.’ Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 19 table 3 FDI for Vietnam and selected Provinces, 1988-2007 Registered capital (Mill. USD)(*) of which: Charter capital Number of projects Total of which Total Foreign side Vietnam side Viet Nam 9810 99596.2 43129.0 36413.7 6715.3 Hà Ná»™i 1183 15085.6 7297.7 5616.5 1681.2 Hải Phòng 321 3188.1 1348.4 1048.6 299.8 South Central Coast 414 8349.3 3719.1 3039.4 679.7 Ä?à Nẵng 148 2478.0 1054.9 941.5 113.4 Quảng Nam 57 766.8 350.1 287.5 62.6 Bình DÆ°Æ¡ng 1607 8958.1 3606.3 3392.0 214.3 TP. Hồ Chí Minh 2816 20174.2 8601.4 6790.0 1811.4 (*) including supplementary capital to licensed projects in previous years There is a need to encourage more domestic private sector investment which entices rural households off the land and into industries and other businesses which will play a critical role in the economic growth of the province. Given that more than 70% of Quang Nam’s registered domestic private enterprises are currently in local industrial zones, and that business informality is substantial, serious consideration will need to be given as to how to plan for and assist these small and medium sized enterprises (SMEs). In particular, issues such as land acquisition and access to capital will be important factors influencing the future growth of SMEs in QNP. Over the last 10–15 years the tourism industry in QNP has expanded significantly with more than 1.5 million visitors, the majority of whom are Vietnamese but with the number of international visitors increasing. This sector is experiencing annual growth of approximately 20% being the single most important non agricultural activity in QNP. Beautiful sandy beaches, two UNESCO World Heritage Sites, waterfalls, forests and waterways are some of the attractions offered within the province. There is substantial potential to continue to attract ‘high-end’ tourist developments, as well as to appeal to budget conscious visitors and adventure seekers. Cultural tourism and ecotourism are, in some respects, still in their infancy in terms of the range of experiences which could be offered to visitors but they represent jobs, income and prosperity. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 20 figure 12 Traditional ethnic minority architecture figure 11 Hoi An Ancient Town figure 13 Handicrafts made in QNP figure 14 High End Tourist Resorts near Hoi An Overall, it is apparent that QNP’s economy is growing and diversifying. Nevertheless, its economic performance within the context of some of the other provinces in the Central Region of Vietnam and, in terms of the nation as a whole, is lagging. It continues to be characterised by a relatively poor, low skilled population with low levels of FDI and a continuing over- representation of GDP and workforce in the agriculture, forestry and fishing sector. It is vital that the next SEDP for QNP focuses on promoting the strengths and opportunities of the province, accompanied by policies and actions to transform the province into a more prosperous, sustainable and attractive place to live, work and invest. This will require a detailed SWOT Analysis and identification of Key Issues facing the Province. This next generation of SEDP needs to position QNP within the Vietnamese economy as it develops into a middle income nation. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 21 3.4 How competitive is QNP? Three theories of competitiveness have shaped much of the thinking on national and local economic development in open economies since the 1960s. They are outlined below. 3.4.1 Comparative Advantage Comparative advantage is based on the principle whereby individuals or regions produce those goods or services for which they have relative advantage, usually has the result of endowed natural resources, labour or capital. Comparative advantage tends to lead to specialization. After WWII the usual strategy was to develop national industries in regions that would export specialized goods and services to international markets. Economic planning policies were directed towards achieving comparative advantage by focusing on lowest production costs (labour, materials, energy, taxes and infrastructure) relative to competitors. However, the full costs of production were often not accounted for. It was understood that a region might specialize in an activity for which it had no absolute industry cost advantage, but tariffs, incentive measures and infrastructure subsidies would be used as a means to advance comparative advantage. 3.4.2 Competitive Advantage During the 1970s and 80s, the focus of competitiveness moved towards a paradigm of competitive advantage. Competitive advantage has an emphasis on efficiencies in the means of production, with a focus on ‘value factors’ related to performance and quality. Value factors relate to resource, capital and labour efficiencies and application of advanced technologies that lead to increased productivity were considered important factors of competitive advantage. However, quality of life, human and social capitals are now considered important to enhance the productivity, innovation and competencies of regional workforces. 3.4.3 Collaborative Advantage The squeezing of margins and increasing competitiveness of business resulting from national competition policies and globalisation is bringing about a change in the way corporations and firms do business. Rival firms and corporations are actively seeking collaboration through alliances, partnerships and other forms of cooperation to explore opportunities for winning and expanding business. This has led to the emergence of a new theory of competitiveness based on ‘collaborative advantage’. Collaborative advantage relies on greater integration, co-operation and partnerships between business, governments and communities. The elements of competitiveness related to comparative advantage focus strongly on production inputs such as labour, infrastructure, material costs and taxation. In the classic economic sense, these are land, labour and capital. The focus of competitiveness for competitive advantage is on strategy and factor costs of production, such as resource efficiency and organisation effectiveness. Many elements of competitive advantage relate to elements of endogenous growth theory, such as a focus on the development of technologies and human capital. The elements of collaborative advantage are the ‘smart’ elements of strategy, organisational arrangements and elements of production. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 22 Key factors of competitiveness evaluated by the approaches are summarised in Table 4 below. table 4 Elements of Comparative, Competitive and Collaborative Advantage Comparative Advantage Competitive Advantage Collaborative Advantage Land Costs R&D Networks Infrastructure Technology Industry Clusters Taxation Regulation Strategic Alliances Labour Costs Labour Productivity Public/Private Partnerships Proximity to Raw Materials Skills Base Inter-Modalities Transport Core Competencies Trust and Empowerment Cost of Capital Quality of Life Openness Governance Location to Markets Social Capital Smart Systems Economies of Scale Economies of Scope 3.4.4 Competitive Indexes There is no single factor that makes a region competitive. Competitiveness is a result of unique sets and combinations of factors operating collectively in a region to support production and other capital development processes. Some factors, such as location or uniqueness of product, are increasingly important drivers of competitiveness. However, these factors are influenced by other factors in the competitiveness equation. Analytical techniques have been developed to explain the importance of the relationships between the various factors that contribute to and continually build upon the competitiveness of industries and firms. The Vietnam Provincial Competitiveness Index (VPCI) was applied in a USAID survey of the provincial competitiveness of provinces in Vietnam in 2005. The Provincial Competitive Index (PCI) assesses and ranks provinces by their regulatory environments for private sector development. In 2005 VPCI covered 42 provinces, accounting for a total of 87% of the national GDP. The survey measured nine primary indicators of competitiveness made up of 41 sub indicators. The nine primary indicators are: 1. Entry Costs: a measure of the time it takes firms to register, acquire land, and receive all necessary licenses start business 2. Access to Land: a measure of whether firms possess their official land-use rights certificate, whether they have enough land for business expansion requirements, and the effective price of land in the province, taking due consideration of the demand and supply in the provinces, and the quality of industrial zone policies. 3. Transparency and Access to Information: a measure of whether firms have access to the proper planning and legal documents necessary to run their business; whether those documents are equitably available; whether the business utility of the provincial web page. 4. Time Costs and Regulatory Compliance: a measure of how much time firms waste on bureaucratic compliance as well as how often and how long firms must shut down their operations for inspections by local regulatory agencies. 5. Informal Charges: a measure of how much firms pay in informal charges and how much of an obstacle those extra fees pose for their business operations Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 23 6. Implementation of Policies and Consistent Applications across Provincial Sub-Agencies: a measure of the coordination between central and provincial governments, as well as the consistent application of central policies across provincial sub-agencies. 7. State Sector Favouritism: a measure of the bias of provincial governments towards state owned enterprise (SOES) in terms of incentives, policy and access to capital 8. Proactive Provincial Leadership: a measure of the creativity and cleverness of provinces in both implementing central policy and designing their own initiatives for private sector development. 9. Private Sector Development Policies: a measure of provincial policies and private sector trade promotion, promotion of regulatory information to firms, business partner matchmaking, and capacity training to improve the quality of labour in the province. From the analysis, QNP ranked 16th out of the 42 provinces in Vietnam but when examining the competitiveness ranking based on the criteria for the province itself a number of weaknesses emerged as shown in Table 5. table 5 Competitiveness Ranking of Quang Nam Province PCI 2006 Sub Index Quang Nam Province Ranking (of 64) Implementation of Policies and Consistent Applications across 3rd Provincial Sub-Agencies Proactive Provincial Leadership 7th State Sector Favouritism 20th Labour Training 20th Entry Costs and Regulatory Compliance 24th Private Sector Development Policies 26th Access to Land 48th Time Costs 38th Transparency and Access to Information 52nd Informal Charges 58th While QNP is performing well on the implementation of Central Government policies and proactive leadership, it is a poor performer on Access to Land, Transparency and Access to Information and Informal Charges. These are critical factors impacting on investment opportunities especially FDI. The next SEDP needs to address these factors if QNP is to become more competitive in a global market economy. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 24 4 SWOT Analysis 4.1 What is SWOT Analysis? SWOT analysis primarily involves recording quantitative and qualitative information about the strengths, weaknesses, opportunities and threats affecting a region’s or province’s economy. The purpose of the analysis is to form an overall position and direction for the management of economic development. It is used extensively as part of strategic planning analysis for business, organizational, regional and other forms of planning for development. The process involves groups in an organization assessing the strengths, weaknesses, opportunities and threats to be taken into consideration in formulating and executing strategic plans and business operations. By identifying the Strengths, Weaknesses, Opportunities and Threats of the current economy and the factors which impact on the economy’s performance, scope exists to modify or adapt the economy so as to: ï‚· Maintain and reinforce the Strengths ï‚· Diminish and remove the Weaknesses ï‚· Maximise and exploit the Opportunities ï‚· Avoid the Threats 4.2 SWOT for QNP During Training Session 2 the participants broke into five working groups and undertook a SWOT analysis for QNP. A summary of the strengths, weakness, opportunities and threats that were identified by the participants is in Table 6. Whilst participants could readily identify the Strengths, Weaknesses and Opportunities for future growth and development in QNP, some of them struggled with the identification of Threats seeing threats as weaknesses when, in fact, they are matters which could prevent a province from realising its Opportunities. Nevertheless, the SWOT analysis provides an excellent starting point in the preparation of an integrated provincial plan for QNP. Further work needs to be undertaken on the SWOT Analysis involving not only government agencies but also representatives from the investment/ developer community. Although there will be factors common to both the public and private sectors in terms of a SWOT Analysis, there will also be matters which the private sector will identify which either the public sector agencies are unaware of, or wish to ignore for whatever reasons. A SWOT Analysis is an excellent tool for engaging all key stakeholders in the economic future of QNP, with a need to involve a wide range of groups from both the urban and rural areas of the province. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 25 table 6 SWOT for QNP Strengths Weakness Opportunities Threats ï‚· Ports, airports, near Da ï‚· Infrastructure is not well ï‚· WTO membership ï‚· Natural disasters Nang airport, near Dung developed creates new trade and deterring investment Quat EZ ï‚· High percentage of poor investment opportunities activity ï‚· 2 world heritage sites households ï‚· Open and complete ï‚· Impacts of WTO may ï‚· Long coastal area ï‚· Large areas with policies in operation create more competition stretching 125 km mountains which are ï‚· Economic zones can be in global markets ï‚· QNP has a large land difficult to access and developed as have ample ï‚· Continued outward area steep terrain capacity movement of skilled ï‚· No champion to ï‚· Located in the East West labour from QNP to other ï‚· Rich natural resources provinces/ regions encourage investment Economic Corridor ï‚· Contains main economic ï‚· Failure of government to focal zone - Chu Lai ï‚· No collaboration between ï‚· Located in the corridor entrepreneurs from Da Nang to Dung implement policies to Open Economic Zone encourage talented ï‚· Labour force not trained, Quat ï‚· Cheap, large and strong people to stay in QNP labour force and has a low skill level ï‚· Develop further the (3% graduates) agricultural and economic ï‚· Inappropriate ï‚· QN has a hospital products development creating ï‚· Low quality public environmental problems ï‚· Highway No. 1 and services, such as ï‚· Develop tourism and National Railway which deter investors, education and health services. The long especially in the tourism ï‚· Border gate with Laos ï‚· Poverty rate is high coastal 125 km can sector ï‚· Forest coverage >30% attract tourism projects. ï‚· Percentage of those Mountainous areas could ï‚· Inability to quickly and large areas for engaged in agriculture address complex conservation have eco tourism sector is high i.e. large opportunities administrative procedures ï‚· Good leadership proportion of population and other hindrances to will require retraining ï‚· Develop energy industry investment ï‚· High education levels especially hydro power ï‚· Strategic location at the ï‚· Agricultural products are due to mountainous ï‚· Growing gap between centre of the nation generally of low value terrain rich and poor resulting in ï‚· Inappropriate sectoral social unrest, increased ï‚· Traditional villages are ï‚· Forests and natural crime etc developed strongly structure resources are largely ï‚· Challenging topography unused but could be of ï‚· Failure of Government to high value address land acquisition ï‚· Area is prone to natural issues as well as land disasters eg flooding, ï‚· International collaboration reforms in the rural areas typhoons and inter regional (lots too small and not ï‚· Investment promotion is collaboration future viable) poor business investments ï‚· Failure to introduce ï‚· Production technology is ï‚· Port, airport, border gates programs for backward and small scale and two World Heritage capital/finance for small Sites and medium sized ï‚· Lack of good reliable IT access ï‚· Expressway is being enterprises and poor constructed to facilitate households ï‚· Policies alone do not movement of goods and attract investment ï‚· Central Government services shifts its capital funds to ï‚· Complex administrative ï‚· IT can develop quickly. another province procedures ï‚· Inability to attract middle ï‚· Small scale of economy level managers with high with very few foreign standard of expertise and investors especially in knowledge manufacturing and industry Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 26 In considering some of the distinctive features or Strengths of QNP which were often mentioned throughout the training program the following are noteworthy: ï‚· The province is made up of hard working people; ï‚· It contains Hoi An - a popular destination for both investors and visitors to Vietnam; ï‚· QNP is in close proximity to the very progressive Da Nang – the third largest city in Vietnam; ï‚· The province offers spectacular scenery with limestone outcrops, a sandy coastline and lush farmland set against a mountainous forested backdrop. Some Weaknesses not identified by participants but clearly evident in QNP include: ï‚· The lack of east-west connectivity between the urban areas located within the coastal strip/ Highway No.1 corridor and the mountainous areas; ï‚· An over reliance on Central Government investment, particularly for infrastructure improvements; ï‚· Limited FDI attraction to date; ï‚· Outward migration of people seeking jobs and a higher standard of living. Quang Nam’s Opportunities are numerous and also include the following: ï‚· Developing the higher education sector to meet needs of local employers, particularly in the tourism industry; ï‚· Potential to ‘value add’ in the supply chains of products, especially primary products; ï‚· Establish networks and partnerships between the public and private sectors in future business transactions and investment decisions; ï‚· Encourage growth of urban centres in the hinterland accompanied by opportunities for SMEs which can offer jobs to rural households; ï‚· Develop greater collaboration with administrators of Da Nang and other Central Region provincial governments; ï‚· Develop alliances with cluster groups in other nations as part of best practice aid, investment and trade development; ï‚· Build a bridge to the south of Hoi An to open up additional tourism opportunities along the coastline of QNP; ï‚· Relocate Da Nang Airport to QNP (close to Hoi An) and develop a stronger tourist focus in and around Hoi An. Additional Threats for the province relate, in part, to the following: ï‚· A slowing down in much needed reforms in the administration and management of urban and rural land; ï‚· The need to avoid epidemics such as avian flu; ï‚· The need for better environmental protection and management practices as a key to building a sustainable economy. Global threats were not mentioned by the participants other than the issue of competition from global players. However, real threats include instability of world markets, and the impact of climate change. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 27 4.3 Multi- Sectoral Analysis for QNP A reason for the failure of socio-economic master planning in Vietnam has been the tendency by planners to focus on sector strategies without sufficient consideration of fostering multi-sector industry inter-dependencies. These interdependencies are an important part of local supply chain networks. Weaknesses in key elements of local supply chain networks (for example, capital markets, weak governance) undermine the competitiveness of local economies and their ability to develop. Various tools, such as input output and supply chain analysis, have been developed to model or describe the multi-sector transactions which occur in regional economies. Another tool often used to supplement the more broad based SWOT Analysis is a Multi-Sector Analysis (MSA). This tool offers policymakers a means of progressing towards multiple objectives which cannot be measured by single criterion. MSA uses a simple matrix table (see Table 7) in which scores of the relative strengths/weaknesses of competitiveness criteria against different industry sectors are entered. Different data techniques (surveys, focus groups) are used to derive the scores for the matrix. The competitive factors (C 1 ..Cn) are listed in the first column and industry sectors (I1 .. In) in columns across the table. The competitiveness value for each cell in the table is determined by a focus or industry group of experts using an assessment system scale of 0-5. The average sum of the score values across the page gives a measure of the strength of different competitive attributes. The average column scores provide a measure of the competitive attributes of sector industries. table 7 The MSA Conceptual Framework Matrix Industry Sectors Evaluation Criteria Is1 Is2 Isn ï?“ X 0 1 0 1 Y 1 3 0 4 Z 0 0 2 2 ï?“ 1 4 2 The matrix provides a picture of the relationship between competitive attributes and industries. MSA identifies relative strengths and weaknesses of competitiveness factors, risks and the economic development potential of different industry sectors which make up a region’s or province’s economy. 4.3.1 Multi sector analysis for QNP The training program participants completed an MSA for QNP and a summary of the results is included in Table 8. Further analysis should be undertaken on these results to gain an understanding of the strong industries in the Province, and industries that require greater investment. Moreover, this analysis will allow for Provincial officials to have a greater understanding of the key issues facing the Province. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 28 table 8 MSA for QNP by participants in the training program Education and Training Government Services Mining and Resource Telecommunications Community Services Tourism and Leisure Capital Performance Domestic Services Business Services Financial Services Food Processing Manufacturing Public Utilities Capital Indicators Construction Agriculture Transport Materials Forestry Trading Fishing FINANCIAL 3 3.57 3.86 2.57 2.29 3.57 2.29 2.43 3.14 3.29 2.57 2.43 2.71 1.43 1.86 3.14 4.43 2.57 2.84 Revenue generation 2 4 4 2 1 4 1 1 4 3 2 3 1 1 1 3 4 3 2.44 Investment attractiveness 2 3 3 3 2 3 1 3 3 3 3 3 3 1 1 3 5 2 2.61 Access to credit 4 3 4 1 2 3 4 2 2 4 2 1 2 2 2 4 4 2 2.67 Capital retention and reinvestment 4 3 4 1 2 3 4 2 2 4 2 1 2 2 2 4 4 2 2.67 Ownership of production 2 3 2 3 2 3 3 2 3 2 4 3 3 2 2 3 4 2 2.67 Market development 5 4 5 4 5 4 2 5 5 2 1 2 5 1 4 2 5 5 3.67 Revenue generation 2 5 5 4 2 5 1 2 3 5 4 4 3 1 1 3 5 2 3.17 PHYSICAL 2.4 2 3 2 2.6 2.4 2.2 3 3 2.6 3.8 3.6 3 2.2 3 3.6 4 1.8 2.79 Public infrastructure Availability of Facilities 3 2 3 2 2 3 3 3 3 5 4 4 3 3 3 4 4 1 3.06 Quality of Facilities 3 2 3 2 2 3 3 3 3 3 4 4 3 3 3 4 4 1 2.94 Private infrastructure Buildings & facilities 2 2 3 2 3 2 1 3 3 1 4 3 3 1 3 3 4 2 2.50 \Machinery & equipment 2 2 3 2 3 2 1 3 3 1 4 3 3 1 3 3 4 2 2.50 Telecommunications services 2 2 3 2 3 2 3 3 3 3 3 4 3 3 3 4 4 3 2.94 NATURAL 3 3.2 2.6 2.2 2.4 2.6 2.6 2.4 1.75 2.6 3.667 3 2.4 3 2.4 2.8 3.2 1.75 2.64 Land conservation 3 3 2 3 2 3 2 2 1 3 4 3 1 3 2 3 4 2 2.56 Water conservation 3 3 2 2 2 3 3 3 2 2 3 3 3 3 2 2 3 1 2.50 Air quality 3 4 4 2 2 2 3 2 2 4 2 3 2 3 3 2.73 Energy conservation 3 3 2 2 3 3 2 2 1 3 3 3 3 3 3 3 2 2.59 Sustainability 3 3 3 2 3 2 3 3 3 3 3 3 3 3 3 3 2 2.82 HUMAN 1.83 1.83 1.83 2.00 2.50 2.67 2.67 2.50 2.33 2.50 3.00 2.83 2.50 2.67 2.67 2.67 3.67 1.67 2.46 Education and Training 2 2 2 1 3 3 3 3 2 2 3 3 2 3 2 2 4 1 2.39 Labour markets 1 1 1 2 2 2 2 2 2 3 3 3 2 2 2 2 3 1 2.00 Leadership 2 2 2 2 2 3 3 3 3 3 3 2 2 2 3 3 4 2 2.56 Entrepreneurship 1 1 1 2 2 2 2 2 2 2 3 3 3 3 3 3 4 2 2.28 Business networks 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 4 2 3.00 Governance 2 2 2 2 3 3 3 2 2 2 3 3 3 3 3 3 3 2 2.56 TECHNOLOGY 3.2 2.8 3.0 2.8 3.0 3.2 3.3 3.3 2.8 3.2 4.0 3.7 2.8 3.0 2.7 2.8 2.8 2.2 3.04 Research and development 3.0 2.7 3.0 3.0 3.0 3.3 3.3 3.3 3.0 3.3 4.0 3.7 3.0 3.0 3.0 3.0 3.0 2.3 3.11 Application of advanced technology 3.3 3.0 3.0 2.7 3.0 3.0 3.3 3.3 2.7 3.0 4.0 3.7 2.7 3.0 2.3 2.7 2.7 2.0 2.96 Total for Each Column 2.49 2.41 2.50 2.18 2.57 2.66 2.63 2.71 2.43 2.65 3.51 3.19 2.64 2.70 2.67 2.95 3.49 1.80 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 29 4.3.2 Analysis of Competitive Attributes A multi-sector analysis was also undertaken by the participants of Quang Nam Province to assess the competitiveness of the province’s capital stocks (finance, resources, ethnology and infrastructure) which support activities in a local economy. The participants worked in groups to assess competitiveness scores for 25 capital stock elements supporting 24 sectors of the provincial economy. The analysis is reported below. The results identified areas of weak capital stock formation which are constraining the development of the province’s economy – especially the growth of new industry clusters. The multi-sector analysis of competitive attributes (see Figure 15) indicates significant weaknesses in some elements of the province’s capital stock. An average score of 3 is considered necessary for an attribute to be sufficiently competitive to support local firms and factories involved in exporting in the national economy. A score of 4 is considered necessary for firms involved in international exports. Of the 25 attributes of competitiveness measured by the group, only four (market development, the availability of public facilities, business networks, research and development) rank as being nationally competitive. Several attributes - revenue raising capacity, access to skilled labour and entrepreneurship - are weak. The competitiveness of these capital attributes is important, and significant effort will be required by the provincial government and local firms working in partnership to improve these elements. All elements of capital stock of the province need further enhancement, especially in those sectors of the QNP economy which have been identified to support the development of industry clusters. 4.3.3 Industry Sector Competitiveness The most competitive industry sectors are telecommunications, financial services and tourism and leisure services (See Figure 16). The competitiveness of the Information, Computer & Telecommunications (ICT) sector has improved significantly in all provinces in recent years. The competitiveness or the tourism and leisure industry is expected because of the expansion of the hotel industry between Da Nang and Hoi An. The competitiveness of the financial services sector is explained by the high level of capital investment secured from central government in recent years to support the development of Tam Ky and the nearby Special Enterprise Zone. Sectors of the base economy such as agriculture and fishing are competitively weak; however, they have potential for development, provided production and supply chain capacity can be improved. The analysis suggests the capital strength in sectors such as trading, business services and transport need improvement to develop a nationally competitive export sector for agriculture, forestry and fishing. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 30 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 Inv Reven FINA es t me ue ge NCIAL Cap n   2.84 ital nt a ttra eratio  ret n 2.44 ent c ti v io Acce en 2.61 Ow n and s s t o c es s ner  r r sh einve edit Ma ip of p s tmen rke rod t Rev t deve uction lo   2.67 2.67 2.67 e nu e g p men t 3.67 ene Pu rati o 3.17 Ava blic in PHYSI n  ilab fras CAL 2.79 ilit tru Qu y of F ct ure a a figure 15 Competitiveness of Capital Assets Priv lity o cilit ie s 3.06 ate f Fac  in ili 2.94 \M Bu ildin fra str t ies Tel achin gs & uctu eco r mm ery &   facilit e un i eq u ies cat ion ipmen t 2.50 2.50 s se rv Lan NA ices 2.94 d T Wa  cons URAL   2.64 ter erv  con a 2.56 s er tion Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam Ene vat 2.50 rgy Air qu ion   co nse ality   2.73 Sus rvatio tain n 2.59 Edu abi cat lit y H 2.82 ion  an UMA 2.46 Lab d Trai N  our n 2.39  ma ing rke ts 2.00 Ent Lead re e Bu s prene rship 2.56 ine ss n u rship e 2.28 App R Gov twork e s 3.00 lica esea r tion ch  TE CH rnanc e  2.56  of  and NO adv  d L 3.04 a nc evelo OGY  ed  pm tec e 3.11 hno nt  log y  2.96 31 figure 16 Capital Competitiveness of Industry Sectors Capital Competitiveness of Industry Sectors 4.00 3.51 3.49 3.50 3.19 2.95 3.00 2.71 2.64 2.70 2.67 2.49 2.41 2.50 2.57 2.66 2.63 2.65 2.43 2.50 2.18 2.00 1.80 1.50 1.00 0.50 0.00   t  n  y it y ice s g re ng es c  U n g s g ns tic ure or e n ices s ng str s  Pr als in ic e io sin C o li t ie ltu ic e an rvic hi tio ri sp ad ct ni v re i is rv tu er es Fis v u rv er tru ai an Le ca Tr er ti Fo   Se   Se ric ac at oc Bu l Se t  S ur d Tr Fin u n i Do n d   Tr s S ns Ag uf  M bli cia Go nes an m  a ce es un od m Pu ism om M an n  ur m si rn m Fo io so m lec ve at Re Co To Te uc d  Ed n g a in in M Overall the results of the MSA indicate there are significant capital stock weaknesses and a general lack of competitiveness in capital stock in all but three sectors of the economy. The analysis provides a useful insight into which attributes of capital stock development the provincial government and business sectors must focus on developing to develop the economy. The results of the analysis also provided useful insights into the reasons why the economy ranks 16th in the national provincial competitiveness study. Transaction costs for business remain high in the region because of poor infrastructure, transport services, skilled labour shortages, and cost of doing business with government. The province remains heavily dependent on the national government to support the development of the economy. This does not provide a strong basis for the attraction of private and foreign investment capital in the future. In the prevailing global and national economic climate, the province will need to significantly enhance the competitiveness of its capital stock to attract private sector investment once the current economic crisis has subsided. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 32 5 Key Issues Once the SWOT Analysis was complete a list of Key Issues facing QNP was identified and discussed. These issues need to recognise that the provincial planning process involves social, economic and environmental considerations as the cornerstones of a strong, sustainable and robust economy for QNP. Much of the discussion in the training program focused on the economic issues facing the province. However it is clear that development decisions invariably have social and environmental consequences (be they benefits or disbenefits). Therefore strategic planning requires an integrated approach to managing the growth and development of a region or province, taking into account all relevant aspects of the social, environmental and economic situation. The key issues emerging from discussions within the training program and incorporating observations of the consultant team about QNP are summarised below. 5.1 Settlement 5.1.1 Tam Ky Tam Ky is the Provincial Capital city of QNP. With a population of around 135,000, this Class 3 urban centre is the administrative hub of the province, as well as accommodating higher order facilities and services such as tertiary education campuses, hospital, shops and offices, industrial estates and residential areas. Tam Ky however is not a tourist destination, having few attractions of visitor interest and being located more than 10km from the coastline. There is no official map available of the city nor is there basic visitor information about the city readily available to the ‘out of town’ business investor. The standard of services and facilities such as restaurants, shopping and entertainment is average and under-developed. Substantial scope exists to improve the liveability, level of services and diversity of goods and services within Tam Ky commensurate with attracting further growth and development. Its close proximity to Highway No.1 and the National Rail network enhances its accessibility as well as connectivity to urban areas to the north and south. figure 17 View of Tam Ky today A common complaint from foreign investors and international teams working in QNP is the reluctance of experienced professionals to come to Tam Ky to live. Special attention needs to be given to the provision of appropriate housing and high standard services and facilities sought by these upper level management and executive personnel if the province is to succeed in attracting more FDI. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 33 Similarly, the appearance, design and quality of civic spaces, buildings and monuments will have an impact on the impressions of visiting investors and tourists. It is important for Tam Ky to progressively upgrade its urban infrastructure, including its streetscapes, parks, public places and civic facilities. This will also present an image of civic pride and provincial identity. 5.1.2 Da Nang Although Da Nang is no longer within QNP, it is the focal point for the region. It is undergoing impressive growth and development, particularly in the residential and commercial sectors. Its university and training college facilities attract students beyond the City’s boundaries. QNP authorities should not seek to replicate the success or directly compete with Da Nang. Rather it should be looking to leverage off Da Nang’s growth via programs of collaboration and partnership between the two government bodies. This could involve major infrastructure programs such as a single international airport and one deep seaport suitable for container freight serving both QNP and Da Nang. figure 18 Da Nang City This view is supported by the recently released ‘World Development Report 2009: Reshaping Economic Geography’ which argues that the most effective policies for promoting long-term growth are those that facilitate geographic concentration and economic integration, both within and across countries.6 Overall, it will important to encourage growth in QNP that promotes economic integration and collaboration with Da Nang as Vietnam’s third largest city. 5.1.3 Urban Hierarchy There are a range of urban centres scattered throughout QNP with the main concentration abutting National Highway No. 1. These highway towns benefit from good access to this major highway but, at the same time, suffer environmental impacts of air, noise and dust pollution, as well as traffic hazards and high levels of congestion exacerbated by high volumes of heavy vehicle traffic. The duplication of this highway in the form of an expressway located west of the current highway alignment will ease some of these adverse impacts. However, it is imperative that the same linear pattern of urban development does not occur along the edges of the new expressway. 6http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:21966677~pagePK:34370~piPK:34424~theSite PK:4607,00.html?cid=ISG_E_WBWeeklyUpdate_NL" Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 34 A key issue for QNP is the concentration of poverty in the mountainous areas where many of the ethnic minority communities live. Challenging terrain and poor connectivity between these distant and somewhat remote highland villages is impacting on the ability for these communities to access jobs, services and higher education. These villages are farming based with varying standards of housing, overcrowding, lack of reticulated services and poor sanitation levels. Poverty levels are high in these villages. A key issue for these communities is how to improve their standard of living, secure a good job and access urban services. A better-defined urban hierarchy of settlements needs to be developed as a basis for attracting different types of development and catering for SMEs linked to business clusters as a source of employment for rural households. This will require the designation of urban growth centres relatively close to highland communities. Moreover, this approach to urban development could also reduce ecological damage within rural areas, as well as provide a framework for regional development programs. A critical infrastructure item associated with a network of urban centres is good road access. At the moment the frequency, quality and capacity of east west roads connecting the coast with the highway and the lowlands and highlands with the highway is poor. Due consideration needs to be given to the upgrading and augmentation of the road network with the possibility of locating urban growth centres at the crossroads of key north-south and east-west road links. 5.1.4 Linear Development Linear urban development is generally an inefficient way to provide basic services such as reticulated water, power, sewerage etc. Often linear development extends for many kilometres on either side of the highway but back fills for only a few hundred metres either side of the road. A more cost effective pattern of development is nodal development at strategic crossroads and other locations. Highway No. 1: A significant level of urban development in QNP is occurring along Highway No. 1 causing congestion, a high incident of accidents etc. Further linear development along Highway No. 1 should cease and actions taken to create more compact nodal settlements close to the highway itself. figure 19 Tourism development underway along coastline Coastal Development: The linear form of coastal development in QNP and its proximity to the sea water line may be a potential threat to life and property. Issues relating to flooding from rising sea levels (climate change impacts) and damage from typhoons are just some of the potential environmental impacts of tourism development and other forms of development too close to the water’s edge. Similarly, much of this coastal development abuts the north-south road running parallel to the coastline. Unless more east- west road connections are provided to this coastal road and heavy vehicle traffic is diverted to alternative north south routes, Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 35 there is potential for increased traffic congestion, traffic accidents, pollution etc in an area seeking to promote its tourist role and attractive natural environment. 5.1.5 Population forecasts The following population forecasts are based on the 2007 resident population of QNP and provide four possible growth scenarios for the Province ranging from -1% to 3% per annum growth. table 9 Four scenarios for future population growth in QNP Annual Growth 2007 2012 2017 2022 2027 Rate -1% 1,489,279 1,416,290 1,346,877 1,280,867 1,218,092 1% 1,489,279 1,565,247 1,645,091 1,729,007 1,817,203 2% 1,489,279 1,644,284 1,815,423 2,004,373 2,212,990 3% 1,489,279 1,726,483 2,001,466 2,320,248 3,689,804 It is highlighted that estimating likely future population is inherently uncertain for the purpose of long term strategic planning given that the scope of a plan can extend for 20+ years. It is therefore important to consider multiple growth scenarios and offer a range of projections for the future growth of QNP. Annual monitoring of population levels is then essential to determine actual rates of growth being experienced by QNP, and the implications of this population change for the Province into the future. Generally speaking, when determining which population growth rates to apply as part of population forecasts it is important to develop both an ambitious and conservative growth target. These targets can be largely influenced by the levels of growth that have been experienced in QNP over a long period of time. However, these growth rates should also consider other factors that can significantly impact on population change. While the causes of population change are quite simply births, deaths and migration, these factors have complex relationships that should be carefully considered by population forecasters for QNP. Births and Deaths A key factor when considering the impact of births and deaths on the population is to have a clear picture of the age structure in the Province. For example, a younger population is expected to have lower rates of mortality and generate higher rates of birth. An older population, even with an increasing life expectancy, could be expected to experience higher rates of mortality. A clear understanding of natural growth rates in the Province is critical to accurate forecasting. It is also important to understand the distribution of age structure across the Province. This information will allow an understanding of areas that are likely to grow and areas that are likely to decline across QNP in this future. A clear understanding of the distribution of growth will allow the tailoring of a Plan and policies to meet the needs of these future populations. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 36 However, age structure data does not seem to be available for QNP. It will be important to collect such data in the future, to accurately forecast natural growth rates in QNP and the impact on population. Migration Migration is arguably one of the most significant factors when determining population change. Generally speaking, there are three kinds of migration in QNP: ï‚· internal migration, with rural populations within QNP moving to provincial cities in search of employment and greater opportunities; ï‚· in-migration with people moving to QNP from outside the Province i.e. from other parts of Vietnam or internationally; ï‚· out-migration, with people leaving QNP in search of employment or educational opportunities. Whilst these are complex movements to understand and measure, gaining insight into the mobility of QNP’s population is fundamental for accurate population forecasting. Internal Migration: It will be important to have a clear picture of the level of urban migration experienced in QNP. Participants in the training program expressed concern that the current data for urban and rural populations in QNP was inaccurate due to changes in the definition of rural and urban areas. This will need to be considered carefully by population forecasters as it will be very important to determine how much and why Quang Nam’s rural population is decreasing. It will also be important to have a clear understanding of the growth experienced in QNP’s cities over time, particularly Tam Ky City and Hoi An. The strengthening of these cities will be important to the overall strength of the Province in the future, particularly in drawing skilled labour into the local economy. Policy can be geared to attract additional growth to these areas by ensuring cities provide affordable housing, a safe clean environment and access to employment and education. Overall, population forecasters need a clear understanding of internal movement within the Province. Moreover, a strong understanding of which cities/areas have been successful at attracting growth will provide good models for attracting population growth to other regions in QNP in the future. In- Migration: Given the reasonably low level of population growth currently occurring in the Province, it is assumed that there is minimal in-migration occurring in QNP. It was reported that this was occurring largely due to a lack of services to support and attract new population; such as limited facilities geared to the needs of investors, poorly developed infrastructure and a lack of capital, as well as a lack of high quality education institutions in the Province. Therefore, it could be assumed that in-migration does not have a large bearing on population change at present. This assumption should be continually monitored. Out- Migration: The rate of out-migration in QNP is difficult to measure given the limited data available. However, it has been assumed by the project team that given the high and increasing rate of growth experienced in Da Nang and the declining rate of growth in QNP, that it has been losing population to this nearby city. This statistic needs to be measured to determine the full extent of this population leakage. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 37 It will also be important to have an understanding of behaviour and mobility of different age groups within the Province, that is, a sound appreciation of migration by age cohort. Many of the workshop participants expressed disappointment that younger people often left the Province to access employment and educational opportunities. It will be important to gain an understanding of the extent of this movement and how well the Province is managing to retain its younger population, as well as an understanding of out-migration and build this rate into the population forecasts for QNP over the next 5,10,15+ years. Overall, when developing population forecasts for QNP, it important to have an understanding of natural population growth in the Province, namely birth rates and death rates, as well as the levels of migration both into and out of the Province. QNP requires a detailed demographic study of its population including the skill base within the Province and the Central Region, patterns of migration especially of skilled people and, the deficiencies and future workforce needs to support existing and new economic activities in the region. 5.2 Environment 5.2.1 Natural Resources and Ecosystems It is critical that planning contributes to the protection of air, land and water quality and the protection of natural ecosystems, resources, energy and cultural heritage. This is particularly important given that QNP has valuable natural resources including minerals, forests, the sea and islands, all of which should be sustainably managed to ensure long term best practice development within the province and the wider Central Region. Despite QNP being well endowed with forests, agricultural products, water and minerals, there is a lack of ‘value adding’ of these resources. Potential investment and employment opportunities are thus not being maximised. figure 20 Agricultural Activities The following is noted: ï‚· Minerals: A potential resource that could be of significant value to the province is silica sand. Rather than continuing the current practice of mining and exporting sand, there are opportunities to use this high quality silica sand for glassware, ceramics and other silicon products such as silica chips. ï‚· Forestry: Much of the wood harvested is being exported as woodchip to paper manufacturing plants in countries such as China. Given that the forested areas are in the poorer highland areas, a challenge exists to value add this natural resource with an emphasis on SME activity. A further opportunity is to identify plants attract high market value – for example those with medicinal or nutritional properties, or possibly of spiritual significance. Replanting and retention of timber plantations also has potential for carbon credit trading, as well as providing a new source of income for remote rural communities. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 38 ï‚· Aquaculture and Agriculture: QNP primary sector could be strengthened with further food processing opportunities. This could be facilitated with improved food processing technology, equipment and increased standards in hygiene and quality control. Additionally, local foods also have the potential to significantly reinforce the QNP tourism ‘product’ and add value to the region. The protection of natural resources in QNP will also be critical to maintaining the region’s tourism industry. Development of polluting industries will not only undermine environmental values on QNP creating future costs, but environmental damage could deter tourists from visiting the region, creating further negative economic impacts. However this relationship is well understood by provincial authorities who have rejected proposals in recent years for manufacturing operations that will impact on the intrinsic values of these attractive and highly scenic coastal areas. Overall, the protection and sound environmental management of natural resources is paramount to the province’s long term economic growth. Accordingly, all major development proposals need to be thoroughly assessed in terms of their social, economic and environmental impacts based on relevant government decrees and environmental regulations. figure 21 Tea plantations in the highland areas of QNP 5.2.2 Natural Disasters A key challenge for QNP and the Central Region will be the area’s susceptibility to flooding and natural disasters, particularly within the lowlands and coastal areas. It was reported that over 3 million persons each year are affected by bad storms in QNP. There is often a lack of good quality drinking water in the rainy season. As illustrated in Figure 22, Storm Peipah, which struck the Central Region in November 2007, resulted in a death toll of 28 persons with 9 persons injured. Reported damages to property included more than 187,000 houses flooded, 410 hectares of rice padi damaged, 51 fishing vessels drifted or sunk, 15,000m2 of transport roads eroded, and 67 low tension poles broken7. figure 22 Hoi An Ancient Town - November 12 2007 7 World Health Organisation ‘Storm Peipah’s death toll rises to 28’ accessed at http://www.wpro.who.int on 25.09.08. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 39 Appropriate flood mitigation will be critical in attracting further development and investment in the Province. Regardless of the vulnerability of the eastern areas within QNP to these natural phenomena, some of the neighbouring provinces within the Central Region also experience those events and yet development and investment continues. Disaster Management Strategies are being developed in these areas to better cope with and avoid unnecessary damage to life and property . 5.3 Economy 5.3.1 Economic Sectors While undergoing a reasonably rapid transition, the local economy in QNP is still largely engaged in agricultural activities (67%). However, the Agricultural sector only provides for 26% of GDP with Industry and Construction and Services accounting for 38% and 36% respectively. It will be a key challenge for the Province to diversify its economy and ensure that a trained work force is available to meet the needs of this new growth. The identification of clusters accompanied by action agendas and investment expenditure in infrastructure will assist in creating a more sustainable and prosperous economy for the Province. The following key issues apply to the different sectors of the provincial economy: ï‚· Service sector: A key growth sector is expected to be service industries and businesses catering for both domestic and tourist interests. Whilst increased population growth will generate demand for services, a key driver in this sector is tourism. As mentioned earlier, the Province contains two UNESCO World Heritage sites (out of a total of six World Heritage Sites in Vietnam), attractive sandy beaches, river estuaries and highland forest areas. The Province has already been very successful in attracting four and five star resorts along the coastal belt adjacent to and north of Hoi An. However, key issues in the service sector relate to diversifying the tourist experience with potential to develop the ecotourism market and provide ‘depth’ to the cultural heritage offer. figure 23 High End resort development, near Hoi An figure 24 Montgomeries golf link development, near Hoi An Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 40 Another aspect of tourism in need of improvement is the quality of restaurants – that is, more choice in dining, promotion of speciality dishes to the region and a generally higher standard of service. This will require substantial investment in training and education programs including language courses, public relations and marketing training etc. ï‚· Industrial Sector: A key issue for QNP is how to further develop the manufacturing and industrial base of the economy. With the CLOEZ underdeveloped and generating low levels of FDI, new industrial opportunities need to be identified, encouraged and assisted to locate in the province. A greater emphasis needs to be given to the importance of domestic private sector development, growth in SMEs, identification of Multi National Enterprises (MNEs) suited to the opportunities available in the province and improved infrastructure, where warranted. The identification and development of clusters for QNP will facilitate the targeting of specific investment projects most suited to the province’s strengths and attributes. figure 25 Private sector industrial development estate by UID, near Hoi An ï‚· Agricultural Sector: A key issue for QNP relates to the problems associated with a highly fragmented agricultural land ownership pattern. It will be important to ensure that agricultural reforms are introduced to maximise the full potential productivity of this land and make it available for higher order activities, where appropriate. There are many ways to approach agricultural reform and much has been written on this issue. The ‘bottom line’ is that landowners must be educated and consulted alongside quicker and more efficient administrative processes in establishing land use rights, easier access to capital to fund new business ventures and, re-training of rural employees for industrial and service sector jobs. Reform in land administration and management to support the economic development of the province so as to make it a more attractive place to invest should be a high priority of government. 5.3.2 Education A key issue for the Province is educating its population given that over 83% of the population are unskilled workers and only 3% have a college or university degree. It will be important to ensure that the Province is increasingly in the position to market itself as an investment destination well equipped with skilled and smart workers. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 41 The proposed Quang Nam International University will be a fundamental educational resource in the future prosperity of the Province and should be a key driver of the training focus for the province. It will be important that the International University and, other vocational and training colleges, develop courses which match the demands for skilled labour now and in the future. Some investors complain that the province lacks middle level managers to operate factories and businesses, whilst others claim that workers need to be multi skilled to embrace new technologies and innovations. For example, it is apparent that QNP has a strong tourist industry and therefore the University should offer language courses i.e. English, French, Japanese and Chinese. The University and/or an associated institution could also offer courses in hotel management, customer service, cooking etc. It will be important to consider all the elements that will be required to support each economic sector and, develop ways to meet these requirements in the shortest possible timeframe. Strategies for improving the higher education facilities of QNP need to be undertaken in consultation with investors, as well as in partnership with existing educational establishments in nearby Da Nang. 5.3.3 Capital Investment A key challenge for QNP will be successfully attracting capital investment from private sources. Currently there is an over reliance on State investment. For example, it was reported that the Chu Lai Open Economic Zone provides land free of charge to industrialists with a 15 year tax holiday as a further incentive. It is important that the Province does not grow to be reliant on State funding as this is generally not a long term sustainable source of income, nor does this approach assist in building a robust and competitive economy for the Province. QNP licensed seventy one Foreign Direct Investment Projects from 1989-2007 involving a combined investment of USD604.78 million. The top five international investors have been the USA, Canada, Hong Kong, Taiwan, and France. This investment was in hotels and restaurants (44%), manufacturing (14%), real-estate and renting business activities (9%), recreation, culture and sporting activities (33%). It is also evident that the province has been relatively successful in attracting tourism investment. However, QNP is not attracting significant FDI in manufacturing. For example, the Chu Lai Open Economic Zone has not yet attracted any large scale multinational companies and, since its opening some 5 years ago only 10% of the estate land is developed. This compares poorly to a privately developed industrial park in Hoi An which had filled rapidly, attracted significant FDI investment and gained access to investors and the workforce in Da Nang City. A further issue is access to micro credit and business services. It is apparent that most small-scale business enterprises rely on informal credit and personal savings to provide the capital to start-up and expand a business. The poor quality and lack of tenure of built assets, such as housing and industrial buildings, also undermines the creditworthiness of many businesses to gain access to formal credit. These are significant impediments to the development of small-scale industries in all sectors throughout QNP. This was exemplified when visiting the highland village of A-Ting where it was indicated that many of the people in the village had some training in handicrafts but were unable to pursue these opportunities as they had no funds available to purchase the materials needed to produce the goods. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 42 Overall, there is a lack of proactive investor targeting by provincial authorities in QNP. Rather the approach is one of reacting to approaches by potential foreign investors rather than proactively seeking out those companies with particular characteristics that dovetail with the QNP economy. It will be critical for provincial authorities to understand QNP’s strengths and competitive advantages when aiming to attract investment. 5.4 Infrastructure It is important that urban and physical infrastructure is developed in QNP in an efficient, coordinated and timely manner. It is also critical that money is spent maintaining infrastructure to ensure it is able to operate at a high standard. In general infrastructure in QNP is under-developed and participants in the training program highlighted the development of good quality infrastructure as a key priority and critical to attracting future investment. The following suggestions were made by various participants during the project or by government officials spoken to during the inception phase of this TA. figure 26 Chu Lai Port Upgrade the seaport in Chu Lai through the development of a deeper channel and more mechanised container facilities and other services associated with the port. It is proposed that a deep sea port be developed in Quang Ngai too and hence the economic feasibility of two deep seaports needs to be properly assessed alongside the capacity of other existing seaports in Da Nang and further north. ï‚· Construction of a 130km Expressway through QNP removing heavy vehicle traffic along the existing National Highway No.1, improving the amenity of the urban centres along Highway No. 1 and providing a faster, safer north south national route which benefits all Central Region provinces. Such a major infrastructure project which spans several provinces and not just QNP will need to be constructed in a series of stages so that QNP is not left to benefit last from this new expressway. Also this expressway project creates the opportunity to integrate new east-west roads into the road network and the possibility of designated urban growth areas in close proximity to its main intersections. ï‚· Development of a bridge to improve connectivity along the coast south of Hoi An where there is pressure for more tourism development. This type of infrastructure could be financed through a developer levy system where a number of developments which would benefit from this improved link contribute to its construction alongside government funds. figure 27 Bridges are a critical infrastructure item in the lowland and coastal areas of QNP Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 43 ï‚· Upgrade degraded sections of the Ho Chi Minh Highway as an alternative north-south route which also opens up access to neighbouring Cambodia and Laos. This is an ambitious project considering the challenges of the terrain and its relative remoteness. It may assist however in opening opportunities for ecotourism in the highlands and more mountainous parts of QNP and the Central Region. ï‚· Develop an East West Road Link from Da Nang as well as developing improved east-west roads to increase linkages across QNP from the mountains to the coast and to lowland and midland urban centres. Any such proposal needs to be considered in the context of an overall road hierarchy for QNP linking in with neighbouring provincial and city plans. With the increasing reliance on telecommunications, high speed broadband and reliable access to the internet and mobile telephone network all essential elements of doing business in a global market place, QNP needs to improve its IT and Telecommunication infrastructure. The current networks are unreliable, prone to ‘dropping out’ and slow to access and this is especially in the case of internet services. If education is to benefit from cyberspace and the myriad of information and knowledge able to be accessed on the internet by all age groups, then a concerted effort is required to upgrade these infrastructure services. There are also ‘soft infrastructure’ projects needed for the Province relating to sectors such as training and education, health, recreation etc. Very few participants made mention of soft infrastructure other than higher education, with the emphasis invariably on ‘hard infrastructure’ such as roads, rail, bridges etc. Overall, it will be important through the development of the next SEDP to investigate and ultimately prioritise the various infrastructure projects that have been suggested for QNP. This prioritisation needs to be within a broader framework – a framework which supports and reinforces the development of industrial and business clusters as integral to a more competitive economy. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 44 6 Cluster Analysis 6.1 What is a cluster? A cluster is a concentration of like-minded firms, talent and support institutions. They have located together (perhaps unconsciously) to do business, utilise a resource and achieve synergies. Some of the players may be fiercely independent and competitive, but they have enough in common to work together to achieve bigger and better outcomes. The clustering phenomenon was introduced into mainstream economic literature by Professor Michael Porter (Harvard Business School) in his celebrated book ‘The Competitive Advantage of Nations’ (1990). Porter described the key factors shaping clusters in terms of the Porter Diamond as shown in Figure 28. figure 28 The Porter Diamond Clusters are about collaboration between organisations – to achieve outcomes not possible through individual effort. But this collaboration must be based on realistic, outcome-based initiatives and also include public organizations, where warranted. For this reason, a cluster is more than simply a network of companies. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 45 Clusters have the potential to: ï‚· Build critical mass and lower the cost of doing business (generate location economies); ï‚· Provide a beacon for investors; ï‚· Build collaborative behaviour and thus facilitate joint problem-solving; ï‚· Provide a system of connection between companies, technologies and competencies; ï‚· Assist in building innovation systems and industrial capability; and ï‚· Help address market failure e.g. lack of information, co-ordination failure, managerial myopia. 6.2 The Cluster ScoreCard A universal problem in cluster analysis is knowing where to start. Common questions are: ï‚· Do we have a cluster? ï‚· How is our cluster performing? ï‚· What do we need to do to start a cluster? ï‚· How are we performing against other clusters? The Cluster ScoreCard8 can provide the answers as it provides a detailed snapshot of industries within locational settings. The Cluster ScoreCard extends the publicly available work of Professor Porter and other international experts. It provides an objective assessment of an industry within a locational setting. It captures the essence of a cluster – within a tight geographic area, or a sub-region, region or state. The assessment is made against 10 attributes of a successful cluster. The 10 attributes have been developed as part of a multilateral research project between cluster practitioners in Australia and elsewhere. The attributes builds upon the Porter Diamond, and they have been ranked and weighted by 50 international clustering experts9 to reflect the relative importance of each. The ten attributes are outlined below. Supply-related 1. Social capital 2. Local champions. 3. Critical mass of suppliers. 8 The Cluster ScoreCard is covered by © Copyright 2008 as this is a tool devised by a group of experts (including Mr. Rod Brown) on cluster analysis. 9Drawn from Australia, Belgium, Canada, Denmark, England, France, Jordan, Mauritius, New Zealand, Northern Ireland, Slovenia, Sweden, USA, Wales. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 46 4. Governance structures. 5. Specialised infrastructure. 6. Technology/knowledge formation Demand-related 7. Local competition. 8. Sophisticated home demand. 9. Growth prospects. 10. Existence of threat. A more detailed explanation of each of these 10 attributes is contained in Training Session 3 – Module 3: Cluster ScoreCard – Understanding Clusters. The Cluster ScoreCard analyses a cluster in terms of these 10 attributes and then provides an overall rating based on weightings determined by international experts. It also provides: ï‚· Hard hitting analysis; ï‚· Identification of likely cluster champions; ï‚· ‘Action Agendas’ to build clusters and business opportunities; ï‚· Identification of sources of external funding to address key initiatives; ï‚· A vehicle for benchmarking the cluster against other clusters; and ï‚· A basis for ongoing evaluation. Often a cluster map is also prepared providing an actual picture of the cluster in terms of: ï‚· The location of all existing firms in the cluster (categorised as firms with an annual turnover below USD5 million or above USD5 million); ï‚· Strategic infrastructure relevant to the cluster e.g. knowledge: universities, technical colleges, research laboratories, broad band etc; ï‚· Hard infrastructure: airports, ports, highways, gas/water pipelines, industry parks etc; ï‚· Social infrastructure: hospitals, schools, government support agencies etc. 6.3 Clusters Identified in QNP As part of this project it was important that cluster opportunities for QNP be identified and developed. The participants in the training program demonstrated a good appreciation of the types of industries that conform to the province’s competitive advantages – namely tourism, forestry, food processing, building materials, engineering-based activities etc. Their strong interest is in knowing how to convert these advantages into actual investments and export opportunities. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 47 Five potential clusters were identified during the training program based on four criteria: ï‚· Good factor conditions taking into consideration the factors in the Porter Diamond and Cluster ScoreCard attributes; ï‚· Export potential; ï‚· Significant short-term outcomes; and ï‚· Likely to generate widespread interest by investors. The five clusters for QNP are: ï‚· Tourism ï‚· Forestry ï‚· Creative Industries ï‚· Construction materials ï‚· Gourmet/ specialty food products 6.3.1 Tourism The QN tourism industry has potential to become a key economic activity for QNP. The province’s competitive advantages include its two world heritage sites (total of six in Vietnam), attractive beaches, river estuaries and highland forested areas. Major international investors are beginning to establish ‘high end’ luxury resorts in the coastal belt adjacent to Hoi An. Its main competitive disadvantages are the risk of flooding during the monsoon season and typhoons. Hence tourist numbers generally decline during November to February. Although QNP is well endowed with cultural heritage and natural landscape assets, there are aspects of the tourist industry which are underdeveloped including: ï‚· A lack of international standard tourism accommodation in most of the province – Hoi An is the exception and even then middle price range accommodation is deficient; ï‚· Few good quality restaurants and cafés with limited choice in cuisine and dining atmosphere; ï‚· A basic level of trained staff, with limited foreign language skills, despite the potential to attract a diverse range of tourists from across the world; ï‚· A lack of sophistication in the tourist experiences on offer, despite the potential to appeal to different tourist market segments e.g. backpackers and adventure seekers, families, retirees, group travellers, or those seeking a luxury and wellbeing experience; ï‚· Poor interpretive information about the cultural heritage of the province; ï‚· The lack of integrated tourism packages whereby visitors can experience a suite of related or themed experiences e.g. culture, sports, environment; ï‚· Very few ecotourism activities which could be linked in with spa resorts, hiking and bush walking etc; ï‚· Absence of certain tourism infrastructure e.g. information centres, signage, public amenities. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 48 A cluster program would be very effective in addressing these and other deficiencies. There is considerable scope to strengthen the branding and packaging of the different tourism products around environmental and cultural experiences. Related initiatives include a network of well equipped interpretive/information centres, a world class tourism training college with specific emphasis on promoting and marketing both QNP and the Central Region to domestic and international visitors, international convention centres, improved brochures and maps and other services and facilities which discerning tourists seek. Further consideration needs to be given to the business traveller and servicing their needs. If QNP is to actively seek more investment (domestic as well as foreign) then it is expected there will be more business people coming to the province to do business. Urban centres such as Tam Ky and Hoi An need to cater for the business traveller. These centres need to present a public image and level of tourist facilities which are safe and secure, hospitable, comfortable and good quality in terms of accommodation, dining and entertainment and recreational pursuits. Because tourism is a global growth market which is both dynamic and highly competitive, a comprehensive tourism strategy is needed not only for QNP but for the Central Region as a whole. At the moment strategic tourism efforts are more focused on attracting tourism investment for investment sake rather than actively seeking the types of tourist developments which: ï‚· Build upon the existing strengths of the province and region; ï‚· Develop new strengths or market opportunities; ï‚· Focus on long term growth outcomes; and ï‚· Strengthen partnership between government and industry. 6.3.2 Forestry The Quang Nam Socio Economic Plan (To 2015) indicates an increase in forested land from 42% to 48% by the year 2015 with an emphasis on planting cinnamon trees, rubber trees, tea, wood for paper materials, fibre and other indigenous trees for timber production. There are different types of forestry activity from fast growing plantations to slow growing natural forests. However forestry is typically adopting the concept of silviculture, that is, how to manipulate nature to produce the products and services that are needed or wanted. figure 29 Forestry activities in QNP Source: E.O. Kofod, draft discussion paper presented to the training participants Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 49 Over the last 8 to 10 years Vietnam has increased its exports in manufactured wood products. In 2001 manufactured wood exports from Vietnam was valued at USD460 million and yet by 2008 it is estimated that these exports are worth USD5,378 million. The annual increase in manufactured wood exports is estimated to be 40% per annum over the last four years. In terms of timber imports (logs and sawn timber) to Vietnam, the trend has been a marked increase since 2001 to an estimated value of USD1,574 million in 2008 and a stable annual increase in such imports over the last fours years in the order of 35% per annum. During the training program the participants benefited from a presentation by Mr. E. O Kofod, forestry expert who is a consultant involved in a current WB funded project underway in QNP and two neighbouring provinces. Under the auspices of the Ministry of Agriculture and Rural Development, the Vietnam Forest Sector Development Project is, amongst other challenges relating to land use rights and surveying land allotments, undertaking a project identifying rural development opportunities based around forestry. A copy of his presentation to the training program participants is attached as Appendix 4 with the figure below which was included in Mr. Kofod’s presentation indicating the relationship of forestry in regional and provincial planning. figure 30 Forestry in Planning Source: ‘ Forestry in Rural Development – Issues and Discussion Points’ (draft, Nov 2008) prepared by E.O. Kofod, forestry expert working on the Ministry of Agriculture and Rural Development, Vietnam Forest Sector Development Project At present forestry in QNP is considered by many farmers in the highland and mountainous areas of the province to be an important economic opportunity – based mainly on producing pulp wood and quality timber. The current Forest Sector Development Project aims to introduce commercial forestry to small scale farmers as a means of improving living standards, overcoming adverse environmental impacts of this sector and reducing Vietnam’s imports of timber in the manufacturing of timber products. The project will have some important findings and outcomes for QNP which will need to be addressed in the next Socio Economic Development Plan. It is acknowledged that the QNP forestry industry has competitive advantages in respect of its readily accessible and significant supplies of quality timber and ‘know how’ with timber plantations, harvesting etc. Timber furniture is a mainstay of Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 50 Vietnamese industrial production and its low labour costs should underpin export development. Exports of woodchips to China and RO Korea are significant, and the locals take pride in their furniture manufacture, although the export performance is modest. Low labour costs should provide strong cost competitiveness for furniture exports. The main disadvantages are the rudimentary nature of much of the milling and transport equipment, and the lack of international supply chains in high value timber products. The industry at present is also likely to be well below international best practice in environmental management and Occupational, Health and Safety (OH&S) requirements. 6.3.3 Creative Industries The term ‘creative industries’ relates to activities which rely upon innovation, creative thinking and artistic talent. Innovation usually results from a collective and social process. Currently the potential of the QNP creative industries is not widely appreciated. The province appears to have competitive advantages in architecture, arts and antiques, crafts, and design. These could conceivably be extended to fashion and performing arts and then integrated into its international tourism product range. figure 31 Hoi An, Lantern Manufacture Creative industries have the potential to generate jobs in the rural villages and small urban centres of QNP, as well as in tourist destinations such as Hoi An. Micro credit schemes providing ‘start up’ funds for rural communities (especially the ethnic minority groups) may be needed to establish small factories and businesses close to home accompanied by appropriate training etc. People will need to be properly trained in these industries requiring specific skills and expertise in such ventures as the making of traditional handicrafts to the designing of high fashion garments, ceramics etc. The creative industry sector also relies upon the generation of new ideas – contact with international design companies and entrepreneurs, trade fairs and exhibitions, marketing and promotion, as well as business development planning, are all integral to the success or otherwise of industries founded on creativity and innovative ideas. 6.3.4 Building and construction materials The QNP building materials industry is well positioned given the substantial local demand associated with Vietnam’s industrialisation and rapid construction phase. QNP and surrounding provinces could conceivably become a significant world supplier of building and construction materials if processing and product technology can be used to upgrade quality. Southern China serves as a model. QNP appears to have a competitive advantage in the availability of raw materials such as good quality silica sand, iron ore, clay and timber. Its well-established ceramic tile capability provides a good platform for international joint ventures. However, Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 51 the lack of sophisticated local customers and processing technology need to be addressed in order to access western markets in glassware, tap ware, bathroom fittings etc as well as supply the quickly expanding domestic market. 6.3.5 Food Industry (especially specialty/gourmet foods) The food industry in QNP currently covers the main staples such as aquaculture, rice, cassava, maize, poultry, spices, pigs etc. However QNP appears to have a competitive advantage in the further processing of these products due to the capacity available in the economic zones, seaports, airports etc. Local foods also have the potential to significantly reinforce the QNP tourism product. The main disadvantages at present appear to be the basic nature of food processing technology and equipment, the lack of hygiene and quality control, and the lack of access to international supermarket chains. The province is also a potential ‘hot spot’ for avian flu and further outbreaks could damage any regional food brand it might develop. 6.4 The importance of ‘Best Practice’ in the development of Clusters ‘Best practice’ can be defined as a technology, product, process or system that is currently the best currently available in the market - hence the terminology of world’s best practice or national best practice. The philosophy is that companies and organisations should strive to be the best in their particular field, or at least be moving to that point. In doing so, they improve their competitive position and progressively build a brand based around innovation, quality and cost-competitiveness, thereby attracting investor and consumer interest. QNP, and Vietnam in general, are a long way off ‘best practice’ in most fields. However, the term is generally understood and appreciated by local officials, and it has been stressed that the development of the clusters in the economic development of the province should pursue best practice initiatives, where ever possible. Essentially the best practice initiatives for each of these five clusters and any additional clusters involve: ï‚· Collaboration within QN province; ï‚· Collaboration between QN and other provinces; ï‚· Collaboration between QN and cluster groups in other countries; ï‚· Proactive investor attraction; ï‚· Investment joint ventures; ï‚· Investor aftercare; and ï‚· Familiarisation activities. Each initiative is discussed below. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 52 6.4.1 Collaboration within QN province This involves collaboration between the key players within QNP - local companies, foreign companies, the various government agencies, support organisations etc. Judging by the discussion at the training sessions, the level of local collaboration is reasonably good, but with room for improvement. There is a view that Vietnamese people are intensely competitive and difficult to organise, and therefore not inherently collaborative. This needs to be tested and debated. It is proposed that this collaboration be fostered by the establishment of industry development projects that have broad support of stakeholders and early commercial outcomes as a means of stimulating further interest. 6.4.2 Collaboration between QNP and other provinces This second type of collaboration is important in: ï‚· Planning and implementing large infrastructure projects that traverse or impact on a number of provinces within the Central Region of Vietnam; ï‚· Facilitating the transfer of technology and ideas; ï‚· Facilitating national government objectives; and ï‚· Improving the lobbying influence of provinces. Some projects that have best practice dimensions include: ï‚· Progressively widening sections of National Highway 1. ï‚· Construction of separate bike paths on sections of Highway 1. ï‚· Completion of the coastal route (Da Nang to Hoi An) to provide a less busy and safer route for international tourists to Hoi An. ï‚· Developing different infrastructure elements for the major coastal tourism corridor emerging north and south of Hoi An. ï‚· Potential for significant education tourism infrastructure, especially international schools that focus on language and hospitality for an increasingly demanding tourism market. QNP is part of the Central Region of Vietnam and hence collaboration amongst all provinces within this region will be fundamental to their future prosperity, competitiveness and well being. Such collaborations need to include consideration of major infrastructure projects and, as importantly, where the direct and indirect benefits of such projects can be shared rather than each province seeking to have the same infrastructure projects in their province. It makes economic ‘common sense’ to not duplicate major projects such as international airports, deep sea container ports and higher education centres offering the same courses in each of the Central Region provinces. Rather, the ability to improve access to these major facilities across provincial boundaries and careful consideration of their strategic locations in terms of maximising regional benefits should influence decisions about significant investments of this type. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 53 6.4.3 Collaboration between QNP and cluster groups in other countries This type of collaboration is non-existent at present. However it is best practice to the extent that it provides a vehicle for driving significant new ways of economic development. It involves the development QNP alliance partners and ambassadors. This collaboration could take several forms such as: ï‚· Developing industry clusters in other parts of Vietnam in order to strengthen the network of business activities and create opportunities for new investment in QNP and the Central Region generally. ï‚· Identifying wealthy and/or influential Vietnamese expats, particularly QNP expats, now living overseas but who have an interest in assisting their homeland’s regeneration. ï‚· Identifying industry clusters in developed economies that could be long-term alliance partners e.g. forestry clusters in Sweden or Canada, artefact clusters in the USA, food clusters in the Netherlands or the UK, ceramics clusters in France. ï‚· Identifying local government agencies in developed economies that have a Vietnamese connection e.g. City of Playford in South Australia. ‘Sister City’ arrangements can be useful in this regard. For example, if the five clusters identified for QNP are to be further investigated and pursued as part of the next Socio Economic Development Plan then the above initiatives will need to be progressed as key actions for implementation. 6.4.4 Proactive investor attraction Proactive investor targeting by either the national or provincial authorities appears to be largely ignored in Vietnam. The situation seems to be one of reacting to approaches by potential foreign investors, rather than proactively seeking out those companies with particular characteristics that dovetail comfortably with the QNP economy. QNP might conceivably take the lead among Vietnamese provinces in the medium term by developing a ‘best practice investment attraction strategy’ geared to identifying and nurturing the best MNEs. The cluster sessions in the training program introduced some MNE performance criteria, in the context of identifying the better-performing MNEs operating in QNP at the moment. The discussion highlighted Victoria Mining as one example but a list needs to be prepared as part of advancing the cluster approach in the province itself. It appears that only 10-15% of investment in QNP is accounted for by foreign MNEs. Inwards investment missions are rare, and the province’s international alliance partners and ambassadors could be instrumental in this regard. Given that good business practice is about building relationships with both public and private sector agencies it would be prudent for QNP to allocate time and resources to fostering investment projects in a more targeted and strategically driven manner. 6.4.5 Investment joint ventures A major goal of the national and provincial governments is to attract foreign investment, and to their credit they readily seek advice on how the investment climate can be improved. There is general acknowledgement of the constraints e.g. lack of Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 54 clear cost and price signals, high informal charges, weak infrastructure etc. The various trade development zones insulate the foreign companies from some of these problems, but the issues run much deeper. The basic options available to the Vietnamese are to grow their own multinationals and to attract footloose foreign multinationals into joint ventures with local companies. In the case of QNP, the second option is preferred as MNEs are important in an increasingly globalised world. They usually have strong supply chains, well-developed marketing channels, superior technology and financial strength – ingredients which work well with clusters. In addition, cluster programs get regions thinking about which MNEs are best suited to their needs, and then use collaborative techniques to establish ‘WIN-WIN’ arrangements between them and local companies. The worst outcome is to attract MNEs that do not deliver the expected benefits in terms of investments and jobs, or enjoy overly-generous treatment or crowd out better companies. These types of MNEs are not founded on best practice in terms of establishing and consolidating collaborative investment opportunities. In recognition of this problem, the participants in the training program were introduced to the concept of performance criteria for identifying high-performing MNEs - that is, an MNE ScoreCard. The following indicators are seen as the most important in identifying foreign companies that fit well into joint venture arrangements with Vietnamese companies: ï‚· Investment track record; ï‚· R&D track record; ï‚· Long-term commitment to the region; ï‚· Degree of autonomy from head office decisions; ï‚· Ability to export and to include local companies in their supply chains; ï‚· Preparedness to support local business e.g. buy local programs; ï‚· Respect for local social, cultural and workforce circumstances; ï‚· Environmental credentials; ï‚· Financial strength; and ï‚· Integrity and honesty. For example, the competitive advantages of the seafood, rice and forestry industries in QNP are the resource base and cheap labour. The need is to engage the foreign partner with the management skills and technology to enhance these advantages. The engagement options include: ï‚· Desk research to identify high-performing MNEs in particular market segments; ï‚· Vietnamese companies, or their agents, attend trade shows; ï‚· Formation of alliances with like clusters or industry associations in targeted countries; ï‚· Inwards investment missions into Vietnam; and ï‚· Outwards investment missions to targeted countries. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 55 An example of an industry association that may be interested in engagement with QNP is the Rice Growers Association of Australia (SunRice brand). It has an extensive track record in the management of international supply chains in the rice industry, including technology transfer, training and export. It is currently involved in joint ventures elsewhere in Vietnam, as well as Papua New Guinea, China, East Timor etc. It is suggested that approaches should be made to federal and/or state agricultural agencies in the USA, Canada, Japan, Australia, the Netherlands, UK etc.) about the possibility of joint funding for desk research (as above) and investment missions. 6.4.6 Investor ‘aftercare’ QNP authorities should pay particular attention to ‘investor aftercare’ as a further means of improving the investment climate for MNEs. To explain, re-investment by existing companies accounts for 70% of industrial investment across the globe. While this figure would be lower in Vietnam because it is still building up its stock of investors, the fact remains that ‘making existing investors happy’ is one of the most effective means of stimulating investment by foreign companies. Aftercare initiatives that have been developed by cluster organisations on behalf of foreign MNEs include: ï‚· Mapping of companies and support organisations, to assist foreign companies to identify collaborative partners; ï‚· Organisation of meetings with politicians or senior officials; and ï‚· Assistance in addressing problems facing the MNE e.g. development approvals, labour shortages etc. 6.4.7 Familiarisation activities Of the 41 participants in the training program, only a handful has been outside Vietnam. This is very limiting in terms of developing connections with potential investors and raising the profile of QNP. It is suggested that the feasibility of outwards investment missions be explored, together with the development of training courses in foreign countries for senior Vietnamese officials. The current situation is that virtually all training is conducted ‘in-country’ for cost and language reasons. Familiarisation activities of this nature would build trust and confidence between the parties and hence the platform for collaboration on investments. 6.5 Action Agendas Action Agendas address 5 key factors relating to opportunities identified for a cluster. They are: ï‚· What? – describe the project proposed for the cluster including its key components; ï‚· Where? – identify where this project will be located within the province and justify why this is the most appropriate location; ï‚· Why? – explain why this project is needed including its benefits (social, economic and environmental) to the province e.g. employment, social benefits such as training, environmental benefits such as application of appropriate ecological management practices etc; ï‚· When? – identify the timing of the project – commencement and completion dates by month/year; Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 56 ï‚· Who? – identify who will be responsible for establishing and managing this project e.g. is a public sector project, private sector or joint venture project?; and ï‚· How much? – estimate the cost of implementation of this project and the source of funds. As the project is developed the action agenda will be accompanied by supporting material such as a scoping study, business plan, feasibility study etc. Action Agendas are integral to the application of cluster analysis in integrated provincial planning. They represent a key component of the implementation of the provincial plan which, in turn, will require regular reviews and monitoring of its progress over the life of the plan. 6.6 Cluster Action Teams As part of the training program five Cluster Action Teams (CATs) were formed with each group assigned a potential cluster in QNP to investigate i.e. tourism, forestry, creative industries, building and construction materials and gourmet/specialty food. Each CAT nominated a team leader who then allocated set tasks to members of each team to complete within a 3 week period. The key tasks for each CAT were: ï‚· Collection and analysis of data about their cluster including contacting existing businesses in that sector to enquire about the nature of current production, issues that they face in growing and expanding their business and opportunities for growth; ï‚· Undertake a SWOT analysis of the cluster and identify key issues emerging from this analysis; ï‚· Prepare a Cluster Map; ï‚· Apply the Cluster ScoreCard attributes to the cluster; ï‚· Identify three Action Agendas to be implemented for the cluster. An Action Agenda is a technique to focus on the key elements of a new project. It is essentially a one page document that can be used as a briefing paper to give to senior government officials or company executives and provides the key information required to promote a project. It aims to get you thinking about: What is the cluster going to achieve?; Where is the cluster going to locate? Why is this cluster being developed? When will the cluster action be implemented? Who will be responsible for implementation? How much will it cost to implement the action? ï‚· Prepare a powerpoint presentation of the team findings and recommendations. Within the context of the five potential clusters for QNP the CAT nominated the following opportunities for further investigation: ï‚· CAT No. 1 - Gourmet Food: This group investigated raising Small Pigs, a speciality food in QNP and other parts of Vietnam. ï‚· CAT No. 2 - Building and Construction Materials: This group investigated the use of silica sands for glass products, particularly glassware. ï‚· CAT No. 3 - Tourism: This group investigated expanding the cultural heritage and ecotourism sector in QNP. ï‚· CAT No. 4 - Creative Industries: This group investigated development of handicrafts made of timber. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 57 ï‚· CAT No. 5 - Forestry: This group investigated furniture manufacturing opportunities in QNP. figure 32 CATs hard at work figure 33 CATs hard at work A copy of each CAT presentation is contained in the CD in Appendix 2 of this report. It is emphasized that the CATs did not have substantial time to undertake their tasks. Nevertheless, the work completed demonstrated a sound understanding and appreciation of the cluster analysis concept and how it can be applied to different economic sectors in QNP. The next Socio Economic Development Plan will require more detailed analysis of these clusters, as well as investigation into any other clusters which should be developed in QNP in the future. To assist the training program participants in understanding how to prepare an Action Agenda for a specific economic cluster a simple example prepared by the consultants based on their visit to a highland village, A -Ting Village, in north western QNP was discussed. A summary of each CAT presentation follows. 6.6.1 CAT No. 1 – Gourmet/Specialty Food - Small Pigs QNP has traditionally bred small pigs and has an established pork industry. The team identified the opportunities to further grow this sector and, the ability to add value to livestock products through exporting dead small pigs to Asia and Europe as a gourmet or specialty food item. figure 34 Small Pig – QNP Speciality table 10 number of livestock in QNP figure 35 Small Pig Market in Thang Binh 600000 500000 400000 Buffalo 300000 Cow 200000 Pig 100000 0 1997 2001 2006 2007 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 58 The team gathered information on this industry from sources such as the General Year Book 2007, the internet, speaking with entrepreneurs in the industry, preparing and administering a questionnaire to entrepreneurs, as well as seeking information from DARD and the College of Food Processing. The group found that agricultural production accounts for a large percentage of QNP’s GDP and agricultural labour accounts for 67% of the QNP workforce. Data also indicated that pigs were the dominant livestock in QNP. The team also examined this potential cluster more generally finding that agricultural enterprises in small pig raising in QNP are often operating on a small scale and, the volume of product on the market is low. The team believes that further development of pig breeding enterprises would be ideal to introduce to rural areas, when considering that the income in rural areas is low. The team are of the opinion that development of this industry supports current government policy. The CAT SWOT analysis for a small pig raising cluster in QNP is below. Strengths Weaknesses Opportunities Threats Tradition in raising pigs Small scale of current small pig Consumption market can be No co-operation and (especially sows) production expanded substantially – collaboration with local locally, nationally and authorities internationally Rich food supply for pigs Big farms in small pig raising Large entrepreneurs in other Large land area for production are currently limited countries involved in pig raising may be required and possible so potential for collaboration loss of valuable agricultural land for other products may restrict expansion of small pig raising Large small pig market in the Production has not been Processing for export if volume Environmental impacts e.g. central region of country connected closely with of small pig production is odour, methane gas, pollution already exists consumption increased etc Convenient transportation Possible problems of disease infrastructure exists within pig farms if poorly managed Three action agendas were identified for the small pig raising industry. They are summarised below. Action Agenda 1: Increase size of pig stock in QNP What? Collect good sows for pig breeding. Where? In villages that have traditionally raised sows. Why? Aim to supply at least 2,000 good sows for farmers yearly in the project area in order to supply more than 3,000 small pigs. Employment = 50-60 people involved in pig breeding. When? Mid 2009 – Mid 2010 Who? Provincial Government. Implementation agencies include DARD, Technology and Science Dept, Agricultural Extension Unit, Veterans Dept How much? Estimated cost VND 20million for training. To fund for Thang Binh district ( 5-7 villages: Bình DÆ°Æ¡ng, Bình Giang, Bình Ä?ào, Bình Triá»?u, Bình Phục, Bình Quý, Bình Trung) Action Agenda 2: Commence Small Pig Breeding Program What? To buy and supply about 100 Mong Cai sow and 5 male seeding pigs Where? In villages that have traditionally raised sows. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 59 Why? Need to increase number of small pigs to meet market demand When? September 2009 Who? Implemented through a newly develop QNP Livestock Centre. Funding to be gained from WB. Implementation agencies include DARD, Technology and Science Dept, Agricultural Extension Unit, Veterans Dept How much? Estimated cost VND 210,000,000 (105 pigs x VND 2,000,000/pig = VND 210,000,000). Supply equipment and support for seeding activities: VND 50,000,000 + Cost estimate: USD 22,500+ Action Agenda 3: Increase size of breeding pig stock What? Supply good seeding pigs 2,000 – 2,500 pigs. Where? Need support from provincial government to identify suitable locations for larger scale pig breeding including establishment of buffer zone to minimise off-site environmental impacts and also implement best practices in management of small pig farms Why? Need good pigs for breeding if cluster is to satisfy growing market demand for small pigs. When? Early 2009. Who? Implement through a newly developed QNP Livestock Centre as an extension of DARD at district level. Implementation agencies include DARD, Technology and Science Dept, Agricultural Extension Unit, Veterans Dept How much? Funding to be gained from local people but consider also credit loans for buying sows (from the provincial budget). Estimated cost: 2,000 pigs x VND 50,000 /kg x 20 = VND 2,000,000,000. Also need provincial government support for ï‚· cost to train people in best practices in pig raising and business management practices; ï‚· materials to establish the small pig raising businesses ï‚· expenses of brand name registration and for project management. Total budget: USD 319, 375(VND 5,110,000,000): WB: USD 34.375 Provincial government: USD 16.250 Provincial budget for agri extension: USD 18.750 Entrepreneurs: USD 125.000 Local People: USD 125.000 6.6.2 CAT No. 2 – Building and Construction Materials QNP has access to good quality silica sand which is largely exported as a raw material to nearby countries. The Cluster Action Team identified potential to value add to this natural resource and investigated the ability to develop glassware products within the Province. The team gathered information on this industry from the General Year Book 2007, from the internet and by speaking to entrepreneurs. The group also visited a Japanese company that currently manufactures glassware in Hoi An. figure 36 Crystal Products – Okinawa Company Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 60 The group found that manufacturing glass was a reasonably new industry in QNP and only beginning to develop. The team believes well designed and manufactured glassware could become an important growth industry for QNP, with the potential to be sold locally or exported to foreign markets. Moreover, the manufacture of good quality glass as a construction material and for ceramics manufacture has potential in QNP. This new industry would need to be supported with training through one of QNP’s educational institutions. A cluster could develop based on the use of silica sand for glass manufacture/ figure 37 Glassware shop in Hoi An CAT No. 2 undertook the following SWOT analysis for a glass manufacturing cluster. Strengths Weaknesses Opportunities Threats Rich natural resource in silica Not much experience in Potential for export as well as Planning for the use of the silica sands. glassware production in QNP at domestic markets in glass for sands in an orderly and the moment. both the construction industry sustainable manner may not be and also household glassware completed by government in a items. timely way. People in Quang Nam and No official and professional Province has investment Slow implementation of Vietnamese (in general) are training units established for promotion policies for such an infrastructure needed for this hard working, skilled and keen this cluster in QNP. industry. cluster could undermine its to learn. growth. Possible lack of silica sands in the future as a finite resource. CAT No. 2 found a range of entrepreneurs already operating in QNP in glassware as indicated in the table below. This list could be the beginning of a cluster business network or association in the glass manufacturing sector for QNP and for the Central Region as a whole. Investment Project Owner Products Capacity Investment Area ha Location Name (tons/day) Capital (bill Dong) Chu Lai Glass Chu Lai Joint Glass for 700 1.309 104 ha Chu Lai OEZ production Stock company construction Phuoc Toan Phuoc Toan Glass for 360 146 6 ha Chu Lai OEZ Glass production Glass company construction and for handicrafts Silica sand Quang Nam Silica powder 10,000 23 Bình Phục, production mineral resource Thăng Bình company Three Action Agendas for the Glass Manufacture Cluster were prepared by the team as indicated below. Action Agenda 1: Protect the sand resource for future use in glass manufacture What? Plan for protection and management of sand resource for future use in glass manufacturing industry with minimal adverse environmental impacts. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 61 Where? Sand area in the east of National highway 1A from Thang Binh to Nui Thanh Why? Sand reserve is finite and important to ensure a stable supply of sand material for glass manufacturing. When? Begin in 2009. Who? Provincial government in consultation with relevant government agencies e.g. DARD, DPI etc. How Much? VND 500 million from State budget. Action Agenda 2: Training in Glass Manufacture and Design of Glassware What? Human resource training to develop a skilled labour force in the manufacture of glass for the building and construction sector and in the design and manufacture of glassware for domestic and overseas markets. Where? Skilled worker training at provincial training colleges Da Nang University could bring in trainers from China and other countries with a strong presence in the glassware design and manufacturing sectors. Selected artisans could undertake training in Italy, India etc. Why? To supply the necessary human resources, design flair and technical knowledge about the sand resource for this new cluster opportunity. Need talented artisans for creating colours and designs of crystal/glass handicraft products for sale to tourists and locals. When? Beginning 2009. Who? Government and entrepreneurial collaborations as well as support from universities and training colleges in QNP and possibly Da Nang. How Much? VND 2,000 million from State budget. Action Agenda 3: Marketing and Promotion of Cluster’s products What? To establish and manage a website (maybe: www. thuytinhquangnam.vn) for the marketing and promotion of glass manufacturing in QNP and sale of its products worldwide. Where? Tam Ky City. Why? To advertise and to sell glass products online to a world market. When? Start of 2009 Who? Call for investment interest in this newly emerging cluster opportunity. Seek collaborative partnerships between entrepreneurs and relevant State and provincial government units e.g. DPI How Much? VND 50 million from State budget and from participating entrepreneurs. 6.6.3 CAT No. 3 – Tourism QNP is a place of natural beauty and scenic splendour with an established tourism sector. CAT No. 3 identified the following tourism markets in QNP: ï‚· cultural and historical tourism; ï‚· sea/marine tourism; ï‚· eco tourism; and ï‚· business tourism. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 62 figure 38 Bhá»? Hôồng village figure 39 The highland area of QNP CAT No. 3 identified the following strengths, weaknesses, opportunities and threats for the QNP tourism industry: Strengths Weaknesses Opportunities Threats Leaders are committed to Lack of capital and human Vietnam’s membership of WTO Reluctance to train developing tourism as a key resources/ skills to develop provides a platform for management personnel in the economic sector for QNP. sustainable tourism model at promoting the tourism tourism sector could deter the moment. opportunities and attractions of future investment, especially QNP. from international tourist operators and potentially reduce growth rates in this sector. QNP offers two World Heritage Tourism Law has just been Quang Nam is located in East Impacts of threats such as Sites: Hoi An and My Son issued with a need to address a West Economic Corridor where terrorism, disease etc on tourist range of issues related to tourism can be further numbers and investment levels. tourism – aspects of the law developed and a Quang Nam may be seen as disincentives to Tourism Association could invest in tourism sector. flourish. The natural landscape of the Tourism products offered at Dac Doc border gate will join to Perception amongst tourists province is diverse with sea, present are limited. Laos along the national and investors that the area is islands, lakes, ponds, long highway 14 (14A,B,D,E). This is unsafe due flooding and other sandy coast of 125km to the convenient to explore tours and natural disasters. Marketing east and Ho Chi Minh trail to new tourism spots within the campaigns need to allay these the west. province. fears where possible. Near the international airport Tourism activities/experiences QNP is rich in tourism Continued lack of adequate and seaport of Da Nang. as well as tourism infrastructure resources and hence the ability investment in training of people in the Central Region and QNP to provide a wide range of in the tourism and hospitality itself are poorly developed. experiences to different industries coupled with a lack of segments in the tourist market. language skills is likely to deter Many of these tourist attractions investors. are conveniently located close to major transport services such as the National Highway No. 1 and the national rail network. Lack of expertise in the Huge potential for advertising Lack of investment capital in government sector in tourism different tourism products this sector from both national planning and development. including eco tourism. and international tourist companies will result in existing facilities and tourist infrastructure becoming run down and poorly maintained. Low levels of co-operation between the tourism investors Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 63 and government. Design of tours is still poor and is not proactive in attracting more visitors. The team acknowledges that QNP has potential to develop ecotourism destinations and experiences given its long coastline, islands, rivers, lakes, mountains, forests and Quang Nam citizens’ hospitality. Cultural and historic tourism is very strong at the moment in QNP and by developing the ecotourism product scope exists to attract more visitors and extend their length of stay in the province. However, it is recognised that in developing ecotourism as an integral part of the tourism cluster, it will be essential to protect the natural environment and scenic qualities of the province. Ecotourism also will bring tourism capital to rural and mountainous areas, creating jobs and increasing incomes for local people. Tourism can be instrumental in poverty alleviation noting that QNP has a poverty level above the national level and is one of the poorer provinces in the Central Region. Decision No.06 of the Provincial Party 2007 and Decision 105 of the People’s Council in 2008 support the development of ecotourism. The team developed a tourism vision statement as follows: To develop ecotourism and cultural-historic tourism by diversifying the tourist product and making tourism important to the province by creating jobs, increasing social income, upgrading living standards, conserving and developing cultural values, increasing economic potential as well as national defence and security, and contributing to the development of the province’s socio-economic sectors. To strive for constructing Quang Nam as both a regional and national centre for tourism. Only two action agendas were identified by CAT No. 3 as follows. Action Agenda 1: Develop ecotourism opportunities in QNP What? Provide appropriate ecotourism opportunities in Suoi Tien, Suoi Tien (Fairy stream) located in Que Hiep village, Que So district. This is one of the most beautiful streams in Central Vietnam. Where? Quế Hiệp village, Quế SÆ¡n district, away from T section Huong An (National Highway 1A) 15 km to the west, and 4km from the town center. Why? This is an ideal ecotourism spot with 14 waterfalls running days and night in the mountains; Quế Hiệp has an area of 39,6km2, average population is 4.083 people, population density is 103 person/km2 , mainly farmers, poverty rate is high ( >30%), agricultural free time is high (>68%). The project was approved by the PPC in 2008. This is the first step to developing the project which now requires a detailed plan for functional areas ensuring the forest area is protected 70-80%. The tourist project has been designed to maximise people’s participation, increase education level, create jobs in agricultural free time, create stable jobs as well as reduce poverty. When? Estimated to implement by 2010 when Suoi Tien Storage lake is completed. Who? State: to provide the transport infrastructure and to complete the construction of Suoi Tien lake with a total investment nearly VND 40 billion. State is calling for local and international investors to assist with this ecotourism project. How much? As yet unknown. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 64 Action Agenda 2: Marketing and promotion campaign for the Suoi Tien waterfalls project What? Prepare a marketing and promotion campaign for the Suoi Tien project which targets local and international markets. Where? Public media - TV, radio stations etc as well as the internet, leaflets and tourism brochures and collaboration of existing tourist operators in QNP. Why? To attract more visitors to QNP and hence increase income level, create jobs etc for communities in the mountainous area. To expand the tourist market to international visitors, nature lovers and adventure seekers. When? Once the storage lake is finished in 2010 tourism companies and public media will be invited to promote and market the waterfalls project to tourists. Who? Culture, Information and Tourism Department assigned for Tourism Promotion Centre cooperating with Que Son to collect information for advertisement campaigns. Working with tourism companies to design tours for visitors. Seek sponsors to advertise this new ecotourism attraction on its website, in newspapers, public media to introduce. Working with DPI, DoF, PPC and investors to mobilize capital to realise the project. How Much? As yet unknown 6.6.4 CAT No. 4 – Creative Industries CAT No.4 identified a segment in the existing creative industries cluster in QNP for further development. This is the manufacture of wooden handicrafts – both traditional and contemporary designs. The group identified synergies between this opportunity and two other key clusters for QNP, namely tourism and forestry. figure 40 Different types of wooden handicrafts in Vietnam The following SWOT analysis for wooden handicrafts was completed by the team: Strengths Weaknesses Opportunities Threats Large labour force and skills in Quality of labour force skills Market demand for timber Natural conditions can threaten traditional handicrafts exist. however is low. handicraft products is high with supply of good quality timber. potential to grow and diversify. Local authorities would support Infrastructure is weak e.g. lack Potential to distribute products Regional competition especially such a program. of warehouses and display through tourism markets and if other manufacturers become Good supply of timber with centres for such handicrafts. enhance collaboration with highly mechanised in the potential to grow different types tourism sector. production of wooden Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 65 of timber for different wooden handicrafts. handicrafts. Advertising and marketing skills Opportunity to export wooden Lack of capital in this sector will are low. handicrafts especially high restrict its growth potential quality products e.g. eco especially for export. friendly wooden toys Samples are not diversified and Opportunity to cooperate with If cannot guarantee the quality a limited range of products farmers to plant the trees of the products then will not be available at the moment in the needed as raw materials for competitive in global market. marketplace. these value adding products. Potential to enhance product Failure to nurture creative quality and range and register design skills in the product trademarks for export market. range will adversely impact on appeal to a wider global market. Opportunities to collaborate and joint venture with international companies seeking high quality wooden handicrafts. Three action agendas have been identified by CAT No. 4 as described below. Action Agenda 1: Training of skilled artisans What? Train artisans and workers in the various production techniques for different wooden handicrafts of both traditional and contemporary designs. Where? Traditional villages of QNP and key tourist centres such as Hoi An where tourists can see the products being made and buy from display centres. Why? To maximise the ability and capacity of labour in the traditional villages that have finished secondary or high school. Villages should make a list for local authorities suggesting possible participants for training courses, and subsidise poor households to attend these training courses. The training fee could be partly paid back by the trainees under the form of a small bank loan. The interest rate and loan could be paid over time from the trainee’s salary after graduation but on the proviso that he/she must work in the traditional village. This will create a skilled labour force which does not then leave the province seeking a job elsewhere as is the current case with many skilled workers and higher educated graduates in QNP. When? Estimated to train 500+ workers ( managers = 50; artisans = 100; marketing = 100; skilled workers = 40, other workers:= 200 and Quality control = 50) Who? Provincial budget contribute 20% of the cost; Entrepreneurs contribute 80% of cost; and the trained workers will work for entrepreneurs after graduation and salary will be deducted for interest rate and loan from social policy bank. How Much? USD 4.112 million Action Agenda 2: Secure land for wooden handicraft producers What? Provide well located land for businesses producing wooden handicrafts with scope to expand the operation in- situ. Where? Traditional villages of Quang Nam province and possibly other selected locations such as key tourist centres. Why? Based on planning for traditional villages, the layout will give priority for production scale: office, design, warehouse, display house, canteen, and worker apartments with total area of 5.000-7.000m2/ per production entrepreneur and rented from the State under Regulation QÄ? 13/2003/QÄ?-UB dated 30/01/2003 by Quang Nam Province. Investment promotion for such ventures could provide the land for free for a 50 year period to attract entrepreneurs, cooperatives and local producers in this sector. When? Start of 2009. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 66 Who? Private sector with incentives from state/provincial government, if necessary. Target SMEs for these new manufacturing businesses in production of wooden handicrafts. How Much? Cost of warehouse construction: VND 3,000-5,000 million from self finance budget. Credit funds to be available for the production scale, job creation projects under 120 employees and finance from entrepreneurs through policy banks who have offer loans equal to 17-18% of the production capital. This should be adjusted to have loan equal to 50-70% of capital based on production meeting market demand. Action Agenda 3: Tree planting program What? Co-operate with farmers and other timber producers in increasing the supply of timber for the wooden handicraft manufacturers. Where? QNP and especially the highland and mountainous forested areas and new timber plantation areas. Why? Planting of more trees will be needed if this industry grows to meet market demand both nationally and overseas. Farmers and entrepreneurs would have contracts for 10-15 year periods in the supply of timber. This is ‘win win’ solution for farmers and entrepreneurs and will increase green coverage for hills which is an environmental objective of State policy. Potential for co-operation and collaboration amongst entrepreneurs in this industry in the production, marketing and distribution of a high quality product range. Project will create more job for people particularly in the rural areas as well as provide a source of income for farmers using their land for tree planting for the use in wooden handicraft manufacture. When? Middle of 2009 Who? Private sector including village co-operatives, small and medium sized businesses. Relevant provincial departments will need to provide support and advice on issues relating to land use, planting of new forests, marketing, bank guarantees etc. How Much? Not known as yet. 6.6.5 CAT No. 5 – Forestry CAT No. 5 investigated the forestry industry with a focus on manufacturing timber furniture. The team found that QNP accommodates a range of enterprises already engaged in the development of timber furniture but these companies are reasonably small and did not collaborate with one another. figure 41 Furniture manufacturing in QNP figure 42 Furniture manufacturing in QNP Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 67 The team found that QNP has a competitive advantage in furniture manufacturing given the large forestry resource available and the number of traditional artisans in QNP. The SWOT Analysis for this cluster revealed the following: Strengths Weaknesses Opportunities Threats Demand for timber furniture is Currently operating on a small Big export market and potential Environmental impacts from high. scale with a lack of strong to expand production. timber felling need to be entrepreneurs to create carefully managed or else competition. major implications for land management in terms of land erosion etc. Materials are available and can, Often designs are too simple Potential to attract investors Transportation and delivery if necessary, also be imported and traditional in appearance and production alliances. cost for export products is high easily to QNP. and little variation in product and this can affect the price of range. goods to the market and hence the competitiveness or otherwise of the industry. Large area of land available Low tech industry at the Value adding opportunities are Highly competitive industry and and there are many artisans in moment which impacts on good provided the quality of the failure to keep ahead of market QNP. production outputs. product is high and caters for trends in design etc could prove different consumer markets. problematic. Cheap labour cost. Limited joint ventures operating Job creation potential is good Failure to introduce more and minimal co-operation provided the workforce is mechanisation in the production between existing businesses. skilled. of wooden furniture will impact on output levels and viability of the product. Many entrepreneurs have Weak infrastructure. established similar businesses and are performing well. Production equipment is Distances between source of produced in the country. materials and place of production are large. Exporting rate (GSP) to EU Some entrepreneurs are not market is 0. familiar with issuance of forest certificate (original) and this can affect export potential. Again, three Action Agendas were prepared by CAT No. 5 for the forestry cluster. They are outlined below. Action Agenda 1: Greater community involvement in the production of timber furniture The team met with the Tam Thai PC including leaders of the Finance Department of Phu Ninh District to identify issues related to producing timber furniture in the villages. An opportunity emerging from the discussion was to have greater community involvement in this sector. What? Timber production to supply timber furniture production units in Tam Ky City and catering for provincial market. Where? The east bordering with Truong Xuan ward of Tam Ky City, the west bordering with Tam Dan, Phu Ninh District located in Road 616 ( from Tam Ky to Tra My). This is the area where many families can plant trees in their gardens. Why? The residents here have difficulty in planting padi. However many people have skills in producing timber furniture. Household incomes are lower than households in Tam Ky City so an opportunity exists to involve the community in small timber furniture production enterprises. Short term result: there will be 70 labourers involved in the initial stages of this project. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 68 When? From 2009 onwards and extended to other areas in the district over time. Who? Local community with support from state/provincial governments. How Much? Industrial management staff of Phu Ninh District support value adding activities by households producing timber furniture and these households want assistance in management and production techniques. The cost of this project is as estimated as follows: ï‚· Expense for travel, accommodation and meals for a teacher in timber furniture design and manufacture is about USD 6,000/year and such a fund will be set up for the first year. ï‚· Buy 5 saws with the speed at 300V/P, wheel 50, table size 600x700, weight 277kg, possible for cutting the timber lodges into pieces for cabinet production. Equipment supplied to 5 households who have been producing timber and have >5 labourers. Expense VND 3,700,000x5=VND 18,500,000VNÄ?. ï‚· Buy 2 planers with speed 3500V/P, function as planer, saw and punch. These planers to support 2 households having >10 labourers. Each saw has VND 7,000,000 x 2 = VND 14,000,000 ï‚· Buying 5 TuPi with speed 4000V/P to polish wood etc. These will be provided for 5 households having >5 labourers. Expense VND 3,800,000x5= 19,000,000VND. Total: VND 151.5 million of which WB fund = VND 100 million, local authority ( Phu Ninh district) = VND 40 million, and households receiving this support will also contribute VND 11.5 million ( based on the value of machines supported). Action Agenda 2: Provision of new technology for the industry The team met the Quang Nam Forest Production for Export to identify issues with entrepreneurs in the forestry industry. Discussion revealed a need for a dryer using solar energy to meet the demand of materials for production. What? To construct a timber dryer using solar energy with capacity 50m3 timber/batch, duration of drying = 15 days. Timber dryer is acted using the glass house effect and all aspects of the drying system is automatically controlled. Where? In Forest Production for Export of Quang Nam Industrial Zone, Dien Nam Dien Ngoc, Dien Ban District. Why? Cost effective and reduced environmental impacts. Saving 60 -70% of production time in comparison with using a steam-dryer. Solar energy dryer to be used by furniture production businesses in QNP. This form of technology will help stabilize production and market supply. Short term result with 50 jobs for labourers. This technology will also allow for market to be expanded. When? June 2009. Who? At the moment, M Drac Forest Farm in Dak Lak has invested in and operates a timber dryer using solar energy with the cost = VND1.5 billion. How Much? VND1.5 billion joint funding from WB and Forest Production for Export of Quang Nam in joint venture with Cam Ha Timber Production Entrepreneur. Action Agenda 3: Design and marketing of timber furniture from QNP Timber Handicraft Production entrepreneur Mr. Nguyen Van Tiep in Dien Phuong village, Dien Ban district, Quang Nam Province provided the team with an understanding of the issues he faced in the timber industry at the moment. What? To provide advice on different designs in timber furniture and development of a range of sample design for domestic and overseas markets. To participate in trade fairs domestically and internationally (Ha Noi, HCMC, German, Singapore etc) selling the timber furniture products of QNP. Where? At entrepreneurs and household production units in Dien Phuong, Dien Ban District. Why? To support the entrepreneurs such as Mr. Nguyen Van Tiep and other households in the marketing of their products, expanding production scale and design range available to the consumer. Short term result: jobs for 100 labourers. When? June 2009. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 69 Who? Hire designers to instruct the design methods ( 5 people ) in 1 month; producing design range ( 10 samples, each will have 3-5 products); and assisting with participating in trade fairs etc. How Much? For design experts = USD 6,000 or VND 100 million; expense for class including materials - VND 30 million; sample production: 10 samples = VND 20 million; Attend fairs in Ha Noi and HCMC 2 times = VND 30 million; Attend trade fairs in German and Singapore = VND 70 million Total cost = VND 220 million. For design experts: apply for funds from NGO programs Sample production: people contribution Fair participation: public budget from national and provincial government levels Each CAT has offered good ideas for the further development of clusters within QNP. Clearly more investigations need to be undertaken in each of these action agendas, including further discussions with key stakeholders in each cluster and, on- going advice from experts in the field of cluster analysis. What the participants have shown is a sound appreciation of the methodology involved in cluster analysis and, the ability to seek both quantitative and qualitative information about their cluster in the preparation of Action Agendas. This is a valuable exercise for them as part of the integrated provincial planning process and, is information which should be developed further in the preparation of action plans for the next SEDP for QNP. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 70 7 The Vision for Quang Nam Province 7.1 What is the purpose of setting a vision for QNP? ‘Vision without action is a daydream. Action without vision is a nightmare.’ (Japanese proverb) Visioning has been widely used in a planning context, and internationally accepted by the planning profession as legitimate exercises from the mid-1990s onwards.10 Since this time, visioning has emerged as a general requirement of integrated regional planning in many countries, including but not limited to the United Kingdom, Australia, Canada and the United States.11 There are many benefits in undergoing a visioning process including: ï‚· Focusing on core values and long term outcomes. The vision-making process can help break through barriers between different interest groups or local authority departments; ï‚· Involving a broad range of people in discussions about their vision for the future. This can lead to development of important networks across the community and the local authority and give people a sense of ownership; ï‚· Allowing an evaluation of past approaches and encouraging new ways of looking at the future; ï‚· Getting people to think about the long term well being of the community.12 Attempts at Vision Statements in Vietnam by government agencies have been based mainly on past trend analysis of development – the ‘rear vision’ forecasting technique followed by long lists of targets to be achieved within set timeframes. Visioning actually requires government planners and officials to think about what they want the province to be like over the next 5, 10, 15, 20 years and then to set the path for achieving those outcomes. This often requires changing direction from past development trends and, establishing a new direction for growth and development which defies past trends and sets new challenges which create new trends. For example, there are characteristics of the QNP current growth and development which need to be addressed rather than repeated in the years ahead. There are also development opportunities which are not being pursued at the expense of central and provincial governments ‘subsidizing’ specific sectors within the economy which are financially unviable or fail to establish a ‘point of difference’ being offered by QNP as a place to invest. 10 Shipley R, Newkirk R, 1998, ‘Visioning: did anyone see where it came from’ Journal of Planning Literature 12, pg. 407-416 11Shipley R, 2001 ‘Visioning in planning: is the practice based on sound theory?’ Journal of Environment and Planning 2002, volume 34, pages 7-22, accessed at http://www.envplan.com/epa/fulltext/a34/a3461.pdf on 30.09.08. 12 Setting the vision and the framework to move towards it’ http://www.environment.gov.au/esd/la21/guide/pubs/actionarea3.pdf Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 71 The Vision Statement for QNP therefore needs to put aside past development trends and aim to consolidate the strengths of the province and maximize its opportunities for creating a more sustainable and competitive economy. The SWOT Analysis in preparing an integrated provincial plan is therefore fundamental to the visioning exercise especially as it will highlight past trends which should not be repeated in the future and opportunities, such as developing key economic clusters, which will be the focus of new policies, programs and actions. There is no specific formula for what a vision should look like. A Vision Statement can be a short statement or a more comprehensive explanation of the preferred future. Session 6, Module 2 of the Training Manual for this TA included a number of Vision Statements prepared for cities and regions. They were all quite different but, in essence, each Vision Statement clearly articulated the way forward in terms of what government was seeking to achieve in terms of the social, economic and environmental well-being of the city or region in which it is responsible for planning. In addition to these Vision Statements the participants in the training project were shown two videos of Vision Statements for two Asian places – Singapore and Hong Kong. These videos are included in Appendix 1. Throughout these videos various key words or phrases have been used to send clear messages to the investor, resident and business person about how the place will develop in the future. Examples of Vision Statements adopted in integrated regional, provincial and city plans include words and phrases such as: ï‚· Livability ï‚· City of beauty, character and grace ï‚· A world in a city ï‚· Quality environment ï‚· Quality living Enhancing the living ï‚· Dynamic, exciting ï‚· Global city experience ï‚· Striving for the best ï‚· Physical and social sustainability ï‚· Achieving growth through ï‚· A welcoming place decentralization ï‚· Tropical metropolis ï‚· Modern but with an ancient pedigree ï‚· A place in our hearts ï‚· Knowledgeable society ï‚· Diverse, creative, embracing the future ï‚· A city on the move ï‚· Vibrant distinctive place ï‚· A place that loves hard work and plays ï‚· Enhancing connectivity hard ï‚· Small island – big needs ï‚· Translating the vision into reality ï‚· Celebrate friendship ï‚· Buzzing with growth and bursting with life ï‚· Challenging future – brighter tomorrow ï‚· Determined and fair ï‚· Transparency and trust ï‚· Aiming higher, dreaming bigger and ï‚· Daring to dream working harder ï‚· Certainty and stability ï‚· To reach higher than the sky ï‚· Reaching out and connecting The choice of words when preparing a Vision Statement for QNP is very important – these words need to convey the desired vision for the future planning and development of the province. They need to realistically and strategically identify the role and functions of QNP in the context of the Central Region and, the nation as a whole. As importantly, the Vision Statement needs to have the support and ‘ownership’ of the people who you are planning for and, that is why the preparation of a vision statement requires meaningful and effective community participation in the shaping of that vision. The Vision Statement to be prepared for the next Socio Economic Development Plan for QNP should take into consideration the following suggestions: ï‚· Be positive and use present tense language. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 72 ï‚· Be capable of attracting commitment and energizing people. ï‚· Be idealistic, ambitious and visionary, but realistic and attainable for Quang Nam Province. ï‚· Allow the reader to gain a sense of Quang Nam’s uniqueness. The vision should describe local characteristics, such as the natural environmental features that make the Province distinctive. ï‚· Incorporate beliefs and values held collectively by citizens of QNP. ï‚· Provide a focus on people and quality of life to ensure that residents of QNP have access to a range of services and infrastructure. ï‚· Look long term (10-20 years or more) but motivate short term action. It should also apply to a stated period of time. ï‚· Be easy to understand and even memorise. ï‚· Be inclusionary and indicate roles for many key stakeholders, not just the Provincial Government. The current Socio Economic Development Plan (To 2015) contains five goals accompanied by specific targets. The goals relate to: ï‚· Rate of economic growth and building an open and developed economy for QNP; ï‚· Transition in the economic structure of QNP to be in line with the strengths of the province and the general planning of the Central Region; ï‚· Developing a coastal economy, industrial zones and seaports whilst enhancing life and living conditions, educational levels, increasing public investment and enjoyment of social welfare policies; ï‚· Ensure economic development is accompanied by social progress, democracy and social equality and continuously improves people’s lives whilst preventing and mitigation against natural disasters; and ï‚· Combining economic development with national defence and social stability. Unfortunately these goals could apply to virtually any of the provinces in Vietnam in terms of goals to b achieved. They are not recognizing the distinctive attributes of QNP or the strategic direction that the province needs to take to realizing further growth and development. These goals are also focused on the social and economic aspects of the province and largely ignore the environmental considerations which, in the case of QNP, are important in attracting investment. The next Socio Economic Development Plan needs to provide a more holistic approach to planning the social, economic and environmental characteristics of QNP based on a clear Vision Statement for the next 10-20 years. The following questions can assist in formulating that Vision Statement: ï‚· What do we like about Quang Nam as it is now? (aspects you may wish to preserve and enhance) ï‚· What don’t we like about the Quang Nam? (issues to be resolved and changed in the future) ï‚· What words could be used to describe Quang Nam’s: natural environment, local economy, local people, governance and leadership and the built environment. (description of QNP attributes). ï‚· What do you want Quang Nam to be like in 10-20 years from now? (future aspirations for growth, lifestyle, environmental quality etc) Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 73 During Training Session 6 the participants brain-stormed potential brands/slogans and Vision Statements for QNP. Ideas from the participants included the following: ï‚· Quang Nam – Dynamic, Creative and Reaching to the Sky ï‚· Opening the Arms- Reaching to the Future ï‚· The Benefit of Investors is Quang Nam’s Benefit ï‚· Quang Nam – Enjoying the Difference ï‚· Quang Nam – Passion to Live ï‚· Quang Nam – Your Opportunity ï‚· Quang Nam – Harmony and Friendly ï‚· Quang Nam – Attractive and Best Living in the World ï‚· Quang Nam – The Gateway of Vietnam to the World ï‚· To develop in a dynamic, diversified, creative and sustainable manner ï‚· To develop Quang Nam tourism in 2030 to become a tourism centre of the nation and the region, contributing to wealthier living, protecting the environment, conserving and developing its cultural values, ensuring social safety and security, and creating a good relationship with friends throughout the world ï‚· Quang Nam is a dynamic province with harmonious growth and development undertaken in a friendly way. People live in a safe and comfortable environment. Quang Nam develops but also preserves its cultural character and world heritage places. ï‚· Quang Nam to 2030 will become a province with strongly developed services, a dynamic and diversified economy to attract investors. Quang Nam will be the ideal destination for tourists and manage and preserve its cultural heritage and natural resource. Quang Nam will create living and working environments in a harmony with one another and in a sustainable manner. ï‚· Quang Nam is open for business! In the centre of Vietnam where people have a passion for living and working; Quang Nam is a special place where the mountains meet the sea; where lifestyles are shaped by a rich culture and heritage; and investment opportunities are diverse and dynamic. 7.2 How can the Vision Statement be realized? In integrated provincial planning once the Vision Statement is established it is imperative that the means by which the Vision is going to be realized is carefully devised. There are various planning tools used to facilitate the achievement of a Vision Statement for a province or region. They are: ï‚· Objectives represent the desired outcome on specific issues – they are statements of intent; ï‚· Policies establish a deliberate plan of action to guide decisions and achieve a desired outcome e.g. housing policy; and ï‚· Actions clearly identify all actions necessary to achieve specified targets. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 74 Objectives cover the major issues and opportunities in a province such as the environment, economy and quality of life. An objective should essentially provide greater detail on the Vision Statement that has been developed and, provide details on how the community will move towards the Vision on particular issues. In formulating an objective it is important that it is ï‚· goal oriented; ï‚· very precise in its wording; ï‚· time-based; and ï‚· measurable. It is also important that an objective begins with an action verb and is worded in order to generate action. Words such as encourage, enhance, consolidate, promote, maintain, reduce, and achieve etc make good verbs to use with objectives. There is no specific formula for what the objectives should look like or cover, yet it is essential that the objectives support the Vision Statement. The Training Manual for this TA provided several examples of vision statements accompanied by Objectives. One example is for Hong Kong as follows: Vision Statement: ‘Hong Kong should not only be a major Chinese city but the most cosmopolitan city in Asia, enjoying a status comparable to that of New York in North America and London in Europe.’ Objectives: ï‚· Adhering to the principle of sustainable development; ï‚· Enhancing Hong Kong's hub functions and providing sufficient land reserve to meet the changing needs of the economy; ï‚· Providing a good quality living environment by conserving natural landscape, preserving cultural heritage, enhancing townscape and regenerating old urban areas; ï‚· Meeting the need for housing and community facilities; ï‚· Providing a framework to develop a safe, efficient, economically viable and environmentally friendly transport system as well as pedestrian facilities; ï‚· Promoting tourism; and ï‚· Strengthening links with the Mainland. (http://www.pland.gov.hk/p_study/comp_s/hk2030/eng/finalreport/) It could be argued that the General Goals stated in the current Socio Economic Development Plan for QNP (To 2015) are, in effect, an attempt at formulating objectives for future development and investment in the province. Nevertheless, these Goals do not link back to a succinct Vision Statement for the Province and, are worded in very general and vague terms e.g. develop the coastal economy but without explaining whether this will be undertaken with minimal environmental detriment and protection of the landscape attributes of this coastal environment. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 75 In the context of QNP participants in the training program prepared a set of economic, social, environmental and governance objectives based on the ideas and suggestions discussed for a Vision Statement for the province. The following table summarises some of the possible objectives for a new Socio Economic Development Plan for QNP. Economy Social Environment Governance Develop a strong, diverse, Train and upgrade the quality Create a green, clean, Ensure government sustainable and highly of human resources. beautiful and sustainable authorities collaborate with competitive economy with Create jobs and upgrade the environment. the people. prioritized actions. quality of life for all. Realise harmony with nature. Ensure the security and Upgrade the quality of Reduce poverty in a Minimize industrial waste. safety of all. services and tourism. sustainable manner, stabilize Implement open, transparent Increase forest coverage. Enhance and develop people’s living standards and policies which attract Reduce pollution of water sustainable development for achieve gender equity. investors. sources. agriculture. Promote fairness, democracy Improve the management Reduce waste to the Proactively attract investment and civil society. capacity of government environment and and entrepreneurs. Create an equal and secure agencies. appropriately treat dangerous Promote growth and living environment for waste. Foster a high level of political sustainability of the economy. everyone. determination and Minimize the impacts of Exploit the value of the Strive for reducing poverty leadership. natural disasters and province’s cultural heritage. and increasing quality of life. disease. Create a dynamic, quickly Establish and develop Reduce the rate of disease, responsive government service-trading as dominant increase average life sector which shows a high sector in the economy. longevity and improve the level of responsibility to the health of the community. community. Develop the rural economy in a diverse and dynamic Develop human resources to Implement transparent manner. meet the demands of governance systems, industrialization and procedures and practices. Increase GDP per capita. modernization. Enhance co-operation and Encourage development of collaboration between all the tourism, service, industry, government departments. agri-forestry and aquaculture sectors Undertake integrated strategic planning of the Develop tourism in a province. diversified way. Enhance co-operation and Develop Chu Lai OEZ as a collaboration between focal area for the Central provinces and overseas. Region. Implement appropriate administrative reforms in a timely and effective manner. Enhance team building within the government sector. The participants in the Training Program did not prepare specific policies to accompany these objectives as this step requires careful consideration of existing national laws and decrees in operation – some of which include statements of Central Government policy. Furthermore, policy formulation often deals with key elements of a provincial plan such as population, urban development, housing, the environment, the economy, infrastructure (hard and soft), urban centres, rural development etc of which objectives are then placed within this policy context. Because planning is an integrated process of guiding and directing development and investment, there will be elements of planning which require a mix of social, environmental and economic objectives. An example for QNP in terms of say, an urban development policy, could have the following objectives: Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 76 ï‚· Establish a functional hierarchy of compact urban centres throughout the province. ï‚· Provide safe, good quality transport connections between these urban centres. ï‚· Integrate natural features into urban centres for recreational, aesthetic and environmental purposes. ï‚· Ensure each urban centre is provided with appropriate community facilities and services based on the application of population thresholds matching service delivery. ï‚· Ensure a good standard of living for all communities within these centres. ï‚· Create friendly, safe and secure communities. ï‚· Provide local employment opportunities close to home. ï‚· Apply community participation processes in the planning of new urban areas. ï‚· Ensure industrial activities are located in well defined, well designed industrial estates with appropriate environmental management practices. The policy topic is clearly about planning and developing urban centres – the objectives therefore need to address economic, environmental, social and governance aspects of these urban centres be they cities, towns or villages. 7.3 Action Plans & Targets The term ‘road map’ is often used in the preparation of integrated regional or provincial plans. It is a term which is also used by world leaders when thinking strategically about how to solve major national or international problems. A road map sets the way forward for implementing Actions. It seeks to: ï‚· prioritize actions; ï‚· identify key stakeholders responsible for implementing the action; ï‚· determine how the action can be funded; and ï‚· set realistic timelines. Because planning and development involves a wide range of stakeholders including the local community, business people and investors, as well as the public and private sector workers/employees, actions will call upon these stakeholder groups to assist in the implementation of the plan. Furthermore, the prioritization of actions is critical for an Integrated Provincial Plan as it: ï‚· Allows for a more co-ordinated and efficient way of implementing actions ï‚· Guides both the public and private sectors to more effectively channel resources (capital, human, physical etc) into specific projects. ï‚· Provides certainty for both the public and private sectors in terms of the order of implementing actions so that they can budget for these actions as well as focus on other managerial, financial and resourcing efforts needed to accompany these actions. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 77 ï‚· Minimizes any potential conflicts between competing social, environmental and economic objectives, as this prioritization will indicate how these potential conflicts should be resolved. Similarly, the identification of key stakeholders for each action is an important step as it: ï‚· Increases accountability and transparency of governance at all levels. ï‚· Reduces duplication between ministries/departments as it allows everyone to be aware of individual roles and responsibilities. ï‚· Allows for effective budgeting for the projects across ministries/departments. Funding is critical to the implementation of actions. Possible funding sources include: â–ª Government funding, at a district, provincial and central government level. â–ª Private sector funding (local, regional, national and international/foreign). â–ª Joint venture investment including Public Private Partnerships (PPPs) and Local and Foreign Partnerships However, even more important than identifying appropriate funding sources is working out which funding source is most suitable for each Action Plan or Action Agenda. It is important that each Action is based on a realistic and preferred funding opportunity so that those responsible for organizing the funding of Action Plans can work collaboratively with others to secure these funds. Another planning tool used in the implementation of an Integrated Provincial Plan is Targets. Targets provide measurable commitments towards the achievement of objectives. However, it is imperative that where empirical targets are set that they are realistic targets based on reasonable timelines. Many of the targets currently set in Socio Economic Development Plans in provinces throughout Vietnam are simply not achievable often because the assumptions which are applied to setting these targets fail to factor in the impacts of operating in a highly competitive global economy. Also some of these targets are based on past trend analysis, overlook emerging opportunities for investment simply because they have not been underpinned by comprehensive SWOT and Multi Sector Analysis or have failed to engage with the key stakeholders to determine the most desirable way to develop in the future. It is important in the success of an Integrated Provincial Plan to establish timelines for action implementation. Setting realistic timelines has benefits such as: ï‚· Accountability of government in meeting proposed timeframes for identified actions; ï‚· Certainty for investors about the public sector’s development agenda; and ï‚· An ability to co-ordinate different actions at the one time and to plan ahead for when these actions are implemented. By following the ‘Road Map’ and determining clear policies and objectives, actions, timelines and who is responsible for implementation of these action, the planning and development of a province can proceed in a logical and coherent way. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 78 Before the participants in the Training Program prepared an Implementation Plan for QNP they were provided with the following example contained in the Hanoi Capital Region Plan, 2030 – Building a Future Together. table 11 Implementation Program: A Region of Economic Prosperity and Innovation Table 12 is an Implementation Plan developed by the five teams of participants in the Training Program based on various objectives for QNP. Each team chose two of the objective topics – economic, social, environmental or governance, set objectives for that topic and then identified actions relating to each objective. They then prioritised the action, identified who is responsible for implementing the action and estimated the anticipated timing to implement the action. A score was allocated to each action as a measure of priority status (score of 1 to 5 with 1 being a lowest priority and 5 being the highest priority). It is emphasized that the table below is indicative only of the types of actions which could be implemented to achieve stated objectives. Clearly the next Socio Economic Development Plan for QNP will need to commence this process of visioning, Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 79 setting objectives and identifying actions in close collaboration with the relevant government agencies and key stakeholders. Nevertheless, the table demonstrates a reasonable understanding of the methodology used in preparing an implementation program for an integrated provincial plan. It is evident that the participants had some difficulty in the timing of implementing some actions, with many actions being identified for implementation within the first few years of the life of a provincial plan. It is inevitable that available resources and competing interests will strongly influence the timing and prioritisation of actions. table 12 An example of an implementation program for QNP ACTION PRIORITY RESPONSIBLE AGENCY TIMING STATUS ECONOMIC OBJECTIVE: TO ENHANCE THE GROWTH OF THE QNP ECONOMY IN A FAST AND SUSTAINABLE MANNER Develop the necessary infrastructure required 5 PPC and relevant agencies 2009 to 2015 to facilitate future growth and development. Establish policies for attracting investment. 4 DPI 2009 OBJECTIVE: TO INCREASE THE NUMBER OF TOURISTS TO QNP Develop tourism activities and services in 5 Cultural and Information Dept, 2009 selected locations. districts and entrepreneurs Rehabilitate and develop the traditional 4 Dept of Commerce and 2009 villages. Industry, districts and entrepreneurs OBJECTIVE: PROMOTE THE CULTURAL VALUES AND HERITAGE ASSETS OF QNP Advertise the cultural heritage attributes of the 5 Cultural and Information Dept, 2009 province in the multi media. districts and entrepreneurs Develop tour packages connecting the different 5 Cultural and Information Dept, 2009 cultural values and heritage sites within the districts and entrepreneurs province SOCIAL OBJECTIVE: IMPROVE THE QUALITY OF LIFE FOR ALL Construct public facilities such as schools, 5 PPC, relevant agencies and 2010 hospitals, leisure centres etc. entrepreneurs Establish a green and clean environment. 5 PPC, relevant agencies and 2009 entrepreneurs OBJECTIVE: CREATE LIVING ENVIRONMENTS WHICH ARE SAFE Propagate and mobilize people to fight against 5 PPC, relevant agencies 2009 criminals. Enhance the security management. 4 PPC an Policemen Dept 2009 OBJECTIVE: CREATE MORE JOB OPPORTUNITIES FOR PEOPLE Develop more training centres (universities, 5 Dept of Education and Training 2009 colleges etc). Improve the quality of education and training. 4 Dept of Education and Training 2009 ENVIRONMENT OBJECTIVE: PROTECT THE ENVIRONMENT FROM POLLUTION AND CREATE A GREENER ENVIRONMENT Plan for new plantations. 4 DARD + DoNRE 2009-2010 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 80 Raise community awareness about the 5 DARD + Mass organizations 2009 importance of forests and the need for environment protection. Upgrade the drainage system. 3 DoC and Urban Environment 2010-2015 Company Construct an appropriate collection and 1 DoH, DoNRE, Science and 2010 disposal system for treating medical waste. Technology Dept and Urban Environmental Company To plan for categorize waste at the collection 2 DoNRE and DoH 2009 units ECONOMIC OBJECTIVE: CREATE A MORE SUSTAINABLE AND COMPETITIVE ECONOMY Establish a list of important projects and seek 5 DPI 2009 suitable investors for these projects. Construct a website on trading information and 3 DPI 2009 investment registration. Encourage, plan and monitor progress of 1 Cultural and Tourism Dept and 2009-2015 important tourism projects. DPI Establish a competitiveness index for QNP. 2 DPI + Statistic Dept 2009-2010 Develop a model for greater collaboration 4 DPI+ entrepreneurs and 2009 within and between industrial clusters. department of Commerce ECONOMIC OBJECTIVE: PLAN AND INVEST IN A MORE SUSTAINABLE AND DYNAMIC ECONOMY Prepare an economic strategy plan for the 5 PCC 2009-2010 province. Prepare yearly implementation plans and 5 4 Relevant departments From 2010 year plans for economic development. Invest in good quality infrastructure 3 Project owners From 2010 accompanying all new development. Seek investment projects which are appropriate 2 Relevant agencies From 2010 for the province. Encourage more MNEs to invest in QNP 1 Relevant agencies From 2009 ENVIRONMENT OBJECTIVE: MANAGE THE ENVIRONMENT IN A SUSTAINABLE MANNER Establish well located waste collection units 4 Environment company From 2009 throughout the province. Establish waste treatment and recycling plants 5 Environment company and From 2009 for solid waste. entrepreneurs Prepare yearly budgets for environmental 1 Relevant agencies and Yearly management projects. entrepreneurs Allocate land to households or household 2 DoNRE From 2009 groups for on going use and management. Prepare plans for new tree plantations and 3 Relevant agencies and From 2009 protection of existing forests. entrepreneurs GOVERNANCE OBJECTIVE: PROVIDE TRANSPARENT AND OPEN GOVERNMENT PROCEDURES AND RESPOND TO COMMUNITY NEEDS Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 81 Establish a governance system with clear 5 State To implement responsibilities to the people and accountability now and keep of government to the community. doing Administer appropriate reforms to provide the 4 State To implement best standard of services to the people. now and keep doing Gradually privatize key public service activities. 1 State and people 2010-2015 Organize regular meetings between authorities 3 State and people To implement and the community. now and keep doing To educate and propagate for law 2 State To implement now and keep doing SOCIAL OBJECTIVE: CREATE A WELL EDUCATED SOCIETY WHICH IS BASED ON SOCIAL JUSTICE AND EQUITY. Increase the number of people with a basic 5 State and people 2009-2012 secondary level education. Support entrepreneurs using skilled local 1 State, DPI Now labour. Educate and propagate against family violence. 3 State and people Regularly Provide opportunities for women to participate 2 State Regularly in social and economical organizations. Privatize the training of workers. 4 State and people Regularly ECONOMIC OBJECTIVE: CONSTRUCT AND DEVELOP THE TRADING AND SERVICES Implement and integrate the planning of trading 1 Commerce and Industrial dept; 2008-2010 services. Cultural and Tourism, DoF Establish an advertising campaign to attract 2 Commerce and Industrial dept; 2008 more investment in QNP. Cultural and Tourism, DPI ECONOMIC OBJECTIVE: ASSIST THE RURAL AREAS IN MODERN DAY FARMING PRACTICES Implement a plan for infrastructure, rural 2 DPI, DoT, Bank of Agricultural 2009 irrigation, local markets in the rural areas Development, DoF, Commerce and Industrial dept Expand and develop credit services for rural 1 Banks, credit organizations 2010 areas. Train farmers in appropriate science and 3 DARD 2008 technology practices in agriculture, forest, and aquaculture. ECONOMIC OBJECTIVE: IMPROVE THE GDP IN THE RURAL AREAS Train people wanting to start-up new 1 Alliances of cooperatives 2009 businesses in farming, co-operatives and other production units. Expand the markets in rural products. 3 Commerce and industrial dept 2009 Develop forestry as a key activity in rural areas. 2 DARD, relevant agencies, 2009 people SOCIAL Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 82 OBJECTIVE: REDUCE POVERTY AND INCREASE THE QUALITY OF LIFE FOR POOR HOUSEHOLDS Implement appropriate policies for the poor. 2 Relevant agencies, 2009-2015 DOLISA,DOF, DPI Create opportunities for the poor to develop 1 Relevant agencies, DoNRE, 2009-2025 economic activities (land allocation, forest Commerce dept, Training and allocation, extension activities) which facilitate Education dept, DoF an improvement in their standard of living and well being. SOCIAL OBJECTIVE: REDUCE THE INCIDENCE OF DISEASE AND INCREASE LONGEVITY IN THE POPULATION Train and upgrade the quality of staff in the 1 Central government, PPC, DoH 2009-2015 medical sector. cooperating with universities and colleges Construct health centres and invest in modern 2 Central government, PPC, DoH, 2009-2015 day medical equipment. DPI, DoF Seek investors in building and operating private 1 DPI, PPC, DoH 2009-2020 hospitals. Construct additional training colleges and 1 PPC, Training and Education 2009-2020 centres for medical practitioners and medical dept, DOLISA staff. Within the context of an Implementation Program it will be necessary to include the objectives and actions arising from the application of cluster analysis in the economic sector for QNP. A key objective will be to develop specific clusters to become key drivers in the economic development of the province. This will warrant a suite of actions and investment decisions from both the public and private sectors which are then incorporated into the Integrated Provincial Plan alongside other objectives and actions relating to social, environmental and governance issues. 7.4 Monitoring & Evaluation All integrated provincial plans need a procedure for monitoring their performance every 3 to 5 years. This monitoring requires an up-to-date and accurate data base using technologies such as GIS and other tools for recording growth and development, as well as evaluating the success or otherwise of action plans or action agendas. In many respects there needs to be a central repository for information being collected and analysed as part of the monitoring and evaluation process. A list of what information is to be collected on a regular basis and by who is fundamental to planning in a co-ordinated, cost efficient and effective manner. This central agency within each province responsible for the data collection and evaluation would also prepare annual Audit reports assessing the performance of the Integrated Provincial Plan and highlighting some factors as: ï‚· what development and change has occurred within the province and where; ï‚· which actions have been implemented and which actions have not been acted upon and if so, why not; and ï‚· recommendations seeking to modify the Integrated Provincial Plan, where warranted. Caution should be applied in modifying the Plan given that the tendency at present in some Socio Economic Development Plans is to amend the plan after a major development has been approved even though that particular development may not Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 83 be consistent with the plan itself. This practice of ‘retrospective’ planning should be avoided at all times as it leads to confusion within the investor community, undermines certainty in the implementation of the Plan, questions the Plans integrity and generates potentially conflicting outcomes. Clear criteria need to be established to justify any modifications to an approved Integrated Provincial Plan and a process set down which involves public participation and comment. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 84 8 Next steps for undertaking an Integrated Provincial Plan for QNP 8.1 Extending the training course The training course in Integrated Provincial Planning for Quang Nam Province, Vietnam was very well received by its participants. As indicated in Appendix 3 – Training Evaluation Report, the course received high scores from the majority of participants in the areas of: ï‚· Delivery of the training sessions; ï‚· Learning environment; ï‚· Quality/knowledge of the International consultants; ï‚· Learning application; and ï‚· Performance of interpreter. Whilst there is invariably room for improvement in training courses, and the open ended questions in the evaluation questionnaire provide good feedback in this regard, the very high levels of attendance by participants throughout the course, coupled with the relatively consistent high standard of team work undertaken by all five cluster teams, demonstrated a keen interest in the content of the course and its application to QNP. Other provinces within the Central Region would benefit substantially from involvement in such a training course in terms of preparing their next SEDP as well as the preparation of a regional plan. Recommendation 1: Undertake the training course in Integrated Provincial Planning in other provinces within the Central Region as a key component of capacity building within the provincial government sector. The course would be adapted to reflect the specific circumstances of each province and establish the foundations for an overall regional plan for the Central Region based on the concepts, tools and techniques introduced in the course as well as other planning and development concepts applicable at a regional level. 8.2 Social capital Matching the skills and knowledge of the QNP workforce with the needs of the existing and new economic activities in the province requires not only a substantial investment in social capital, but initial work about such matter as: ï‚· The available skills base including current deficiencies in the skills and knowledge of the workforce of the province; ï‚· The patterns of skills migration; ï‚· The future needs of different economic sectors and clusters in terms of skills and knowledge to support existing and new economic activities in the province. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 85 Based on these investigations an education and training strategy for QNP should be developed and implemented in close partnership with the private sector (domestic and international enterprises). Recommendation 2: The Provincial People’s Committee allocate adequate funds to undertake a detailed demographic study focused on enhancing the social capital of the province and, in so doing then prepare and implement an education and training strategy for the province. 8.3 Land Administration and Management Reform Throughout the training course the urgent need for land administration and management reform, especially in the agricultural sector, was mentioned as a high priority. If SMEs and MNEs are to actively invest in development in QNP then the ability to access land and secure land use rights and development approvals are integral to building a healthy investment climate for growth. Fragmentation of land ownership and particularly forest leases impedes growth of both the agricultural and forestry sectors. These are two key sectors in QNP which have potential to form competitive economic clusters focused around diversity in product and value adding on supply chains. Land as a resource is fundamental to the success of these clusters and is aligned with broader objectives of poverty alleviation and improved standards of living. Recommendation 3: The Provincial People’s Committee lobby Central Government to fast track the land administration and management reforms in QNP given that this is a very high priority in the economic development of what is currently a poor, underperforming central region province. 8.4 Tourism Development As highlighted throughout this report, further development of the tourist sector in QNP is fundamental to building a sustainable and competitive economy. Tourism has many facets of employment from small to medium and large scale ventures. It is a sector which requires a skilled workforce as well as a marketing and promotion campaign which seeks to attract growing numbers of domestic and international tourists. Unlike several other provinces in Vietnam, QNP offers a wide range of cultural and natural assets of national and world class notoriety. Despite these distinctive qualities, tourism remains under developed in QNP. Recommendation 4: A Tourism Strategy be prepared for QNP with the potential for this strategy to be expanded over time to cover the Central Region of Vietnam. The strategy is to be developed based on best practice concepts and techniques, involve a range of local, national and international businesses involved in tourism and the hospitality and leisure sectors and, outline an implementation program for improving all facets of tourism including funding sources, timelines for implementation and administrative structures. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 86 8.5 Economic Clusters QNP has at least five potential clusters in its current economy and yet these clusters are under developed and disconnected. A strategy is needed to foster these clusters in such a way that they become highly competitive entities which successfully ï‚· attract investment and generate jobs; ï‚· develop collaborative relationships within each cluster at local, regional and international levels; and ï‚· strengthen the network of business activities. Although government will play a key role in the development of these clusters, there is a need for a person or persons to facilitate the development of industry clusters in QNP. This is a role for a person familiar with the concept, management and operations of clusters both nationally and globally. A person who is able to connect existing and future business people with clusters overseas and hence build strategic business alliances and partnerships. Government’s role will provide the necessary administrative and development approval support needed by the cluster facilitator to achieve the establishment of vibrant, competitive and sustainable clusters within the province. Recommendation 5: Provincial People’s Committee to appoint a provincial cluster facilitator for a minimum of 3 years to foster the development of industry clusters in QNP. The facilitator would encourage inter firm industry cooperation, help develop the capacity of clusters to collaborate on marketing, information and business development and, provide advice on building business networks with clusters in other parts of Vietnam and the Asia Pacific Region. 8.6 The next SEDP for QNP The next generation of SEDPs for QNP will be required to apply best practice approaches, concepts, tools and techniques to integrated provincial planning. This will require a more rigorous and comprehensive SWOT analysis, the identification of all key issues and challenges facing the people of the province over the next 20+ years and the identification of the vision statement for the province accompanied by objectives and policies, action agendas and mechanisms to monitor and review change over time. In essence, the next SEDP should build on the work already undertaken during the Training Program of this TA but develop this in more detail with valuable input at major milestones with key stakeholders. The following recommendations aim to move forward with the next SEDP for QNP Recommendation 6: Establish a team of government professionals (some of whom were participants in the Training Program funded by the WB) responsible for preparing the next SEDP for QNP based on best practice methodologies, concepts, tools and techniques applied to integrated provincial planning. This team would be responsible for preparing the next plan by November 2009 and hence would spend 100% of their work time solely on this project. A team leader would be nominated to organise and manage the project with appropriate administrative assistance and staff resources, as required. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 87 Recommendation 7: Engage appropriate foreign consultants to assist with the preparation of the next SEDP for QNP but only in the capacity of guiding the provincial team through the steps in the preparation of the new plan so as to achieve key milestones in that process. The consultants would not prepare the plan but rather advise the provincial team at various stages in the plan preparation. The consultants would ensure that the provincial team are implementing the steps in the plan preparation process in a competent and expeditious manner and, provide expert advice when needed. Recommendation 8: The provincial team is to prepare a draft work schedule and budget for the preparation of the new SEDP for discussion with the PPC of QNP and the foreign consultants. The work schedule will identify key tasks to be completed and timing, key milestones to be achieved and dates, formulation of a consultation program involving key stakeholder participation in the plan preparation and other details as discussed. A budget would be established for this important project and funding secured as a very high priority. Recommendation 9: Secure funds for the preparation of the next SEDP from Central and provincial government sources and, possibly an international donor agency. Recommendation 10: Seek the full co-operation and collaboration from relevant government agencies (Central and QNP) in the collection of data and information as required by the provincial team responsible for preparing the next SEDP. The collection of data etc would be given the highest priority by these agencies given the time constraints involved in the preparation of the next SEDP which needs to be approved by Central and Provincial Government by the end of 2009. A Manual on ‘How to Prepare an Integrated Provincial Plan in Vietnam’ has been prepared as a key output of this TA. The Manual builds on the work prepared in the Training Manual - Technical Assistance and Training in Provincial Planning, Quang Nam Province, Vietnam and provides further support and guidance to provincial agencies responsible for preparing the next generation of Socio Economic Development Plans (SEDP) for QNP. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 88 Appendix 1 Training Manual Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam training manual Technical Assistance and Training in Provincial Planning Quang Nam Province, Vietnam September 2008 prepared by hansen partnership pty ltd Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 2 table of contents Background ...........................................................................................................................................................5 The Team of Experts are….......................................................................................................................................................6 Basic Rules for the Training Course..........................................................................................................................................8 Training Session 1 Integrated strategic planning in a Market Economy ..............................................................................17 Module 1: Concepts underpinning integrated planning and development in an open–market economy. ..............17 Module 2: The Competitiveness of Regional Economies.......................................................................................31 Module 3: Strategic Planning for Regional Economic Development ......................................................................55 Training Session 2 SWOT Analysis as a tool in provincial planning ....................................................................................71 Module 1: Analytical Techniques for Integrated Strategic Planning ......................................................................71 Module 2: SWOT Analysis for Quang Nam Province.............................................................................................91 Module 3: Multi-Sectoral Analysis (MSA) of the Competitiveness of the Capital Base of Quang Nam Province ..93 Training Session 3 Industry Clusters – From theory to practice (day 1)............................................................................ 109 Module 1: What is a cluster?................................................................................................................................109 Module 2: Examples of clusters in Asia ...............................................................................................................115 Module 3: Cluster ScoreCard – understanding clusters.......................................................................................125 Module 4: Identifying Clusters in Quang Nam Province.......................................................................................141 Module 5: About Best Practice and Collaboration................................................................................................147 Module 6: Action Agendas to drive Cluster Action Teams (CATs).......................................................................153 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 3 Training Session 4 Cluster Analysis – From theory to practice (Day 2) .............................................................................159 Module 1: Formation of Cluster Action Teams .....................................................................................................159 Module 2: Using Clusters to attract Multinational Enterprises..............................................................................161 Module 3: Cluster Action Teams – Data, Mapping and Cluster ScoreCards........................................................167 Module 4: Cluster Action Teams – Work Session................................................................................................169 Module 5: Report Back from each CATs team to the whole group ......................................................................171 Module 6: Governance..........................................................................................................................................173 Training Session 5 QNP Cluster Action Teams ..................................................................................................................175 Module 1: QNP Cluster Action Teams Report Back .............................................................................................175 Training Session 6 Formulating a Vision for Quang Nam Province ...................................................................................177 Module 1: Some different perspectives about the future of QNP........................................................................177 Module 2: What is the purpose of setting a Vision for QNP? ...............................................................................179 Module 3: Formulating a Vision for QNP .............................................................................................................187 Module 4: Recapping what we have learnt about QNP .......................................................................................191 Training Session 7 Formulating Objectives and Actions to achieve the Vision for QNP ...................................................193 Module 1: Examples of Objectives and Policies in Integrated Regional Planning .............................................. 193 Module 2: Refining the Action Agendas to realise the Vision and Objectives .....................................................201 Module 3: The ‘Road Map’ for the future development of QNP ...........................................................................203 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 4 Background Vietnam’s traditional approach to national and regional development planning has been driven by ‘top-down’ central government targets and limited analytical work. However, recent changes in policy, including Decree 92, calls for a more decentralized approach to development planning based on the preparation of integrated regional development strategies for six sub-national regions. Additionally, there is growing recognition among central government agencies such as MPI and DSI, that regional development plans should be more strategic, driven by the realities of Vietnam’s emerging market economy and designed to support broader regional development in the country’s size sub-national regions. The Province of Quang Nam is required to produce an Integrated Provincial Development before the end of 2009. There is a need to have a coordinated and strategic approach to provincial development in order to guide future investment in the province. The World Bank, at the request of Quang Nam Province, has engaged a team of experts from Australia to provide technical assistance and training in the development of such a plan. For Quang Nam Province these policy shifts by central government create an important opportunity for using new and innovative approaches for preparing its next integrated provincial development plan. More specifically, the World Bank has recommended that Quang Nam adopt a strategic cluster based approach to regional development planning for the province. The advantage of this approach is that it will provide provincial planners with the tools to introduce both strategic and cluster based analytical methods to regional planning. Strategic planning will allow Quang Nam’s provincial planners to assess the province’s strengths, weakneses, threats and opportunities (SWOT analysis). It will also enable them to articulate an economic vision for the overall development of the province that will serve as a compass for guiding regional development activities. Cluster analysis will provide the tools for provincial planners to systematically identify current industrial, agricultural and service sector specializations, and to identify emerging economic specializations. Together the SWOT analysis, the visioning and the cluster analysis will enable the province to define the appropriate set of investments, policy activities and initiatives to design an effective integrated regional development plan. Overall Technical Assistance and Training Course Objectives The Technical Assistance and Training in Integrated Provincial Planning Project objectives are as follows: 1. SWOT analysis training workshop to introduce concepts and rapidly apply to the province; 2. Cluster analysis training workshop to introduce concepts and rapidly apply to the province; 3. Visioning for integrated regional economic development training workshop to introduce concepts and rapidly apply to the province; 4. Linking visioning, SWOT and cluster analysis to design an effective integrated regional development plan; and 5. Training in the formation of cluster network support groups. The project is not a full strategic planning exercise. Rather, the project focuses on undertaking initial data analysis, the development of a rapid SWOT analysis, cluster analysis and visioning exercise. It will also include training and workshops to allow the local authorities to learn and use these techniques and workshops to orient the authorities to take the planning process through to the end. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 5 Expected Outcomes At the conclusion of the training course it is expected that the participants will have attained: 1. A sound understanding of the concepts underpinning integrated planning and development in an open market economy; 2. A sound understanding of the different techniques and tools used in best practice integrated strategic planning; 3. The ability to undertake a SWOT Analysis for Quang Nam Province; 4. Knowledge about cluster analysis as an important technique in identifying current and future development and investment opportunities for Quang Nam Province; 5. The application of cluster analysis including the collection and analysis of data about clusters and the use of tools such as cluster mapping, the Cluster ScoreCard and Action Agendas for each cluster within Quang Nam Province; 6. How to prepare a Vision Statement for the Province; 7. The application of the tools used to realize the Vision Statement – from the formulation of objectives to the setting of targets and the implementation of actions necessary to reach these targets. The Team of Experts are…. Professor Roz Hansen – Project Leader and Regional Planner - has more than 30 years experience in urban and regional planning having worked in Australia, Indonesia, Thailand, Laos and Vietnam. Roz commenced working in Vietnam in 1995 as conservation planner and strategic planner on the Hanoi Planning and Development Control Project funded by AusAID and operated within the Chief Architect of Hanoi Office. She lived and worked in Hanoi for most of the duration of this project which extended to 1997. Roz was also been the Project Leader for a course in Urban and Rural Planning in a Free Market Economy as part of the Vietnam Australian Training Program (VAT) funded by AusAID in 2000 and 2001. Roz has been involved in other projects incorporating training workshops and national workshop presentations of which the most recent in Vietnam is the review of the Hanoi Capital Region Plan, 2030 completed in September 2007 and adopted by the Vietnam National Government in May 2005. This was the first regional plan based on best practice planning concepts and techniques to be undertaken in Vietnam at the regional level involving a total of 8 provinces including the City of Hanoi. Professor Brian Roberts - Regional Planner and Economic Development Specialist - has worked in Africa, Asia, the Middle East, Australia and New Zealand on a diverse range of projects dealing with urban management and public policy, economic development in all key sectors, land administration and industry cluster analysis. His blend of skills in planning and economic development has provided vital input into a wide range of internationally funded projects over the last 30 years. Brian has also extensive experience in teaching university students in planning and economic development with a specialty in Asian Cities. He worked with Professor Hansen on the VAT training program as well as on the Hanoi Capital Region Plan, 2030 and their training techniques are highly complementary. Brian is co-author of a text book on Regional Economic Development: Analysis and Planning Strategy and has conducted cluster analysis work in Ho Chi Minh City, Vietnam. Brian has a particular expertise in cluster analysis having used this technique both in Australia and overseas. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 6 Rodney Brown – Cluster Analysis and Investment Expert - is an economist, business adviser and investment facilitator who has worked in Australia, Spain, France, China, India, Indonesia and the Philippines. Rod has developed an excellent reputation in the field of cluster analysis being a founding member of Clusters Asia Pacific Inc. His knowledge on cluster analysis is diverse having advised government and non-government agencies on the future of different industrial and business sectors within economies of both advanced and developing countries. His approach is both pragmatic and innovative seeking to move from a theoretical understanding of cluster analysis to its more practical and creative application for all sectors of an economy. Rod also offers knowledge and experience in regional development issues and opportunities and has a sound appreciation on the nature and need for infrastructure to entice new business and industrial enterprises to a region. He has held senior policy advisory positions in government and has a passion for ways of building supply chains for investment and trade in developing countries as part of wealth creation and improving living standards for all. Kim Hong Tran – Research Assistant, Translator and Interpreter - has been working on a range of international funded projects in Vietnam since 2000. As a qualified translator and interpreter fluent in Vietnamese and English, as well as a specialist in poverty reduction and development management, she will provide valuable support and assistance to the Australian team in data collection, development of the training manual and assisting with the interpreting throughout the project. Kim is also skilled in areas of policy formulation, social planning and community development in Vietnam and hence she brings to our team a sound knowledge of technical terms used in planning, urban management and economic development. She will also assist with the preparation of the Training Program Evaluation survey and report and act as a liaison person with key government officials working closely with the Project Leader. Katherine Morton – Urban and Regional Planner – has been working as a planner for almost four years during which time she Katherine has gained practical experience in single dwelling and multi unit development projects as well as industrial, commercial land use and development permit applications. She has contributed to the preparation of planning advice, permit applications, planning scheme amendments and planning appeals and expert witness reports to VCAT. Katherine has also undertaken a number of strategic urban planning projects. These include Strategy Plans, Urban Design Frameworks and Structure Plans as well as Feasibility and Concept Design Plans for regional tourism facilities. While undertaking these projects Katherine has gained exposure to community consultation processes and developed excellent skills in dealing with project stakeholders. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 7 Basic Rules for the Training Course 1. Arrive on time for each training session. We will start without you at the designated times on the attached training program so please do not be late. 2. Make sure you sign in each day in the attendance book at the front door of the training room. You need to sign in for each morning and each afternoon session. 3. Once assigned a group table please sit at this table for each session unless the group work requires you to move around. 4. Make sure you wear your name tag each day – there are 40 of you and only 5 of us so we have many more names to remember! 5. Turn off the mobile phones whilst the training session is underway in the training room. We will have three breaks each day – morning tea, lunch and afternoon tea – for you to catch up with your office enquiries etc. Mobile phones that ring during the training session will be placed in a box until the time that we break for coffee or lunch when they will be returned to the offender! 6. Do not be afraid to ask questions – during, before or after the session. We do not bite!!!! Some of the content of the training program will be complicated and may need further discussion and explanation. If you don’t ask the questions then how can you expect to understand the steps in the integrated provincial planning process. 7. Because integrated provincial planning is a ‘step-by-step’ process it is important that you attend all training sessions – if you miss one session then you may find it very difficult to understand what is going on. 8. Read the training session for the next day, the night before so that you are at least familiar with some of the terminology being used in each session. It may not be the most thrilling bedtime reading but being prepared for the next day’s topics will enhance your level of understanding and generate questions and discussion. Please note that participants of this training course are required to attend 100% of the course sessions to qualify for the certificate stating that you have successfully completed this course. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 8 Outline of the Technical Assistance and Training Program for Integrated Provincial Planning, Quang Nam Province, Vietnam 7 October Training Session No. 1 – 2008 Integrated Strategic Planning in a Market Economy Welcome to participants 8.00 - 8.20 Purpose of this technical assistance project funded by WB Brief outline of the training program and hand out manuals Module 1: Concepts underpinning Integrated Planning and Development in an Open Market Economy Key differences between a central planned economy and a free market economy. The concepts of: ï‚· Price Signals ï‚· Competitiveness 8.20 - 9.45 ï‚· Allocated Efficiency ï‚· Sustainability ï‚· Partnerships ï‚· Networks ï‚· Supply chains How can we measure competitiveness and why do we measure it? Case studies of regions or cities which are competitive and why they are competitive. 9.45 – 10.00 Morning Tea Module 2: The Competitiveness of Regional Economies 10.00 – 11.00 The Competitive Index Study for Vietnam – explain the technique and why it is useful in preparing an integrated provincial plan Small groups to identify the components of the criteria for Quang Nam Province and what could they do to address these components – use of a matrix. 11.00 – 1.00 Lunch break 1.00 – 2.15 Presentation by each group on their assessment of competitiveness followed by discussion. Module 3: Strategic Planning for Regional Economic Development 2.15 – 3.00 What is meant by thinking strategically? Different models of integrated planning in a market economy (use case studies) 3.00 – 3.15 Afternoon Tea What are some of the differences between an integrated provincial planning approach and the 3.15 – 4.15 current socio economic development planning approach in Vietnam? 4.15 – 4.30 Discussion and questions Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 9 8 October Training Session No. 2 – 2008 SWOT Analysis as a tool in provincial planning Module 1: Analytical Techniques for Integrated Strategic Planning 8.00 – 9.15 The key elements of an integrated provincial plan for Quang Nam Province – get participants to identify in a white board session these elements Analytical techniques used in integrated provincial planning: ï‚· SWOT Analysis ï‚· Shift Share Analysis 9.15 -9.45 ï‚· Location Quotient Analysis ï‚· Cluster Analysis ï‚· Multi Sectoral Analysis Case studies using these analytical techniques 9.45 – 10.00 Morning Coffee 10.00 –11.00 What do we know about Quang Nam Province today in terms of essential data? 11.00 – 1.00 Lunch Module 2: SWOT Analysis for Quang Nam Province 1.00 - 2.00 Small group task undertaking a SWOT of Quang Nam Province 2.00 – 3.00 Reporting back from the groups on their SWOT Analysis 3.00 – 3.15 Afternoon Tea Module 3: Multi Sectoral Analysis for QNP 3.15 – 4.15 The group will undertake a MSA for the Province 4.15 – 4.30 Discussion and Questions Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 10 9 October Training Session No.3 – 2008 Cluster Analysis – From Theory to Practice (Day 1) Module 1: The Theory of Cluster Analysis 8.00-9.00 What is a Cluster? The benefits of a cluster Two types of clusters Module 2: Examples of clusters in Asia 9.00 – 10.00 Chiang Mai, Thailand Bangalore, India Singapore Chemicals Cluster Malaysian Fish Clusters 10.00 – 10.15 Morning Tea 10.15 – 11.00 Module 3: The Cluster Score Card 11.00 – 1.00 Lunch Module 4: Identifying Clusters in Quang Nam Province 1.00 – 2.00 What clusters exist in Quang Nam Province today? Module 5: About Best Practice and Collaboration What is Best Practice? 2.00 – 3.00 Collaboration within QNP Collaboration between QNP and other provinces Collaboration between QNP and clusters overseas Proactive investment attraction Investor aftercare 3.00-3.15 Afternoon Tea 3.15 – 4.15 Module 6: Action Agendas to drive Cluster Action Teams (CATs) 4.15 – 4.30 Discussion and Questions Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 11 10 October Training Session No. 4 – 2008 Cluster Analysis – From Theory to Practice (Day 2) Module 1: Formation of Cluster Teams 8.00 – 9.00 Work session to form five cluster action teams – decide the industry cluster group for each team, geographic scope etc Module 2: Using Clusters to attract MNEs 9.00 – 9.45 MNE rating system Supply chain concept – case studies 9.45 - 10.00 Morning Tea Module 3: Cluster Action Teams – Data, Mapping and Cluster ScoreCards 10.00 - 11.00 Discussion about data requirements for each of the clusters for QNP Tips on gathering and presenting data – cluster mapping 11.00 – 1.00 Lunch 1.00 - 2.00 Module 4: Cluster Action Teams – Work Session 2.00 – 3.00 Module 5: Report Back of CATs to the group as a whole 3.00 – 3.15 Afternoon Tea Module 6: Governance session 3.15 – 4.15 Finalise cluster teams with team leaders and agree on their tasks to be completed over the next 2 weeks. 4.15 – 4.30 Discussion and Questions Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 12 4 November Training Session No. 5 – 2008 QNP Cluster Action Team (CAT) Report Back 8.00 – 8.15 Recap on cluster analysis technique 8.15 – 9.00 Cluster Action Team 1 reports to the group on its findings followed by discussion 9.00 – 9.45 Cluster Action Team 2 reports to the group on its findings followed by discussion 9.45 – 10.00 Morning Tea 10.00 - 10.45 Cluster Action Team 3 reports to the group on its findings followed by discussion 10.45 – 11.00 General discussion on CATs presentations for the morning session 11.00 – 1.00 Lunch 1.00 - 1.45 Cluster Action Team 4 reports to the group on its findings followed by discussion 1.45 – 3.00 Cluster Action Team 5 reports to the group on its findings followed by discussion 3.00 – 3.15 Afternoon Tea 3.15 – 4.15 Open discussion on the Action Agendas of each CAT – any additional actions/ideas? 4.15 – 4.30 Awarding of prize to the best CAT presentation Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 13 5 November Training Session No. 6 – 2008 Formulating a Vision for Quang Nam Province Module 1: Some different perspectives about the future of QNM 8.00 – 8.15 Introduction of the Panel members 10 minute presentation (plus translation time) from each panel member on their vision for QNP in 8.15 – 9.45 terms of economic development including key issues and opportunities for the future followed by questions to panelists 9.45 – 10.00 Morning Tea Module 2: What is the purpose of setting a vision for QNP? 10.00 – 11.00 Case studies of vision statements 11.00 - 1.00 Lunch Module 3: Formulating a Vision for QNP 1.00 – 3.00 Key elements of a vision statement Small group exercise formulating a vision for QNP followed by reporting back to the group as a whole 3.00 – 3.15 Afternoon Tea 3.15 – 3.45 Finalise the vision for QNP 3.45 – 4.15 Module 4: Recapping what we have learnt about Quang Nam Province 4.15 – 4.30 Discussion and questions Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 14 6 November Training Session No. 7 – 2008 Formulating Objectives and Actions to achieve the Vision for QNP Module 1: Examples of Objectives and Policies in Integrated Regional 8.00 - 9.00 Planning Case studies of different approaches to objectives and policies 9.00 – 9.45 Small groups formulate objectives for QNP which will achieve the Vision 9.45 – 10.00 Morning Tea 10.00 – 10.45 One member from each group presents the objectives for the QNP Vision (5 minutes per group) 10.45 – 11.00 Discussion and questions 11.00 - 1.00 Lunch 1.00 - 1.45 Module 2: Refining the Action Agendas to realise the Vision and Objectives Module 3: The ‘Road Map’ for the future development of QNP 1.45 – 3.00 Prioritize the Actions Identify the key stakeholders for each action Identify potential funding sources Establish timelines to implement the actions 3.00 – 3.15 Afternoon Tea 3.15 – 3.45 Review the steps in integrated provincial planning based on the cluster analysis technique 3.45 – 4.00 Participants complete the Training Evaluation Form Presentation of Certificates to participants who have completed the training course and final words of 4.00 – 4.30 thanks to all participants Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 15 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 16 Training Session 1 Integrated strategic planning in a Market Economy Module 1: Concepts underpinning integrated planning and development in an open–market economy. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 17 Introduction In Vietnam the economic system was modelled on the concept of the socialist economy. Under this model the State (that is, the people) owns all the land and government was responsible for setting targets and allocating necessary resources for production. Since the early 1980s there has been a rapid transformation in the former socialist countries with most adopting a more open market economy. In Vietnam, the government has adopted the socialist market economy model which follows closely that of China. In the case of Vietnam, the introduction of the centrally planned market economy as a result of Doi Moi has allowed both foreign and domestic investors/developers to undertake development, provided they can secure the relevant approvals from Government. Land is still owned by the State but development rights can be transferred (for a fee and a specified time) to individuals or companies to use and develop that land. Development leases are issued by the Ministry for Planning and Investment (MPI) who is responsible for the efficient allocation of State resources. In this first training session we explain: ï‚· What is a Market Economy. ï‚· Reasons centrally planned economies have failed. ï‚· Differences between the socialist and open market economy. ï‚· Economic models that have shaped the development of open market economies. ï‚· Factors that are shaping the development of modern economies. ï‚· Some challenges to Vietnam’s engagement in participating in open market economies. What is a Market ‘A market economy is an economic system in which decisions about the allocation of resources Economy? of production are made on the basis of prices generated by voluntary exchanges between producers, consumers, workers and owners of the factors of production. Decision making in a market economy is decentralised and made independently by groups and individuals rather than central planners Market economies involve a system of private ownership of the means of production. Market economies can function to some extent under social ownership.’ - Dictionary of Economic Terms, Harvard Press Why Controlled Markets are more efficient at allocating resources, products and services among consumers Economic according to preference. In centrally planned economies, the choice of products and services is Planning has largely determined by what is provided for in central plans. The rapid pace of change and failed. increasing complexity of decision making makes it impossible for central planners to satisfy the demand for new goods and services, and to allocate responsibility for the production of these goods and provision of these services. Markets are better able to maximise output and minimise resource inputs by ensuring that producer prices are subjected to competition. In centrally planned economies, planners assume demands and allocate production targets based on perceived needs. Because need is not subjected to market analysis or testing, over-production and shortages occur resulting in market inefficiencies. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 18 Markets are more flexible in responding to change. In controlled economies many planning decisions about production are made centrally. Opportunities to service demand for goods and services at the local or specialised level are often lost because of the slowness of bureaucratic processes to respond to market demands and the priorities placed on nation production targets. Markets encourage private economic activity and disperse economic power. In controlled economies, mainly state and limited private capital is available for investment. Market economies disperse wealth, which enables private assets to be used more efficiently to raise capital for a wide range of production purposes. Key differences Most countries depend upon market mechanisms, rather than government systems, to allocate between a central goods, services and factors of production. There are six important features of market planned economy economies: and a free market economy. 1. Price is the principal mechanism used to determine the supply and demand for goods and services in society; 2. Government intervention in markets is used sparingly to manage development processes to achieve desired economic and social development outcomes or, where necessary, to address market failure; 3. The profit motive leads business and investors to make choices about how best to allocate limited resources in the most efficient way; 4. Decisions about production, investment, distribution and sale of goods and services are left to markets to determine; 5. All assets (public, private and personal) which comprise savings, materials, labour, property and infrastructure) have the potential to be used for production, and 6. Competition is important to market efficiency and innovation. In centrally planned or controlled economies: ï‚· Decisions about the production of goods and services are determined by social and economic goals and societal needs set by government, not prices and markets. ï‚· Demand is determined by the (assumed) average propensity of the population to consume goods and services. ï‚· Price is determined by the expected level of consumption of goods and services. Most Economies There is no such thing as a fully capitalist or fully controlled economy. Most economies are what are Mixed we call ‘mixed economies’. In mixed economies governments set goals and agendas for the Economies private sector to follow but maintain control of many factors of production. National development goals in mixed economies are usually formulated in consultation with the private sector and organised labour. Governments still retain control over the development and provision of many urban services, and some manufacturing enterprises. These are usually operated on a competitive basis. Many centrally planned economies are transferring public utility services such as telecommunications, water and environmental waste management to the private sector. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 19 Centrally planned economies were very successful in supporting the development of national economies in the post World War II reconstruction period. By the 1980s the rates of change in technology, free trade, and demand for greater consumer choice, and flexibility and inefficiencies in centrally planned production systems led to the need to reform controlled economies. The reforms have resulted in: 1. The scope and penetration of central planning being greatly curtailed; 2. Central planning becoming directed mainly at general macro economic goals, such as rates of growth, consumption or investment targets, or regional development; 3. Planning for production being delegated to factories and guided by considerations of profit and loss; 4. Factories are free to buy from and to sell with whomever they pleased; 5. Managers are free to reduce staff to labour cut costs, improve efficiencies and management and introduce more capital and technology orientated equipment to improve output; and 6. Small private enterprises, especially in farming, small-scale manufacturing and the retail trades, are being encouraged, to boost national and regional economic output. Regional The role of regions in national economies has changed significantly in recent times as a result Economic of globalization and economic reform programs. Understanding these processes of change is Development in crucial for undertaking regional economic analysis and in planning for regional and provincial the Old and New development. Economy In developed economies in the 1950s and 1960s often industries in the regions of a nation tended to be highly specialized and protected through the operation of tariffs and other government policies that shielded them from international competition. Many regions—and especially large urban regions—tended to be characterized by large scale, energy intensive, low labor skill, locally integrated industries producing commodities, manufactured goods and services based on resources and largely local expertise. National and provincial governments played a leading role in the development of regional and local economies, often promoting the development of industrial development by building industrial estates and providing incentives for industries to locate in regions. In the 1970s Korea and Japan began developing Economic Enterprise Zones, with countries like China, Thailand and Indonesia using these zones successfully to attract foreign direct investment (FDI) in manufacturing industries. The approach was largely driven by supply-side economic ideas, in the belief that if governments built infrastructure and provided cheap industrial land and services, companies (especially international companies), would be attracted to regional centers. The supply side approach to economic development has been adopted by most governments in Asia in open and socialist market economies, including Vietnam. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 20 However, in the 1980s and 1990s, regions in developing countries began to be affected profoundly by globalization and structural change, including changes to the international sourcing of goods, materials, services, design, finance, production and marketing. These changes led to greater inter-regional and international trade, and, at the same time, resulted in the development of highly specialised agglomerations of new geographic clusters of industries, especially in global cities and mega metro regions that service both national and international markets. These powerful sub-regional economies have Gross Regional Products (GRP) larger than that of many nations and, in some cases, regional economies dominate the national economy from a leading technology or entrepreneurial perspective. These changes led to two approaches to regional economic development. The ‘old’ economy approach was based on demand-side economics, with government playing a leading role in fostering and controlling economic development. The ‘new’ economy approach is more demand-side, where governments have a role in facilitating and supporting private sector development in response to demands generated by global market forces. Table 1 shows the different attributes of old (supply-side) and new (demand side economies). Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 21 Table 1: Key attributes of the old and new economies* Economy-wide ‘Old economy’ ‘New economy’ characteristics (industrial) (post-industrial) Organizational form Vertically integrated Horizontal networks Scope of competition National Global Markets Stable Volatile Competition among sub- Medium High national Geographic mobility of Low High business Role of government Provider Facilitator Labor and workforce characteristics: Labor-Management Adversarial Collaborative relations Global learning skills and Skills Job-specific skills cross-training Lifelong learning & Requisite education Task specialization learning by doing Higher wages and Policy goal Jobs incomes (productivity) Production characteristics: Information and Resource orientation Material resources knowledge resources Relation with other firms Independent ventures Alliance and collaboration Source of competitive Innovation, quality, time Agglomeration economies advantage to market and cost Primary source of Mechanization Digitization productivity Innovation, invention and Growth driver Capital/labor/land knowledge Role of research and Low moderate High innovation Production methodology Mass production Flexible production Role of government Infrastructure provider Privatization Infrastructure characteristics: Soft (information and Form Hard (physical) organizations) Travel time reduction Transport Miles of highway using IT Linked power grid (co- Power Standard generation plant generation) Organizational flow Highly regulated Deregulation Telecommunication Miles of copper wire Wireless and fiber Learning Talking head Distance learning * Source: Jin and Stough (1998).Learning and Learning Capability in the Florist and Post-Fordist age: an interactive framework. Environment and Planning A 30:1255-1278 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 22 Factors Important The progressive move towards more market and knowledge/service-based economies in Asia to Operating in is bringing about a fundamental change in the approach by governments to foster the Open Economies development of cities. There is the realization, in most Asian countries, that cities and regions are now the key to driving national economic development. The impact of globalization, free trade and governance reforms has resulted in the opening up of economies to competition and direct foreign investment to boost national and regional economic development and, to improve industry productivity. Asian governments, particularly in Vietnam, still maintain a high level of control over economic development activities, especially over industry policy, provision of infrastructure and public services. However, as the responsibility for planning and delivering economic development becomes more decentralized in Asian countries, it is city and provincial governments that will be expected to provide the leadership for these tasks. However, if regions are to benefit from decentralization, governance systems must respond quickly to changing factors which shape the economic development. The following discussion addresses important factors shaping the future economic development of provinces and cities in Vietnam. Enhancing the Competitiveness is driven by the need for local/regional firms and governments to have the Competitiveness lowest possible transaction costs for the optimal structure of the economy now and in the near of City and future. Transaction costs are affected by a number of factors, many of which are not directly Regional related to economics. The efficiency of government systems, strategic infrastructure, stock, Economies development and quality of human capital, community attitudes/culture and amenities are key factors important to human development, which also relate to the economic competitiveness of cities, regions and provinces within those regions. Various studies have been conducted in Asian countries to measure competitiveness of regions and cities. A study of the Competitiveness of Provinces in Vietnam was undertaken in 2006 by USAID. The next session will examine and discuss some of the implications of this study on the province. While international comparisons of competitiveness between cities and provinces or regions in Asia are not possible, common elements of competitiveness are observed between the different studies. Evidence from other Asian countries suggests public investment in skills, technology development and governance reforms are probably more critical to economic development than investment in infrastructure, although investment in all of these activities are essential. Introducing New Decentralization has become the catalyst for renewed interest in regional development in Asia. Forms of It has also taken different forms. There are three basic forms of decentralization: Economic Governance ï‚· reconcentration e.g. physically shifting functions within the central government out of headquarters to regions; ï‚· delegation e.g. transferring some responsibilities to another tier of government or agency to administer on behalf of central government; and ï‚· devolution e.g. transferring full responsibilities to sub national governments and agencies. Many countries in Asia have applied all three forms in implementing policies for decentralization. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 23 The level of decentralization in Asian countries varies significantly, but the fiscal revenue sharing arrangements (discussed later) are a good indication of progress in decentralization. Cross-country comparison studies on the impact of decentralization on regional economic development are difficult to undertake since some countries are further advanced in the process than others and, the structure and function of the levels of government tend to be quite different. A major problem for some Asian countries, notably the Philippines and Indonesia, is that decentralization is leading to greater fragmentation of government with new provinces and cities being created. This has resulted in the reduction in the allocation of central government grant funds in these cities, greatly reducing funds available to support development. Establishing Catalysts are mechanisms, persons, firms or other instruments that facilitate linkages and Catalysts to transactions between business, government and community in order to: Support Economic ï‚· Identify potential business investment contracts and infrastructure; Development ï‚· Create networks and clusters of core competencies attractive to business; ï‚· Draw together people, resources and technology; and ï‚· Facilitate investment through a range of finance, land, technology and business development packages. In developed countries catalysts operate very efficiently with markets in enabling a wide range of public infrastructure development projects to be realized at considerable cost savings to government. The involvement of catalysts allows greater creativity in drawing upon the available resources in a region than would be possible through a single development organization or, the individual efforts of business enterprises or government. Catalysts are able to come up with innovative ways for regional governments to develop important projects, often without increasing public debt. Catalysts therefore play a critical role in creating new investments and infrastructure, management services, community development organizations, projects and programs that governments are unable to create using traditional mechanisms. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 24 Focusing on Since the early 1980s, city economies have continued to play a more dominant role in shaping Regional / the development of national and regional economies in Asia. Nation states have been replaced Provincial by the city or region state as the primary driver of national economic development. This can be Specialization seen in Vietnam where two cities Hanoi and Ho Chi Minh City dominate industrial production in and the country. Part of the reason for this is the trend towards greater specialization and Agglomeration integration of global production systems in cities. Factors which have contributed to this phenomenon include: ï‚· multinational corporation control of world trade, finance, communication and information dissemination; ï‚· the deregulation and decentralization of national economies, the embracement of capitalism, open markets and free trade in many formerly controlled economies; and ï‚· greater cultural, educational, knowledge and visitor exchanges and sharing between nations and cities. Adding Value to The value chain, also known as value chain analysis, is a concept from business Supply Chains1 management that was first described and popularised by Michael Porter in his 1985 best-seller, Competitive Advantage: Creating and Sustaining Superior Performance. A simple example of a value chain for food production from rice is show below. At each stage of production chain value is added to products produced from rice at the point of sale. 1 Source of Notes: http://en.wikipedia.org/wiki/Value_chain Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 25 A value chain is a chain of production and distribution activities. Products pass through all activities of the chain in order and at each activity the product gains some value. The chain of activities adds value to products more than the sum of added values of all activities. It is important not to mix the concept of the value chain with the costs occurring throughout the activities. A diamond cutter can be used as an example of the difference. The cutting activity may have a low cost, but the activity adds much of the value of the end product, since a rough diamond is significantly less valuable than a cut diamond. The value chain categorizes the generic value-adding activities of an organization. The "primary activities" include: The "support activities" include: ï‚· inbound logistics ï‚· administrative infrastructure management ï‚· operations (production) ï‚· human resource management ï‚· outbound logistics ï‚· information technology ï‚· marketing and sales (demand) ï‚· procurement. ï‚· services (maintenance). The costs and value drivers are identified for each value activity. The value chain framework quickly has made its way to the forefront of management thought as a powerful analysis tool for strategic planning. Its ultimate goal is to maximize value creation while minimizing costs. Attracting The ability of regions to attract foreign direct investment (FDI) is important to stimulating Foreign Direct economic activities. Foreign investment brings in much needed capital, technology and Investment management practices to improve the efficiency of productivity and provides competitions for State owned enterprises. Unfortunately, it has resulted in a severely distorted pattern of urban and regional economic development throughout Asia. Urban dominated regions attracting high levels of foreign investment are experiencing the strongest economic growth. Regions which have not been successful in attracting foreign investment get left behind. Under more open market conditions, national governments are less able to direct foreign investment, leaving many urban regions in the position of falling further behind in development stakes. How to address these regional distortions is a major challenge for national and provincial governments. Decentralization and greater regional responsibility for government decision making is important to creating a competitive environment to attracting foreign investment. This is the reason many provinces in China are able to attract high levels of foreign investment. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 26 Building Perhaps the most challenging problem facing Asian cities is meeting the demand for urban Strategic infrastructure, to provide access to good quality, affordable and reliable services. The current Infrastructure demand for infrastructure and services far outstrips supply in most Asian cities. Governments are investing far too little in infrastructure and this is undermining economic growth, private sector development, and the achievement of social and poverty reduction goals. However, it is not just the provision of hard infrastructure which is proving a challenge to the development of Asian cities. Cities are being driven increasingly by the demand for advanced knowledge and information services. Soft infrastructure such as higher education and research facilities, IT services, logistics management, efficient decision–making systems of government and, innovation and strong capital markets, are elements of infrastructure needed to support development and enhance the competitiveness of cities. Most Asian cities lack the elements of soft infrastructure needed to support the development of strong and sustainable economies. The critical mix of hard and soft infrastructure in cities which is needed to make them competitive places for trade and investment is referred to as strategic infrastructure. Strategic infrastructure is targeted at developing the export growth sectors of the economy such as manufacturing, tourism, business services or logistical services. Most Asian cities have weak strategic infrastructure reducing their ability to compete for investment and development in areas of advanced level manufacturing and knowledge–based industries which add greater value to local economies. Integrated Plan implementation in Asia, and especially Vietnam, is currently failing for many reasons. Most Strategic development plans or master plans are prepared with a focus on physical development. Planning However, the failure to consider the economic, financial and social needs to implement master plans means few of these are ever implemented. What is intended to ensure a well planned physical environment ends up with sporadic concentrations of poorly serviced middle and upper income housing and industrial development, vast areas of informal settlement adversely occupying public and private lands as well as areas intended for public open space or environmental protection, for example flood ways and tidal coastal foreshores. In China the adverse environmental impacts of poorly planned development are adding huge costs to the public purse in remediation works to address these impacts. A similar situation is emerging in some provinces and regions in Vietnam. The challenge for national and provincial governments in Asia is to introduce strategic planning which is much less concerned with physical layout details, and more focused on market demands and the long term provision of infrastructure and services. The relationship between urban planning, budgeting and financing is very weak. Subsequently projects are stopped, or half completed, while agencies wait for annual budgets to be announced to see if they have funds to complete projects. This creates uncertainty in the planning system, results in massive cost overruns on most public sector projects and a tendency to cut corners, compromising safety and quality of public buildings and assets. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 27 Developing Knowledge is one of the most important factors needed to support economic development in Knowledge open market economies. Knowledge leads to the creation of new ideas, better skilled workers, Economies more efficient production systems, better intelligence on the way market operate and greater acceptance of change. Regions and provinces within those regions which have focused on the development of knowledge generally have higher economic performance. Knowledge is developed through formal learning and through networks, especially international networks and partnerships. An important element of knowledge development is improved foreign language skills. This is necessary to facilitate international business development and information exchange, and for the development of regional tourism for international visitors. Fostering Fostering the development of clustering industries and urban development has the potential to Industry Clusters improve the sustainability, competitiveness, liveability and productivity of Asian cities. Clusters now form the industrial organizational basis for economic planning and development in the 21st century. Clusters are replacing traditional sector industry plans and initiatives which are failing to drive sustainable economic development processes. Clusters comprise industries whose operations are intrinsically linked or networked with suppliers, distributors and economic infrastructure and that are responsive to the requirements of industries producing goods and services that are traded in the national and global economies. Later in this training program we will discuss clusters and focus on Quang Nam Province. Focusing on Governments and global corporations are now paying much closer attention on the need for Sustainable sustainable development and cleaner industrial productions systems. This is in response to Development customers and shareholders in global corporate businesses in developed economies demanding goods and services produced in developed countries be manufactured or produced in a more sustainable way. Sustainable development involves focusing not only on the environmental issues, but on improving social conditions and economic management. The effect of global warming and increased air and water pollution will also have a big impact on public health and labour productivity performance. These factors will require all levels of government in Vietnam to ensure greater compliance to international cleaner production standards and environmental management. Regions that do not adopt sustainable development practices are unlikely to attract investment from foreign companies because they will not be able to sell their goods into developed economy markets unless they are certified are produced sustainably. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 28 Some Challenges The new economy will bring many challenges to the economic development of provinces and for Provincial and cities in Vietnam. Some of the more difficult challenges the country and provincial governments Regional will face include: Development ï‚· How does will national and provincial government address the issue of competition and removal of protection barriers under the World Trade Organization Agreement? ï‚· How can provincial governments and industries become more engaged in networks and partnerships with international firms to gain better access to markets? ï‚· How can business leadership and the knowledge base of local communities be improved? ï‚· How much autonomy and responsibility will the Government of Vietnam give provinces and regions to mange their own economic development affairs? ï‚· How will provincial governments increase the level of transparency and accountability needed to comply with international standards of good governance expected by foreign investors? ï‚· How can the level of investment in innovation and technology be improved in the regions and provinces of Vietnam? ï‚· How can the foreign language skills for the population be improved to enable regions to attract investors and to engage in global trade and development? Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 29 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 30 Training Session 1 Integrated strategic planning in a Market Economy Module 2: The Competitiveness of Regional Economies Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 31 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 32 Introduction To be successful in developing regional and local economies, governments and business must pay attention to factors that create competitive advantage. Competitive advantage is achieved through the development of good infrastructure and governance systems; endowed resources; strong leaderships; well developed knowledge and information systems and a dynamic business sector. Understanding which factors are important to regions in establishing competitive advantage is difficult and requires much research. Many countries, including Vietnam, have begun to measure the competitiveness of cities and regions to identify the strengths and weaknesses of the factors describe above. These measures of competitiveness have enabled regions through different planning processes to develop appropriate strategies and actions to capitalise on strengths and opportunities and to address weakness and risks where they are able to do so. This session will examine: 1. Theories on competitiveness which have been used by governments and business to achieve competitive advantage 2. Various indexes used to measure the competitiveness of national, provincial, regional and urban economies 3. Discuss theThe Vietnam Provincial Competitiveness Index survey of 2006 4. The Competitiveness of Quang Nam Province through a group exercise discussion Theories on Three theories of competitiveness have shaped much of the thinking on national and local Competitiveness economic development in open economies since the 1960s. Comparative Advantage Comparative advantage is based on the principle whereby individuals or regions produce those goods or services for which they have relative advantage, usually has the result of endowed natural resources, labour or capital. Comparative advantage tends to lead to specialization. After WWII the usual strategy was to develop national industries in regions that would export specialized goods and services to international markets. Economic planning policies were directed towards achieving comparative advantage by focusing on lowest production costs (labour, materials, energy, taxes and infrastructure) relative to competitors. However, the full costs of production were often not accounted for. It was understood that a region might specialize in an activity for which it had no absolute industry cost advantage, but tariffs, incentive measures and infrastructure subsidies would be used as a means to advance comparative advantage. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 33 Competitive Advantage During the 1970s and 80s, the focus of competitiveness moved towards a paradigm of competitive advantage (Porter 1985, 1990) (Porter, 1985). Competitive advantage has an emphasis on efficiencies in the means of production, with a focus on ‘value factors’ related to performance and quality. Value factors relate to resource, capital and labour efficiencies and application of advanced technologies that lead to increased productivity were considered important factors of competitive advantage. However, quality of life, human and social capitals are now considered important to enhance the productivity, innovation and competencies of regional workforces. Collaborative Advantage The squeezing of margins and increasing competitiveness of business resulting from national competition policies and globalisation is bringing about a change in the way corporations and firms do business. Rival firms and corporations are actively seeking collaboration through alliances, partnerships and other forms of cooperation to explore opportunities for winning and expanding business. This has led to the emergence of a new theory of competitiveness based on ‘collaborative advantage’. Collaborative advantage relies on greater integration, co- operation and partnerships between business, governments and communities. The elements of competitiveness related to comparative advantage focus strongly on production inputs such as labour, infrastructure, material costs and taxation. In the classic economic sense, these are land, labour and capital. The focus of competitiveness for competitive advantage is on strategy and factor costs of production, such as resource efficiency and organisation effectiveness. Many elements of competitive advantage relate to elements of endogenous growth theory, such as a focus on the development of technologies and human capital. The elements of collaborative advantage are the ‘smart’ elements of strategy, organisational arrangements and elements of production. Key factors of competitiveness evaluated by the approaches are summarised in the table below. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 34 Table 1: Elements of Comparative, Competitive and Collaborative Advantage Comparative Competitive Collaborative Advantage Advantage Advantage Land Costs R&D Networks Infrastructure Technology Industry Clusters Taxation Regulation Strategic Alliances Labour Costs Labour Productivity Public/Private Partnerships Proximity to Raw Materials Skills Base Inter-Modalities Transport Core Competencies Trust and Empowerment Cost of Capital Quality of Life Openness Governance Location to Markets Social Capital Smart Systems Economies of Scale Economies of Scope Competitive There is no single factor that makes a region competitive. Competitiveness is a result of unique Indexes sets and combinations of factors operating collectively in a region to support production and other capital development processes. Some factors, such as location or uniqueness of product may appear to be primary drivers of competitiveness. However, these factors are influenced by other factors in the competitiveness equation. If we are to better understand the nature of regional competitiveness and how it can be used for competitive advantage in the future, we need analytical techniques that will explain the importance of the relationships between the various factors that contribute to and continually build upon the competitiveness of industries and firms. The following describes some useful techniques for evaluating regional competitiveness. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 35 World Economic Forum Competitiveness Index (National Competitiveness) The World Competitiveness Report (WCR) is prepared by the Institute for Management Development for the World Economic Forum (WEF). The WCR is an annual multi-dimensional analysis comparing and ranking the competitiveness of nations. Competitiveness is defined by the WEF as: "The ability of a country or company to proportionately generate more wealth that its competitors in world marketsâ€?. The term wealth in the World Competitive Index Report is used very broadly. The report recognises that competitiveness cannot be reduced to the measurements of economic factors alone. Competitiveness involves the way political, economic, social, cultural, human and educational dimensions are taken into account to measure the competitiveness of a country. The report recognises that competitiveness occurs at several levels -: national, regional and enterprise. The focus of the report is on countries and the approach is extensively concerned with how national environments are conducive or detrimental to the domestic global competitiveness of the enterprises operating in the countries studied. There are eight broad categories of competitiveness measured by the World Competitiveness Report (See Figure 1). To prepare the World Competitiveness Report, data is obtained from two sources. Hard data consists of statistical information gathered from international, government and regional organisations, private and national institutes. There are 248 hard data criteria collected from a range of statistical sources. Soft data is compiled from an opinion survey sent to 21,000 executives in more than 50 countries. Qualitative information on 130 issues of concerned with competitiveness is collected. The World Competitiveness Scoreboard ranks countries on their overall competitiveness. Scale factors are applied to different criteria to provide a common basis for comparisons of the factors and criteria used to compile the overall scoreboard. The USA and Singapore have consistently ranked highest in overall competitiveness in recent years. The Factors of Competitiveness Rankings lists in table format the rankings by countries of the eight factors of competitiveness. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 36 Domestic Economic Strength macroeconomic evaluation of the Internationalisation People domestic economy overall extend to which the country availability and qualifications participates in international of human resources n=48 trade and investment flows n=60 n=56 Science and Technology n=54 scientific and technological World Government capacity, together with the extent to which success of basic and Competitiveness government n=42 applied research policies are conducive n=35 to competitiveness Management n=37 n=46 extent to which enterprises Finance are managed in an Infrastructure performance of capital innovative, profitable extent to which resources markets and quality of and responsible manner and systems are adequate to financial services serve the basic needs of business n-number of criteria per factor Figure 1: Eight Factors of Competitiveness Used in WEF Competitiveness Report Table 2 below shows the World Economic Forum (WEF) ranking for the top world economies and those of Asia. Vietnam ranks 68 out of 131 countries measured by the index. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 37 Table 2: World Competitiveness Index for Countries Country/Economy Rank WEF Score United States 1 5.67 World Switzerland 2 5.62 Denmark 3 5.55 Sweden 4 5.54 Germany 5 5.51 Finland 6 5.49 Singapore 7 5.45 Asia Japan 8 5.43 Korea, Rep. 11 5.4 Hong Kong SAR 12 5.37 Taiwan, China 14 5.25 Malaysia 21 5.1 Thailand 28 4.7 China 34 4.57 India 48 4.33 Indonesia 54 4.24 Vietnam 68 4.04 Sri Lanka 70 3.99 Philippines 71 3.99 Bangladesh 107 3.55 Nepal 114 3.38 Timor-Leste 127 3.2 Source: WEF 2008 Other Several Asian countries have or are conducting studies of the competitiveness’ of regions, and Competitiveness cities. The study of the competitiveness of 23 Chinese cities (Dollar et al. 2004) provided strong Indexes evidence of the importance of public investment in technical skills and R&D. The Philippines and India have conducted a study of the competitiveness of cities; while Sri Lanka and Bangladesh are current conducting studies on the competitive of their ten largest cities. Evidence from these studies in other Asian countries suggests investment in skills and technology critical to economic development and attraction of investment. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 38 Case Study 1 The Philippine Cities Competitiveness Ranking Project2 (PCCRP), which is the flagship project The Philippine of the City Competitiveness Program, provides a good Asian example of an attempt at Cities measuring city competitiveness. The methodology used to conduct the study was adapted from Competitiveness the World Competitiveness International by the Asian Institute of management (AIM) Policy Ranking Project Centre in Manila. The objectives of PCCRP study were to: ï‚· Assessment of the general well-being of a city ï‚· Underscore the absolute and relative performances of cities ï‚· Provide a tool for development planning, monitoring and evaluation ï‚· Highlight the strengths and weaknesses of cities ï‚· Help in prioritising investments, identifying growth areas The PCCRP assessed the capability of cities to provide an environment that nurtures dynamism of its local enterprises and prosperity of its residents. It measures seven drivers (see figure 2), comprising 68 indicators, of competitiveness (quantitative data and executive opinion survey) for 65 cities categorized as small, mid-sized, and metro. The study looks at seven drivers of competitiveness: Figure 2: Philippine Cities Competitiveness Ranking Project Competitiveness Indicators 2 Material used from AIM http://competitiveness.multiply.com/journal/item/3 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 39 To validate survey results of the study, a focus group discussion involving 5-10 people from the business sector is conducted in each city. The group answers the following main points: the vision for the city according to local and regional development plans; the strengths and weaknesses and areas for improvement of the city; political obstacles in the city’s development; changes in the city’s economy during the past two decades, and the industries dominating the city’s economy. The Philippine Cities Competitiveness Ranking Project indicates the benefits of cities fostering the development of industry clusters. It shows that cities and provincial governments that wish to foster the development of clusters in support of local economic development must appreciate: ï‚· Economic activities extend beyond territorial and administrative jurisdictions ï‚· Need to address trans boundary issues and concerns ï‚· Local industries need to compete in bigger playing fields to achieve economies of scale ï‚· Strategic partnership and positioning ï‚· Development of new services ï‚· Brings in variety of benefits to firms and local economy (creation of new ideas and new businesses) The challenges to the City Cluster Development approach in the Philippines are: ï‚· Fragmentation (administrative unit vs. economic unit perspective) ï‚· Local autonomy (parochial mindset) ï‚· Government structure not conducive for cluster development ï‚· Weak government support and initiative on cluster-based economic development ï‚· Weak public sector participation and industry associations ï‚· Weak regional planning in a decentralized system Case Study 2 In 1996, the Hong Kong government began a research project to investigate the Hong Kong competitiveness of Hong Kong's economy, and to set strategic directions for its development of Cluster the special regions economy over the next fifty years (Enright et al. 1997). This was the first model used to develop a measure of the competitiveness of factors that support the Competitiveness Model development of clusters. The analytical technique used is a variation on Michael Porter’s model used to analyse the competitiveness of nations (Porter 1990). The model used to analyse the competitiveness of the Hong Kong economy contains six competitive variables: 1. Inputs are services, materials, and commodities, human and other resources that are used in production. Inputs are a direct response to demand and relate to size, sophistication and structure of local demand and foreign demand. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 40 2. Industrial and consumer demand can provide pressures to improve the size, sophistication and demand for local, foreign and overseas investment, production and development. Other factors affecting demand include geographic scope of competition and relevant competitors, drivers of cost and customer satisfaction, key success factors and resource requirements. 3. Industrial and regional clusters increase regional capabilities and add stimulus to economic development by enhancing market information, technical information, knowledge spill-overs, know-how spill-overs and economies of scope for developing new business ventures. 4. Inter-firm competition and cooperation creates pressures for firms to innovate and cooperate, leading to increased regional capabilities. The extent of innovation however depends upon the degree and nature of local competition, stimulus from foreign competition, and cooperation amongst local firms. 5. Internal organization and strategy of firms need to be aligned to support the development of core regional industries. If there is congruence agreement in the thrust and competitiveness of business strategies, opportunities for regions and industries to collaboratively market, innovate, collaborate, share, stretch and leverage resources, expertise and knowledge increase. 6. Institutions, social structures and agendas shape business policy and strategy. Increasingly, business investment and decision-making are influenced by perceptions, assumptions and beliefs found within a region. Thus industries are becoming embedded in social systems, and these, in turn, have an impact on competitive outcomes. The measurement of the six competitive variables and simple qualitative matrix techniques to evaluate the competitiveness of eight industry sectors in the Hong Kong economy are shown in Table 3. Working groups comprising leading industry managers, academics, government officials and other experts made the evaluation. Hong Kong’s competitive advantage is strongest in the inputs and firm strategy, especially the transport sectors (Enright, et al., 1996). Strong opportunities for developing forward and backward linkages were identified in the trading, funds management, and garment and telecommunications industries, suggesting that the thrust of the long-term development strategy for the city should focus on these core business activities. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 41 Table 3: Sources of Competitive Advantage for Hong Kong Industry Industrial and regional Inter-firm Competition Consumer Demand Institutional, social Strategy of Firms Organisation and & Cooperation Industrial and structures Clusters Inputs Garments + ++ + ++ + Electronics + + + Trading + ++ ++ ++ Fund ++ + ++ + Management Civil + ++ + Engineering Air Cargo ++ ++ ++ + + Sea Cargo ++ +++ +++ + ++ Telecom + + ++ ++ Source: 2047 Strategy for Hong Kong & Enright et al 1996 Case Study 3 In 2005, USAID conducted a survey of the competitiveness of provinces in Vietnam. The Vietnam Provincial Competitive Index (PCI) assesses and ranks provinces by their regulatory Provincial environments for private sector development. In 2005 VPCI covered 42 provinces, accounting for a total of 87% of the national GDP. The survey measured nine primary indicators of Competitiveness Index (VPCI) competitiveness made up of 41 sub indicators. The nine primary indicators are: 1. Entry Costs: a measure of the time it takes firms to register, acquire land, and receive all necessary licenses start business 2. Access to Land: a measure of whether firms possess their official land-use rights certificate, whether they have enough land for business expansion requirements, and the effective price of land in the province, taking due consideration of the demand and supply in the provinces, and the quality of industrial zone policies. 3. Transparency and Access to Information: a measure of whether firms have access to the proper planning and legal documents necessary to run their business; whether those documents are equitably available; whether the new policies and laws are communicated to firms and predictably implemented; and whether the business utility of the province has a web page. 4. Time Costs and Regulatory Compliance: a measure of how much time firms waste on bureaucratic compliance as well as how often and how long firms must shut down their operations for inspections by local regulatory agencies. 5. Informal Charges: a measure of how much firms pay in informal charges and how much of an obstacle those extra fees pose for their business operations. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 42 6. Implementation of Policies and Consistent Applications across Provincial Sub-Agencies: a measure of the coordination between central and provincial governments, as well as the consistent application of central policies across provincial sub-agencies. 7. State Sector Favouritism: a measure of the bias of provincial governments towards state owned enterprises (SOEs) in terms of incentives, policy and access to capital. 8. Proactive Provincial Leadership: a measure of the creativity and cleverness of provinces in both implementing central policy and designing their own initiatives for private sector development. 9. Private Sector Development Policies: a measure of provincial policies and private sector trade promotion, promotion of regulatory information to firms, business partner matchmaking, and capacity training to improve the quality of labour in the province. To generate the data to compile the index, a survey questionnaire was sent to 16,200 firms in 42 provinces. The response rate to the survey was a low 13%, due to many questions being asked about confidential information which firms felt uncomfortable about providing. A minimum threshold of 25 firm responses was set for each province to ensure that the sample size was sufficient to have confidence in the results. The second stage of the process was to weight the sub-indices of competitiveness in response to the importance of the factors and contributed to the operations of firms and industries in the provinces. Not all indices have the same weight. The survey respondents were asked to rank the importance of each primary indicator. Table 4 weights by % the survey responses in developing the index for Vietnam. Table 4: Weights of Some Indices for Final Provincial Competitiveness Index Sub index Contribution Entry costs 17.1% Pro activity 16.8% Transparency 16.1% SOE bias 13.1% Private sector development policies 11.1% Time cost/inspections 9.6% Access to land 8.4% Informal charges 7.6% Implementation in consistency of policies 0.2% Total 100% Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 43 The overall results of the survey are shown in Table 5. The table shows the competitiveness of the nine key indices, as described above. In addition, a measurement of the Human Development Index, Quality of Infrastructure and Urbanisation and Proximity to Markets has been evaluated. From this analysis, it can be observed for Vietnam as a whole, that the quality of infrastructure, transparency of access to information, favouritism to state-owned enterprises, weaknesses in the performance of provincial leadership and lack of policies favourable to the development of the private sector, are significant competitive weaknesses in the country. Table 5: Overall Vietnam Provincial Competitiveness Index Rankings Province Weighted PCI (Max =100) Rank Binh Duong 76.82 1 Da Nang 70.67 2 Vinh Long 68.56 3 High Ben Tre 65.24 4 Vinh Phuc 65.09 5 Dong Nai 64.14 6 Quang Ninh 62.93 7 Thai Binh 61.39 8 Can Tho 61.29 9 Kien Giang 61.13 10 Quang Tri 61.09 11 Binh Dinh 60.60 12 Mid-High Phu Yen 60.44 13 Ha Noi 60.32 14 Hung Yen 60.03 15 Quang Nam 59.72 16 HCMC 59.61 17 Nghe An 59.56 18 Hai Phong 59.40 19 BRVT 59.15 20 Dong Thap 58.65 21 Long An 58.49 22 Bac Ninh 58.06 23 Average Tay Ninh 57.44 24 TT-Hue 56.77 25 Tra Vinh 56.25 26 Tien Giang 55.89 27 Soc Trang 55.63 28 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 44 Khanh Hoa 54.08 29 Binh Thuan 53.97 30 Ha Nam 53.36 31 Mid-Low Quang Binh 53.07 32 Ha Tinh 51.67 33 An Giang 50.90 34 Thanh Hoa 49.29 35 Quang Ngai 47.99 36 Binh Phuoc 47.06 37 Nam Dinh 45.97 38 Low Hai Duong 45.79 39 Ninh Thuan 44.45 40 Ninh Binh 41.21 41 Ha Tay 38.81 42 The highest competitiveness indicators are: low entry costs, accessibility to land, time costs and regulatory compliance and the low cost of informal charges. These figures measure between 6.11 and 6.34, which is low by international standards. Table 2 showed the world economic competitiveness ranking for Vietnam was 68. However, in using the World Economic Forum Index figures, Vietnam’s competitiveness approximately 25% below that of Singapore, but above that of the Philippines and Bangladesh. There are many areas of competitiveness that Vietnam will need to improve significantly if it is to become a more attractive place for foreign direct investment. Tables 6 - 17 show the current position of Quang Nam Province in the context of VPCI. We will discuss these rankings for Quang Nam Province in more detail in this session. The VPCI has provided a useful guide to provincial leaders to enable them to identify the strengths and weaknesses of provincial economies more clearly. Major gains in public and private sector industry performance and provincial economic development can be achieved by enhancing the competitiveness of the indicators measured by the survey. The results indicate there is need for significant improvement by provinces to enhance their overall competitiveness through reforms which reduce entry barriers for the private sector, increase transparency and accountability, strengthen provincial leadership and flexibility in response to investor needs. As noted in the summary report, the VPCI is a valuable policy tool to undertake diagnostic activities focusing on the economic governance in the provinces. Provinces should begin looking across the nine key indic to discover their lowest scores, especially those in highly weighted categories. Next they should look at the sub-indices to find the most pressing weaknesses within each sub-index. Finally, the provinces should work to design provincial activities, including provincial socio economic development plans, which address these weaknesses. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 45 Group Exercise The following group exercise examines indices of competitiveness for Quang Nam Province. Table 6 shows the overall ranking of competitiveness of the province for the nine primary Competitiveness indicators. Table 7 shows the ranking of the province for the nine primary indices for the of Quang Nam province. Tables 8 and 17 provide more detailed information on each of the nine sub- Province indicators. The class is to divide into nine groups to discuss the weaknesses of the primary and sub- indices. You may agree or disagree with these indices. From this discussion, each group is to identify critical actions needed to address the weaknesses identified by the survey or raised in the group. The reasons for the main weaknesses and proposed actions are to be written down on the paper provided for the presentation after lunch. You need to nominate a group leader to present your group’s findings which will be presented to the whole class in the afternoon. Each presentation should run for about 4-5 minutes followed by 2-3 minutes for questions. At the end of the presentation, the presenter should hand the material used in the presentation to Ms Kim Hong Tran who will compile these into one document which will be circulated to participants the next day for use in the SWOT analysis. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 46 Table 6: Provincial Competitiveness Index for Vietnam’s Provinces (9 Key Indicators) Structural Endowments Provincial Competitiveness Sub-Indices Development Private Quality of Proximity to Access to Time/ Informal Weighted PCI Province Cluster Level (Human Entry Costs Transparency Implementation SOE Bias Proactivity Sector Dev. Infrastructure/Urbanization Markets Land Inspections Charges (Max =100) Capital) Policies Can Tho 1. Metro 3.35 3.91 6.44 6.13 6.01 5.15 6.75 7.01 5.97 5.40 5.62 8.14 61.29 Da Nang 1. Metro 7.52 8.42 2.17 8.77 6.90 6.72 8.24 4.87 6.35 5.26 7.18 7.54 70.67 Ha Noi 1. Metro 9.73 6.82 8.81 7.28 6.05 4.12 6.78 3.97 4.32 5.72 6.23 7.73 60.32 Hai Phong 1. Metro 9.05 5.07 8.14 7.02 5.68 5.69 6.42 6.01 4.69 5.98 5.32 5.29 59.40 HCMC 1. Metro 6.13 10.00 8.31 6.23 8.32 5.57 6.56 3.38 4.55 6.28 6.11 4.99 59.61 Bac Ninh 2. Red River 8.76 3.26 7.81 6.19 6.21 5.37 8.35 5.29 6.62 4.68 7.53 2.39 58.06 Ha Nam 2. Red River 7.93 2.22 7.36 7.37 4.40 2.90 5.17 7.18 6.21 6.04 5.40 4.40 53.36 Ha Tay 2. Red River 8.44 3.04 8.21 4.27 3.67 3.75 6.10 6.87 4.84 4.27 1.20 3.27 38.81 Hai Duong 2. Red River 8.79 2.80 7.52 4.50 5.26 4.18 6.18 6.43 6.62 5.39 3.39 2.93 45.79 Hung Yen 2. Red River 8.96 2.34 8.89 7.73 6.57 5.34 6.28 7.96 5.40 5.37 6.01 3.08 60.03 Nam Dinh 2. Red River 9.03 2.36 7.50 5.82 4.23 4.19 7.41 7.08 2.77 5.85 1.60 2.56 45.97 Ninh Binh 2. Red River 7.39 2.47 6.60 4.99 5.08 2.97 8.25 5.78 6.05 4.92 2.15 1.05 41.21 Quang Ninh 2. Red River 7.77 5.34 5.39 6.49 6.41 7.12 6.32 4.58 6.47 6.09 6.74 5.41 62.93 Thai Binh 2. Red River 10.00 0.99 8.83 5.39 5.90 5.13 7.77 5.57 7.53 7.38 6.78 5.45 61.39 Vinh Phuc 2. Red River 7.35 3.12 7.54 7.46 5.71 5.37 6.50 7.17 6.62 5.87 8.12 5.18 65.09 Binh Dinh 3. Central Coast 6.39 3.94 1.01 5.50 6.40 6.04 5.92 6.04 7.05 5.85 7.11 5.45 60.60 Ha Tinh 3. Central Coast 8.21 2.48 4.14 4.66 6.09 4.52 5.80 5.98 5.60 5.90 4.62 5.06 51.67 Khanh Hoa 3. Central Coast 7.10 5.01 3.19 6.22 6.05 3.33 5.46 6.43 6.30 5.85 5.62 5.09 54.08 Nghe An 3. Central Coast 7.23 3.58 4.81 7.15 4.18 5.55 6.52 6.25 5.82 6.01 5.61 5.82 59.56 Phu Yen 3. Central Coast 5.99 3.81 3.00 6.56 6.35 5.84 4.17 6.40 6.56 5.76 6.72 6.00 60.44 Quang Binh 3. Central Coast 8.26 2.44 2.72 5.77 6.54 4.01 6.41 5.97 8.20 5.42 4.58 5.06 53.07 Quang Nam 3. Central Coast 5.71 3.52 3.91 6.23 6.22 4.65 5.23 5.04 8.00 5.92 7.01 7.03 59.72 Quang Ngai 3. Central Coast 5.40 3.44 2.01 5.27 5.32 3.85 5.65 5.88 5.67 5.33 4.13 3.96 47.99 Quang Tri 3. Central Coast 6.38 3.48 2.59 6.48 5.76 4.72 7.22 6.89 5.95 6.51 5.13 7.35 61.09 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 47 Thanh Hoa 3. Central Coast 7.11 2.85 6.48 4.86 5.05 4.54 7.06 6.27 4.17 5.27 3.65 4.30 49.29 TT-Hue 3. Central Coast 6.81 4.50 3.62 6.31 5.56 4.49 6.48 6.32 5.52 5.15 5.07 6.93 56.771 Binh Duong 4. North Southeast 5.96 5.62 9.14 7.65 7.88 6.05 6.29 8.85 7.39 8.53 9.30 6.92 76.82 Binh Phuoc 4. North Southeast 2.50 3.78 7.82 4.05 6.08 2.78 5.16 4.37 6.99 5.67 5.28 5.27 47.06 Binh Thuan 4. North Southeast 4.06 4.52 6.42 6.18 6.48 6.14 7.66 5.86 5.81 4.17 3.13 4.91 53.97 BRVT 4. North Southeast 6.34 5.75 10.00 5.33 7.06 4.69 6.43 6.70 6.54 5.80 6.54 5.93 59.15 Dong Nai 4. North Southeast 5.53 5.30 9.62 6.52 6.42 5.19 7.88 6.88 5.30 6.30 7.74 4.58 64.14 Long An 4. North Southeast 4.25 3.38 7.89 7.24 6.37 3.51 6.23 6.91 5.34 6.22 5.89 5.17 58.49 Ninh Thuan 4. North Southeast 4.13 4.23 5.26 3.64 6.08 3.29 4.52 6.31 5.96 5.66 3.57 4.67 44.45 Tay Ninh 4. North Southeast 4.09 5.23 7.38 5.21 7.22 3.25 6.32 6.85 6.26 6.78 4.95 7.80 57.44 An Giang 5. Mekong 3.52 4.00 6.05 6.36 7.07 4.10 4.64 3.44 7.96 4.75 5.61 4.18 50.90 Ben Tre 5. Mekong 4.82 2.67 8.12 7.02 6.73 4.92 7.75 6.77 6.83 6.29 7.50 5.50 65.24 Dong Thap 5. Mekong 1.74 3.03 6.64 6.27 6.76 4.72 5.60 7.87 6.01 6.29 5.91 4.53 58.65 Kien Giang 5. Mekong 1.58 3.73 6.00 6.44 6.28 4.74 7.26 7.28 7.68 6.29 6.39 5.05 61.13 Soc Trang 5. Mekong 1.00 2.92 7.91 7.35 6.03 4.03 5.26 4.21 6.97 6.15 5.79 4.80 55.63 Tien Giang 5. Mekong 5.35 3.64 6.96 6.40 6.71 3.23 6.58 8.10 8.27 6.19 5.51 3.72 55.89 Tra Vinh 5. Mekong 1.81 2.88 7.18 4.53 7.96 3.80 4.01 8.39 7.61 6.72 6.20 5.54 56.25 Vinh Long 5. Mekong 3.22 2.59 6.91 5.66 7.50 5.58 5.52 7.21 6.62 7.35 8.56 7.84 68.56 Average 6.06 3.92 6.34 6.11 6.16 4.65 6.34 6.25 6.22 5.87 5.63 5.19 56.95 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 48 Table 7: Overall Competitiveness of Quang Nam Province Table 8: Competitiveness Ranking of Quang Nam Province [R2] Province Weighted PCI (Max =100) Rank Quang Nam Province PCI 2006 Sub Index Binh Duong 76.82 1 Ranking (of 64) Da Nang 70.67 2 Vinh Long 68.56 3 Implementation of Policies and Consistent Applications High Ben Tre 65.24 4 across Provincial Sub-Agencies 3rd Vinh Phuc 65.09 5 Dong Nai 64.14 6 Proactive Provincial Leadership 7th Quang Ninh 62.93 7 Thai Binh 61.39 8 State Sector Favouritism 20th Can Tho 61.29 9 Kien Giang 61.13 10 Labour Training 20th Quang Tri 61.09 11 Binh Dinh 60.60 12 Entry Costs and Regulatory Compliance 24th Mid-High Phu Yen 60.44 13 Ha Noi 60.32 14 Private Sector Development Policies 26th Hung Yen 60.03 15 Quang Nam 59.72 16 HCMC 59.61 17 Access to Land 48th Nghe An 59.56 18 Hai Phong 59.40 19 Time Costs 38th BRVT 59.15 20 Dong Thap 58.65 21 Transparency and Access to Information 52nd Long An 58.49 22 Bac Ninh 58.06 23 Informal Charges 58th Average Tay Ninh 57.44 24 TT-Hue 56.77 25 Tra Vinh 56.25 26 Tien Giang 55.89 27 Soc Trang 55.63 28 Khanh Hoa 54.08 29 Binh Thuan 53.97 30 Mid-Low Ha Nam 53.36 31 Quang Binh 53.07 32 Ha Tinh 51.67 33 An Giang 50.90 34 Thanh Hoa 49.29 35 Quang Ngai 47.99 36 Binh Phuoc 47.06 37 Nam Dinh 45.97 38 Low Hai Duong 45.79 39 Ninh Thuan 44.45 40 Ninh Binh 41.21 41 Ha Tay 38.81 42 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 49 Table 9: Cost of Entry % of firms waiting % of firms waiting Post-Elaw Median days Natural Log of over a month to over 3 months to Effective Land Registration waiting for land Active Enterprise Ratio of Allocated Entry Costs Soft- Post Enterprise Entry Costs Hard Entry Costs Final Province start business start business Unused Land Wait Days Capital as a (after the per 1000 people Land Sub-Index Law registrations Sub-Index Index (after the (after the ((T/U)*R) percentage of Enterprise Law) per 1000 people Enterprise Law) Enterprise Law) provincial GDP Survey Question B2/8 B2/8 B1/2.1.4 No. Da Nang 17.31 1.92 45 1.93 0.777 0.223 5.20 9.21 2.80 0.06778 7.45 8.77 Quang Nam 22.92 0.00 37.5 0.30 0.556 0.444 55.50 7.65 0.53 0.00944 1.96 6.23 Quang Ngai 23.68 2.63 60 0.30 0.532 0.468 93.60 6.10 1.05 0.01373 2.77 5.27 Min 9.76 0.00 20.00 0.19 0.29 0.02 1.73 3.91 -0.06 0.00364 1.00 3.64 Max 63.41 21.95 750.00 3.43 0.98 0.72 101.67 9.21 3.90 0.09365 9.19 8.77 Average 35.96 6.93 83.73 0.68 0.80 0.20 26.58 6.84 1.56 0.02 3.90 6.11 Table 10: Access to Land Quality of IZ policy Primary Conversion of Active Construction of Land Price Ratio of (J/100*K/100*L). If premises is agricultural Land Easier: Enterprise Effective Land industrial and IZ occupancy Access to Province Have CLUR VND per Unused Izs planned not PM approved Izs on land of land for Expand per 1000 Price (P/Q*R) concentrations for rate Land hectare Land yet, province get J SOE business people private sector score Survey Question No. B1/1; B1/2 C/4_3 B1/2.1.3_1 B1/3_1 C/4_2 Da Nang 9.23 4.32 88.00 73.85 4813 1.93 0.223 556.06 38.46 64 4 0.98 6.90 Quang Nam 0.00 3.92 72.34 73.77 3409 0.30 0.444 5045.02 26.23 97 3 0.64 6.22 Quang Ngai 3.77 3.07 72.73 75.47 1340 0.30 0.468 2090.40 15.09 48 3 0.18 5.32 Min 0.00 2.48 18.18 48.48 0.19 0.02 53.65 3.70 22.30 0.06 3.67 Max 22.86 4.38 100.00 81.08 3.43 0.72 13510.26 38.46 97.50 2.83 8.32 Average 5.45 3.62 80.72 69.77 4893.61 0.68 0.20 2045.62 20.31 62.58 2.55 0.37 6.16 Table 11: Transparency and Access to Information Negotiations with Province Transparency of Transparency of Relationship tax authority are Equity and Predictability of Transparency, Friends discussed Predictability Web Page Province planning decisions and Transparency Important or V. an essential part consistency of implementation of Openness access to information Important changes in and Consistency Score documents decrees Important of doing application those laws and predictability laws with you business Survey Question No. D/1 D/1 D/2 D/7_2 D/6_4 D/5 D/3 Da Nang -0.39 0.19 4.93 66.67 55.56 75.86 5.99 9.68 16.90 2.66 21 10.00 6.72 Quang Nam -0.02 -0.20 3.88 72.22 43.48 74.00 6.58 9.80 10.87 2.23 10 5.29 4.65 Quang Ngai -0.14 -0.15 3.87 70.59 52.17 56.82 7.28 12.00 61.54 6.11 0 1.00 3.85 Min -0.79 -0.49 2.74 50.00 34.35 52.17 1.35 4.35 0.00 1.35 0.00 1.00 2.78 Max 1.49 0.48 9.72 100.00 80.00 96.15 8.62 60.38 61.54 7.15 21.00 10.00 7.12 Average -0.02 -0.01 4.75 73.67 56.69 76.58 5.45 17.17 13.97 3.05 9.31 4.99 4.65 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 50 Table 12: Time Costs and Regulatory Compliance % of firms spending over Days reduced since the Regulatory Compliance Median number of Inspections have Regulatory compliance Province 10% of their time on Median Tax hours Inspections Sub-Index Enterprise Law Sub-Index inspections decreased since E-law and inspections sub-index bureaucracy Survey Question No. E/2 E/3 B3/11 B3/12 B3/13 Da Nang 48.08 8.47 7.05 1 64.00 3 9.43 8.24 Quang Nam 40.82 18.00 4.94 1 40.74 24 5.51 5.23 Quang Ngai 41.86 30.43 2.93 1 56.00 8 8.37 5.65 Min 18.18 3.64 2.06 1.00 12.50 1.00 5.11 4.01 Max 78.57 30.43 8.75 3.00 70.00 24.00 9.43 8.35 Average 42.29 14.46 5.64 1.42 41.83 7.99 7.03 6.34 Table 13: Informal Charges Do firms in your line of business Firms paying over 2% of their Extra fees to tax inspector as a Province Major obstacle to doing business % of firms paying a commission Scope of the Informal Charges make extra payments? revenue percentage of revenue Survey Question No. E/13 E/7 E/9 E/14 Da Nang 27.59 31.43 14.29 53.85 0.0857 4.87 Quang Nam 17.02 46.34 14.58 36.00 0.0863 5.04 Quang Ngai 25.00 34.33 9.52 53.49 0.0355 5.88 Min 5.00 6.67 0.00 12.20 0.00 3.38 Max 60.61 48.28 29.41 76.36 0.12 8.85 Average 27.81 26.21 11.18 50.77 0.03 6.25 Table 14: Implementation of Policies and Consistent Applications across Provincial Sub-Agencies Good initiatives at provincial level, but Province Coordination between Central and Local Implementation of those plans Implementation Sub-Index departments frustrate action Survey Question No. F/8_2 F/8_8 D/5 Da Nang 81.36 61.82 72.00 6.35 Quang Nam 84.78 46.51 85.00 8.00 Quang Ngai 73.47 59.18 63.64 5.67 Min 50.00 38.89 30.43 2.77 Max 91.30 90.91 100.00 8.27 Average 77.92 61.89 73.90 6.22 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 51 Table 15: State Sector Favouritism Attitude does not depend on Firm rating of Favouritism Favouritism Attitude toward Attitude is contribution to provincial Bias toward the Average loans to Percent change Percentage local Bias toward the State sector bias Province toward the state toward equalized private sector improving revenue to equalization state sector - soft state sector in SOEs SOE output 03 state sector-hard index sector companies provincial policy development Survey Question F/9_1 F/1 F/3 D/6_1 F/9_3 C/4_4 No. Da Nang 67.24 48.39 75.81 38.98 36.36 3.77 4.87 84.00 -40.00 22.54 5.65 5.26 Quang Nam 57.45 57.41 73.21 51.06 36.36 3.73 5.66 38.96 5.56 20.40 6.18 5.92 Quang Ngai 59.18 34.00 56.00 50.00 50.00 3.07 3.08 64.80 -52.94 4.11 7.59 5.33 Min 33.33 20.59 53.85 29.09 18.18 2.68 2.72 5.66 -62.07 4.11 4.53 4.17 Max 78.95 78.26 95.45 78.57 50.00 4.27 8.08 87.47 50.00 66.15 8.98 8.53 Average 57.68 50.09 71.44 52.65 33.05 3.47 5.36 47.18 -22.63 25.64 6.38 5.87 Table 16: Proactive Provincial Leadership Province creative and clever about Good initiatives at provincial level, but Province Province good at working w/in central law No initiatives at provincial level Proactively-Soft solving business problems. centre frustrates Survey Question No. F/8_3 F/8_4 F/8_6 F/8_9 Da Nang 77.59 78.18 41.51 20.37 7.18 Quang Nam 89.36 85.42 19.05 20.00 7.01 Quang Ngai 62.00 40.43 30.43 36.73 4.13 Min 43.75 31.25 4.76 7.89 1.20 Max 94.29 85.71 60.00 60.42 9.30 Average 74.14 63.27 32.50 33.15 5.63 Table 17: Private Sector Development Policies Business consulting (Regulatory Province Market information (Trade Promotion) Matchmaking for business partners Labour capacity training PSD Sub-Index Information) Survey Question No. C/3_8 C/3_9 C/4_5 C/4_9 Da Nang 41.54 23.08 20.00 18.46 7.54 Quang Nam 24.59 21.31 18.03 26.23 7.03 Quang Ngai 13.21 16.98 11.32 7.55 3.96 Min 0.00 3.33 0.00 2.78 1.05 Max 41.54 35.85 26.19 28.57 8.14 Average 21.95 17.20 13.59 14.01 5.19 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 52 1. Dollar, David, Shuilin Wang, Lixin Colin Xu and Anqing Shi. 2004: Improving City Competitiveness through the Investment Climate: Ranking 23 Chinese Cities. Working Paper Series Washington D.C.: World Bank. 2. Enright, M. J., E. E. Scott and D. Dodwell. 1997: The Hong Kong Advantage. Hong Kong: Oxford University Press. 3. Porter, M. E. 1985. Competitive Advantage: Creating and sustaining superior performance. New York: Free Press. 4. Porter, M. E. 1990. The Competitive Advantage of Nations: New York: Macmillian Inc. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 53 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 54 Training Session 1 Integrated strategic planning in a Market Economy Module 3: Strategic Planning for Regional Economic Development Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 55 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 56 Introduction Planning and managing economic development will become increasingly difficult in a world of dynamic and constant change. In the past planners, developers and business could anticipate market trends, and stage the development of infrastructure and services to new residential, commercial and industrial development areas with confidence. This is no longer the case. Anticipating future demand for land, investment, housing preference, recreational, educational and employment has become more difficult in an open market economy. Many assumptions used to plan and develop new residential and employment areas are no longer valid. In the future development of regional and urban economies will be influenced more by external environmental factors, with change becoming more rapid, the forecasting of demand less predictable and needs will have to be more specifically defined. The following session will examine. ï‚· How we think about and analyse the future issues affects the planning and management of development ï‚· Approaches to strategic planning for economic development ï‚· Integrated strategic planning The Importance Many approaches to the preparation of regional economic development strategies are the of Strategic products of different ideas on strategic thinking. In strategic thinking we seek a clear Thinking in understanding of a particular character of each element of a situation and, use all available Regional resources to restructure the elements in the most advantageous way. A number of authors have Development written about the importance of strategic thinking. To prepare an economic development Planning strategy that will enable provinces and regions in Vietnam to compete in the global economy, it is important to learn how to think differently – to think strategically. Our ability to use strategy to create or manage the future is related to how we think about strategy. Strategic thinking is an integral part of strategic planning. It involves a level of thinking that moves above the day-to-day operational concerns and needs of an organisation. It involves looking at ways to solve problems, issues and challenges by coming up with solutions or reasons for things being the way they are that may be out of the ordinary or unconventional. Strategic thinking is a process by which we seek a clear understanding of the particular characteristic of each element of a situation and use all available resources to restructure the elements in the most meaningful and advantageous way. Good strategic thinking combines a clear grasp of current realities with a consideration of a variety of possibilities for change. Strategic thinking is used to set a strategic perspective and generally entails three types of thinking: 1. Holistic thinking: which involves rising above the detail of specific situations and thinking in broader terms about what a planning process should be trying to achieve. 2. Long term thinking: which involves taking into consideration factors that will affect plan preparation and implementation over the next five to ten years, and considering what action should be taken. 3. Innovative thinking: which involves considering possible changes in key factors that affect organisations and plans, and therefore what changes in direction are desirable. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 57 Strategic thinking, however, is not just about the ways to solve a problem. It is also about the way we conceptualise a problem - the risks, issues, challenges and the current position or viewpoint we may hold on the problem. Take for example the following exercise often given to management students. Students are asked to join all nine dots on the page using no more than 4 lines. You are not permitted to remove the marker from the page, and can only cross a line once. Most people attempting this exercise for the first time will try and solve it by thinking that the solution to the problem lies inside the dimensions of the page. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 58 There is more than one solution to the problem. The solution you may have found is constrained by the way the question is asked and the parameters we construct to arrive at a solution. To find other solutions requires us to think differently about how we conceptualise the problem and the solutions available. It is possible to solve the problem using one line by drawing a spiral starting at the centre and passing through all the points. A spiral is a single continuous line of changing radii. Another solution is to draw one thick line covering all the dots. The question did not limit the thickness of a line and no-one said the dots were a perfect square. Think of other solutions using creativity, imagination, innovation etc. Regional The field of regional economic development planning strategy has followed behind the Economic development of business strategy. Two traditional planning school models have been applied Development extensively for the preparation of regional economic development strategy in many countries. Models The following briefly explains the two models and why they have not been responsive to the changing environments in which contemporary economic strategy must function. Model 1: Strategy as ‘Strategic Fit’ The national Urban Policy Report on Strategies for Cities (Sorkin et al. 1984) was an important document in setting out a process for strategic planning associated with urban and regional economic development. The Bryson and Einsweiler’s Strategic Planning for Economic Development Model (Figure 1) developed from the above report has been widely used for the preparation of economic development plans in the USA and many other countries. Strategic Planning Process Competitors Forces/Trends •Competitive Clients/ •Political forces •Economic Customers/ Payers Collaborators •Social •Collaborative •Technological forces External 4 Environment •Scenarios Opportunities Mandates 2 Threats Actions Results Calculating the Result 6 Strategies 7 8 1 Initial •Practical alternatives Description of Agreement Strategic •Barriers Organization in ("Plan for planning") Issues •Major proposals the Future 3 •Actions ("Vision of success") 1 Mission/Values •Work program •By stakeholders Strengths Weaknesses 5 Internal Environment Resources •People Present Strategy Performance •Economic •Overall •Results •Information •Functional •History •Competencies or Department Strategy formulation Implementation Source: Bryson and Einsweiler (1998)3 Figure 1: Bryson and Einsweiler’s Strategic Planning for Economic Development Model 3 Bryson, J. M., R. E. Freeman and W. D. Roering. 1986. "Strategic planning in the private sector: approaches and directions." In Strategic perspectives on planning practice, ed. B. Checkoway. Lexington, Mass: Lexington Books. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 59 The preparation of a strategic plan for regional economic development uses an eight-step process as follows: Step 1 in the process begins with an initial agreement amongst decision-makers (those with key roles in plan formulation and implementation) to jointly prepare a strategic plan. This usually involves a joint memorandum of understanding between government agencies and industry associations to define the scope of the strategic plan and, determine a program to develop such a plan. Step 2 involves the identification of mandates from organisations, including government and business, on what must be incorporated into a strategic plan for regional development. Step 3 clarifies the values of the various stakeholder that need to be incorporated into a Mission or Vision Statement for the strategic plan. Step 4 involves an external environmental analysis, drawing upon forecasting, trend analysis, consultation with regional customers and clients, assessment of competition and opportunities for collaboration. An opportunities and threats analysis will be conducted as part of the external environmental assessment. Step 5 involves an internal environmental assessment examining the strengths and weaknesses of regional resources, existing strategies and industry performance history Step 6 is a description of the way organizations implement key elements of strategy. It may also include structural changes to an organization’s functions. Step 7 is the formulation of strategies, which may involve an examination of alternatives, major proposals or actions for the work program. Step 8 is the process described to implement the strategies and actions that result from the strategic planning process. A key element of this process is "strategic fit". Strategic fit involves matching the capabilities and the capacity of the organization or a region with external markets and suppliers. The purpose of strategy is to achieve greater congruence between regional supply capability and market demand for goods and services. These eight steps complete the strategy formulation process. What follows are detailed action plans, comprising long-term and short-term programs, to be implemented by various agencies and organizations in a region. Action plans establish specific targets that will be monitored through evaluation and performance criteria or specific benchmarks. Benchmarks are often used as a basis for comparing competitiveness between regions (Clones, et al., 1998). Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 60 Model 2: Blakely Bowman Model The Blakely Bowman Model4 (1986) has been used for the preparation of several regional economic development strategies in Australia, USA, and China (see Figure 2). The model incorporates a seven-stage preparation process. The first stage involves information gathering and analysis. This involves a regional audit of socio-economic, physical and environmental data. The data is synthesised into two sets for analysis using both qualitative and quantitative assessment. From these analyses, opportunities, challenges and preparedness index for a region is prepared. This analysis leads to a formal process for the formulation of goals, objectives and strategies. The building of action plans, which defines outputs and management structures, leads to an overall development program, for long, medium and short term actions. Benchmarking and performance criteria are derived for monitoring the performance of the plan. The full planning process for the model is described by Blakely (1994) in Planning Local Economic Development: Theory and Practice. There are weaknesses in the Blakely Bowman model, namely: 1. The analysis, which is generally an audit of the local economy, does not address the impact of externalities on the planning and implementation process. 2. The implementation mechanisms are largely dependent upon government processes. However, the model is valuable in recognising the role and weaknesses of industries in capacity building. At the time the model was developed, public institutions had more resources than they do at present. The model represents an important step in the development of strategic frameworks for economic development, which was carried through until the 1990s. 4 Blakely, E. and K. Bowman. 1986. "Taking local development initiatives: a guide to economic and employment development for local government authorities." Canberra: Australian Institute of Urban Studies. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 61 IN F O R M A T IO N G A T H E R IN G A N D A N A L Y S IS S O C IO -E C O N O M IC A N A L Y S IS IN S T IT U T IO N A L C A P A C IT Y A N A L Y S IS ï‚· D e m o g ra p h ic ï‚· P o litic a l In s titu tio n s ï‚· L a b o u r M a rk e t ï‚· E c o n o m ic /C o m m e rc ia l ï‚· E c o n o m ic S y s te m ï‚· F in a n c ia l In s titu tio n s ï‚· C o m m u n ity S e rv ic e s ï‚· C o m m u n ity D e v e lo p m e n t P ro je c ts ï‚· P h y s ic a l/L o c a tio n a l ï‚· S o c ia l D e v e lo p m e n t P ro g ra m s ï‚· C o n d itio n s ï‚· E d u c a tio n a n d T ra in in g ï‚· C o m p e titiv e A d v a n ta g e O p p o rtu n itie s a n d C h a lle n g e s P re p a re d n e s s D E V E L O P M E N T P L A N N IN G ï‚· E s ta b lis h in g G o a ls ï‚· D e te r m in in g A lte r n a tiv e S tr a te g ie s ï‚· A s s e m b lin g a S tr a te g y B U IL D IN G A C T IO N P L A N S ï‚· D e f in e I n p u ts , O u tp u ts , a n d M a n a g e m e n t S tru c tu re s A S S E M B L IN G T O T A L D E V E L O P M E N T A C T IO N P R O G R A M ï‚· D e ta ile d F e a s ib ility A n a ly s is ï‚· F in a l D e s ig n a n d B u s in e s s P la n ï‚· S y s te m s D e v e lo p e d fo r M o n ito r in g a n d E v a lu a tio n P R O G R A M IM P L E M E N T A T IO N A N D F O L L O W -U P Source: Blakely & Bowman (1986) Figure 2: Blakely Bowman Strategic Planning Model for Regional Development Integrated All governments recognise the importance of improving the integration of planning processes. Strategic However, integrated planning remains a problem and few governments do it well. Many of the Planning problems associated with integrated strategy relate to the process we use to go about preparing integrated strategic plans. In most cases, sector strategies are prepared independently by public agencies with an attempt to integrate these into an overall planning framework once the sector planning strategy processes have been completed. This approach fails to realise an integrated planning outcome. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 62 Whole-of-Government Approaches to Integrating Systems To improve the integration and delivery of public services, many governments in developed economies have adopted ‘whole-of-government’ initiatives to encourage closer working relationships between departments and agencies, and between all levels of government. The means of doing this, however, has proved difficult. The only area where government has effectively achieved full integration is in the areas of finance and budget management which is a highly controlled process. There is still a strong ‘silo mentality’ in all levels of government; however, the redefining of many public sector functions following national competition policy reforms has forced governments into whole of government approaches to public sector management and planning. Whole-of-government initiatives are being applied to the following areas. Multi-disciplinary approach to Integrated Planning Thinking in a multi-sector way is difficult and uncomfortable for most people. However, the need to make cities and regions more sustainable has introduced a new dimension into the strategic planning process. Sustainability requires that we adopt multi-disciplinary ways of thinking about problem solving and strategy formulation skills. In most planning processes an analysis will be made of the economic, physical/environmental, social and administrative issues to develop strategies and action plans to address specific problems and the facilitation of new initiatives. Each of these fields represents a facet of planning. Different theories and approaches have been used in planning each field which correspond to recognised professional disciplines. All of these fields are inter-related and influence each other. Managing Sustainability at Multiple Levels of Government and Community A further element is the level at which planning takes place. Planning does not occur at just one level. An integration of the various levels of planning needs to be introduced if there is to be an effective and efficient planning system. There are three major levels of engagement that need to be considered in all planning processes. These relate to national/state, regional/metropolitan and local/district. This adds a new dimension to the problem of co- ordinating planning which needs to occur in different fields and, at various government levels. Figure 3 illustrates this problem in a conceptual matrix. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 63 Figure 3 Integrated Planning Process Field Economic Physical/ Social Organisational Level Environmental National State Regional Metropolitan Local Neighbourhood Neighbourhoo Integrating across the full spectra of Strategy Process The different cells in the figure represent the facet of fields of planning to be performed by different levels of government. The arrows in each row indicate the need for co-ordination at each planning level of the different fields. They also represent the need for co-ordination of each planning field between the different levels of government. In a properly functioning and integrated planning system, both the inter-relationship between the different fields and between the various levels should receive attention. Another model shows that within these fields there are other issues that need to be considered. Figure 4 shows that there needs to be an integrated approach to the analysis of issues, the formulation of objectives, actions, monitoring and evaluation of plans between various levels of government. This requires a systematic approach to plan formulation and consultation in all approaches to planning at all levels of government. This is not always easy, and requires an open and transparent process to plan formulation to be adopted by government. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 64 Figure 4 Multi-levelled Integration of Elements of Planning Source: http://www.alga.com.au/res.htm Regional Environmental Strategies (1997) Thorman and Heath. Case Study 1 Far North Queensland (FNQ) is a tropical region of Australia which has experienced a period of Far North rapid growth and development in its agriculture, marine, tourism and mining industries. In 1992 Queensland the government of Queensland funded an integrated regional development planning process to (Australia) 2010 guide the long-term development of the Region. The first step in the FNQ 2010 process began Integrated with the establishment by the State Government of a Regional Planning Advisory Committee Regional (RPAC). The RPAC was given the responsibility to investigate the impacts of development on Development the region, and to prepare the Integrated Regional Development Plan. The RPAC comprises Plan representatives from the three levels of government, as well as from community organisations and industry sectors. The aim of the Integrated Regional Development Plan was to provide a broad planning and policy framework within which decisions could be made with greater confidence, certainty and community support. The planning process adopted was to ensure growth and development were planned and managed in a way that enhanced the positive benefits to the region’s community whilst minimising or avoiding potential negative impacts - especially on the environment. The Regional Development Plan was to ensure: ï‚· the region’s key environmental, social and economic values are not degraded but rather enhanced, wherever possible; and ï‚· infrastructure services are delivered in a timely, cost-effective manner to support the community and economic development. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 65 How was the Integrated Regional Plan developed? A three staged process was established to develop the Regional Plan as described below. Stage 1 involved the preparation of a Regional Growth Management Framework (RGMF) report (Regional Planning Advisory). This report identified the key growth management issues facing the Region and, presented a broad planning framework to guide the preparation of detailed Regional Strategies for the plan. The RGMF comprised three key elements: ï‚· A Regional Vision Statement ï‚· A Set of Integrated Regional Goals to guide the development of detailed strategies; and ï‚· A Regional Structure Plan (broad based land-use plan) which establishes the broad physical arrangements and preferred settlement/development patterns for the Region until the year 2016. Stage 2 of the process involved the preparation of an integrated set of detailed Regional Strategies. The Regional Strategies incorporated a comprehensive set of aims, objectives and strategy statements and, provided the mechanisms by which the Regional Vision, Goals and Structure Plan were to be achieved. Two key reports were produced as part of Stage 2, namely: 1. The Strategic Directions and Regional Priorities Report (Regional Planning Advisory Committee 1998) outlines the key issues facing the Region and the strategic initiatives proposed to deal with these issues. The report also identifies key implementation actions that need to be undertaken in the short-term to alleviate existing or potential problems or, to take advantage of regional opportunities. These include: ï‚· Incorporation of regional planning outcomes into capital works programs and policy making processes of federal, state and local government; ï‚· Incorporation of regional planning outcomes into local government land use planning processes, in particular, local government planning schemes; and ï‚· Implementation of the Regional Plan involving a wide range of community and industry groups and individuals, particularly at the sub-regional and local levels. 2. The Integrated Regional Strategy Report outlines nine key strategies to support the implementation of the Regional Growth Management Framework. These are shown in figure 5. The Tourism Strategy was undertaken as a separate process to FNQ 2010 and was completed well in advance of the other strategies. The Tourism Strategy was incorporated into the draft Integrated Regional Plan with some changes in 1998. The Cairns Economic Development Strategy (CREDC 1997), which forms a key element of the Integrated Regional Development Plan, was also undertaken as a separate planning process and will be described in more detail below.. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 66 Regional Planning Advisory Committee Regional Planning Advisory Committee Task Forces Task Forces Integrated Regional Plan FNQ Integrated Regional Plan FNQ Vision Vision Environment Environment Integrated Development Goals and Strategies Tourism Tourism Integrated Development Goals and Strategies Regional Structure Plan Regional Structure Plan Natural Resources Natural Resources Integrated Transport Integrated Transport Strategies Strategies Water Management Water Management Strategies Urban Growth and Infrastructure Urban Growth and Infrastructure Solid Waste Management Solid Waste Management Economic Development Economic Development Social Planning and Human Services Social Planning and Human Services Figure 5 Integrated Regional Development Plan for FNQ (Australia). Regional Development Plan The Regional Development Plan for Far North Queensland (called the Regional Growth Management Framework or RGMF) was released in 1999. It contains a range of documents that integrate the different strategies with the planning and policy parameters contained in the RGMF. The RGMF establishes a broad policy and decision-making framework to guide the management and development of the Far North Queensland Region well into the 21st century. The implementation mechanisms involve a series of multi-discipline task forces, committees or organisations responsible for overseeing the implementation of Regional Strategies. These task forces considerable autonomy and e encouraged to collaborate and leverage resources between responsible agencies, whenever possible. A representative from each task force sits on the Regional Planning Advisory Committee (RPAC) which overall responsibility for plan implementation and monitoring. Importance of Community Input The success of the FNQ Regional planning process is due largely to the involvement of the community from the beginning of the process. The community maintains a strong presence in the implementation of the plan and the regional strategies. Community organisations maintain representation on the RPAC, and are called upon for advice and consultation on different issues related to the implementation of the regional strategies. The incorporation of community representation, targeted consultation and the opportunity for broad public involvement has ensured community values and needs have been properly considered and, integrated into the Regional Plan. The planning process has been transparent and accountable, and this has helped to build community confidence and support for the Plan. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 67 Case Study 2 Singapore is an island economy with a population of just over 4 million located at the southern Singapore end of the Malacca Straits. It has been a trading centre for many centuries. In 1960, Singapore Cluster had a GDP of less than US$1658 per capita. In a period of just over 40 years it has developed Development into one of the most dynamic economies in Asia, with a GDP of US$ 27,800 per capita (2004). Strategy Singapore is a global hub of finance, transportation, IT, education, trade and commerce. With virtually no natural resources and, very limited land for development, it developed its economy by focusing on the development of human capital, world-class strategic infrastructure and a high quality environment. Singaporeans are among the best educated people in the world, with outstanding universities and training institutions which have helped to build a knowledgeable community and a high-level service economy. Part of Singapore’s success can be attributed to the focus on best practices designed to achieve sustainable development. Good planning has been a primary factor in developing a high quality living environment for the island economy. Singapore is considered by many experts in planning to be the most well planned city in Asia. The responsibility for planning Singapore lies with the Urban Redevelopment Authority (known as the SRA). It has overseen the preparation of strategic plans that have involved the development of several new towns, linked by a rapid integrated road and rail transit system enabling the population to move quickly and conveniently from one location to another. Singapore has applied strict zoning controls over development, and strongly polices violations of planning, building and other regulations related to development. Good urban design has been encouraged by incentives to developers to provide open space and civic amenities, in return for being able to construct additional floor space granted through special dispensations. This is akin to a performance based development bonus system. Governance has played an important role in the growth of the country. Singapore is a self- governing country, with an elected parliament. It has had a long period of stable government which has developed a platform of policies enabling it to cultivate competitive advantage in several industry sectors. The rule of law has been strictly upheld, providing confidence within the community, the business sector and investors. Singapore has been criticized for not having more open and democratic systems; however, there is a high level of accountability in all government processes. Singapore’s airport and seaport facilities are among the best in the world. Singapore airport is a major hub for the Asian region. It is managed by the Singapore Airport Authority which is run as a corporate entity. The Port of Singapore is a major transit centre for all the world’s major shipping lines. It is strategically linked to some regional ports in Malaysia and Indonesia. The island nation has a well developed network of freeways and distributor roads. It has a policy of road pricing designed to encourage greater use of public transport by imposing a toll electronically on vehicles that enter into the city centre after 7am. There is a high level of infrastructure maintenance, which ensures that its road network continues to operate at above average levels of efficiency. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 68 The economic development for the island has been guided by policies to transform Singapore into Asia’s leading knowledge economy. In the 1990s, the Singapore government placed a strong emphasis on building a knowledge economy. It has constructed high-quality academic institutions to attract world-class academics and scientists, and encouraged the setting up of foreign universities as a means of promoting competition in the education sector. These initiatives, combined with increasing levels of expenditure on research and development, have resulted in Singapore establishing a reputation as a global centre of excellence in education, information management, research and development. Singapore offers very attractive incentives5 to entice regional headquarters of global corporations to be located in Singapore in recognition of the role corporations play in developing industry clusters6. Singapore is also a worldwide financial centre. It has one of the largest futures markets in Asia, and provides a wide range of banking and other financial facilities for the business sector. It is a major supplier of capital for foreign direct investment (FDI) into other Asian countries and Australia. It is also an important centre of insurance, which is becoming an increasingly large industry in Asia. The principal reason for its success as a financial centre is a well-regulated financial market with a high level of transparency and accountability required from companies that operate from Singapore. In the 1980s, Singapore realized it was losing competitive advantage in its manufacturing sector. Production costs were rising due to higher wages, higher land costs and stricter environmental conditions being imposed on new industries locating in the country. Singapore businesses realized there was competitive advantage if they relocated industries to the nearby regions of Johore Bahru and Riau (Malaysia) and, on the islands of Batam and Bintan in Indonesia. This led to the development of new manufacturing industries in these neighbouring countries which use Singapore as their hub for providing finance, business, technology and transportation services. Singapore was, therefore, able to develop a high level service economy, but at the same time ensure that it did not lose the value of manufacturing, even though this is now conducted offshore. The Integrated Strategy for the Development of Singapore identified by six key cluster industries which will provide the focus for the long term economic development of Singapore (see figure 6). These industry clusters, which include business and finance, manufacturing, telecommunications, transport, chemicals and construction, are located in different parts of the city and are expected to provide the economic foundations for supporting the long-term development of the Singapore economy over the next 30 years. 5 See Business Incentives Singapore: http://www.business.gov.sg/incentives/. 6 Economic Development Strategy: http://www.wtec.org/loyola/em/04_05.htm. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 69 Figure 1: Integrated Strategies for Singapore’s Economic Development The development of these clusters will be supported strongly by an enabling environment which will focus on the development of ï‚· human capital ï‚· trade and marketing ï‚· financial capital development ï‚· education and research ï‚· provision of strategic infrastructure While the Singapore model of development cannot be replicated easily in other South East Asian countries, Singapore has many best practices, which, if applied in other Asian countries, would result in more sustainable development outcomes in these countries. 1. Regional Planning Advisory, Committee. 1996. Far North Queensland Regional Growth Management Framework Report. Brisbane: Queensland Department of Tourism, Small Business and Industry. 2. Regional Planning Advisory, Committee. 1998. Draft Integrated Regional Strategy Report. Brisbane: Department of Communications and Information, Local Government and Planning. 3. Sorkin, D. L., B. Nancy and J. Hudack. 1984. Strategies for Cities and Counties: A Strategic Planning Guide. Washington: Public Technology Inc. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 70 Training Session 2 SWOT Analysis as a tool in provincial planning Module 1: Analytical Techniques for Integrated Strategic Planning Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 71 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 72 Introduction Analysis is a process we use to decipher and distil information into a format that provides meaning and ideally answers questions that we may pose about any subject. Regional economic analysis is extensively undertaken for two purposes: 1. To understand the nature of the past; and 2. To develop a picture or a model of the future of an economy. Analysis may involve the use of qualitative or quantitative research techniques, or a combination of both. When undertaking analysis as a basis for integrated provincial planning it is important to identify the information needed to facilitate the setting of a vision for the future. Often in Vietnam too much information is collected by government agencies without really appreciating if this information is useful in the integrated planning process. Also there is a tendency to adopt a ‘rear vision mirror’ approach to identifying future development trends – that is, to rely upon past development trends in the setting of goals and targets for the future when such trends may be influenced by external factors in the market place and may not be realistic or desirable trends to apply in the future. In seeking to offer explanations of factors responsible for regional economic development and competitiveness, a range of analytical techniques are available to regional development practitioners and economists. In this module we will discuss the following analytical techniques used in integrated planning of a city, province or region: ï‚· Location Quotient Analysis ï‚· Shift share analysis ï‚· Input output analysis ï‚· SWOT analysis ï‚· Multi criteria analysis ï‚· Multi sectoral analysis Later in this training session we will undertake a SWOT Analysis for Quang Nam Province to assist us in understanding the province’s Strengths, Weaknesses, Opportunities and Threats for its future development over the next 10+ years. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 73 Location Location quotients (LQ) are used widely to compare a region’s relative position to that of the Quotient Analysis nation on a wide range of economic activities such as employment, industry production, as a Tool for investment, gross regional product, wages, R&D, skills and education. The LQ measures the Measuring extent to which a particular economic activity (employment, sector industry production) is Regional comparatively over or under represented in the economy of a region compared to its presence Competitiveness in the nation as a whole. Algebraically, the location quotient for an industry i in a region r, LQir, is expressed as: LQir = (Eir/Etr) / (Ein/Etn) ï‚· Eir is a measure of economic activity in an industry sector i in region r; ï‚· Etr is total economic activity in all industries in the region; and ï‚· Ein and Etn are industry and total economic activity respectively in the nation. Employment numbers are often used as a measure for location quotient analysis. If a region has more than its proportional share of the total, i.e. LQ > 1.0, it can be said to be a net exporter and to have an over representation of an economic activity. If the LQ for employment in an industry is < 1.0, a region is said to be a net importer or to have an under representation of people employed in this economic activity. An example is if a nation has two people per 1,000 persons (0.2%) working in the motor car manufacturing industry. In a region that has a major automobile manufacturing industry there might be six people per 1,000 persons (0.6%) working in the automobile manufacturing industry. The location quotient is estimated by dividing the local representation (0.6%)/ national representation (0.2%). This gives a location quotient of 3. This means there are three times as many workers per capita in the automobile manufacturing industry locally compared to the national per capita representation. The greatest value of LQ analysis is the identification of regional sector industry “strengthsâ€? – especially in the primary and manufacturing sectors. It is a tool used widely to analyse the strength of industry clusters. Where there are high location quotients for an industry such as, finance in Hong Kong, jewellery in Bangkok and garments in Ho Chi Minh City, this is usually an indication of clustering activities. A major difficulty with LQ analysis lies in the interpretation of the results. In many cases, LQ analysis needs supplementation with other forms of analysis. The most useful is shift-share analysis. Shift-Share Shift-share analysis is used widely to analyse trends or changes in economic activities over Analysis time periods (usually census or annually reported data). Shift-share is a simple technique that involves measuring the differences in the proportion of economic activities occurring over time in different industry or employment sectors. It is used to estimate the strength of regional events, such as regional policy, by estimating the shift-share parameters of a region with and without policy change. It is used extensively with input/output analysis for the examination of changes in economic structure and the determination of regional co-efficients. Shift-share analysis is used in modelling future scenarios for regional economic development to adjust co- efficients for possible changes in economic structure. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 74 Case Study 1 The following example shows the result of a shift share analysis for the Far North Queensland Far North Region of Australia. Table 1 indicates the % contribution to Regional Gross Domestic Produce Queensland (RGDP) for 18 industry sectors for three time periods: 1986, 1990 and 1994. Finance, Region of tourism/recreation services, retail trade, mining, food processing and community services are Australia the dominant sectors of the economy. Building construction and transport services grew significantly during the 1980s, but slumped during the early 1990s as foreign investment in the region declined. Table 1: Contribution of Industry Sectors to Gross Regional Product 1986 -1994(AUS $m) 1986 1990 1994 Animal 38.1 47.7 52.5 Other Agriculture 93.2 159.5 225.1 Forestry/Fishing 50.0 48.0 53.4 Mining 92.8 218.0 259.1 Food Processing 78.5 97.8 159.1 Wood & Paper Manufacturing 29.8 31.1 42.1 Machinery Manufacturing 32.5 44.9 50.0 Metals 49.6 19.2 37.9 Non Metals 8.9 14.8 16.8 Other Manufacturing 5.6 9.9 16.8 Elect/Gas/Water 30.1 46.3 49.9 Build/Construction 186.2 191.6 193.5 Trade 258.5 283.5 399.5 Transport 198.5 200.8 254.2 Finance 267.4 294.0 347.7 Public Administration 55.1 81.6 184.5 Community Services 227.2 294.4 435.1 Personal Services 167.9 198.7 381.4 Household Consumption 8.5 231.4 267.6 GRP 1878.6 2513.1 3426.2 Source: Queensland Government Statistical Office Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 75 Table 2 shows the percentage contribution of the different industry sectors to RGDP. Figure 1 indicates the proportional shifts in the contribution of industries to regional GDP between 1986 - 94. Between 1986 and 1994, the importance of the manufacturing sectors (with the exception of food processing) declined by 1.4%. Despite the decline of traditional local manufacturing industries, the region has developed a range of small, but very specialised industries. Metals fabrication manufacturing showed the greatest real decline in contribution to GRP, along with declines in the building construction, transport and trade sectors. This change is the result of national structural change in these industries and, the closure of local industries facing import competition. Table 2: Proportional Shift Share of Industry Sectors to RGDP (1986, 1990, 1994) Shift Shift Shift 1986 1990 1994 86 -90 86 -94 90 -95 Animal 2 1.9 1.5 - 0.1 - 0.4 - 0.5 Other Agriculture 5 6.3 6.6 1.3 0.3 1.6 Forest / Fish 2.7 1.9 1.6 - 0.8 - 0.3 - 1.1 Mining 4.9 8.7 7.6 3.8 - 1.1 2.7 Food Processing 4.2 3.9 4.6 - 0.3 0.7 0.4 Wood & Paper Man 1.6 1.2 1.2 - 0.4 0 - 0.4 Machinery Man 1.7 1.8 1.5 0.1 - 0.3 - 0.2 Metals 2.6 0.8 1.1 - 1.8 0.3 - 1.5 Non Metals 0.5 0.6 0.5 0.1 - 0.1 0 Other Man 0.3 0.4 0.5 0.1 0.1 0.2 Electricity / Gas / 1.6 1.8 1.5 0.2 - 0.3 - 0.1 Water Build / Construction 9.9 7.6 5.6 - 2.3 - 2.0 - 4.3 Trade 13.8 11.3 11.7 - 2.5 0.4 - 2.1 Transport (Trans) 10.6 8 7.4 - 2.6 - 0.6 - 3.2 Finance 14.2 11.7 10.1 - 2.5 - 1.6 - 4.1 Public Administration 2.9 3.2 5.4 0.3 2.2 2.5 Community Services 12.1 11.8 12.7 - 0.3 0.9 0.6 Personal Services 8.9 7.9 11.1 - 1.0 3.2 2.2 H-Hold Consumption 0.5 9.2 7.8 8.7 - 1.4 7.3 GRP 100 100 100 0 0 0 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 76 Percentage Change in Contribution to GRP Animal (A) Other Agriculture (OA) Forest/Fish (FF) Mining (OM) Food Processing (FP) Wood&Paper Man (W/P) Machinery Man (MM) Metals (MET) Non Metals (NM) Other Man (OM) Elect/Gas/Water (EGW) Build/Construction(B/C) Trade Transport (Trans) Finance (FIN) Public Administration (PA) Community Services (CS) Personal Services (PS) H-Hold Consumpt -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% Figure 1: Proportional Shift in Contribution to GRP by Industries (1986 -94) Shift-share analysis does not provide an explanation of the reasons for growth or decline. It is simply an analytical technique that describes the change in economic activities over time. These changes provide evidence of competitive forces operating in an economy. To unravel what some of these forces may be we need to use more advanced analytical techniques. SWOT Analysis SWOT analysis primarily involves recording quantitative and qualitative information about the strengths, weaknesses, opportunities and threats affecting a region’s economy. The purpose of the analysis is to form an overall position and direction for the management of economic development. It is used extensively as part of strategic planning analysis for business, organizational, regional and other forms of planning for development. The process involves groups in an organization assessing the strengths, weaknesses, opportunities and threats to be taken into consideration in formulating and executing strategic plans and business operations. Traditional SWOT Analysis The simplest form involves a general and often unstructured assessment of the internal and external environments affecting the strategic planning and management of a region. A SWOT analysis of the current system operating in Vietnam under the centrally controlled market economy is a useful way of understanding the components of this system and, the scope for improving this system for both the public and private benefit. By listing the Strengths, Weaknesses, Opportunities and Threats of the current system we can focus on modifying the system to: ï‚· Maintain and reinforce the Strengths ï‚· Diminish and remove the Weaknesses ï‚· Maximise and exploit the Opportunities ï‚· Avoid the Threats Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 77 Case Study 1 The following summarises a SWOT for HCMC in terms of Transport/Accessibility. SWOT Analysis STRENGTHS for Ho Chi Minh City in terms of ï‚· Airport close to the City. Transport / ï‚· Increased choice in transport modes. Accessibility ï‚· Traffic management measures have successfully been implemented in some areas. ï‚· Improved sign posting is facilitating the movement of people and goods within and through the city. ï‚· Established ring road system taking the pressure off the central areas. WEAKNESSES ï‚· Excessive reliance on private transport modes. ï‚· Poorly developed public transport system with low patronage levels. ï‚· Lack of appropriate road hierarchy in the newly developing areas. ï‚· Lack of enforcement of traffic regulations. ï‚· Increased pollution levels and adverse impact on people’s heath and well-being. OPPORTUNITIES ï‚· Potential to introduce a rapid transit system and inter-modal facilities at key locations. ï‚· Close proximity of the river to the CBD (District 1) offering river based transport services. ï‚· Opportunities to improve the road network connecting Saigon South with the CBD. ï‚· Potential for new access links (tunnel/ bridges) on the other side of the river and expansion of the city in this direction. THREATS ï‚· Continued lack of co-operation and co-ordination between the relevant government agencies. ï‚· Slowness of public sector to address the transport issues in an integrated and staged manner. ï‚· Lack of capital funds to invest in and upgrade the urban transport system. ï‚· On-going reliance on private transport modes combined with a growing unwillingness of the community to patronize public transport services. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 78 S-7 SWOT Analysis of Organization Capability A second technique is more structured and is referred to as the S-7 model7. This involves an assessment of seven interrelated categories that are viewed as the source of strength/weaknesses for an organization or region. The categories include strategy, structure, staff, skills, systems, style, and super-ordinate goals (or shared values). The analysis is undertaken by documenting systematically strengths and weaknesses, opportunities and threats, as shown in Table 3 below. Table 3: Framework for S-7 SWOT Analysis Sub- goals Structure Strategy System Skills Style Staff Strengths Weaknesses Opportunities Threats S-7 SWOT analysis is used to identify the capability of regional governance systems to support economic development. It is used to measure the strength and weaknesses of government, business, research and development and education sectors in terms of their capability and capacity to support local economic development. Multi-Sector SWOT Analysis A weakness of SWOT analysis is that it can be very broad. It may not be specific enough to develop an economic sector or organisational unit strategy. This may be overcome by also undertaking a multi-sector SWOT analysis. If we take the framework used for conducting a general SWOT analysis and apply this on an industry sector basis (e.g. a SWOT is undertaken for each industry sector) the analysis may reveal patterns or similar factors that affect the competitiveness and performance of different sectors of a regional economy. For example, some factors such as strength of marketing, leadership may be common to several industry sectors. A commonality of strengths or opportunities across several industry sectors might reveal opportunities for collaboration or resources leveraging. To undertake a multi-sector SWOT analysis, it is necessary to develop a set of attributes C1 … Cm which might be used to compare the four elements (Strengths, Weaknesses, Opportunities and Threats) on an industry sectors I1 …. In basis. For example agriculture, mining, chemicals, trading. This can be done by using an analytical grid for each element as shown in Table 4. 7 Waterman, R. H., T. J. Peters and J. R. Phillips. 1980. "Structures is not organisation." Business Horizons, 23(4):14-29. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 79 By comparing the results on an industry sector basis, critical elements of strengths and weaknesses, opportunities and threats that affect the economic performance of regions can be identified. For example, Criteria C1 (e.g. finance) may have common factors (science) with Industry I1 and I2. The analysis would involve a synthesis of the four data sets to identify negative attributes that require attention in key industries, and the reinforcement of ‘positives’ in a marketing strategy that promotes industry sector advantages. Table 4: Framework used for a Multi-Sector SWOT Analysis (STRENGTHS) Criteria Criterion1 Criterion2 Criterion3 Criterion4 Criterionm Sector Finance Governance Skills Research Industry1 Leadership Science FDI Industry2 IT Science ??? Investment Industry3 Transparency ??? Industryn Capital Legal Innovation ??? The application of multi-sector SWOT for regional analysis can be time-consuming. It is used in strategic planning for business and regional development when divisions in companies or sector industries conduct SWOT analyses independently. Multi-Sector SWOT analysis has limitations in that information collected does not measure the magnitude of strengths or weaknesses. It can identify if there are common strengths, weaknesses, opportunities and threats to industry sectors and, is particularly useful in identifying opportunities for cross-industry collaboration between industries. SWOT techniques are used widely for economic development analysis and planning processes. However, there are several weaknesses in the application of SWOT analysis for regional economic appraisals such as: ï‚· SWOT analyses are generally broad based, that is, they tend to look at a region or organization as a whole rather than the key constituent parts that are responsible for driving economic development. ï‚· The appraisal of a region is nearly always undertaken with a bias towards supply-side advantages/disadvantages. Experts involved in a SWOT analysis use their local judgement to determine what is competitive or weak, but seldom consider the demand perspective from the point of view of operators, investors, traders, and visitors etc which have an external and comparative perspective of regional competitiveness. ï‚· Many regional SWOT analyses are undertaken using unsubstantiated facts, opinions or intuitions, rather than empirical evidence. This can lead to ill-informed judgments or positions being adopted and unrealistic strategies being prepared to guide the future development of a region. ï‚· The deficiencies and strengths identified by a SWOT analysis do not apply equally to every industry sector of a regional economy. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 80 Input Output ï‚· Input/output analysis (I/O) is widely used as a technique for modelling and analysing the Analysis structure, operation and performance of national, regional and local economies. They measure the value of inputs into production and the value of goods produced, consumed and exported from an economy, hence the name input/output tables. They provide an important set of accounts for a regional economy, especially in measuring regional gross domestic product (RGDP). Regional I/O tables have the following uses: ï‚· They are often the sole source of regional accounts, allowing estimates of gross regional product, and the contribution of each sector to regional economic micro indicators; ï‚· They provide a picture of the local economy, indicating significant and insignificant categories of transactions and structural characteristics of the economy; ï‚· They provide an indicator of sector purchasing and sales patterns within a region; and ï‚· They can be used to evaluate the impact of change in an economy that may result from an event, such as the loss of a major industry, or the development of a new industry in a region. Other impacts that can be assessed using I/O analysis are changes in personal consumption and expenditure, purchasing or sales, wages and salaries, import patterns, capital formation, government expenditure and exports. Changes may result from the introduction of new technology, labour policies, import substitution or the purchasing policies of government. As a database, components of the table can be used in general equilibrium models and linear programming to evaluate pollution, energy, employment and transport outcomes. Clusters or strategically linked industries that are important for regional development can be identified from I/O analysis. Care must be taken in analysing regional industry clusters using I/O data. I/O tables also provide important clues about the performance and efficiency of sector inputs into production ─ especially labour costs, imports and tax structures. These can be compared with other regions. Inter-regional input/output tables are a rich source of information in analysing the competitiveness of regions. Inputs to production, performance factors (such as costs of imports/units of production, wages/unit of production, taxes/units of production) can be identified and compared between regions. Table 5 shows an example of an Input/Output Table for Gympie Region of Queensland, Australia. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 81 Table 5: Simple form of regional Input-Output table for Gympie Region Australia (AUS$000) Intermediate sector, by industry Final demand sectors (AUS$ thousands) Other FOD (gross private Household s (consumer investment, additions to goods sales in region) Total Intermediate Outside (exports) Output Totals 3 Secondary inventories ) 1 Primary 4 Tertiary 2 Mining 1 1167 9 5381 505 7061 2196 53 9660 18970 Intermediate sector, by 2 4 119 1739 37 1899 81 -2118 7417 7279 industry 3 2189 589 24563 14134 41475 33373 8498 44806 128153 (Thousands) 4 1937 603 11556 27586 41681 98657 44691 436171 228647 Total Intermediates 5298 1320 43238 42262 92117 134308 51124 105500 383049 Sectors Household 2287 1036 23762 81561 108646 108646 Income Other Value Added (taxes, 7603 3335 22866 62325 96128 13084 10120 119332 dividends, use of profits Outside (imports) 3783 7279 38228 42500 86159 -1041 -1011 84107 1897 12815 Input Totals 7279 228647 383049 146350 60234 105500 695134 0 3 FTE 272 20 870 2843 Employment Deriving the Gross Regional Product Gross Regional Product (GRP) is defined as the market value of all final goods and services produced within a metropolitan area in a given period of time. Case Study 2 Gympie Region, GRP is derived using two methods as shown in Table 6 for the Gympie Region. Australia Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 82 Table 6: GRP for the Gympie Region, Australia Expenditure Method (AUS$m) Income Method Household Expenditure $146.350 Household Income $108.646 Other Final Demand (OFD) $60.233 Other Value Added (OVA) $119.332 Plus Exports $105.500 Less Imports -$84.107 Gross Regional Product Gross Regional Product $227.978 $227.978 (GRP) (GRP) Threshold Threshold analysis is based on the population needed to make it ‘economic’ (cost effective, Analysis profitable) to provide a product, service or piece of infrastructure (Figure 2). For instance, very few people are needed to justify a baker setting up in a village, but it takes more people to justify a major hospital or a new motorway. There are two key aspects that need to be considered: ï‚· Range – how far people are willing to travel for a product or service (for instance, people will travel further to get a life saving medical service than to buy bread). This determines the area (‘catchment’, ‘market area’) that is served. In the case of production and major economic infrastructure it will be the transport costs that can be paid for production still to be profitable (for example, how far it is profitable to transport a rural crop, piece of timber, mineral or manufactured product). ï‚· Threshold – the minimum amount of demand necessary to justify the local provision of the product, service or infrastructure (for instance, a low population can support a local baker, a much larger population is needed to support a major supermarket, and an even larger population is necessary to support advanced medical services). •Tax office •Daily newspaper •Television station •Stadium •University •Hospital •Manufacturing  •Technical College •Airport •Swimming pool •Commercial banks •Cinema •Supermarket •Theatre •Car sales yard •Chemist •Banks •Doctor •Motel •Petrol station •Baker •Library •Hairdresser •football club < 1000 1000â€?5000 5000â€?25,000 25,000â€?50,000 50,000â€?125,000 125,000 + Figure 2: Thresholds for Development Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 83 Thresholds can be determined by: ï‚· Calculating population per unit of activity for the country as a whole (or for a region). This is similar to calculating ‘employment ratios’ (for example, the number of persons per doctor or number of persons per hospital bed). It can be determined by asking those agencies providing products, services, or infrastructure. ï‚· Researching the costs, revenues and minimum required profits (or use) for each type of activity. Multi-Sector Approaches to Regional Analysis The analytical techniques described above are useful in identifying general trends and patterns of development that occur in an economy, mainly from an historic perspective. From these trends various sector or industry strategies can be formulated to facilitate regional economic development. However, economists have known for a long time that activities in one sector of an economy have both direct and indirect impacts on activities in other sectors of an economy. A failure of strategic planning for regional economic development for some time now has been the tendency for planners to develop sector industry strategies which do not consider adequately the multi-sectoral inter-dependencies (economic and non economic) that exist and function in regional economies. Various tools have been developed to model or describe the multi-sector transactions that occur in a regional economy. Some common techniques used to analyse multi-sectoral attributes of economic development are now described. Multi-Criteria Multi-criteria Analysis (MCA) offers policymakers an alternative when progress towards multiple Analysis objectives cannot be measured by single criterion (that is, monetary values). MCA can be used as a decision support tool to evaluate the optimal outcomes of a project taking into consideration a range of predetermined criteria or variables. Table 7 shows the basic matrix used for MCA. A scoring (usually ranked scaling system based on 0 - 5 rankings) is used to evaluate the strength of criterion against the scenarios of options. The column with the highest score is considered the preferred option. A more advanced application of the technique involves weighting each criterion, as some criterion may have greater importance than others. Table 7: Multi Criteria Analysis Basic Matrix Table Scenario or Planning Strategy Options A B C D E TOTAL Criterion 1 2 5 5 3 3 18 Criterion 2 3 4 3 2 4 16 Criterion 3 4 3 4 5 5 21 Criterion n 5 1 1 2 3 12 Total of 14 13 13 12 15 Columns Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 84 This basic technique has been used extensively for prospect evaluation and decision-making needs, especially in testing scenarios or prioritising projects for an action plan. The technique is relatively simple: Scenarios or other factors to be evaluated are listed across the columns. Criterions by which these scenarios will be evaluated are list in the first column down the page. Each factor (A, B …N) is evaluated against the criterion using a ranked score system from 1-3, 1-5 or 1-10. The column with the highest score is the best option, while the row with the highest score is the strongest criterion. In Figure 4 above, this would be column E and Criterion 3. Multi-Sectoral Multi-Sector Analysis (MSA) is a more advanced application of MCA. MSA can help identify Analysis key elements for achieving competitiveness in different sectors of an economy and, can be used to develop a platform for fostering economic development. The MSA has its genesis in two areas of research − regional input-output theory and structural analysis. The MSA approach draws upon the industry framework used for compilation of I/O tables. However, MSA applies qualitative methods to identify relative strengths and weaknesses of competitiveness factors, risks and the economic development potential of different industry sectors which make up a region's economy. MSA uses the same basic matrix as MCA. The MSA conceptual framework is presented in a matrix shown in Table 8. The matrix uses ranked scores applied to criteria measured against different industry sectors. The industry sectors are defined by input/output regional data tables. Different data techniques (surveys, focus groups) are used to derive the scores for the matrix. The competitive factors (C) (criterion 1,2,..n) are listed in the first column and industries (i) in columns across the page (i) (i = 1…m). The competitiveness values are then obtained for each cell (Xij) in the matrix. If the Xij (cell) values are added across the page, the strength of different competitive attributes can be identified. If the column scores are added, the industries with the strongest competitive attributes can be identified. The matrix provides a picture of the relationship between competitive attributes and industries. Table 8: The MSA Conceptual Framework Matrix (example only) Evaluation Industry Sectors Criteria Is1 Is2 Isn ï?“ X 0 1 0 1 Y 1 3 0 4 Z 0 0 2 2 ï?“ 1 4 2 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 85 Case Study 3 In August 2001, a Multi-Sector Analysis (MSA) exercise was undertaken to measure the Analysis of the strength and importance of the capital stocks in the Mekong Delta Region of Vietnam. The Competitiveness exercise was undertaken as part of an AusAID Vietnam Australia Training (VAT) Programme by of the Capital a group of 40 senior executives from the Departments of Science, Technology and Stock of the Environment; Planning and Investment; Construction; Education and Rural Development. The Mekong Region Mekong Region is one of the poorest regions of Vietnam. At the time of undertaking the MSA the data on the region’s economy was very limited, dated and not reliable. MSA was able to demonstrate clearly, on a sector basis, the status of the capital stock (explained below) in the region. The information can be used in formulating regional development strategies to develop economic, social and environmental capital on a sector and multi-sector for the region and six provinces. As we all know, the effects of globalisation and national reforms since Doi Moi have had a significant impact upon regional and rural development in Vietnam. As a result, public sector agencies responsible for regional and rural development have had to consider new ways to develop the economy and attract investment to the region. Historically, the reform process has focused on improving efficiencies in labour productivity and public sector management as a means of improving regional competitiveness and to stimulate investment. However, the focus on infrastructure investments and public sector reforms goes only part way to addressing other major capital weaknesses in rural and metropolitan regions of Vietnam. Economists now realise that focusing upon improving the efficiency of financial, labour and technology capital is not enough to make regions competitive to encourage new investment and enterprise development. New forms of capital are acknowledged to have a significant role in supporting economic development. Natural capital (quality of environmental resources), human capital (business networks and leadership) and technology capital (level of local research and development) have a significant impact upon investment and the stimulation of economic development in regions. To develop a better understanding about what types of capital are important to regional and local economic development, regional economists have developed new techniques to measure the strength and competitiveness of “the capital base or stockâ€?. The capital base represents the financial, physical infrastructure and built investment, natural resources, human and technological capital that communities at a local, regional and metropolitan level use to support economic development. Regions with high levels of capital stocks are known to enjoy significantly higher rates of economic growth and development. The creation and retention of capital stock is important in stimulating and maintaining the local and regional economic development. A useful tool for auditing and analysing the stock of capital is a Capital Balance Sheet. This type of analysis enables regions to understand the strength and weakness of their capital base and is useful in assisting policy makers and public sector agencies in setting priorities for improving the development of the local communities in regions. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 86 As part of the VAT program to enhance institutional capacity in urban and rural development planning, an exercise was undertaken with staff from five development agencies to prepare a balance sheet for the Mekong Region. The analysis covers six provinces in the region. The balance sheet has enabled provinces in the Mekong to understand the weaknesses, importance and competitiveness of different types of capital supporting the development of the region. This analysis has been designed to assist the development of provincial and regional policies to enhance the capital base and competitiveness of the Mekong region. The base analysis involved an assessment of 22 categories of capital. These are grouped under financial, physical, natural, and human and technology capital. Figure 3 shows the level of capital for each category using an index scale from 0 to 1. The overall balance of the capital stock for the region and most of the six provinces is weak. Resource sustainability is the highest capital stock category for the region. Sectors with particularly weak capital stocks were private infrastructure, private building stock, and plant and equipment used for production. This is a clear indicator of the failure of the region to attract capital in private sector development projects and housing. Research and development and advanced technology capital stocks in the region are also very low. The stocks of natural capital are strongest in the region; however, these are being depleted as the result of poor environmental management and resource over utilisation. Capital Stock 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 Figure 3: Strength of the Types Capital in the Mekong Region Figure 4 shows the overall capital base of the region and the six provinces surveyed for the research. The graph shows small variations between the provinces. The index for Kien Giang and Dong Tap are overstated because of the smallness of the focus group, but the figures for the other provinces are a fair and realistic assessment of the depth of capital in the region. The figure indicates that all provinces have low capital bases that are constraining their development. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 87 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00 Vinh Long Can Tho Bac Lieu Soc Trang Dong Tap Kien Giang Mekong Region Figure 4: Provincial Strengths of Provincial Capital Bases The strength of capital stock in the region’s economy is not spread evenly between industry sectors. There are always some sectors of a local or regional economy that have higher stocks of capital than others. These sectors are likely to have a very significant influence on the nature or structure and the development of a local economy. Sectors of an economy that have high capital stock levels are also more likely to be associated with exporting activities or enhancing the capacity of a community to develop, for example, finance, education and training. Figure 5 shows the strength of the capital stock for 18 industry sectors of the region’s economy. Agriculture, construction, transport and communications, education and training have the highest levels of capital stock. However, these are relatively weak. Rice dominates the agriculture sector of the Mekong region, although there has been substantial growth in regional exports of tropical fruit since the mid 1990s. Quality factors are significant impediments to the development of capital stocks in the sector in all provinces. Other important industries in the region such as fishing and food processing also suffer from product quality problems which have lowered capital stocks in these sectors. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 88 Strength of Industry Capital Stock 1 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 Figure 5: Strength of Sector Industry Capital Stock Capital stocks which are weak and constraining the development of the region are public utilities, financial and business services. Access to micro credit and business services are major impediments to the development of business in the region. Most small-scale business enterprises rely on informal credit and personal savings to provide the capital to start and expand a business. The poor quality and lack of tenure of built assets, such as housing and industrial buildings, also undermines the credit worthiness of many businesses to gain access to formal credit. These are significant impediments to the development of small-scale industries in all sectors throughout the region. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 89 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 90 Training Session 2 SWOT Analysis as a tool in provincial planning Module 2: SWOT Analysis for Quang Nam Province Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 91 Introduction In the SWOT Analysis which we will undertake in smaller groups YOU will be required to identify what you believe are the strengths (advantages) and weaknesses (disadvantages) of the current development investment sector of Quang Nam Province. Then you will be asked what are some of the opportunities in the future for the Province to establish a more competitive economy in a regional, national and international context. Finally you will be asked what are some of the possible threats which may prevent these opportunities being realised. By sharing your knowledge of the Quang Nam Province economy and, especially its development sector, we will be able to better understand the challenges ahead in terms of creating a more robust, strong and competitive economy for the people of the province. Using the table format below, and the large sheets of paper (e.g. one sheet for Strengths, one sheet for Weaknesses etc) provided on your group table, complete a SWOT Analysis for Quang Nam Province. Ensure you nominate a team leader to complete the table and present your group’s findings to the larger group based on your knowledge and experience of the development sector of the province. Remember that the development sector includes social, economic, environmental and infrastructure elements – it is not just about money and land!! STRENGTHS WEAKNESSES OPPORTUNITIES THREATS Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 92 Training Session 2 SWOT Analysis as a tool in provincial planning Module 3: Multi-Sector Analysis (MSA) of the Competitiveness of the Capital Base of Quang Nam Province Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 93 Introduction The following exercise will prepare a capital stock balance sheet for Quang Nam Province. This analysis will provide a picture of the competitiveness and capacity of the province to support economic development. The balance sheet will be used specifically to identify areas of weak capital formation which will need improvement if the economy is to develop in a sustainable manner in the future. The exercise will be done in two parts. The first part will evaluate the strength of the capital base factors. The second part will measure the importance of these factors in supporting the development of the province’s economy. Take about 30 minutes to complete each assessment. If it is not completed on time, it will be taken away and completed by YOU. The assessment must be returned at the next training session tomorrow morning. The results will be presented and made available later in the week to course participants. Measuring the The preparation of the balance sheet will be undertaken as a group exercise. The class will be Strength (s) of divided into 5 groups. Each group is asked to answer 4 to 6 questions related to 18 industry the Capital Stock sectors using a scaling or ranking scoring system based on a measurement of 0 to 5. The questions sheet providing guidance on the scoring is attached as Appendix I. A score of 0 indicates the question is not relevant. The scale used is as follows: 5 = Very significant or strong 4 = Significant 3 = Moderate 2 = Weak 1 = Very weak The following questions from Appendix I have been assigned to the following groups: ï‚· Group A Financial Capital ï‚· Group B Physical Capital ï‚· Group C Natural Capital ï‚· Group D Human Capital ï‚· All Groups Technology Capital Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 94 Tasks for each 1. The group should appoint a group leader to manage the discussion group and record group the scores. 2. The group should discuss each question, agreeing upon a score from 0–5 for every industry sector across a row. Appendix 1 provides a more detailed guideline on the scores. 3. Add the total score for each row and divide this by the total number of rows that do not have zero scores. The example below shows a total score of 42 which is then divided by 17 to provide a Capital Performance Indicator for Physical Capital - Public Infrastructure of 2.47. (Note: There are 18 industry sectors but only 17 are valid.) 4. Do tasks 1 to 3 for each question allocated to the group. AN EXAMPLE OF THE SCORING The example below shows how the scores for public infrastructure quality might be completed. PROCESS Household Domestic services Transport & Communications Capital Performance Education and Training Mining and Resources Public Administration Community Services Tourism and Leisure Retail and Trading Business Services Financial Services Sum of each row Food Processing Petro Chemicals Capital Manufacturing Public Utilities Construction Agriculture Indicators Indicator Forestry Fishing PHYSICAL CAPITAL Public 1 3 3 5 3 2 2 3 4 2 1 1 2 3 3 3 1 0 42 2.47 Infrastructure Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 95 The scores from the other groups will be collected and put into an Excel spreadsheet so that the column scores can be calculated. The results of the matrix will look something like the example on the next page. Interpreting the Using this information it is possible to show and graph the level of capital performance and industry Results capital credit rating for a province. In the example on the next page Technology (see highlighted row) is the strongest capital asset in the province surveyed. This suggests there are new export industries being developed or, that local industries are reinvesting in the province. The sector with the highest level of community capital in this example is Fishing (see highlighted column). The capital stock for Housing is low. This suggests that some attention should be given to capitalising on technology development as part of an economic development strategy. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 96 Importance (I) of This exercise is repeated to measure the level of importance the group places on the each item Factors in of capital. The reason for this is that water quality, for example, is something that is not as Building important to the economic performance of the transport sector as it is to agriculture or the Community tourism sectors. Understanding which elements of capital are important to local economic Capital development of different sectors of an economy enables provinces and regions to set priorities in formulating strategies which help to create competitive advantage. If local communities do not understand what factors are important to developing local competitiveness, many development opportunities will go unrealised. The scale used to measure the importance of elements of community capital is as follows: 5 = Very important to the development of sector 4 = Moderate importance to the development of sector 3 = Important to the development of sector 2 = limited importance to the development of sector 1 = Very minor importance to the development of sector In making a judgement about the importance of the capital stock to the development of the sector, think about how big or important the development of the sector is to the economy. For example, the automobile manufacturing assembly industry may be considered important to the development of Quang Nam Province, so having a strong capital infrastructure base will be important. It will be scored as 4 or 5. However, the importance of public infrastructure would be less important to the development of the financial services sector as it will not be a major driver in the future development of the province’s economy. It would therefore be scored as 3. The example below shows how the scores for importance of Public Infrastructure Quality might be completed using this scoring technique. Example of the Importance Matrix Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 97 Table 1: Example of a Completed Score Sheet using the MSA technique. Education and Training Public Administration Tourism and Leisure Community Service Domestic Services Financial Service COMMUNITY Communication Manufacturing Public Utilities Retail Service Food Process AND CAPITAL Agriculture Transport Forestry INDICATORS Fishing Energy Mining (strength) FINANCIAL CAPITAL Income 2 2 3 3 1 1 1 3 3 3 2 1 1 2 1 3 2 0.67 Expenditure 1 1 3 1 3 3 1 3 3 3 1 1 1 3 3 2 3 0.71 Finance & Capital 1 3 3 2 2 3 1 1 3 2 2 1 1 2 3 1 1 0.63 Ownership 1 3 3 1 1 3 1 1 2 1 3 1 1 1 1 1 2 0.53 PHYSICAL CAPITAL Public infrastructure 1 3 3 1 2 1 3 1 1 2 2 3 3 2 3 2 2 0.69 Private Infrastructure 3 3 3 1 2 2 3 2 3 1 1 1 2 1 1 2 1 0.63 SOCIAL CAPITAL Community 1 3 3 1 1 1 1 1 2 2 3 1 2 3 3 3 1 0.63 Organizations Sponsorship 1 3 2 3 1 3 3 1 2 1 3 2 2 1 2 3 2 0.69 Housing 1 3 1 2 1 1 1 1 2 2 1 1 2 1 2 3 2 0.53 ENVIRONMENTAL CAPITAL Land 1 3 3 2 1 1 1 1 3 1 1 1 1 2 3 2 3 0.59 care/Conservation Management Policy 3 1 3 2 2 1 1 1 2 1 1 1 2 2 3 2 3 0.61 Waterways 1 3 3 2 1 1 1 1 3 1 1 1 1 2 3 2 3 0.59 Management Air Quality 1 3 3 2 1 1 1 1 3 1 1 1 1 2 3 2 3 0.59 Management HUMAN CAPITAL Education and 1 1 1 2 2 3 1 2 1 2 2 1 2 1 1 3 2 0.55 Training Labour 1 1 3 1 1 3 1 2 2 2 3 1 1 3 3 2 1 0.61 Technology 3 3 3 3 3 2 3 3 2 2 1 3 2 2 1 2 2 0.78 Industry Linkage 1 1 2 2 2 3 3 2 2 1 3 2 3 3 1 3 1 0.69 Industry Credit Index 0.47 0.78 0.88 0.61 0.53 0.65 0.53 0.53 0.76 0.55 0.61 0.45 0.55 0.65 0.73 0.75 0.67 0.21 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 98 Public Capital CAPITAL Indicators PHYSICAL Infrastructure 5 Agriculture 5 Forestry 5 Fishing 4 Mining and Resources 5 Food Processing 2 Petro Chemicals 2 Manufacturing 3 Public Utilities 4 Construction 2 Retail and Trading 1 Transport & Communications Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 1 Financial Services 2 3 Business Services Public Administration 3 Community Services 3 Education and Training 5 Tourism and Leisure 5 Household Domestic services 60 Sum of each row Capital Performance Indicator 3.33 99 Public Administration Tourism and Leisure Community Service Domestic Services Financial Service CAPITAL Communication Education and Manufacturing Public Utilities Retail Service Food Process INDICATORS Agriculture Transport Forestry Training (Importance) Fishing Energy Mining FINANCIAL CAPITAL Income 2 1 1 1 3 1 3 1 1 1 1 1 1 3 1 1 1 1.41 Expenditure 2 1 3 3 3 3 3 1 3 3 3 1 3 1 3 3 1 2.35 Finance & Capital 3 3 3 3 3 3 3 3 3 2 1 2 3 3 3 3 1 2.65 Ownership 3 1 2 1 3 1 1 1 1 3 2 2 2 2 2 2 2 1.82 PHYSICAL CAPITAL Public infrastructure 1 3 3 3 2 1 2 3 1 3 1 3 1 1 1 1 3 1.94 Private Infrastructure 1 1 1 1 3 3 3 1 1 3 1 3 1 1 1 1 1 1.59 SOCIAL CAPITAL 0 Community 3 3 3 2 2 1 3 2 2 2 2 2 3 2 3 3 1 2.29 Organizations Sponsorship 3 3 2 1 2 2 1 2 2 1 2 1 1 1 1 1 2 1.65 Housing 2 1 2 3 1 2 1 3 3 3 1 3 1 1 1 1 2 1.82 ENVIRONMENTAL Land 1 1 1 1 2 3 2 1 2 2 2 3 1 2 1 1 2 1.65 care/Conservation Management Policy 2 3 2 1 2 2 1 3 3 1 1 3 2 2 2 2 1 1.94 Waterways 1 3 3 1 1 3 1 3 3 2 2 1 3 3 3 3 1 2.18 Management Air Quality 3 2 1 1 2 2 2 2 3 3 3 3 2 2 2 2 3 2.24 Management HUMAN CAPITAL Education and 2 3 1 2 2 2 1 1 1 2 2 1 3 3 3 3 2 2 Training Labour 1 1 1 2 2 3 1 2 1 2 2 1 2 1 1 3 2 1.65 Technology 1 1 3 1 1 3 1 2 2 2 3 1 1 3 3 2 1 1.82 Industry Linkage 3 3 3 3 3 2 3 3 2 2 1 3 2 2 1 2 2 2.35 Industry Credit Index 2.00 2.00 2.06 1.76 2.18 2.18 1.88 2.00 2.00 2.18 1.76 2.00 1.88 1.94 1.88 2.00 1.65 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 100 APPENDIX 1: QUESTION SHEET GUIDELINES 1. ECONOMIC & FINANCIAL CAPITAL Category Explanation of Scoring REVENUE What are the strengths of 5 = High level of International exports GENERATION the revenue flows from sales of goods or services 4 = International and domestic exports and the regional exports in the industry sector? 3 = Mainly national exports 2 = National and local/regional sales 1 = mainly local sales 0 = Not applicable INVESTMENT What are the main 5 = Attracts major International and national investment ATTRACTIVENESS sources of financing the development of the 4 = International and some national Investment sector? 3 = Mainly national Investment 2 = National and local/regional investment 1 = mainly local investment 0 = Not applicable ACCESS TO Ability of government, 5 = High level of access to national/ international credit CREDIT firms and SMEs to gain access to credit and Micro 4 = Good access to national credit credit? 3 = Moderate access to credit 2 = Limited credit facilities 1 = No credit facilities 0 = Not applicable CAPITAL What level of capital, 5 = High level of International and national reinvestment RETENTION AND wages, and profits are REINVESTMENT retained and reinvested in 4 = International and some national reinvestment the region? 3 = Moderate national reinvestment in sector 2 = Limited local/regional reinvestment 1 = Little or no reinvestment 0 = Not applicable Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 101 OWNERSHIP OF What is the level of private 5 = High levels of private sector ownership PRODUCTION ownership of production? 4 = International and domestic exports 3 = 50% mix state and private 2 = Predominantly provincial local state owned 1 = Predominantly national state owned 0 = Not applicable MARKET What is the level of 5 = International and National DEVELOPMENT development of markets for goods and services 4 = National produced by the sector? 3 = National and regional 2 = Regional and provincial 1 = Mainly local 2. PHYSICAL CAPITAL - PUBLIC INFRASTRUCTURE Category Explanation of Scoring AVAILABILITY OF What is the level of 5 = High level International service connections INFRASTRUCTURE availability of public utility SERVICES services, for example, 4 = Good national services electricity, roads in 3 = Moderate regional services (improving) servicing production of goods and services in a 2 = Limited services region? 1 = Little of no services available QUALITY OF What is the quality of 5 = International quality and standards PUBLIC public utility services, for INFRASTRUCTURE example, electricity, 4 = High quality national services and standards roads, telecommunications in 3 = Moderate quality regional services (improving) servicing production of goods and services in a 2 = Limited quality services region? 1 = No or very unreliable services TELECOMMU- What is the level of 5 = High level International service connections NICATIONS availability of SERVICES telecommunications 4 = Good national services (including internet) 3 = Moderate regional services (improving) services supporting production of goods and 2 = Limited services services in a region? 1 = Little of no services Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 102 3. PRIVATE INFRASTRUCTURE (Including State Owned Enterprises) Category Explanation of Scoring QUALITY OF What is the quality of 5 = International quality and standards PRIVATE facilities, (buildings, FACILITIES factories etc) used in 4 = High quality national services and standards production of goods and 3 = Moderate quality regional services (improving) services 2 = Limited quality services 1 = No or very unreliable services QUALITY OF What is the quality of 5 = International quality and standards PRIVATE equipment, machinery, EQUIPMENT AND technologies and 4 = High quality national services and standards TECHNOLOGIES equipment servicing production of goods and 3 = Moderate quality regional services (improving) services in a region? 2 = Limited quality services 1 = No or very unreliable services 4. NATURAL CAPITAL Category Explanation of Scoring LAND What is the quality of land 5 = International quality and standards of management MANAGEMENT management and administration related to 4 = High national standards of management the conservation and 3 = Moderate quality regional services (improving) development of land? 2 = Limited quality and standards of management 1 = Very poor management WATER What is the quality of 5 = International quality and standards of management CONSERVATION water (supply, use, MANAGEMENT pollution) management by 4 = High national standards of management sector? 3 = Moderate quality regional services (improving) 2 = Limited quality and standards of management 1 = Very poor management AIR QUALITY What is the quality of air 5 = International quality and standards of management MANAGEMENT pollution management by sector? 4 = High national standards of management 3 = Moderate quality regional services (improving) 2 = Limited quality and standards of management 1 = Very poor management Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 103 ENERGY What is the level of 5 = International standards for energy conservation CONSERVATION efficiency of energy usage? If sector is a 4 = Applying national standards for energy conservation users of renewable energy score high. 3 = Moderate attention to improved energy conservation 2 = Limited attention to energy conservation 1 = Very poor or not interest in energy conservation RESOURCE What is the awareness 5 = International quality and standards of management SUSTAINABILITY and application of sustainable development 4 = High national standards of management practices in the sector. If the practices of the sector 3 = Moderate quality regional services (improving) have an overall harmful effect on the quality of life 2 = Limited quality and standards of management and he environment the score would be very low. 1 = Very poor management 5. HUMAN CAPITAL AND GOVERNANCE Category Explanation of Scoring EDUCATION AND What is the general 5 = International standard TRAINING quality and level of education and training of 4 = Above national standards people in the sector 3 = At national standards 2 = Below national standards but improving 1 = Below national standards and falling LABOUR MARKET What is the depth and 5 = High quality and skilled labour market breath of labour market skills and experience to 4 = Moderately skilled labour market service the sector (is there a good supply of quality 3 = Limited skilled labour market professional, managerial skills that support the 2 = Mainly semi-skilled labour market sector? 1 = predominantly unskilled labour LEADERSHIP What is the strength of 5 = Very significant or strong political, community and business leadership in the 4 = Significant sector? 3 = Moderate 2 = Weak 1 = Very weak Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 104 ENTREPRENEURS What is the strength of 5 = Very significant or strong HIP AND local business INNOVATION entrepreneurship and 4 = Significant innovation in the province? 3 = Moderate 2 = Weak 1 = Very weak NETWORKS What is the level of 5 = International and National DEVELOPMENT development of professional and 4 = National management networks and interaction for 3 = National and regional business development? 2 = Regional and provincial 1 = Mainly local GOVERNANCE What is the efficiency and 5 = Very strong SYSTEMS effectiveness of Governance systems 4 = Significant supporting the development of the 3 = Moderate sector? 2 = Weak 1 = Very weak 6. TECHNOLOGY AND INNOVATION CAPITAL Category Explanation of Scoring RESEARCH AND What is the strength of 5 = Very strong DEVELOPMENT strength of research and development activities in 4 = Significant the regional industries 3 = Moderate 2 = Weak 1 = Very weak APPLICATION OF What is the level of 5 = Very strong ADVANCED acceptance and use of TECHNOLOGY advanced technologies 4 = Significant used in production for business development? 3 = Moderate 2 = Weak 1 = Very weak Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 105 If you have any questions please ask the instructor of this training session. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 106 Matrix Sheet (Importance) Education and Training Government Services Mining and Resource Capital Performance Telecommunications Community Services Tourism and Leisure Total for each Row Domestic Services Business Services Financial Services Petrol Chemicals Food Processing Public Utilities Manufacturing Construction Agriculture Transport Materials Forestry Trading Fishing Capital Indicators FINANCIAL Revenue generation Investment attractiveness Access to credit Capital retention and reinvestment Ownership of production Market development Revenue generation PHYSICAL Public infrastructure - Availability of Facilities - Quality of Facilities Private infrastructure - Buildings & facilities - Machinery & equipment Telecommunications services Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 107 Education and Training Government Services Mining and Resource Capital Performance Telecommunications Community Services Tourism and Leisure Total for each Row Domestic Services Business Services Financial Services Petrol Chemicals Food Processing Public Utilities Manufacturing Construction Agriculture Transport Materials Forestry Trading Fishing Capital Indicators NATURAL Land conservation Water conservation Air quality Energy conservation Sustainability HUMAN Education and Training Labour markets Leadership Entrepreneurship Business networks Governance TECHNOLOGY Research and development Application of advanced technology Total for Each Column INDUSTRY CREDIT RATING Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 108 Training Session 3 Industry Clusters – from theory to practice Module 1: What is a cluster? Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 109 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 110 Introduction In April 2008 Professor David Dowall from the Institute of Urban and Regional Development at the University of California, Berkeley visited Quang Nam Province with representatives of the World Bank. Professor Dowall presented information about regional development planning using a cluster based approach. He believes clusters drive regional performance stating that clusters are simply the ‘lens’ for understanding economies and, every region can have a ‘portfolio’ of clusters which will grow and change over time. In this training session we will explain: ï‚· what is a cluster? ï‚· the benefits of clusters to economic growth and prosperity What is a A cluster is a concentration of like-minded firms, talent and support institutions. They have cluster? located together (perhaps unconsciously) to do business, utilise a resource and achieve synergies. Some of the players may be fiercely independent and competitive, but they have enough in common to work together to achieve bigger and better outcomes. The clustering phenomenon was introduced into mainstream economic literature by Professor Michael Porter (Harvard Business School) in his celebrated book The Competitive Advantage of Nations (1990). Porter described the key factors shaping clusters in terms of the Porter Diamond as shown in Figure 1. Clusters are about collaboration between organisations – to achieve outcomes not possible through individual effort. But this collaboration must be based on realistic, outcome-based initiatives, and also include public organizations, where necessary. For this reason, a cluster is more than simply a network of companies. Benefits of a Clusters have the potential to: cluster ï‚· Build critical mass and lowers the coat of doing business (generates locational economies). ï‚· Provide a beacon for investors. ï‚· Build collaborative behaviour and thus facilitate joint problem-solving. ï‚· Provide a system of connection between companies, technologies and competencies. ï‚· Assist in building innovation systems and industrial capability. ï‚· Help address market failure e.g. lack of information, co-ordination failure, managerial myopia. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 111 figure 2 The Porter Diamond Clusters build on two realities: 1. Local leadership and the ability to innovate are core ‘success’ factors in economic development at a regional or provincial level. 2. Investment, exports and jobs growth generally require collaboration by companies and government – cluster programs identify their ‘self-interest' and teach them how to collaborate. Two types of It is important to distinguish between clusters ï‚· Physical clusters or clump of companies. A ‘clump’ is just a group of companies occupying similar space ; and ï‚· Porter-type clusters being complex and dynamic locational economies where the stakeholders compete and collaborate to drive the cluster’s performance. Cluster programs can facilitate this process. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 112 YOU are asked to think about and describe some physical clusters or clumps in Quang Nam province. List three in the space below including their location within the province. 1. ……………………………………………………………………………………………. 2. ……………………………………………………………………………………………. 3. ……………………………………………………………………………………………. Are there any Porter-type clusters in Quang Nam province? If yes, list at least one below and its location within the province. ……………………………………………………………………………………………. ……………………………………………………………………………………………. ……………………………………………………………………………………………. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 113 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 114 Training Session 3 Industry Clusters – from theory to practice Module 2: Examples of clusters in Asia Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 115 Introduction This module aims to explain some clusters elsewhere in Asia. The particular aim is to demystify the cluster term and show that Cluster Programs are very practical. YOU are asked to think about whether any of the examples discussed in this module might be relevant to Quang Nam province. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 116 The Cockatoo Network has many examples of clusters – you can read about them by going to www.investmentinnovation.wordpress.com or we can access further case studies for you. Case Study 1 Chiang Mai is a major cultural centre within Thailand, and much of its industrial activity Chiang Mai, originates from a history of local craftsmanship. The key industries are tourism and handicrafts. Thailand The emphasis on culture has developed with the ‘Lanna style’ which has been nurtured for seven centuries. A regional innovation survey was conducted in 2005, with the support of the Japan International Cooperation Agency (JICA) and Thailand’s National Science and Technology Development Agency (NSTDA). The survey was the first of its kind in Thailand. It sought to gain a better understanding of the nature of R&D and innovation activities in Thai industries and services, and to find ways to enhance and support them. It also aimed to identify potential opportunities in selected clusters that are strategic to the future development of the city of Chiang Mai. Chiang Mai is unique in Thailand because it hosts the only centre dedicated to private sector innovation. It is called the Research, Development and Innovation Service Centre (R&DISC) of the Federation of Thai Industry. It is active in collaboration and the facilitation of innovation among its members. The focus of innovation is both technological and non-technological, developed around ‘Lanna’ wisdom and a foundation of hospitality. R&DISC portrays itself as the main driver and facilitator of the Chiang Mai Innovation System. There are eight key clusters and they cover the majority of industries in Chiang Mai. It is not possible to rate any of these clusters without more information and analysis. However, its world- famous tourism cluster would rate highly. The health, fashion and construction/decorative materials clusters also appear to be particularly appealing and timely. The scope and activities of the eight clusters are described below. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 117 Table 1: Eight Key Clusters in Chiang Mai, Thailand Scope R & D activity Innovation Food and Local food (Northern Process R&D for new Generating a new line of agro- food), preserved food, products and quality product (ice cream) via new industry processed food and improvement of existing machinery. Also productivity beverages. products; new baking benefits; introducing ‘natural- process to improve product look’ product to the market. quality. Handicrafts Skilled-intensive Machine tools development. Using clean technology to production of handmade improve productivity and products (e.g. liquor ware, reduce costs; process wood-crafting, silverware innovation to serve new etc.) product lines; adding more variety of flowers for new product; using work study to improve productivity in handicraft production. Construc- Scale-intensive production Experiment to find an New materials for brick and tion and of construction materials optimal firing temperature in tiles production; process decorative (e.g. roof and tiles, bricks, brick and tiles production; improvement by using new materials window frames and pre- pilot production of roof tiles heat recovery system; trend cast concrete products) from extruder. setting in knock-down and decorative materials products. (e.g. furniture and house ware) Fashion Textiles, garments, leather New blends of cotton, linen, products and jewellery. wool and silk in order to generate new products; applications of preventative maintenance, line balancing and inventory control; new dyeing process; applying local knowledge into new styles of fabric and garment. Health Health services (e.g. spa Sensory analysis to improve New ingredient of bee pollen and massage, relaxation bee pollen products; clinical product; one stop service for and rehabilitation, research for Spirurina hospital management e.g. hospitals) and health product application to emergency room products (e.g. functional diabetes patients management. food and nutraceuticals, cosmetoceuticals). Tourism Tourist attractions, Applying ICT to improve restaurants and hotels, service quality; new package and tour operators and tours and services based on ticketing. local culture e.g. Lanna-style wedding package Software Software and information Application of ActiveX to technology services. deliver new solutions Knowledge- Education, consultancy, English courses for e-mail intensive technical testing, product communication and spa services design, and research & business; first VDO Learning development services. Colour multimedia in the world. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 118 Collaborative These clusters in Chiang Mai are likely to rate highly in terms of social capital and a critical opportunities mass of suppliers. However some of the clusters – such as health, software and knowledge- intensive services – might lack a little in terms of specialised infrastructure and technology/knowledge formation. Our reasoning is that they would be playing catch-up with more mature clusters in these industries. The collaborative opportunities include the sharing of experiences with more advanced clusters, especially those with companies interested in joint ventures with Thai companies. Three areas of activity suggest themselves in the case of the clusters in Chiang Mai. They are: 1. Functional foods and nutraceuticals The Canterbury and Nelson Nutraceuticals Cluster in NZ is very interested in exchanging ideas and information with similar clusters overseas. It was formed in 2002 and now has 120 member companies. This cluster offers a variety of natural products and services, ranging from bulk raw materials, private label contract manufacturing, extraction services, branded dietary supplements, and internationally-recognised R&D and clinical trial facilities. The cluster aims to promote overseas members through knowledge sharing and collaboration aimed at enhanced production capabilities and sales. Email: jennie.cope@cdc.org.nz Website www.cdc.org.nz. 2. Wool-cotton textile blends There are clusters in Italy (particularly Biella and Prato), as well as in India and Australia, that are known to be interested in developing high quality product lines using new age blends of natural fibres. The particular opportunity is to develop a global supply chain in the design and manufacture of high value garments. 3. Handicrafts Just as Thai artisans have developed a world-wide reputation for their artistic skills, flair and attention to detail, so have the Italians. There are some very sizeable opportunities for product development as well as market development. The main body in Italy is the Club of Industrial Districts which aims, inter alia, to promote international relations with other districts, economic and cultural organizations. It also sponsors studies and research. There are 25 industrial districts in Italy that are currently associated with the Club. The relevant sectors would appear to be metalwork (Treviglio and Lecco), furniture (Altolivenza, Pesaro and Marsciano), clothing (Empoli), glasses (Cadore), silk textiles (Como), leather goods and footwear (Fermo, Santa Croce and Verona) and goldsmith (Valenza). The website is www.clubdistretti.it Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 119 Case Study 2 The success of India’s high-tech and outsourcing industry has been built on Bangalore, Bangalore, India particularly its IT cluster. We estimate that it would rank around 80-85 out of 100 in terms of the Cluster ScoreCard. It would deliver high ratings in terms of social capital; local champions; critical mass of suppliers; technology/knowledge formation; and local competition. Bangalore’s IT players include Texas Instruments, Siemens, Synopsis, Philips, National Semiconductors, Lucent Technologies, Nortel, Siemens, Motorola, Cisco Systems, Ericsson & Sony, Oracle, Novell, Sun Microsystems, Digital, Apple and Microsoft. Software Technology Parks of India, the organisation that facilitates high technology exports, says that 284 firms have set up base in the ‘Silicon Valley’ of India in the past two years, taking the total to 1,322 firms. Who 10-15 years ago would have believed that Bangalore would become India’s own Silicon Valley? For companies like Motorola, Bangalore now provides a strategic hub in its global research and development efforts. Bangalore also acts as a recruiting ground for NASA in the United States. Bangalore is thus a good example of the international connections that underpin the process of technology diffusion and know-how between companies operating within clusters across the world. The clustering process in Bangalore has worked at a number of different levels – job creation, inward investment, innovation, skills formation and the development of physical, digital and social infrastructure to build new economy collaboration and alliance formation. The process has not been perfect - ‘whole of government’ approaches linking local industry development opportunities to the national education, science and technology or innovation architecture have not advanced as hoped. However, there is evidence that some businesses have learned to collaborate with rival firms to fill new export orders and develop new products. Bangalore has become a victim of its own success according to Jay Shankar (AFP). He has recently highlighted the fact that its rapid growth has put additional pressure on the city’s congested roads, and software firms are now fierce critics of the city’s energy grid, as power cuts take a toll on their businesses. Other types of Infrastructure were actually a key factor in bringing IT firms to Bangalore, along with a pool of English-speaking engineering students and a mild hillside climate that offers respite from India’s sweaty summers. Restaurants, pubs and boutiques sprouted up. However, the narrow roads and lanes of the city (population 6 million) are now packed with 2 million vehicles – and traffic accidents are very high. Living costs are being driven up by a shortage of hotels and quality apartments. The consensus view of IT firms is that they need both manpower and infrastructure for sustainable growth. However, they have seen no significant improvement in the quality of Bangalore’s infrastructure over the last five years. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 120 Collaborative opportunities As the foregoing suggests, Bangalore has a major drawback, specifically its road infrastructure and electricity supply and connections. It also has shortages of managers with strong marketing skills. The skills issue should correct itself in light of the significant numbers of Indian IT workers now picking up these skills by taking postings in North America, Europe, Singapore, Australia etc. The electricity issue should also be resolved in time. Softening bureaucratic mindsets and regulations International collaboration could assist in addressing problems associated with the bureaucratic mindset of Indian business, and the regulatory systems that govern it. There is considerable anecdotal and documented evidence that this mindset is retarding innovation and long-term investment by foreign interests in the Bangalore IT cluster. An appropriate Action Agenda might be for the appropriate industry association to regularly benchmark the local business regulatory system and approvals processes against those in other IT hubs around the world. This is already done to some extent by international consultancy groups (e.g. KPMG) and the big IT companies. However it might be that government officials in Bangalore are not properly aware of the problem. This is a complex issue, but there are numerous clusters that would be willing to collaborate on a benchmarking exercise. Linking clusters Cities such as Bangalore are not self-contained production hubs – they are linked to national and international systems of innovation and markets. The vast range of multinationals active in Bangalore provides a springboard for further growth across India and, indeed southern Asia. The multinationals are already linking their facilities across borders and regions. It thus makes sense for support agencies to do the same. Which other ICT clusters could Bangalore collaborate with? There are clusters that would welcome interaction with Bangalore - cities like Chicago, Ottawa, Dublin, Stockholm, Sydney, Wellington and Valencia to name a few. Case Study 3 This is a stand-out cluster. It would most likely rate 90 out of 100 on the Cluster ScoreCard by Singapore virtue of high scores for local champions; critical mass of suppliers; governance structures; chemicals cluster specialised infrastructure; technology/knowledge formation; and sophisticated home demand. Output of Singapore's chemicals cluster was US$59.4 billion in 2007. This represents 34% of Singapore’s manufacturing output. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 121 Merrill Lynch says the petrochemicals segment has not been affected by the oil price hike - on the contrary. Saudi Basic Industries Corp (SABIC) predicts Asian demand for petrochemicals would outstrip the combined demand of the US and Europe within two years. This forecast is based on the fact that Singapore has moved to build an entire petrochemicals supply chain that includes end products such as plastic bags, packaging, textiles, car parts, electronics. These types of products go hand in hand with the rising incomes across Asia. The Singapore Economic Development Board (SEDB) says it has been actively building its petrochemicals capabilities since it opened South East Asia's first petrochemicals complex in 1984. Today, there is even a dedicated island - Jurong Island - hosting 95 companies including heavyweights Exxon Mobil Chemical and Shell. Companies benefit from industry integration – sourcing raw materials and selling products over the fence, and sharing common pipeline services and other utilities. The latest boost is synthetic rubber supplier Lanxess AG's decision to invest in a €400 million butyl rubber facility to meet demand from auto tyres. Technology is a critical enabler, and companies based in Singapore have been investing heavily in petrochemicals R&D to become a "first implementer" of technologies, as well as a technology creator. Singapore has its sights set on new process routes and novel applications. Indeed, Singapore's Agency for Science, Technology and Research fosters research talent e.g. the Institute of Chemical and Engineering Sciences, sited on Jurong Island, does research work in biocatalysis, catalyst screening & optimisation, bioprocess engineering, and protein engineering. Collaborative opportunities An observer might be excused for thinking that a strong cluster such as this might have little need to collaborate. However there are increasing risks for businesses based on the oil resource. Given that the Singaporeans are well-known for their business acumen and long-term thinking, it is expected that Singapore will move increasingly into oil alternatives. In this regard the main alternatives are biofuels, solar, wind, fuel cells, geothermal and hydro – and Singapore would appear to have competitive advantages in the first four. There are at least two major collaborative opportunities for Singapore. Build clusters in wind energy Singapore has been very active in respect of wind energy and Vestas Wind Systems (Denmark), the world’s largest manufacturer of wind turbines, located its R&D team of 150 engineers there in 2005. It included a reported investment of $US319 million over the next 10 years. The big opportunity is for other Asian nations to work with Vestas to develop pan-Asian development agendas in the wind energy field. Vestas already has plants in China and India, and the increasing competitiveness of wind energy suggests that there are major development opportunities throughout the region. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 122 Build clusters in biofuels Clusters have developed in Malaysia (palm oil) and India (mustard) in recent years, and these might conceivably be extended. However the concerns about the impact on food resources squeeze need to be resolved first. Case Study 4 The Straits Times has reported that small-scale fish rearers along Sungai Pahang, Malaysia’s Malaysian fish biggest river, face logistical difficulties marketing their produce. Wholesalers have been clusters reluctant to buy fish from them due to insufficient quantities and their scattered locations. This was a real threat because the fish producers simply could not sell into the stronger regional and national markets. However the problem has eased since most of the 32 fish rearers have regrouped into four clusters, each with its own "transit cage" supplied by Federal Agricultural Marketing Authority (FAMA). Under the "cluster-cage" concept, FAMA is now obtaining its fish supply only at selected locations. Fish rearers are informed a few days before transit cages are brought to central collection points. Although there are about 200 fish cages along the river, most of the rearers own just two or three. The cluster-cage concept enables the rearers to concentrate on improving their produce. "We don’t have to think about the marketing aspect anymore. The most important thing for us now is to produce high-quality fish." said a local, who owns 10 cages. He previously had to go to Kuantan or Kuala Lumpur to sell his fish. A FAMA official said the concept had been expanded to Maran and Kuantan. "We can’t go and buy fish from individual rearers. That is why we have to treat them as a big group supplying more than 400kg of fish each time we come to collect their produce," he said. There are 219 fish rearers in Pahang with 1,636 cages. FAMA plans to formulate a new type of fish feed so that rearers can harvest their fish every four months instead of 6-9 months at present. These clusters are relatively small and very new. Nevertheless they might rate around 65-70 on the Cluster ScoreCard on the basis of their strong social capital, a critical mass of suppliers, good governance structures (due to FAMA’s leadership role) and specialised infrastructure. The existence of a threat was also the stimulus to the clusters’ formation. Collaborative opportunities The whole area of fisheries is ripe for strong collaboration based around clusters. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 123 Refrigeration Many markets are able to pay good prices, as long as the product is fresh. However a lack of refrigeration capacity is a common constraint among fishing communities in developing countries. The core problem is often the lack of feel that financial institutions have for this industry. Development banks and commercial banks are reluctant to finance aquaculture projects because of the common perception of the industry being rife with insolvencies and under-capitalisation. The fish farmers also often lack the know how in presenting their projects to financial institutions. It would be instructive to identify the extent of refrigeration facilities along Sungai Pahang, and whether collaboration with more advanced aquaculture clusters could address this issue. It might be progressed as part of an aid project or through a commercial arrangement. There are aquaculture clusters and industry associations throughout Asia that might be interested in collaboration. One further afield is the Humber Seafood Institute (England), which aims to promote international collaboration on innovation and sustainability. It should be contacted to at least share information. There is a Perishables Hub at Humberside airport – a purpose-built temperature controlled facility for the efficient handling of air freight cargo. There is also the Humber Seafood Exchange, a chilled seafood logistics hub, distribution centre, auction and processing facility – construction work will start early in 2009. Fish feed Best practice aquaculture depends on the quality and delivery of feed, and this is recognised by FAMA. The Port Lincoln Marine Centre in South Australia has world-class technology in this field. Indeed there are many Australian and New Zealand aquaculture businesses with such expertise – an initial contact for FAMA is Mr. Tony McLennan at mclennan@netspace.net.au Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 124 Training Session 3 Industry Clusters – from theory to practice Module 3: Cluster ScoreCard – understanding clusters Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 125 Introduction This module introduces participants to the Cluster ScoreCard which is a tool that explains key aspects of high-performing clusters. YOU are asked to pay attention to the 10 attributes covered by the score card because you will be applying them to a real life cluster example in Quang Nam Province as part of a cluster team exercise. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 126 Cluster Please note that The Cluster Scorecard is covered by © Copyright 2008 as this is a tool devised ScoreCard – by a group of experts including Mr. Rod Brown, presenter of these training sessions on cluster a new approach analysis. to measuring competitive Clusters result when companies, including competitors, locate near one another to gain the advantage advantage of economies of scale. Clusters provide ready access to suppliers, support services, skilled labour pools, and to knowledge that occurs when people meet and talk business. Companies that cluster operate as a system, use their resources more efficiently, and collectively produce more than the sum of their individual outputs. The most important advantage of clusters is the access to innovation, knowledge, and know-how - the drivers of all successful businesses in the New Economy. Companies and communities are thus looking to clustering concepts to attract investment, and to get better outcomes from research and infrastructure expenditure. However a universal problem is in knowing where to start. Common questions are: ï‚· Do we have a cluster? ï‚· How is our cluster performing? ï‚· What do we need to start a cluster? ï‚· How are we performing against other clusters? The Cluster ScoreCard provides the answers. It provides a detailed snapshot of industries within locational settings. The Methodology The pioneering work of Professor Michael Porter (Harvard Business School) identified four factors influencing competitiveness at an industry and regional level: 3. Talent, technology & infrastructure 4. Sophisticated home demand 5. Critical mass of local suppliers 6. Local competition. The ‘Porter Diamond’ has since been integrated into development strategies across the world. To be global, you must understand and use your local strengths. Location counts as much as ever – but in a different way...many businesses still don’t understand that a lot of their competitive position is based on their location’. Professor Michael Porter (March 2002) Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 127 The Cluster ScoreCard extends the publicly available work of Professor Porter and other international experts. It provides an objective assessment of an industry within a locational setting. It captures the essence of a cluster – within a tight geographic area, or a sub-region, region or state. The assessment is made against 10 attributes of a successful cluster. The 10 attributes have been developed as part of a multilateral research project between cluster practitioners in Australia and elsewhere. The attributes builds upon the Porter Diamond, and they have been ranked and weighted by 50 international clustering experts8 to reflect the relative importance of each. The ten attributes are outlined below: Supply-related 1. Social capital. 2. Local champions. 3. Critical mass of suppliers. 4. Governance structures. 5. Specialised infrastructure. 6. Technology/knowledge formation. Demand-related 7. Local competition. 8. Sophisticated home demand. 9. Growth prospects. 10. Existence of threat. 8 Drawn from Australia, Belgium, Canada, Denmark, England, France, Jordan, Mauritius, New Zealand, Northern Ireland, Slovenia, Sweden, USA, Wales. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 128 The Cluster ScoreCard analyses a cluster in terms of these 10 attributes and then provides an overall rating based on weightings determined by international experts. It also provides: ï‚· Hard-hitting analysis. ï‚· Identification of likely cluster champions. ï‚· ‘Action Agendas’ to build clusters and business opportunities. ï‚· Identification of sources of external funding to address key initiatives. ï‚· A vehicle for benchmarking the cluster against others. ï‚· A basis for ongoing evaluation. A Cluster Map is also prepared. It provides an actual map of the cluster to complement the written analysis. An example of a cluster map is attached at the end of this training module. The data includes the locations of: ï‚· All firms within the cluster, classified either as firms with an annual turnover below $5 million or above $5 million. ï‚· Strategic infrastructure relevant to the cluster e.g. Knowledge: universities, technical colleges, research laboratories, broadband. ï‚· Hard infrastructure: airports, ports, highways, gas/water pipelines, industry parks etc. ï‚· Social infrastructure: hospitals, schools, government support agencies etc. The 10 attributes of the Cluster ScoreCard Attribute 1 – Innovation usually results from a collective and social process. In this regard, strong ‘social Social capital capital’ helps firms to take advantage of each other’s competencies and knowledge. Social capital depends on an environment that allows people to identify common interests and get to know and trust one another. The World Bank notes that the social capital of a society includes the institutions, the relationships, the attitudes and values that govern interactions between people and contribute to economic and social development. It says that social capital is not simply the sum of the institutions that underpin society - it is also the glue that holds them together. It includes the shared values and rules for social conduct expressed in personal relationships, trust, and a common sense of civic responsibility. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 129 Benefits of social capital Research suggests that social capital generates benefits in several ways including: ï‚· It reduces the costs of transactions of conducting day-to-day business. The known customer or friend does not need to establish his/her credit every time, and speaks a similar language. ï‚· It facilitates the spread of knowledge and innovation. ‘Word of mouth’ or endorsement from your neighbour is worth more than an impersonal advertisement. Many people get a job through friends. ï‚· It promotes co-operative and socially-minded behaviour. It’s not fear of a fine that makes people pick up their litter. In places with strong social capital, customers will not steal if the shop is unattended. ï‚· People with access to social capital are more ‘hired, housed, healthy and happy’ than those without. Strong stable institutions with known rules and ways of operating are a big help. They might be banks, schools, churches, hospitals, social clubs or the system of government. Poor social capital is felt in critical ways - communities with less social capital have lower educational performance and more teenage pregnancy, child suicide, low birth weight and prenatal mortality. Role of clusters Mutual trust is a critical element of social capital, and clusters build this trust. It is embedded in non-profit organisations, clubs, associations and the informal networking among people with similar interests. People know their peers and competitors on a social level, and share ideas and discuss common concerns. Social capital exists in tandem with competition. For example, companies may compete ‘head to head’, but when it is necessary to collaborate to achieve outcomes beyond their individual reach, they co-operate through an industry or trade association, or an informal network. Social capital is about: ï‚· A sense of shared vision and destiny. ï‚· Common values that facilitate collaboration and wealth creation. ï‚· A ‘sense of community’ and progressiveness that attracts the interest of external stakeholders. Some indicators are: ï‚· Percentage of companies that are members of trade and industry associations. ï‚· Examples where industry collaboration has delivered major outcomes (facilitates business confidence). ï‚· Existence of long-standing industry co-operatives. ï‚· Extent of grass roots social programs e.g. Meals on Wheels, soup kitchens. ï‚· Crime rates. ï‚· Church attendance. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 130 Social capital ranks No. 3 out of the 10 attributes on the Cluster ScoreCard. Attribute 2 – Strong cluster agendas result from getting the right people involved. They are people who are: Local Champions ï‚· Confident in themselves, with the ability to enthuse and convince others. ï‚· Generous and collaborative - based around a view that there is plenty of work available in the world. ï‚· Prepared to take on and carry out action, with open and transparent reporting back to others. In the New World, no one can do it alone - collaboration is a recognised need. But collaboration does not come naturally to many people. It is therefore important to find the collaborative leaders – those committed individuals with the vision and confidence to push the existing boundaries. They have a vision to see the industry or locality grow, develop and change. The New World of alliances and collaboration is driven by champions. ‘Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed it is the only thing that ever has!’ Margaret Mead (sociologist) Examples of local champions ï‚· Maritime Industry – one of the world’s strongest maritime clusters has been championed by a succession of chief executives of the Singapore Maritime and Port Authority. They also manage the S100m Maritime Innovation & Technology Fund which supports entrepreneurship and collaborative outcomes. ï‚· Film & Television – Sydney’s National Institute of Dramatic Arts and Fox Studios are supported by champions like Mel Gibson, Nicole Kidman, Cate Blanchett and Russell Crowe, as well as Rupert Murdoch, the media baron. Although they may not be familiar with the term ‘cluster’, each has played a championing role - as investors, innovators, risk-takers, catalysts or marketers - in the development of industry and regional clusters in their respective fields. Summing up Local champions can: ï‚· Create and trigger outcomes through their credibility and networks. ï‚· Leverage off the social capital within the region/industry and bring others into the agenda. ï‚· Often exist within the public sector, but are most effective when complemented by industry leaders. Indicators are being developed. Local champions rank No. 2 out of the 10 attributes on the Cluster ScoreCard. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 131 Attribute 3 – Suppliers and their customers working in close geographic proximity create favourable Critical mass of conditions for innovation and cost-effective production systems. Companies that are networked local suppliers in a compact area reinforce each other, and create a unique critical mass. The cluster provides a beacon for suppliers, investors, technology and venture capital, and generates its own momentum. The attraction of a cluster is the flexibility it provides to small firms. Individual units with craft skills can adjust because they are within earshot – they can easily re-combine and are inherently more flexible than vertically-integrated, bureaucratic organisations or the isolated firm. In these circumstances, clusters assist firms to shift from a price to quality focus. A critical mass of local suppliers confers a competitive edge on lead customers. Indeed, multinational enterprises looking to establish greenfield operations want quality supplies of not only raw materials, but also technical and service back-up. While they know they may depend on foreign supplies of machinery or expertise on the odd occasion, they will actively encourage the development of local suppliers. Everything doesn’t have to be sourced locally, but the aim is to have a critical mass of technology and suppliers within the cluster. Summing up A critical mass of local suppliers is one of the hallmarks of a successful cluster. Some indicators are: ï‚· Highly localised, but outward-looking firms (local or foreign) with strong connections and commitment to the local economy. ï‚· Majority of firms have supply chains to world markets. ï‚· Suppliers and customers work in close proximity to create favourable conditions for innovation. ï‚· Financial institutions that understand the local businesses and appreciate their risk profiles. ï‚· Tacit and collaborative exchanges enable the development of new ideas and production processes. Critical mass of local suppliers ranks No. 4 out of the 10 attributes on the Cluster ScoreCard. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 132 Attribute 4 – Governance structures are an important indicator of high-performing clusters. The problem Governance areas are: structures ï‚· The lack of appreciation by senior management (of the lead agency) of the long-term nature and resource-intensity of cluster programs. ï‚· Insufficient attention to stakeholder engagement i.e. keeping them informed, focused and connected. ï‚· Lack of involvement by senior management in the activities of the clusters. ï‚· Deployment of too few staff resources. ï‚· Deployment of staff unsuited to the task i.e. staff need to have people skills, organisational and networking skills, and the ability to synthesise peoples’ ideas and thoughts. A view from an Australian cluster practitioner: “Weak governance structures have been the main impediment to progress in this region. There is simply no high level commitment or good strategic thought about how to grow appropriate business in the region. Maybe this will come in time.’ The problem is exacerbated by the tendency for government agencies to cut corners. Faced with budget constraints, they make savings in areas that will not affect job or export outcomes. But this puts pressure on governance, consultative structures and facilitators - where the outcomes are not immediately visible. Role of clusters The opportunity is to create inclusive Cluster Action Teams to set the stage for implementation. The leaders of these teams need to be committed, and capable of recruiting high profile participants from small and large companies in the region. Capacity building must be the key objective. Many regions receive substantial government support – but it is mostly in the form of income security and agricultural subsidies. The smarter approach is to build a sustainable economic base by improving regional infrastructure, fostering entrepreneurship, providing technical assistance and encourage private sector investment. Clusters provide the vehicle for this. Summing up Governance structures are about: ï‚· Well-resourced, integrated development agencies whose role is generally understood and respected by the broader community. ï‚· Minimal infighting and conflict between councils, development agencies and government agencies. ï‚· Confidence of central agencies to devolve decision-making to the local level. Indicators are being developed. Governance structures rank No. 7 out of the 10 attributes on the Cluster ScoreCard. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 133 Attribute 5 – Good roads and an airport with regular services used to be regarded as the key to enjoying a Specialised sustainable competitive advantage for a community or region. This is no longer the case. While Infrastructure it can be a distinct disadvantage if this type of infrastructure is not present, it no longer provides as clear advantage. The reason is that as economic systems become increasingly sophisticated, the mix of hard and soft infrastructure becomes critically important. Poorly aligned infrastructure drags down the competitive advantage of industries and locations. Clustering concepts are designed to address this problem. The government role is most important in infrastructure – as a funder, planner or coordinator. But an increasing role for government is leadership in ‘connecting’ the different forms of infrastructure to achieve a complete production system that attracts private sector investment and creates sustainable jobs. There are three main categories: ï‚· Hard (economic) infrastructure - major airports, local airports, energy generation/transmission facilities, sea ports, railways, telecommunications, gas and water pipelines, transport terminals and hubs, cold stores and bulk storage facilities, water treatment plants, sewerage systems etc. ï‚· Soft infrastructure - schools, universities, technical and further education colleges, hospitals, research and development centres, business incubators, day care centres, health centres, tourism facilities, museums, libraries, sports facilities. ï‚· Security infrastructure - prisons, defence facilities. In view of the central role played by governments in this area, the OECD has developed guidelines to for government. They include: ï‚· Facilitating local partnerships and the co-location of complementary public investments with related concentrations of private investment. ï‚· Targeting market failures in the provision of infrastructure – this provides the discipline to reduce the chance of being captured by political interests or straying into areas best served by the market. ï‚· Letting the private sector lead in cluster-development initiatives, with the public sector playing a catalytic role. Summing up Specialised infrastructure is critically important in delivering productivity and investment growth in the 21st Century. It underpins technology and knowledge formation. Cambridge UK is a good example of a cluster with well-developed specialised infrastructure. Some indicators are: ï‚· Extent to which different forms of infrastructure are mutually reinforcing. Measured by expert studies. ï‚· Buoyant private investment. Measured by investment data, planning and development approvals. ï‚· Talent is attracted because of the quality of the soft infrastructure. Measured by expert studies, occasional surveys and censuses. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 134 Specialised infrastructure ranks No. 5 out of the 10 attributes on the Cluster ScoreCard. Attribute 6 – Being a fast follower doesn’t get you far in a globalised world – the challenge is to be a first Technology & mover who takes calculated risks and looks for niche opportunities. Innovative activity requires knowledge excellence, connectivity and education. Businesses also cannot afford to innovate at a leisurely formation pace, because competition has become global. If a firm is to prosper over the long haul, it must innovate relentlessly to compete. This is particularly true for well-developed industrial clusters. In the New Economy, technology and knowledge are basic raw materials. Consequently, timely and easy access to them is a real competitive advantage. This advantage is largely realised through human capital – hence training and lifelong learning have become keys to innovation and regional competitiveness. Technology and knowledge formation depend on structures that support and accelerate knowledge formation. Examples include: ï‚· Cooperation and staff exchanges between firms, research centres, universities, banks etc. ï‚· Dissemination of research results and technological adaptation within small companies. ï‚· Establishment of incubators for new enterprises, with links to universities and research centres. ï‚· Encouragement for spin-offs from university centres or large companies. ï‚· Schemes to facilitate fast-track collaboration between companies, universities and research centres. ï‚· Financial instruments that provide venture capital for business start-ups. One of the real advantages of clusters is that they facilitate technology diffusion and knowledge spillovers. Research shows that clusters enable better and faster transmission of knowledge, especially tacit knowledge embedded in the minds of individuals and the routines of organisations. Summing up Innovation is very difficult to measure at either the firm or industry level. High-performing clusters bring forward the champions who understand how to build innovation systems. These champions have the people networks and standing within their profession to make things happen. Some indicators of effective technology and knowledge formation are: ï‚· Expenditure on research – it is tied to productivity growth and competitive advantage. ï‚· Pools of specialised skills and technology that provide quality inputs into production systems. ï‚· Concentration of technology-intensive firms. ï‚· Networks of dynamic SMEs that drive local innovation. Technology & knowledge formation ranks No. 1 out of the 10 attributes on the Cluster ScoreCard. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 135 Attribute 7 – One of the maxims of economic development is that competition drives success. The worldwide Local evidence is that vigorous rivalry between firms builds competitive advantage in an industry. competition Competition and rivalry also drives regional performance. Strong local rivals push to gain a competitive advantage – by lowering production costs, creating new products, deploying new technology or introducing better forms of service. In most cases this rivalry is ‘unconscious’, with competitors picking up hints and nuances and adapting accordingly. In extreme cases, there is feuding, poaching of staff and customers, cut-throat pricing and industrial espionage. However, local competition is beneficial and mutually reinforcing in the long-term. It strengthens competitive advantages and better equips them to compete in external markets. At another level, their rivalry and success drives regional innovation systems. This is why IT companies are willing to pay a premium to locate in Silicon Valley. Bangalore (India) is a who’s who of the leading global ICT players - Texas Instruments, Siemens, Synopsis, Philips, National Semiconductors, Lucent Technologies, Nortel, Siemens, Motorola, Cisco Systems, Ericsson & Sony, Oracle, Novell, Sun Microsystems, Digital, Apple and Microsoft. Almost 300 firms have set up base in the ‘Silicon Valley’ of India in the past two years, taking the total to over 1,300. There are many other examples of competitive clusters – Italian jewelry firms, garment manufacturers in Ho Chi Minh City, motorcycle manufacturers in Hamamatsu, advertising on Madison Avenue, New York. Summing up Local competition drives companies to perform better. They are aware of each other, and this stimulates them to technology uptake, cost savings, product development and marketing. Some indicators are: ï‚· Sufficient companies in the same business generating rivalry, innovation and growth. ï‚· A dynamic mix of local and foreign enterprises, with multiple entry points to markets and innovation systems. Local competition ranks No. 9 out of the 10 attributes on the Cluster ScoreCard. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 136 Attribute 8 – Companies derive competitive advantage if local buyers are sophisticated and demanding. Sophisticated They place pressure on the companies to meet product quality, price and service requirements. home demand The short feedback loops, due to the proximity between the suppliers and customers, help ensure this. Italy’s export success in shoes derives from the average Italian’s demand for quality shoes. They buy from specialty stores which are expert in marketing and understanding the product – the retailers in turn provide customer feedback on styles, textures, leathers to the manufacturers. The innovation cycle is driven by this customer feedback. This criterion is important when the buyers are operating in a world market. For example, global vehicle manufacturers place constant pressure on their suppliers to meet quality and delivery deadlines under long-term contracts. The lack of sophisticated home demand is a real constraint for companies in south east Asia looking to compete in western markets. Summing up Sophisticated home demand is a subtle dimension that is difficult to identify and measure. However it will become increasingly important as regional production and innovation systems strengthen. The Cluster ScoreCard provides a vehicle for understanding and tracking this attribute. Some indicators are: ï‚· A core of demanding customers in the regional market that push companies to innovate. ï‚· Local marketing expertise that understands the feedback loops between retailers and customers. ï‚· Companies that are responding to changing consumer tastes and preferences. Sophisticated home demand ranks No. 8 out of the 10 attributes on the Cluster ScoreCard. Attribute 9 – The prospect of strong growth in aggregate demand, or in specific product and service Growth categories of the cluster, can be important in driving cluster development. The main advantages prospects are that it: ï‚· Identifies market opportunities that underpin Action Agendas for the cluster. ï‚· Provides companies with the self-interest and confidence to collaborate to win bigger outcomes. ï‚· Lowers investor risk and thereby sparks the interest of financiers and infrastructure providers. Many IT cluster agendas are being driven by the desire to capture growth opportunities in that industry. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 137 Summing up Growth prospects can be an important attribute, but they can be wasted if stakeholders are not equipped or interested in pursuing them. Conversely, powerful clusters can form in low growth industries, and lead to major shake-ups in the industry and market structure. Some indicators are: ï‚· Good performance in output, investment, employment growth. ï‚· The industry structure is skewed towards industries where world demand is growing e.g. IT services, defence, environmental management. ï‚· Realistic prospects that the region or industry can develop sustainable competitive advantages over the longer-term. ï‚· Positive export growth trajectories. Growth prospects rank No. 6 out of the 10 attributes on the Cluster ScoreCard. Attribute 10 – Collaboration is often forced on companies because of a common threat to them. And public Existence of agencies are sometimes accused of inventing a crisis to galvanise stakeholders into forming threat clusters. This is an interesting issue, because government agencies can often have a clearer appreciation of the problem, and the companies may not understand the crisis or have the social capital to effectively address it. On the other hand, the risk is that a small group of concerned government officials, noting the advice about the importance of private sector leadership, find themselves organising meetings with a handful of private sector participants, or propping up private sector leaders as chairs of committees. Example of Ecofish TNQ Ecofish represents the commercial fishing industry in Tropical North Queensland. The cluster also comprises fish processors, wholesalers and retailers, chandleries, slipways, engineers, paint and fuel distributors, and legal and financial firms. It was established to address the threat of regulation posed by environmentalists, government and the recreational fishing sector. Rather than rely on legislators to dictate the future of environmental management, the cluster developed its own Environmental Management System, including environmental certification. Ecofish also placed particular emphasis on public relations and marketing, to improve the industry’s image and gain greater public support e.g. developing a local seafood festival, school visits. Summing up The existence of a threat can be an important trigger for cluster development. The experience and trust gained by firms in collaborating to address the threat provides a foundation for widening the agendas. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 138 Some indicators are: ï‚· Significant job losses, company closures or government decisions adversely impacting on the industry or region. ï‚· There is a demand for urgent action, created by a threat – it provides the local champions with a platform and engages the stakeholders. Existence of a threat ranks No. 10 out of the 10 attributes on the Cluster ScoreCard. The Cluster Once the analysis of the cluster is completed against, the analysts apply a basic score out of ScoreCard – 10, to each of the 10 attributes. The analysis is objective, rigorous and defensible. Cross-sector the rating system and cross-regional indicators are used, where appropriate. These basic scores are then factored up or down according to the weightings developed by the international cluster experts. These weightings are confidential, and updated every two years by an expert academy. The results are ratings against each of the 10 attributes, and an overall rating out of 100 for the cluster. The ratings provide a clear assessment of a cluster. They highlight the strengths and weaknesses, and Action Agendas to address the latter. Clients then have the choice of posting the Cluster ScoreCard on designated websites as an investment attraction tool. If the client thinks the ratings are too low for public disclosure, they will nevertheless implement the Action Agendas. It should be stressed that the Cluster ScoreCard assesses a cluster at a point in time. A low rating does not mean there is not latent potential. The Cockatoo Network Ltd - phone 02 – 62317261 or email apd@orac.net.au ©Copyright 2008 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 139 Example of A Cluster Map Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 140 Training Session 3 Industry Clusters – from theory to practice Module 4: Identifying Clusters in Quang Nam Province Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 141 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 142 Introduction There is a wide range of economic activities occurring in Quang Nam Province including local and foreign investment projects. The structure of Quang Nam’s GDP has shifted in recent years. For example, the proportionate value of ‘Agriculture, Forestry and Fishing’ outputs has declined sharply from 42% in 2000 to 26% in 2007. This has given way to a significant rise in the contribution of ‘Industry and Construction’ outputs from 25% in 2000 to 38% in 2007. Quang Nam’s industrial outputs have been steadily increasing over time. However, the majority of Quang Nam’s labour force is still engaged in Agriculture, Forestry and Fishing (67.4%), followed by Manufacturing (9.1%) and Wholesale, Retail Trade and Motor Cycles (7.2%). Despite this shift, Quang Nam still gains a higher proportion of its GDP from ‘Agriculture, Forestry and Fishing’ in comparison to Vietnam, 26% and 20% respectively. From 1991 to 2005, Quang Nam's tourism sector grew from 100,000 to 1,400,000 visitors. Of the 1.4 million tourists visiting Quang Nam Province in 2005, a total of 900,000 persons were Vietnamese and 500,000 persons were international visitors. Of a total of 64 provinces in Vietnam, Quang Nam is ranked as No. 22 in terms of its ability to attract FDI projects to the value of USD766.8 million (September 2008 data). This module is a ‘hands-on’ exercise where YOU will decide on which industries or activities will drive and dominate the economy of Quang Nam Province over the next 10-20 years. If you are worried about making such a decision just treat it a hypothetical exercise! Step 1 – There are clumps and clusters. A ‘clump’ is just a group of companies occupying similar space. Identify your We are looking to grow dynamic clusters in Quang Nam Province. Clusters vary markedly in likely clusters their size and performance. Some are growing, some are fading. We want to identify, as a training exercise at least 5 clusters that can provide strong outcomes for Quang Nam Province in the years ahead. Why 5? It is a manageable number. It is proposed that we use the following selection criteria: ï‚· Good factor conditions – think about the Porter Diamond and the Cluster ScoreCard. ï‚· Export potential. ï‚· Significant short-term outcomes. ï‚· Likely to generate widespread interest by investors. YOU need to identify which industry and then which particular segment and location. For example, a cluster program covering all of the tourism industry across all of Quang Nam Province will be difficult to manage. But it may be possible to develop a cluster that captures the imagination of international tourists looking for a mix of culture combined with relaxation. It might perhaps be a QNP Cultural Trail with Hoi An and My Son as the key centres, connecting to smaller nodes such as the HCM Trail, associated eco-lodges, Cham Island, Ba Na tourist area, ethnic villages etc. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 143 Or YOU may be thinking in terms of certain market segments such as eco-tourism, adventure tourism, cultural tourism, leisure tourism or ‘back-packer’ tourism. The bottom line – YOU decide on the five broad industries. We can then refine these later. Step 2 – The next step is to undertake some research to understand the cluster. Understand the ï‚· The approximate number of firms within the cluster – and the names of the 10-15 bigger dynamics of the firms cluster ï‚· Strategic infrastructure relevant to the cluster e.g. knowledge/information - universities, technical colleges, research laboratories, broadband; hard infrastructure - airports, ports, highways, gas/water pipelines, industry parks etc. ï‚· Map all of the above as a Cluster Map. ï‚· Collect supporting data o Employment data at an industry level. o Industry turnover or output. o Export and import data. o Wages. o Patents held or applied for. o Building approvals. Step 3 – This is the critical step. Cluster programs fail when people sit around the room, not knowing Identify the where to start. They look at the ‘ceiling’. opportunities for collaboration Someone has to start the process – by identifying the collaborative opportunity. The others can then criticise, modify and improve it. A useful technique is for YOU to undertake interviews with senior managers beforehand forming a Cluster Action Team – the aim is to identify the constraints to their businesses on which they are willing to collaborate. YOU are then in a privileged position! (KNOWLEDGE IS POWER) This step can also be advanced by commissioning the preparation of the Cluster ScoreCard. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 144 Step 4 – Cluster Action Teams and Action Agendas The next step involves the formation of Cluster Action Teams and the preparation of Action Agendas. This is discussed in the next module. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 145 Background notes on QNP industries The QN tourism ï‚· Competitive advantages in terms of its two world heritage sites (out of six in Vietnam), industry quality beaches, estuaries and highland forest areas. ï‚· Major international investors are beginning to establish resorts in the coastal belt adjacent to Hoi An. ï‚· Competitive disadvantage is the monsoon season (1 metre rainfall in December 2007) and associated flooding. Tourism accordingly drops off during November-February. ï‚· Lack of international standard tourism accommodation in most of the province – Hoi An is the exception. A cluster program could be effective in addressing this, while also strengthening and packaging the overall tourism product around a whole lifestyle, environmental and cultural experience. Related initiatives might include a series of interpretive centres, a tourism college, international convention centres, improved brochures and maps etc. The QN forestry ï‚· Competitive advantages in respect of its readily accessible and significant supplies of industry quality timber and know how with timber plantations, harvesting etc. ï‚· Timber furniture is a mainstay of Vietnamese industrial production, and its low labour costs should underpin export development. ï‚· Main disadvantages are the rudimentary nature of much of the milling and transport equipment, and the lack of international supply chains in high value timber products. The industry is likely to be well off international best practice in environmental management and OH&S. The QN food ï‚· Main staples such as aquaculture, rice, cassava, maize, poultry, spices etc. industry ï‚· However QN province appears to have a competitive advantage in the further processing of these products due to the capacity available in the economic zones, seaports, airports etc. ï‚· Local foods also have the potential to significantly reinforce the QN tourism product. ï‚· Main disadvantages at present appear to be the basic nature of food processing technology and equipment, the lack of hygiene and quality control, and the lack of access to international supermarket chains. ï‚· The province is also a hot spot for avian flu, and further outbreaks could damage any regional food brand it might develop. The QN building ï‚· Well positioned given the substantial local demand associated with Vietnam’s materials industrialisation and construction phase. industry ï‚· QN and surrounding provinces could conceivably become a significant world supplier of building materials if processing and product technology can be used to upgrade quality. Southern China serves as a model. ï‚· Competitive advantage in the availability of raw materials such as silica sand, iron ore, clay and timber. ï‚· Its well-established ceramic tile capability provides a good platform for international joint ventures. However the lack of sophisticated local customers and processing technology need to be addressed in order to access western markets in glassware, tapware, bathroom fittings etc. The QN creative ï‚· Potential is not widely appreciated. The province appears to have competitive advantages industries in architecture, arts and antiques, crafts, and design. ï‚· Advantages could conceivably be extended to fashion and performing arts and then integrated into its international tourism product. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 146 Training Session 3 Industry Clusters – from theory to practice Module 5: About Best Practice and Collaboration Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 147 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 148 Introduction Before YOU start developing some Action Agendas for the clusters that we have identified in Quang Nam Province, we want to talk briefly about best practice and collaboration. Why? There are three reasons: 1. We are trying to do the best for Quang Nam Province – there is no point in pursuing second-rate outcomes. 2. We are trying to ‘stretch’ the key stakeholders to achieve things that cannot be achieved by working alone. 3. We want to do things that will attract interest and position Quang Nam Province as worthy of investment. What is Best Best practice can be defined as: Practice? “a technology, product, process or system that is currently the best currently available in the marketâ€? Hence the terminology of world’s best practice or national best practice. The philosophy is that companies and organisations should strive to be the best in their particular field, or at least be moving to that point. In doing so, they improve their competitive position and progressively build a brand based around innovation, quality and cost-competitiveness, thereby attracting investor and consumer interest. Action Agendas that are progressed in a cluster program are essentially different ways of moving towards best practice. During our initial visit to Quang Nam Province we identified some other activities that YOU could pursue as part of a best practice agenda. They are: ï‚· Collaboration within QN province. ï‚· Collaboration between QN and other provinces. ï‚· Collaboration between QN and cluster groups in other countries. ï‚· Proactive investor attraction. ï‚· Investor aftercare. These are explained below. Collaboration This involves collaboration between local and foreign companies and, various government within QN agencies within QN Province. Province We are unsure as to the level of local collaboration at present. There is a view that Vietnamese people are intensely competitive and difficult to organise, and therefore not inherently collaborative. Is this true? This needs to be tested and debated. Could we develop some ‘collaboration indicators’ suited to Vietnamese circumstances? Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 149 Collaboration This type of collaboration is likely to be important in: between QN Province and ï‚· Planning and implementing large infrastructure projects in the province. other Provinces ï‚· Facilitating the transfer of technology and ideas. ï‚· Facilitating national government objectives. ï‚· Improving the lobbying influence of provinces (‘safety in numbers’). Collaboration This type of collaboration is non-existent at present. However we want to pursue it because between QN such collaboration may provide the vehicle for driving significant new ways of attracting Province and investment and transferring technology. This collaboration could take several forms such as: cluster groups in other countries ï‚· Identifying wealthy and/or influential Vietnamese expatriates, particularly those born and raised in QN province, now living overseas but who have an interest in assisting their homeland’s regeneration. ï‚· Identifying industry clusters in developed economies that could be long-term alliance partners e.g. forestry clusters in Sweden or Canada, artefact clusters in the USA, food clusters in the Netherlands or the UK, ceramics clusters in France.9 ï‚· Identifying local councils in developed economies that have a Vietnamese connection e.g. City of Playford in South Australia. ‘Sister City’ arrangements can be useful in this regard. Proactive There is possible scope for the national and provincial authorities to get involved in proactive investment investor targeting. As in most nations, the situation seems to be one of reacting to approaches attraction by potential foreign investors, rather than proactively seeking out those companies with particular characteristics that dovetail with the provincial or regional economy. QN province might conceivably take the lead among Vietnamese provinces in the medium term by developing a best practice investment attraction strategy geared to identifying and nurturing the best MNEs. This is discussed further in a later module. Investor aftercare A major drawback to foreign investment in a communist system is that the true pricing structure within the market is disguised, thereby adding a layer of complexity to decision-making by foreign companies. The establishment of economic zones is an attempt to insulate the foreign companies from these problems, and to generally reduce the cost of doing business. In this context, a cluster program could pay particular attention to ‘investor aftercare’ as a further means of improving the investment climate for MNEs. To explain, re-investment by existing companies accounts for some 70% of industrial investment across the globe. While the figure would be lower in Vietnam because it is still building up its stock of investors, the fact remains that ‘making existing investors happy’ is one of the most effective means of stimulating investment by foreign companies. 9 The Cockatoo Network in Australia (Rod Brown et al) specialises in nurturing these alliances. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 150 Aftercare initiatives that have been developed by Cluster Action Teams in Australia include: ï‚· Mapping of companies and support organisations, to assist foreign companies to identify collaborative partners. ï‚· Organisation of meetings with politicians or senior officials on behalf of MNEs. ï‚· Assistance in addressing problems facing the MNE e.g. development approvals, labour shortages. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 151 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 152 Training Session 3 Industry Clusters – from theory to practice Module 6: Action Agendas to drive Cluster Action Teams (CATs) Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 153 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 154 Introduction Forming Cluster Action Teams can facilitate the achievement of best practice and collaborative outcomes for future development investment. Cluster Action Teams must be action-oriented to keep the CAT members interested. Each CAT might have 3 to 4 Action Agendas to develop and implement. Or if it is a big Action Agenda there will only be one. This module explains what is meant by the term ‘Action Agenda’ and how YOU can prepare actions agendas for your specific cluster within the economy. The training session tomorrow will begin to develop your own Action Agendas by your CAT. Action Agenda Our technique is to prepare a one page document that explains the Action Agenda. The one page only! purpose of this is to get the CAT members to focus and understand exactly what their project is – there is an intellectual challenge in getting a complex set of ideas down to one page! The one-pager can be used as a briefing paper to give to senior government officials or company executives. It also helps you give an ‘elevator pitch’ i.e. you are in an elevator for 10 seconds with a key official that needs to know about your project. Note that the one-page should be supplemented with supporting material as it is developed e.g. scoping study, business plan, feasibility study. The aim is to get YOU thinking of the what – why – how – when – where – how much. It is amazing how many intelligent people forget to cover all these categories, or at least have an approximate answer to these questions or an idea of how to find the answers! The following are some case studies of Action Agendas – one is real, the other relates to A-Ting Village in the mountainous area of Quang Nam Province. Case Study 1 Wilcannia is a small town in the outback of Australia. It has a majority aboriginal population, Wilcannia Cross many of whom have never had a job. This Action Agenda was prepared in June 2008 by the Roads Project local council and is now being used to identify funding partners for the project. What? ï‚· A quality enterprise hub - tourist stop between Broken Hill and Cobar. ï‚· Heritage Post Office – retail outlet including healthy foods; coffee-shop; Indigenous arts and crafts from across the region; post office agency, Tourist Information. Commercial operation – 20 jobs ï‚· Caravan Park - 40 vans & 20 camp sites. Commercial operation – 5 jobs. ï‚· Heritage and cultural trails - historical buildings & river. Commercial operation – 10 jobs. ï‚· Part of a new regional NSW tourism loop viz. Dubbo - Cobar - Wilcannia - Broken Hill - Mungo - Mildura – Griffith - Wagga – Canberra - Sydney. ï‚· 35 full-time jobs & 50 part-time jobs across region. Indigenous youth to be trained for employment within the three enterprises. ï‚· A site for a suite of artisan studios. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 155 Where? The main cross-road in Wilcannia – Darling River is 100 metres to the rear. Why? ï‚· Wilcannia (population 600 - 60% indigenous) – highest unemployment rate of any town in NSW. ï‚· To be an iconic centrepiece for the region. Wilcannia is at the cross-roads. This project MUST be best practice, and be made to work. ï‚· It is the first step in the regeneration of the main street – it will provide a trigger for decisions on premises on two other corners of the cross-roads. ï‚· Designed to generate pride and maximum involvement of local population, and to present the Wilcannia indigenous community as progressive and capable of generating sustainable employment. When? Construction to commence second half of 2009. Who? Murdi Paaki Regional Enterprise Corporation Ltd is the sponsoring organisation. However the management functions would be undertaken by an expert external agency. Action Team to be coordinated by Kym Fuller, Central Darling Shire. How Much? Costs $’000 Post Office 1,600 Caravan Park Project 300 Heritage Trail Project 500 Marketing & other costs 400 Total 2,800 Source of funds $’000 Murdi Paaki & Central Darling Shire 1,000 Federal (Local Infra Program as from 1.7.09) 1,400 State (NSW Infra Fund as from 1.7.09) 200 State (Indigenous Affairs; Sport & Rec) 200 Total 2,800 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 156 Case Study 2 Our initial visit to QN Province included talks with the A-Ting village chief to gain an A - Ting Village, appreciation of some of the issues facing ethnic minority groups. This Action Agenda is a draft Quang Nam only and has no formal status. Province YOU might wish to further research the issues raised in this draft Action Agenda and progress it. What? A possible aid program for an ethnic village in Quang Nam province. One or more local councils in Australia could fund the start-up capital with other parties managing the project and funding recurrent costs. Why? Ethnic villages are in danger of being marginalised. Poverty and unemployment levels are high. There is also an opportunity to take pressure off traditional aid agencies by introducing new players – in this case, local councils in Australia. Where? Low income, ethnic highlands village, two hours drive west of Da Nang. Around 425 households averaging 5 occupants per household. The village currently grows a limited amount of cassava, maize and rice, and makes a small number of brooms. When? To commence in mid 2009 How Much? Action Agenda 1 - Economic/community development officer to provide guidance on what value-adding activities could be pursued and managed. Estimated cost of USD 3,000 per year incl. accommodation and on-costs. A minimum 3 years of funding required. Action Agenda 2 - purchase 4 sewing machines at a total cost of $US1,200 as a community asset. Training would be another cost item. Action Agenda 3 – purchase a pig herd for breeding purposes – cost of perhaps $500. To provide protein for the community’s diet. Action Agenda 4 – establish a saw mill. This is a higher order project that would await satisfactory progress of the other AAs. Possible to ship a disused mill from Australia? Training would be required, plus the cost of buildings and other plant e.g. forklift, truck. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 157 A local council in Australia might fund the cost of the EDO for three years, as well as the pigs and sewing machines (capital costs). This would equate to $4,700 in Year 1, and $US3,000 in each of Years 2 and 3. Training costs and some modest ‘start-up’ capital for the purchase of material could be met by other parties as part of a collaborative arrangement. The provincial government and the EDO would be responsible for the administration of the project. Other issues? An issue is to determine how many other ethnic villages are in the same circumstances, since best practice might mean bundling up 20 or so villages, in which case a network of councils in Australia might be put into a one-on-one partnership. A distinguishing feature of the project would be signage in the village as well as on the sewing machines and sawmill to entice Australian tourists to visit the village i.e. a highlands experience involving lunch, a bushwalk to a nearby natural hot spa, indigenous culture ceremony, and returning to their luxury accommodation that evening. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 158 Training Session 4 Cluster Analysis – From theory to practice Module 1: Formation of Cluster Action Teams Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 159 Introduction This module assembles the participants into five Cluster Action Teams (CATs). Each will have a minimum of 6 members and a maximum of 9. Unless participants decide otherwise, the CATs will involve the following industries: ï‚· Food ï‚· Forestry ï‚· Creative Industries ï‚· Building and Construction ï‚· Tourism Participants are free to choose which CAT interests them most. We may need to add or subtract from some of the CATs to even up the numbers. Participants will be able to swap into another CAT during the afternoon module if they wish. Tasks Each CAT should 1. Appoint a leader or perhaps two co-leaders. 2. Discuss and agree on the industry segment or activity to be covered. 3. Discuss and agree on the geographic scope. 4. Begin discussing the sorts of Action Agendas that might form the basis of collaborative activity. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 160 Training Session 4 Cluster Analysis – From theory to practice Module 2: Using Clusters to attract Multinational Enterprises Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 161 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 162 Introduction This module raises some issues about attracting the right multinational enterprises (MNEs). One of the major aims of cluster programs is to make Quang Nam Province more attractive to foreign investment, especially to MNEs. They are critically important in an increasingly globalised world because they usually have: ï‚· Strong supply chains (see below). ï‚· Smart marketing channels. ï‚· Superior technology. ï‚· Financial ‘muscle’. A key aim of cluster programs is to get regions thinking about which MNEs are best suited to their needs, and to then establish a ‘WIN-WIN’ arrangement with them. Cluster programs can actually be very effective in this regard. The worst outcome is to attract MNEs that: ï‚· Do not deliver the expected benefits in terms of investments and jobs, and employment creation. ï‚· Enjoy overly-generous subsidies or incentives (thus attracting criticism from the local community). ï‚· Crowd out better companies. MNE rating The Cockatoo Network has developed performance criteria to assist the rating of MNEs. This system work is at a preliminary stage, but the following indicators are the most important: 1. Investment track record. 2. R&D track record. 3. Long-term commitment to the region. 4. Degree of autonomy from head office decisions. 5. Ability to export and to include local companies in their supply chains. 6. Preparedness to support local business e.g. buy local programs. 7. Respect for local social, cultural and workforce circumstances. 8. Environmental credentials. 9. Financial strength. 10. Integrity and honesty. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 163 What is YOUR opinion of these criteria in terms of selecting the most appropriate MNEs to Quang Nam Province? What is a supply ‘A supply chain or logistics network is the system of organizations, people, technology, chain? activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform natural resources, raw materials and components into a finished product that is delivered to the end customer’. Definition from Wikepedia dictionary - http://en.wikipedia.org/wiki/Supply_chain Supply Chain - the sequence of steps, often done in different firms and/or locations, needed to produce a final good from primary factors, starting with processing of raw materials, continuing with production of perhaps a series of intermediate inputs, and ending with final assembly and distribution. Can YOU give us an example of a supply chain that operates in Quang Nam Province at the moment? Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 164 Case Study No. 1 1. Research Molucca Spice ï‚· market research Company ï‚· develop and/or identify the right product technology ï‚· develop and/or identify the right process technology 2. Investment and Finance ï‚· identify competitive sources of finance ï‚· identify an ‘understanding’ bank ï‚· arrange legal and insurance support 3. Production ï‚· design and manufacture (or buy) the right equipment ï‚· install the equipment and get the plant operational ï‚· operate the plant ï‚· identify and train workforce ï‚· manage the workforce 4. Trade ï‚· transport and logistics ï‚· health and product standards 5. Marketing ï‚· market access - tariffs ï‚· marketing – price/quality/certainty ï‚· distribution systems - supermarkets, local networks ï‚· brand integrity and culture - presenting the product in a favourable ï‚· light, mystique, different etc. ï‚· packaging 6. Governance ï‚· management ï‚· legal systems ï‚· Governance makes the whole chain work! Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 165 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 166 Training Session 4 Cluster Analysis – From theory to practice Module 3: Cluster Action Teams – Data, Mapping and Cluster ScoreCards Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 167 Introduction There are various sets of data or information that are required to advance an understanding of the potential opportunities of clusters within the development sector. Similarly, there are different ways to present this data with the application of the Cluster ScoreCard as a very useful tool in evaluating the data in terms of each cluster. This module addresses data requirements for advancing Action Agendas. Advice on presenting the data and explaining the cluster will also be provided during this module with examples of cluster maps provided. The Cluster Action Teams for QNP will also be asked to begin thinking about how they might prepare a Cluster ScoreCard for their particular cluster. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 168 Training Session 4 Cluster Analysis – From theory to practice Module 4: Cluster Action Teams – Work Session Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 169 This module is a work session in which CATs continue to identify and discuss Action Agendas for their cluster. The leaders of each CAT will present their findings in the afternoon Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 170 Training Session 4 Cluster Analysis – From theory to practice Module 5: Report Back from each CATs team to the whole group Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 171 Each of the Cluster Action Teams will present its work to the full group in this module. This will cover: 1. The industry segment or activity to be covered. 2. The geographic scope. 3. Any comments on how the cluster would rate in terms of the Cluster ScoreCard. 4. Suggestions about collaborative Action Agendas, and reasons why YOU chose them. 5. YOUR work schedule over the next 2 weeks to refine your Cluster ScoreCard and develop your clusters Action Agenda. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 172 Training Session 4 Cluster Analysis – From theory to practice Module 6: Governance (getting organised to do extra fieldwork over the next 2 weeks) Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 173 This is a wrap-up session. We want to make sure YOU are reasonably familiar with the clustering concepts that we have discussed over the last two days. We also want to make sure each CAT has agreed on sensible and achievable tasks for completion over the next two weeks. Each CAT is free to decide its own priorities, but they might cover some of the following: ï‚· A list of the major companies and support groups in the cluster. ï‚· Preparation of a Cluster Map. ï‚· Identification of cluster ‘champions’. ï‚· Preparation of a basic Cluster ScoreCard. ï‚· A rating of the strongest and weakest attributes of your cluster (using the Cluster ScoreCard) and reasons why. ï‚· Ideas on how ‘governance’ of clusters might be arranged. ï‚· Identification of infrastructure gaps. ï‚· Ideas on what types of clusters you might want to link with. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 174 Training Session 5 QNP Cluster Action Teams Module 1: QNP Cluster Action Teams Report Back Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 175 Introduction The purpose of this session is to allow each of the Cluster Action Teams to report back to the large group about their findings and recommendations for the cluster that they have been investigating over the least 2 weeks or so. To recap, each Cluster Action Team was required to collect further information about their cluster in Quang Nam Province and to then map the cluster, undertake a more detailed Cluster ScoreCard assessment of their cluster and develop a more comprehensive list of Agenda Actions for that cluster. So what did each CATS find out about their cluster? What are the opportunities for those clusters within the province, the central region and internationally? What needs to be done to build a more collaborative and connected cluster for QNP? What is the potential of the supply chain for this cluster? Report Back from Each CATs will present their cluster analysis followed by 10-15 minutes of discussion and the CATs questions to each team. Other Ideas or Actions for the Clusters in QNP? Are there any other ideas or actions which would make these clusters stronger and more competitive? How can the clusters collaborate with other similar industries and investment projects in the Central Region to make the region more competitive? These and other questions will be discussed in the wrap up for this session. The best presentation by a Cluster Action Team will be awarded a prize from the trainers. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 176 Training Session 6 Formulating a Vision for Quang Nam Province Module 1: Some different perspectives about the future of QNP Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 177 Introduction of the Panel members 10 minute presentation (plus translation time) from each panel member on their vision for QNP in terms of economic development including key issues and opportunities for the future followed by questions to panellists. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 178 Training Session 6 Formulating a Vision for Quang Nam Province Module 2: What is the purpose of setting a Vision for QNP? Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 179 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 180 Introduction Vision without action is a daydream. Action without vision is a nightmare.’ (Japanese proverb) Visioning has been widely used in a planning context, and internationally accepted by the planning profession from the mid-1990s onwards10. Since this time, visioning has emerged as a general requirement of integrated regional planning in many cities and countries, including but not limited to the United Kingdom, Australia, Canada and the United States11. There are many benefits in undergoing a visioning process including: ï‚· Focussing on core values and long term outcomes. The vision-making process can help break through barriers between different interest groups or local authority departments; ï‚· Involving a broad range of people in discussions about their vision for the future. This can lead to development of important networks across the community and the local authority and give people a sense of ownership; ï‚· Allowing an evaluation of past approaches and encouraging new ways of looking at the future; ï‚· Getting people to think about the long term well being of the community.12 Once a vision statement is formalized and adopted for the Province it will provide an opportunity to recognize shared values and collective ideals for future development which everyone is then able to focus on and work towards. This agreed vision is thus useful for the coordination of public and private efforts, providing a base for which progress can be measured, understanding and promoting the role of Quang Nam Province regionally, nationally and globally, adapting to new circumstances and improving living conditions. Case Studies of There is no specific formula for what a vision should look like. A vision can be a short statement Vision or a more comprehensive explanation of the preferred future. Below are some examples of Statements vision statements that have been adopted by cites’ and/or provinces in Asia, Australia, Europe and the USA. Hong Kong, People’s Republic of China ‘Hong Kong should not only be a major Chinese city but the most cosmopolitan city in Asia, enjoying a status comparable to that of New York in North America and London in Europe.’ (http://www.pland.gov.hk/p_study/comp_s/hk2030/eng/finalreport/) 10 Shipley R, Newkirk R, 1998, ‘Visioning: did anyone see where it came from’ Journal of Planning Literature 12, pg. 407-416 11 Shipley R,2001 ‘Visioning in planning: is the practice based on sound theory?’ Journal of Environment and Planning A 2002, volume 34, pages 7-22, accessed at http://www.envplan.com/epa/fulltext/a34/a3461.pdf on 30.09.08. 12 Setting the vision and the framework to move towards it’ http://www.environment.gov.au/esd/la21/guide/pubs/actionarea3.pdf Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 181 Melbourne, Australia ‘In the next 30 years, Melbourne will grow by up to one million people and will consolidate its reputation as one of the most liveable, attractive and prosperous areas in the world for residents, business and visitors.’ (http://www.dse.vic.gov.au/melbourne2030online) Singapore Singapore is to be a lively and liveable global city – a city that is distinctive in its ability to offer a unique combination of economic opportunity, vibrant lifestyle and quality environment, for a cosmopolitan population, providing a good home for current and future generations of Singaporeans. It would also be a city that continues to be attractive to the foreign talent and investments which help us to grow the economy and high-value jobs. (http://app.mewr.gov.sg/web/Contents/ContentsSSS.aspx?ContId=1035) Cairns, Australia Cairns will be the best regional city in Australia and the Asia Pacific. It will have a reputation for: ï‚· Balancing the demands of its growing population and the desire to maintain quality of life; ï‚· Maintaining unique natural and cultural environments; and ï‚· Having the highest standards of excellence applied in the management of the City. (http://www.cairns.qld.gov.au/cairns/council/cairns_plan/chapter_index.htm) Kuala Lumpur, Malaysia Kuala Lumpur’s vision is to be a World Class City. Kuala Lumpur promotes the concept of growth with distribution, physical and social sustainability, economic justification as well as a fair and efficient government, provisions of public amenities and good quality of life in the pursuit of a knowledgeable society. (http://klcityplan2020.dbkl.gov.my/eis/?page_id=280) Himalaynon, Philippines A progressive, Ecologically-Balanced, Peaceful City characterized by healthy, empowered self reliant citizenry under responsible, accountable Governance with south justice and equality to all Himalaynon. (http://www.negros-occ.gov.ph/index.html) Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 182 London, England London is to develop as an exemplary, sustainable world city, based on three interwoven themes: ï‚· strong, diverse long term economic growth ï‚· social inclusivity to give all Londoners the opportunity to share in London’s future success ï‚· fundamental improvements in London’s environment and use of resources. (http://www.london.gov.uk/thelondonplan/thelondonplan.jsp) Las Vegas, USA A vibrant, affordable, diverse, unique and world-class city of opportunity in which all citizens enjoy their neighbourhoods, feel safe, and know they will be heard. (http://www.lasvegasnevada.gov/information/5266.htm) Beverly, Australia Our Vision is to have a community: ï‚· Providing a lifestyle in which traditional rural values of care, mutual respect, responsibility, personal security and supported independence underpin our relationships. ï‚· Where our businesses and services can operate effectively to sustain the community. ï‚· Where the appearance of our community assets, buildings and facilities is attractive and encourages use by both residents and tourists. ï‚· Where responsible management of our heritage and natural resources takes precedence to maintain our assets for future generations. ï‚· Where community leadership is values and individuals have the opportunity to aspire and participate in that role. (http://www.beverley.wa.gov.au/our_council/strategic_plan/vision.html) Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 183 The Hanoi Capital Region Plan, 2030 – Vision Statement What will the Region be like in the year 2030? The Hanoi Capital Region will reinforce its national significance as the seat of Vietnam’s Government and the symbol of national identity and pride. Underpinned by good governance practices and a stable political system, the Hanoi Capital Region will grow and develop in an integrated and sustainable manner sharing the social, economic and environmental benefits amongst all of the Region’s population. The Region’s strategic location close to world trade routes and major international markets within South East Asia, Southern China and beyond will generate substantial investment and economic growth. The Hanoi Capital Region is within the larger Northern Economic Region being the most important economic region for Vietnam. By developing a strong, diverse and prosperous economy supported by a well educated, progressive and young workforce, the Hanoi Capital Region will create wealth, adopt innovative and technologically advanced ways of doing business, value-add to all sectors of the economy and aggressively compete in a global economy. Facilitated by a well connected transport system, provision of good quality urban services and facilities and clean, green and healthy living environments, the Region will offer choice in where to live and work. Affordable housing, improved standards of living in both urban and rural areas and directing population growth into designated urban growth centres, will ensure that the benefits of urbanization are managed in a responsible and holistic manner. As a vast area of contrasting landscapes, well endowed with natural resources as well as places of natural beauty and scenic value, the Region will protect and conserve its natural environment and biodiversity. The area’s diverse culture and heritage, including its many handicraft villages and places of historic significance, will continue to attract tourists from all over the world and enrich the daily lives and national identity of the people of the Region. 3 Hanoi Capital Region Plan 2030 Building a Future Together Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 184 The Strategic Planning Framework for the Hanoi Capital Region Plan, 2030 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 185 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 186 Training Session 6 Formulating a Vision for Quang Nam Province Module 3: Formulating a Vision for QNP Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 187 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 188 How do you YOU are required to formulate a Vision Statement for Quang Nam Province. formulate a Vision for a It is important when you are preparing your vision statement that it: province or region? ï‚· Is positive, present tense language. ï‚· Is capable of attracting commitment and energizing people. ï‚· Is idealistic, ambitious and visionary, but realistic and attainable for Quang Nam Province. ï‚· Allows the reader to gain a sense of Quang Nam’s uniqueness. The vision should describe local characteristics, such as the natural environmental features, that make the Province distinctive. ï‚· Incorporates beliefs and values held collectively by citizens of Quang Nam Province. ï‚· Provide a focus on people and quality of life to ensure that residents of Quang Nam Province have access to a range of services and infrastructure. ï‚· Looks long term (10-20 years or more) but motivates short term action. It should also apply to a stated period of time. ï‚· Is easy to understand and even memorise. ï‚· Is inclusionary and indicates roles for many key stakeholders, not just the Provincial Government. When you begin working in groups you could start by asking yourselves some of the following questions: ï‚· What do we like about Quang Nam Province as it is now? (aspects you may wish to preserve and enhance) ï‚· What don’t we like about Quang Nam Province? (issues to be resolved and changed in the future) ï‚· What words could be used to describe the attributes of Quang Nam Province: natural environment, local economy, its people, governance and leadership and the built environment. ï‚· What do you want Quang Nam Province to be like in 10-20 years from now? (future aspirations for growth and development) Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 189 After you have prepared an initial vision statement for Quang Nam Province you can evaluate the effectiveness of this statement by asking the following questions: ï‚· Does it capture the ideas and descriptions generated by your working group? ï‚· Is it easy to remember and does it provide clear directives for future growth? ï‚· Is it inspiring, motivating and powerful? ï‚· Does it use present tense and positive language? ï‚· Can it be felt or experienced by the reader? Does the reader gain a sense of the unique elements which comprise Quang Nam Province? ï‚· Does it capture the collective aspirations of your working group, and would this vision be shared by those outside your working group? ï‚· Is the vision achievable? Finalise the Vision for QNP We will work together to combine the vision statements that were developed by the working groups. At the end of this session we will present the final Vision Statement for Quang Nam Province Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 190 Training Session 6 Formulating a Vision for Quang Nam Province Module 4: Recapping what we have learnt about QNP Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 191 We now know what is meant by the following: ï‚· The concepts often used in integrated planning in an open market economy including the importance of competitiveness in regional economies; ï‚· The different analytical tools we use in the preparation of integrated regional and provincial plans; ï‚· The SWOT of Quang Nam Province as well as completing a Multi Sectoral Analysis of the Province; ï‚· The key issues facing the Province in the future in terms of future development and investment opportunities and challenges; ï‚· The application of the cluster analysis technique where we have identified clusters for QNP, applied the Cluster ScoreCard to determine the characteristics of these clusters, mapped these clusters within the Province and developed Action Agendas for each cluster; and ï‚· Formulated a Vision Statement for QNP for the next 10-20 years. What else do YOU think we have learnt to date during this training program about integrated provincial planning? We will need to revisit our Action Agendas for each of the clusters in the context of our Vision Statement as part of the next steps in preparing an integrated plan. How do we intend to achieve our Vision based on our findings and recommendations to date for Quang Nam Province? This is the implementation phase of the integrated planning process – setting a path forward in terms of our objectives, our targets and the actions necessary to achieve the objectives and realize the vision. We may need to make adjustments to our Action Agendas in this next phase of integrated planning. There is a saying: ‘Actions speak louder than words.’ Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 192 Training Session 7 Formulating Objectives and Actions to achieve the Vision for QNP Module 1: Examples of Objectives and Policies in Integrated Regional Planning Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 193 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 194 Introduction In integrated provincial planning once the Vision is established it is imperative that the means of determining how you are going to achieve it. During this module we will learn how to prepare the following to achieve our Vision Statement for Quang Nam Province: ï‚· Objectives represent the desired outcome on specific issues ï‚· Indicators measure progress towards the objective ï‚· Targets provide measurable commitments towards the achievement of objectives ï‚· Actions clearly identify all actions necessary to achieve specified targets Below is an example as to how objectives, indicators, targets and actions fit together. It is clear that by using this approach you can confidently find an ‘action’ to address a key issue, achieve an objective, set a target, implement an action and measure the effectiveness of that action. The ‘issue’ we have chosen in this instance, relates to community waste, however this same approach could be applied to all ‘issues’ experienced in Quang Nam. The Issue: The community’s generation of solid waste is unacceptable Objective Reduce solid waste produced by the community Indicators ï‚· Number of tonnes of solid waste going to landfill ï‚· Proportion of households buying recycled products rather than non recycled. ï‚· Proportion of waste that is recycled. Targets ï‚· One third of households directing their organic waste to neighborhood depots for composting by a set date ï‚· Reduce construction waste to landfill by a certain percentage by a set date ï‚· Reduce industry waste to landfill by a certain percentage by a set date ï‚· Increase the amount of solid waste being recycled by a specified percentage by a set date Actions ï‚· Set up organic waste depots ï‚· Encourage the regional waste board to actively work with the building industry to recycle construction waste ï‚· Liaise with businesses in the area on methods of reducing waste (e.g. setting up and coordinating a database of available waste resources) ï‚· Establish collection, treatment and reuse of recycled solid waste programs at the local and provincial levels. ï‚· Provide incentives for households and businesses to recycle waste Source: http://www.environment.gov.au/esd/la21/guide/pubs/actionarea3.pdf - we have added a few more ways of addressing the issue in the table above Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 195 Formulating an Objectives cover the major issues and opportunities in the local area such as the environment, Objective economy and quality of life. An objective should essentially provide greater detail on the vision statement that has been developed and provide details on how the community will move towards the vision on particular issues. In formulating an objective it is important that it is ï‚· goal oriented ï‚· very precise in its wording ï‚· time-based ï‚· measurable It is also important that an objective begins with an action verb and is worded in order to generate action. Words such as encourage, enhance, consolidate, promote, maintain, reduce, and achieve etc make good verbs to use with objectives. When setting an objective it must deal with a major subject, therefore in preparing your objectives you could begin by asking yourself the following questions: What are the main things that we want to achieve in Quang Nam Province in terms of our assessment of the province and its clusters? What are the specific issues that we are most concerned about in terms of future development and investment in QNP? There is no specific formula for what the objectives should look like or cover, yet it is essential that the objectives support the vision statement. Below are examples vision statements with supportive objectives. Case Study 1 Hong Kong, ‘Hong Kong should not only be a major Chinese city but the most cosmopolitan city in Asia, People’s enjoying a status comparable to that of New York in North America and London in Europe.’ Republic of China Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 196 This vision statement is underpinned by the following objectives: ï‚· Adhering to the principle of sustainable development; ï‚· Enhancing Hong Kong's hub functions and providing sufficient land reserve to meet the changing needs of the economy; ï‚· Providing a good quality living environment by conserving natural landscape, preserving cultural heritage, enhancing townscape and regenerating old urban areas; ï‚· Meeting the need for housing and community facilities; ï‚· Providing a framework to develop a safe, efficient, economically viable and environmentally friendly transport system as well as pedestrian facilities; ï‚· Promoting tourism; and ï‚· Strengthening links with the Mainland. (http://www.pland.gov.hk/p_study/comp_s/hk2030/eng/finalreport/) Kuala Lumpur, Kuala Lumpur’s vision is to be a World Class Cit. Malaysia Kuala Lumpur promotes the concept of growth with distribution, physical and social sustainability, economic justification as well as a fair and efficient government, provisions of public amenities and good quality of life in the pursuit of a knowledgeable society. Objectives to support this vision for KL are included below: ï‚· To enhance the role of Kuala Lumpur as an international commercial and financial centre. ï‚· To create an efficient and equitable city structure. ï‚· To enhance the city living environment. ï‚· To create a distinctive city identity and image. ï‚· To have an efficient and effective governance. (http://klcityplan2020.dbkl.gov.my/eis/?page_id=280) London, England London should develop ‘as and exemplary, sustainable world city, based on three interwoven themes: ï‚· Strong, diverse long term economic growth. ï‚· Social inclusivity to give all Londoners the opportunity to share in London’s future success. ï‚· Fundamental improvements in London’s environment and use of resources. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 197 This vision statement is underpinned by the following objectives: ï‚· To accommodate London’s growth within its boundaries without encroaching on open spaces. ï‚· To make London a healthier and better city for people to live in. ï‚· To make London a more prosperous city with strong, and diverse long term economic growth. ï‚· To promote social inclusion and tackle deprivation and discrimination. ï‚· To improve London’s accessibility. ï‚· To make London an exemplary world city in mitigating and adapting to climate change and a more attractive, well-designed and green city. (http://www.london.gov.uk/thelondonplan/docs/londonplan08.pdf) Melbourne, ‘In the next 30 years, Melbourne will grow by up to one million people and will consolidate its Australia reputation as one of the most liveable, attractive and prosperous areas in the world for residents, business and visitors.’ This vision statement is underpinned by 9 key directions relating to the following themes/objectives: ï‚· A more compact city ï‚· Better management of metropolitan growth ï‚· Networks with the regional cities ï‚· A more prosperous city ï‚· A great place to be ï‚· A fairer city ï‚· A greener city ï‚· Better transport links ï‚· Better planning decisions, careful management Each of these directions is supported by specific policies that will be incorporated into the planning system. The policies will be implemented through a range of initiatives undertaken through joint action by local government, the Government and the wider community. (http://www.dse.vic.gov.au/melbourne2030online/content/implementation_plans/00_summary.ht ml) Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 198 Toronto, Canada Toronto, Canada, developed a healthy community and equity statement which included the following goals/objectives: ï‚· Adequate food, shelter, income, literacy and education; ï‚· Opportunities for people to participate in decisions affecting their lives and communities; ï‚· Elimination of intolerance and violence; ï‚· Physical, mental and social well-being; ï‚· Uncontaminated air, water and food; and ï‚· Access to nature. (http://www.environment.gov.au/esd/la21/guide/pubs/actionarea3.pdf) Las Vegas, ‘A vibrant, affordable, diverse, unique and world-class city of opportunity in which all citizens United States of enjoy their neighborhoods, feel safe, and know they will be heard.’ America This vision statement is underpinned by the following objectives: ï‚· Create, integrate and manage orderly and sustainable development and growth of our community. ï‚· Manage cost and revenue resources to achieve efficient operations. ï‚· Support and encourage sustainability, livability and pride in our neighborhoods. ï‚· Aggressively attract and retain diverse businesses. ï‚· Promote healthy lifestyles for all segments of the community. ï‚· Promote an open government which allows access, participation and respectful communication. ï‚· Provide a safe environment for our residents, businesses and visitors using a community oriented approach. ï‚· Revitalize and invigorate our mature areas and the urban core. Beverly, Australia ï‚· ‘Providing a lifestyle in which traditional rural values of care, mutual respect, responsibility, personal security and supported independence underpin our relationships. ï‚· Where our businesses and services can operate effectively to sustain the community. ï‚· Where the appearance of our community assets, buildings and facilities is attractive and encourages use by both residents and tourists. ï‚· Where responsible management of our heritage and natural resources takes precedence to maintain our assets for future generations. ï‚· Where community leadership is values and individuals have the opportunity to aspire and participate in that role.’ Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 199 This vision statement is underpinned by the following objectives: ï‚· Provide efficient, responsible Government to the district by promoting the concept of enabling leadership. ï‚· Provide effective planning based on the development of the effective community networks to address: economic development and tourism, community affairs, environmental issues and land use, infrastructure development, services and governance. ï‚· Support and encourage initiatives determined as a benefit to the district. ï‚· Represent the interests and needs of the district to Government and other agencies. ï‚· Develop effective partnerships with Government and other agencies. ï‚· Develop effective partnerships with Government and other agencies to provide benefits to Beverley. (http://www.beverley.wa.gov.au/our_council/strategic_plan/vision.html) Your group will now formulate some objectives for QNP based on your work over the last month or so. Remember to select your words carefully when devising an objective. Do not confuse an ‘action’ with an ‘objective’ – they perform different functions in integrated provincial planning. An objective is about what we are going to achieve – an action is how we are going to achieve that objective. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 200 Training Session 7 Formulating Objectives and Actions to achieve the Vision for QNP Module 2: Refining the Action Agendas to realise the Vision and Objectives Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 201 Introduction As we have seen in previous training sessions, the development of Action Agendas is critical to achieving the broader vision that has been developed for Quang Nam Province. During this module we will revisit and refine the Action Agendas we developed in Training Session 5 to ensure that they support the Vision and help achieve the objectives that have now been developed for QNP. We will now break into groups and refine these Action Agendas for each of the clusters which we worked on over the last few weeks. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 202 Training Session 7 Formulating Objectives and Actions to achieve the Vision for QNP Module 3: The ‘Road Map’ for the future development of QNP Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 203 Introduction The term ‘road map’ is often used in the preparation of integrated regional or provincial plans. It is a terms which is also used by world leaders when thinking strategically about how to solve major national or international problems. The example is the road map for resolving the Israeli Palestinian conflict in the Middle East. A road map sets the way forward for future actions – it seeks to: ï‚· prioritise actions ï‚· identify key stakeholders responsible for implementing the action ï‚· determine how the action can be funded ï‚· set realistic timelines Prioritization of The prioritization of actions is critical for an Integrated Provincial Plan as it: Actions within the Action ï‚· Allows for a more co-ordinated and efficient way of implementing actions Agenda ï‚· Guides both the public and private sectors to more effectively channel resources (capital, human, physical etc) into specific projects. ï‚· Provides certainty for both the public and private sectors in terms of the order of implementing actions so that they can budget for these actions as well as focus on other managerial, financial and resourcing efforts needed to accompany these actions. ï‚· Minimizes any potential conflicts between competing social, environmental and economic objectives, as this prioritization will indicate how these potential conflicts should be resolved. Can YOU think of any other benefits of prioritizing actions? Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 204 Identification of The identification of key stakeholders for each action is an important step as it: the key stakeholders for ï‚· Increases accountability and transparency of governance at all levels. each action ï‚· Reduces duplication between ministries/departments as it allows everyone to be aware of individual roles and responsibilities. ï‚· Allows for effective budgeting for the projects across ministries/departments. Identification of It is important that your Integrated Provincial Plan identifies the following funding sources: potential funding sources ï‚· Government funding, at a district, provincial and central government level. ï‚· Private sector funding (local, regional, national and international/foreign). ï‚· Joint venture investment including Public Private Partnerships (PPPs) and Local and Foreign Partnerships However, even more important than identifying these funding sources is working out which funding source is most suitable for each Action Agenda that you wish to implement. It is important that each Action you wish to implement is based on a realistic and preferred funding opportunity. You can then work collaboratively with others to secure these funds. Establishment of It is also important that you establish timelines within your integrated provincial plan that allow Timelines to for: implement the Actions ï‚· Accountability of government in meeting proposed timeframes for identified actions. ï‚· Certainty for investors about the public sector’s development agenda. ï‚· An ability to co-ordinate different actions at the one time and to plan ahead for when these actions are implemented. By following the ‘Road Map’ and determining clear objectives, actions, timelines and responsibilities from the outset a logical and coherent way forward for implementing the Integrated provincial plan for Quang Nam Province is established for all to adhere to. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 205 An example of an Implementation Program for an integrated regional plan is shown below. This is an extract from the Hanoi Capital Region Plan, 2030 – Building a Future Together. Each small group will prepare a ‘road map’ for its cluster action agendas and then report back to the large group on their actions based on the above outline. This will be followed by discussion and questions. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 206 Participants complete the Training Evaluation Form and hand back to Professor Hansen. Presentation of Certificates to participants who have completed the training course and final words of thanks to all participants. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 207 Additional Information Training Course Certificate Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 208 Additional Information Training Session 2 What do we know about Quang Nam Province today in terms of essential data? Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam Dân số - Population 3.5 Annual Population Increase 1996-2007 Qang Nam % Annual Increase 3.1 Viet Nam % Annual Increase 3 Da Nang % Annual Increase 2.5 2.3 2.3 1.9 1.9 2 1.8 1.9 1.9 Percentage 1.6 1.6 1.6 1.6 1.5 1.5 1.5 1.5 1.5 1.3 1.3 1.4 1.3 1.3 1.2 1.2 1.3 1.2 1.2 1.0 1.0 1.0 1.0 0.9 0.9 0.9 1 0.8 0.8 0.7 0.5 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Prel. 2007 •Introduction •During this session we will be looking at the essential information that is available in QN. We will work through this data and hopefully by the end of this session, we will have a better understanding of what this essential data tells us about the future of QN and what kinds of data should be included within an integrated provincial plan. • So you will see in your manuals that we have included some basic data , it is located at the back of your manuals behind the blue leaf. You may wish to refer to this from time to time as some of the graphs may be difficult to read on the overhead. •So to begin we will look at population. •The population of Quang Nam Province in 2007 was 1,489,279 persons. •In looking at this growth over a longer period i.e from 1995-2007 Quang Nam has been growing by an average of 1% per annum. From the graph it is clear that QN has been growing below the national average. •Yet when one looks at this graph even closer it is also clear that QN is loosing population to urban migration, with Da Nang showing that it has been very successful at attracting increasing populations and human capital. •This will have some significant future implications, and I would like to discuss this with you? So we need to think about this leakage of the population and decide if this is a good or bad thing? •Who is leaving the province? Is it young people? We are loosing future investment in human capital? 1 Dân số - Population 10 % Annual Growth in Rural and Urban Population in Quang Nam 200-2007 Urban 8.7 8 Rural 6 4.7 Percentage 4 2.4 2.1 2 1.5 1.2 1.2 1.0 0.8 0.8 0.7 0.5 0.3 0 2000 2001 2002 2003 2004 2005 2006 Prel. 2007 -0.6 -2 •This graph further illustrates this trend of urban migration being very significant. •But in looking at this data a couple of things stand out and I hope you can assist. • Why was it in 2002 that there was such a mass in urbanisation? (TK was developing and new industry) • What has been driving this growth (manufacturing)? • If this urban migration continues, what could the implications of this be for QN in 10-20 years? (Well with over 82%, of Quang Nam’s population living in rural areas, negative growth in these rural areas could potentially lead to a population decline across the province and greater leakage of the population to nearby Da Nang.) And again, it is important that we know about these migrants, and any implications. For example, is QN agricultural sector loosing its skill? Are people moving because poverty is such a problem for them? How are new migrants experiencing QNs cities? 2 Việc làm theo khu vá»±c - Employment by sector Employment Sectors in Quang Nam 2007 Agriculture Forestry and Fishing Mining 80 Manufacturing Production Distribution and electricity, gas 70 67.4 hot water, steam and air conditioner Water supply, management and treatment of garbage and waste water Construction 60 Wholesale, retail trade and motor cycles Transport, storage and communications Stay and living services 50 Information and communications Percentage Finance and banking insurance activities 40 Property Business Science and technology 30 Administrative activities and support services Public administration and defence compulsory social security 20 Education and training Health and social work 9.1 Recreational, culture and sporting activities 10 7.2 Other services 3.0 3.2 3.2 0.5 1.5 2.0 0.9 0.6 0.3 0.1 Private households with employed persons 0 Activities of international organisation bodies When looking at the employment by sector data, it is clear that the vast majority of the workforce is in agriculture, but what we are seeing is migration from rural into the city. It is important to note this in conjunction with the large amount of urban migration that is currently happening and what kind of programs may potentially be required to retrain the workforce from an agriculture to manufacturing. 3 Tổng sản phẩm quốc ná»™i GDP Changing structure of GDP Quang Nam % Change in Structure of GDP 2000-2007 Agriculture, forestry and fishing 45 Industry and construction 42 Service 40 40 38 38 36 36 35 36 35 35 33 33 34 33 34 35 33 32 30 31 30 28 29 Percentage 27 26 25 25 20 15 10 5 0 2000 2001 2002 2003 2004 2005 2006 Prel. 2007 •While agriculture is such a big employer, it is clear that the GDP structure is changing and manufacturing is comprising an increasing proportion. If you look at the blue bar, it is clear that agriculture is dropping, yet if you look at the purple bar industry and construction in rising. •One question I do have for you though, is that the service sector has been relatively stable at between 33-38% over the past 7 years. Do you think this is a realistic figure? •It seems that there is a large number of persons employed in the informal service sector and that with increasing urbanisation this is likely to also be growing, yet this hasn’t really been reflected. •How do we create more jobs for the informal sector in urban centres of province? (tourism, hospitality) 4 Tá»· lệ nghèo - Poverty 80 General Poverty Rates by Region 1998-2006 73 68 70 1998 2002 62 59 60 52 52 2004 2006 49 48 50 44 Percentage 37 38 40 37 35 32 33 29 29 29 29 29 30 25 25 22 23 20 19 20 20 16 12 13 12 11 10 9 10 5 6 0 Vietnam Red River Delta North East North West North Central South Central Central Highlands South East Mekong River Coast Coast Delta It is apparent that poverty rates are falling across the country. I only have this information on a regional basis, yet it apparent that the south central coast is somewhere in the middle in relation to poverty rates, and is comparative with the broader country. Poverty rates are falling, so an important question to ask is what is driving this growth across Vietnam? What is driving it in South Central area? What is driving this wealth. It is also important for you to look at these figures and ask if you think they are correct? 5 Chi tiêu hàng tháng - Monthly expenditure Thous. dongs 1999 2002 2004 2006 Viet Nam 221 269 360 460 By residence Urban 373 461 595 738 Rural 175 211 284 359 By region Red River Delta 227 271 374 475 North East 176 220 294 373 North West 179 233 296 North Central Coast 162 193 253 314 South Central Coast 198 248 331 415 Central Highlands 251 202 295 391 South East 385 448 577 741 Mekong River Delta 246 258 335 435 This is also an interesting table to have a quick look at, as it is apparent that monthly expenditure in Vietnam in almost double in urban regions. This is very important to think about in relation to the urbanisation that is happening across QN. Yet again, it is also important to think about how you can capture this urbanisation within the Province, so that this expenditure can be put back into the local economy. 6 Bằng cấp - Qualifications Qualifications Quang Nam Viet Nam Da Nang College/University 3% 4% 14% Vocational Secondary 3% 4% 5% Skilled w/ certificate 1% 3% 7% Skilled w/o certificate 3% 3% 2% Elementary Apprentice 7% 7% 14% Unskilled worker 83% 79% 58% •As Brian discussed in great detail yesterday, a key factor for a regions competiveness is the education levels of there labour force. •The data collected is from 2003, as I was unable to locate a more recent labour survey. • However, it is clear that this data shows us that Quang Nam is similar to all of Viet Nam in the three lowest skill levels. However, Quang Nam's labour force provides lesser proportion of workers within the three highest skill levels. •This gap is particularly evident when compared to the urban center of Da Nang, where 3% of QNs population has a College/University certificate and 14% in Da Nang. •This is an important factor as having an educated work force will be critical, it is also important to work out if this is the population leakage from QN that we were discussing earlier as it is a great loss to the Province to loose its young peoples that have been university educated when they could greatly contribute to the local economy 7 FDI Registered capital (Mill. USD)(*) Of which: Charter capital Number of projects Total Of which Total Foreign side Vietnam side Total 9810 99596.2 43129.0 36413.7 6715.3 Red river delta 2261 26728.0 11663.1 9356.3 2306.8 North East 409 3014.9 1260.2 975.7 284.5 North West 38 154.1 61.3 50.9 10.4 North Central Coast 145 2084.6 713.8 565.6 148.2 South Central Coast 414 8349.3 3719.1 3039.4 679.7 Quảng Nam 57 766.8 350.1 287.5 62.6 Central Highlands 128 1183.8 292.4 226.6 65.8 South East 5931 50837.9 20969.8 18230.2 2739.6 River Delta 425 4057.9 1806.1 1630.1 176.0 Petroleum & Gas 59 3185.7 2643.2 2338.9 304.3 One thing that we have talked quite a lot about during our initial research is FDI in QN. While QN has contains Chu Lai Open Economic Zone and range of industrial areas it is apparent that the Province has not been very successful at attracting FDI. We have spoken about a few reasons already that could help explain that. Yet just to set the scene if you look at this table and at the total Registered Capital Million USD it is apparent that less than 1% of the registered capital in Vietnam. If you look at Ha Noi or HCM it is 15% and 20% of Vietnam’s total FDI. It is also apparent that if you look at it per capita QN is attracting half the FDI per capital than Vietnam as a whole, which is $1169.65 to $514.97 per head. 8 Sản lượng công nghiệp – Industrial output QN Indsutrial Output 1995-2007 4500.0 4000.0 4018.1 3500.0 3182.3 3000.0 2500.0 2525.6 Bill VND 2000.0 1982.4 1655.9 1500.0 1351.1 1150.2 1000.0 931.9 686.6 776.7 500.0 515.6 607.3 468.9 0.0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Prel. 2007 •QN’s industrial output has been increasing, which is a positive sign. •What industries are driving the percentage increase in output in the province? 9 Sản lượng công nghiệp – Industrial output 35.0 % Annual Increase in Million VND for Indsutrial Output from 1996-2006 33 Quảng Nam 30.0 Vietnam 27 Ä?à Nẵng 25 25.0 23 23 22 20 21 20 20.0 19 Percentage 18 18 17 18 17 17 17 16 15 15 15 15 15.0 14 13 12 12 11 9 10.0 9 5.0 1 0.0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 •This graph looks at percentage increase in industrial output from year to year. 10 Questions • Compile a list of key data that you would need to prepare a strategic plan for socio econ development (List current gaps in available data that may need to be collected)? • How are you going to go about collecting additional data on the economy which is not currently available through official statistics? • From the data we have provided what are some of the key issues for QN? Ok so we now want you to have more of a think about the importance of data in an integrated provincial plan, so we have a few questions that we would like you to discuss in groups. First off, we would like you to compile a list of key data that you would need to prepare a strategic plan for socio econ development, I have mentioned a couple of gaps during this presentation yet there are some more? I would like you to come up with these and think about why you believe this data is important for integrated planning. Now with this additional data, I would like for you to think about how to collect this data, as it is generally not available through official statistics? Ok so I will give you an example of what I would like to see: Data Gap: Spatial data related to different types of industries. Why is this important To understand spatial agglomeration of industries and determine if there are clusters emerging within QN. This may assist in determining public infrastructure priorities, We also want to see later today, data to inform that SWOT analysis for the province. So in beginning could you come up with 3 key issues for the Province from this data? 11 Additional Information Multi Sectoral Analysis (MSA) undertaken by participants Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam MSA for QNP by participants in the training program Education and Training Government Services Mining and Resource Telecommunications Community Services Tourism and Leisure Capital Performance Domestic Services Business Services Financial Services Food Processing Manufacturing Public Utilities Capital Indicators Construction Agriculture Transport Materials Forestry Trading Fishing FINANCIAL 3 3.57 3.86 2.57 2.29 3.57 2.29 2.43 3.14 3.29 2.57 2.43 2.71 1.43 1.86 3.14 4.43 2.57 2.84 Revenue generation 2 4 4 2 1 4 1 1 4 3 2 3 1 1 1 3 4 3 2.44 Investment attractiveness 2 3 3 3 2 3 1 3 3 3 3 3 3 1 1 3 5 2 2.61 Access to credit 4 3 4 1 2 3 4 2 2 4 2 1 2 2 2 4 4 2 2.67 Capital retention and reinvestment 4 3 4 1 2 3 4 2 2 4 2 1 2 2 2 4 4 2 2.67 Ownership of production 2 3 2 3 2 3 3 2 3 2 4 3 3 2 2 3 4 2 2.67 Market development 5 4 5 4 5 4 2 5 5 2 1 2 5 1 4 2 5 5 3.67 Revenue generation 2 5 5 4 2 5 1 2 3 5 4 4 3 1 1 3 5 2 3.17 PHYSICAL 2.4 2 3 2 2.6 2.4 2.2 3 3 2.6 3.8 3.6 3 2.2 3 3.6 4 1.8 2.79 Public infrastructure Availability of Facilities 3 2 3 2 2 3 3 3 3 5 4 4 3 3 3 4 4 1 3.06 Quality of Facilities 3 2 3 2 2 3 3 3 3 3 4 4 3 3 3 4 4 1 2.94 Private infrastructure Buildings & facilities 2 2 3 2 3 2 1 3 3 1 4 3 3 1 3 3 4 2 2.50 \Machinery & equipment 2 2 3 2 3 2 1 3 3 1 4 3 3 1 3 3 4 2 2.50 Telecommunications services 2 2 3 2 3 2 3 3 3 3 3 4 3 3 3 4 4 3 2.94 NATURAL 3 3.2 2.6 2.2 2.4 2.6 2.6 2.4 1.75 2.6 3.667 3 2.4 3 2.4 2.8 3.2 1.75 2.64 Land conservation 3 3 2 3 2 3 2 2 1 3 4 3 1 3 2 3 4 2 2.56 Water conservation 3 3 2 2 2 3 3 3 2 2 3 3 3 3 2 2 3 1 2.50 Air quality 3 4 4 2 2 2 3 2 2 4 2 3 2 3 3 2.73 Energy conservation 3 3 2 2 3 3 2 2 1 3 3 3 3 3 3 3 2 2.59 Sustainability 3 3 3 2 3 2 3 3 3 3 3 3 3 3 3 3 2 2.82 HUMAN 1.83 1.83 1.83 2.00 2.50 2.67 2.67 2.50 2.33 2.50 3.00 2.83 2.50 2.67 2.67 2.67 3.67 1.67 2.46 Education and Training 2 2 2 1 3 3 3 3 2 2 3 3 2 3 2 2 4 1 2.39 Labour markets 1 1 1 2 2 2 2 2 2 3 3 3 2 2 2 2 3 1 2.00 Leadership 2 2 2 2 2 3 3 3 3 3 3 2 2 2 3 3 4 2 2.56 Entrepreneurship 1 1 1 2 2 2 2 2 2 2 3 3 3 3 3 3 4 2 2.28 Business networks 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 4 2 3.00 Governance 2 2 2 2 3 3 3 2 2 2 3 3 3 3 3 3 3 2 2.56 TECHNOLOGY 3.2 2.8 3.0 2.8 3.0 3.2 3.3 3.3 2.8 3.2 4.0 3.7 2.8 3.0 2.7 2.8 2.8 2.2 3.04 Research and development 3.0 2.7 3.0 3.0 3.0 3.3 3.3 3.3 3.0 3.3 4.0 3.7 3.0 3.0 3.0 3.0 3.0 2.3 3.11 Application of advanced technology 3.3 3.0 3.0 2.7 3.0 3.0 3.3 3.3 2.7 3.0 4.0 3.7 2.7 3.0 2.3 2.7 2.7 2.0 2.96 Total for Each Column 2.49 2.41 2.50 2.18 2.57 2.66 2.63 2.71 2.43 2.65 3.51 3.19 2.64 2.70 2.67 2.95 3.49 1.80 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 Inv Reven FINA es t me ue ge NCI AL Cap n   2.84 ital n t  a ttra eratio  ret ct n 2.44 ent ion Acces ivene 2.61 Ow  and  s t o c s s ner r r ship einves edit Ma  of p tmen rke r Rev t de oduct t 2.67 2.67 2.67 enu velop ion  e g m Competitiveness of Capital Assets 3.67 ene ent P ub ra 3.17 Ava lic in PHY tion  ilab fras SICAL 2.79 ility tr uc Qu  o tu alit f Facil re Priv y it 3.06 ate  of Fac ies  in i li 2.94 \M Bu ildin fra str t ies Tel achin gs & uctu eco r mm ery &   facilit e un i e i cat q uipm es ion 2.50 2.50 s se ent rv L an NA ices 2.94 d T Wa  cons URAL e 2.64 ter  con rvatio   n 2.56 s er vat Ene i 2.50 rgy Air qu on   co nse ality   2.73 Sus rvatio tain n 2.59 Edu abi cat l 2.82 ion HU it y  an M d T AN  2.46 Lab r our ain ing 2.39  ma rk 2.00 Ent Lead ets re e Bu s prene rship 2.56 i ne u ss n rship e 2.28 Gov twork App Res s 3.00 l i ca ea r TE C ernan tion ch 2.56  of   and  HNOL ce  adv d a nc evelo OGY  3.04 e d  p tec ment   3.11 hno log y  2.96 Ag ric 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 M u ltu in re in g a Fo n d  re Re str so y ur F is ce hi  M ng Fo at 2.49 2.41 2.50 od eria  Pr ls oc M es 2.18 Capital Competitiveness of Industry Sectors an sin uf g ac Pu tu bli rin c  U g ti C o li t ie ns s tru 2.57 2.66 2.63 ct io n  Tr 2.71 ad Te in lec Tr g om ans 2.43 m po Fi n u n i rt   an ca 2.65 cia tion Bu l Se s rv 3.51 sin ic e Go es s ve s S rn er 3.19 m v ic Co en e m t  S s Ed m er uc un v at it y ice s io  Se   n  To an rvic es ur d Tr ism ai Capital Competitiveness of Industry Sectors 2.64 2.70 2.67  an ning Do d  m Le 2.95 es isu tic re   Se rv 3.49 ic e s 1.80 Appendix 2 List of training program participants Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam Appendix 2 A list of the participants who attended the Technical Assistance Training Course in Provincial Planning, held October – November 2008 is included below: Võ NhÆ° Toàn Phan PhÆ°á»›c Tá»· Hà PhÆ°á»›c Lá»™c Nguyá»…n Duy Ân Trần Công Lành Lê Ba Trần Văn Tân Phạm Văn Sang Nguyá»…n Văn Thông Nguyá»…n TrÆ°á»?ng Tâm Nguyá»…n Ä?ịnh Bui Van Tien Pham Thie Hien Huỳnh Ngá»?c Thiệu Trần Quý Tấn Huỳnh Ngá»?c Trung Huỳnh Thị Mỹ Nhân Nguyá»…n Khoan Trần Văn Ẩn Nguyá»…n Minh Nam Phan Hoài Nam Võ Thị Trâm Anh Phạm Văn Trung Lê Tôn Tưởng LÆ°u Văn Nam Lê Văn Vinh Trần Ngá»?c Hoàng Ä?inh Ngá»?c Thanh Hùynh Văn MÆ°á»?i Võ Anh Tuấn Phạm Ä?ình Thành Ä?á»— Văn Ba Nguyá»…n Văn Thân Ä?inh Hùng Võ Ä?ình Trung Nguyá»…n Tan Nhon Lê Quang Triá»?u Tăng Ngá»?c Duẩn Huỳnh CÆ° Lê Văn Tá»± Nguyá»…n V. Thành Ä?ình Chau Hien Toan Pham Văn Hoang Phan Xuan Thao Nguyá»…n Nguyá»…n Văn Zheinh Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam Appendix 3 Training Evaluation Report Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam Table of Contents 1 Training Evaluation ...........................................................................................................................2 2 Results of the questionnaires...........................................................................................................3 2.1 Feedback from Sessions 1 to 4 ...............................................................................................................3 2.1.1 Training Manual 3 2.1.2 Delivery of Training Sessions 4 2.1.3 Learning Environment 4 2.1.4 International consultants 5 2.1.5 Learning Application 6 2.1.6 Quality of the training sessions overall 6 2.1.7 Quality of the Interpreter 7 2.2 Feedback from Sessions 5 to 7 ...............................................................................................................8 2.2.1 Training Manual 8 2.2.2 Delivery of Training Sessions 8 2.2.3 Learning Environment 9 2.2.4 International Consultants 10 2.2.5 Learning Application 11 2.2.6 Quality of the Training Sessions Overall 11 2.2.7 Quality of the Interpreter 12 2.2.8 Response to open ended questions 12 2.2.9 Summary of Results from Training Evaluation 14 3 Participant Evaluation by the Consultant Team............................................................................15 3.1 SWOT Analysis.....................................................................................................................................16 3.2 Clusters Analysis ...................................................................................................................................16 3.3 Vision and Objectives for Quang Nam Province....................................................................................16 3.4 Implementation Plan ..............................................................................................................................16 EVALUATION OF TRAINING SESSIONS FROM 7 TO 10 OCTOBER 2008 BY THE PARTICIPANTS....18 EVALUATION OF TRAINING SESSIONS FROM 5 TO 7 NOVEMBER 2008 BY THE PARTICIPANTS ...22 Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 1 1 Training Evaluation To ensure participants gained the maximum benefits from the Technical Assistance Training Course, the Project Team undertook a two part evaluation process to assess key aspects of the training program and the performance of the Project Team. Two questionnaires were circulated to all participants seeking comments on the following: ï‚· Training material resources; ï‚· Delivery of the training sessions; ï‚· Learning environment; ï‚· Quality/knowledge of the International consultants; ï‚· Learning application; ï‚· Performance of interpreter; and ï‚· Open ended questions about what they appreciated about the training sessions; what changes would they suggest to improve the training sessions; how they might apply what they have learnt in the training sessions in their job; any other comments about the training program. A copy of each of the questionnaires is attached at the end of this report. Because the training course was delivered in two parts, that is four sessions in October 2008 and another three sessions in November 2008, the training evaluation questionnaires were given to all participants at the completion of each block of training to complete and return to the project team. This approach enabled the project team, after the first four sessions of the training course, determine what changes, if any, were required to the way the training was being delivered by the project team. It also provided valuable feedback on aspects of the training course in relation to the content of the manual and, their ability to understand key concepts, tools and techniques underpinning integrated provincial planning. It is noted that throughout the training course the project team adopted a highly interactive learning environment – where participants were ‘tested’ on their level of understanding of important techniques such as SWOT Analysis, Cluster Analysis and Visioning. Given our experience in training programs we adopted a team structure within the training room with participants grouped into five teams at the outset of the course. These teams nominated a team leader and continued throughout the training course to work together undertaking set tasks and presenting their findings to the whole group. The participants in this training course worked very well in a team structure and the presentation sessions ensured that the breadth of ideas were shared by all. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 2 2 Results of the questionnaires The results of the two questionnaires are summarised below. Even though the total number of participants in the training course expanded to 45 persons not all participants completed the questionnaires. For sessions 1 to 4 the total number of questionnaires returned to the consultant team was 38 and for sessions 5 to 7 it was 39. Nevertheless the sample size is more than adequate for statistical purposes. 2.1 Feedback from Sessions 1 to 4 2.1.1 Training Manual Tài liệu giảng dạy 1 2 3 4 5 Training Material Resources 1. Tài liệu giảng dạy cho khóa há»?c dá»… Ä‘á»?c và dể hiểu, trình bày rõ ràng và phù hợp. 0 0 7 23 8 The training manual for this session was easy to (0%) (0%) (18%) (61%) (21%) understand and the language, layout and content were clear and appropriate. 2. Tài liệu giảng dạy có nhiá»?u thông tin hữu ích cho công việc của bạn. 0 1 5 19 13 (0%) (3%) (13%) (50%) (34%) The training manual provided useful material for your workplace. 3. Tài liệu được dịch sang tiếng Việt dá»… Ä‘á»?c và dá»… hiểu. 0 1 8 22 7 (0%) (3%) (21%) (58%) (18%) The training manual translation into Vietnamese read well and made sense. 4. Mức Ä‘á»™ kiến thức của tài liệu là phù hợp vá»›i bạn. 0 0 15 17 6 (0%) (0%) (39%) (45%) (16%) The academic level of the training manual was appropriate for you. 1 = Poor 2 = Average 3 = Good 4 = Very Good 5 = Excellent Overall the training manual was well received with a very positive response to its content and being easy to understand. The participants also considered the training manual read well and made sense with three quarters of participants stating the translation was ‘very good’ or ‘excellent.’ A total of 84% believed the material in the manual was useful for their workplace. Notably 39% of participants classified the academic level of training provided was ‘good’ whilst 61% believed it was very good to excellent. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 3 2.1.2 Delivery of Training Sessions Giảng dạy trong khóa há»?c 1 2 3 4 5 Delivery of Training Sessions 5. Các module trong các phần có gắn kết vá»›i nhau và sắp xếp hợp lý. 0 0 9 19 10 (0%) (0%) (24%) (50%) (26%) The modules in the training session were well linked and well organized. 6. Trong quá trình giảng có sá»± tÆ°Æ¡ng tác và tham gia giữa há»?c viên và giảng viên. 0 0 2 14 22 (0%) (0%) (5%) (37%) (58%) Delivery of the session was interactive and participatory. 7. Các bài tập trong suốt khóa há»?c phù hợp vá»›i những gì há»?c được vá»? khái niệm, kỹ thuật và công cụ trong quy há»?ach tổng hợp tỉnh. 0 0 4 23 11 Assessment exercises during the training (0%) (0%) (11%) (61%) (29%) session were appropriate in your learning about the concepts, techniques and tools in this session. 1 = Poor 2 = Average 3 = Good 4 = Very Good 5 = Excellent The participants rated the delivery of the training sessions highly and considered the sessions were well linked, organised and he tools and techniques taught were appropriate. The participants were particularly positive about the degree of interaction offered by the training course with 58% nominating this aspect as ‘excellent’. 2.1.3 Learning Environment Môi trÆ°á»?ng há»?c 1 2 3 4 5 Learning Environment 8. Các phần há»?c Ä‘em đến cÆ¡ há»™i chia sẻ ý tưởng vá»›i bạn đồng nghiệp và há»?c há»?i. 0 0 5 24 9 The training session created opportunities for (0%) (0%) (13%) (63%) (24%) you to share ideas with your colleagues and to learn from them. 9. Bạn được khuyến khích để há»?c qua ná»™i dung giảng dạy. 0 0 6 22 10 (0%) (0%) (16%) (58%) (26%) You were motivated to learn by the content and delivery of the training session. 10. Trong suốt khóa há»?c, môi trÆ°á»?ng há»?c tập tốt. 0 1 6 19 12 A good learning environment was created during (0%) (%) (16%) (50%) (32%) this session. 1 = Poor 2 = Average 3 = Good 4 = Very Good 5 = Excellent The learning environment was also considered positively by training course participants with 82% of participants nominating that a ‘very good’ or ‘excellent’ learning environment was created. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 4 2.1.4 International consultants Các chuyên gia nÆ°á»›c ngòai 1 2 3 4 5 International Consultants Chuyên gia quốc tế trong khóa đào tạo tập huấn này có kiến thức trong lÄ©nh vá»±c của há»? giảng dạy. 0 0 0 15 23 (0%) (0%) (0%) (39%) (61%) The international consultants involved in the delivery of this session were knowledgeable in their field. Các chuyên gia cÅ©ng linh há»?at trong việc giảng dạy và có đáp ứng các yêu cầu của há»?c viên cÅ©ng nhÆ° trả lá»?i các câu há»?i đặt ra. 0 0 1 15 22 (0%) (0%) (3%) (39%) (58%) The international consultants were flexible during the session and responded to participants learning needs and questions as they arose. Các chuyên gia thÆ°á»?ng xuyên kiểm tra mức Ä‘á»™ hiểu biết của há»?c viên trong suốt khóa. 0 0 4 20 14 The international consultants frequently checked (0%) (0%) (11%) (53%) (37%) the understanding of participants during the training session. Các chuyên gia giải thích ná»™i dung khóa há»?c má»™t cách rõ ràng và dá»… hiểu. 0 0 3 18 17 The international consultants explained the (0%) (0%) (8%) (47%) (45%) content of the training session in a clear and understandable manner. The international consultants’ attitudes were 0 0 1 20 17 appropriate and culturally sensitive. (0%) (0%) (3%) (53%) (45%) 1 = Poor 2 = Average 3 = Good 4 = Very Good 5 = Excellent The participants responded very positively to the international consultants and considered they were knowledgeable in their field (61% nominated ‘excellent’) and flexible (58% nominated ‘excellent’). The international consultants were also well regarded in terms of clearly explaining the content of the course (45% nominated ‘excellent’) and being culturally sensitive (53% nominated ‘excellent’). An element for improvement for future training courses of this nature is that the consultants could more frequently check understanding of material with only 37% of participants rating this as ‘excellent.’ Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 5 2.1.5 Learning Application Ã?p dụng việc há»?c 1 2 3 4 5 Learning Application 16 Các khái niệm, kỹ thuật và công cụ giảng dạy trong suốt khóa há»?c có thể áp dụng và/hoặc bổ sung cho công việc của bạn. 0 0 8 23 7 (0%) (0%) (21%) (61%) (18%) Concepts, techniques and tools taught can be applied to and/or modified for my workplace. 17 Bạn cho Ä‘iểm mức hiểu biết của bạn vá»? ná»™i dung khóa đào tạo này thế nào ? 0 3 18 15 2 (0%) (8%) (47%) (39%) (5%) How would you rate your understanding of the content of this session? 1 = Poor 2 = Average 3 = Good 4 = Very Good 5 = Excellent The weaker of the categories surveyed was learning application, this will be critical to address in the upcoming workshops. While participants responded positively to the consultants and the course material, 47% nominated that they had a ‘good’ understanding of the material and only 5% nominated that they had an ‘excellent’ understanding of the course content. Moreover, in regards to the relevance of the content, 21% of participants nominated it as ‘good.’ It is important to ensure a high level of understanding to ensure the relevance of the course it fully understood by participants. 2.1.6 Quality of the training sessions overall Training Sessions Poor Average Good Excellent Tập huấn ngày 1: Quy Há»?ach Chiến Lược Trong Ná»?n Kinh Tế Thị TrÆ°á»?ng 0 1 18 19 (0%) (3%) (47%) (50%) Training Session 1: Integrated Strategic Planning In A Market Economy Tập huấn ngày 2: Các Kỹ Thuật Phân Tích cho Quy Há»?ach Chiến Lược Tổng Hợp. 0 1 17 20 (0%) (3%) (45%) (53%) Training Session 2: Analytical Techniques for Integrated Strategic Planning Tập huấn ngày 3: Phân tích Cluster – từ lý thuyết đến thá»±c tiá»…n 0 1 22 15 (0%) (3%) (58%) (39%) Training Session 2: Analytical Techniques for Integrated Strategic Planning Tập huấn ngày 4: Phân tích Cluster – từ lý thuyết đến thá»±c tiá»…n 0 1 22 15 (0%) (3%) (58%) (39%) Training Session 4: Cluster Analysis – From Theory To Practice (Day 2) Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 6 The most popular session for the first block of training in October 2008 was Training Session 2 with 53% nominating this session as ‘excellent.’ However, all training sessions were well received with only one participant rating the four training sessions as ‘average’ and the remaining participants (37) nominating these sessions as ‘good’ or ‘excellent.’ 2.1.7 Quality of the Interpreter Interpreter Poor Average Good Excellent Mức Ä‘á»™ chính xác tổng quát 0 1 12 25 (0%) (3%) (32%) (66%) General accuracy of interpreting Âm giá»?ng rõ 0 1 11 26 (0%) (3%) (29%) (68%) Voice clarity and voice projection Dịch các câu há»?i và các ý kiến của há»?c viên 0 1 12 25 Interpreting of participants questions and (0%) (3%) (32%) (66%) comments Thái Ä‘á»™ đối vá»›i há»?c viên 0 1 11 26 (0%) (3%) (29%) (68%) Attitude towards participants 1 = Poor 2 = Average 3 = Good 4 = Very Good 5 = Excellent The participants also responded very positively to the interpreter with over 65% nominating ‘excellent’ in relation to the interpreter’s accuracy, voice clarity, attitude and response to participants. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 7 2.2 Feedback from Sessions 5 to 7 2.2.1 Training Manual Tài liệu giảng dạy 1 2 3 4 5 Training Material Resources 1. Tài liệu giảng dạy cho khóa há»?c dá»… Ä‘á»?c và dể hiểu, trình bày rõ ràng và phù hợp. 0 0 7 22 10 The training manual for this session was easy to (0%) (0%) (18%) (56%) (26%) understand and the language, layout and content were clear and appropriate. 2. Tài liệu giảng dạy có nhiá»?u thông tin hữu ích cho công việc của bạn. 0 0 6 24 9 (0%) (0%) (15%) (62%) (23%) The training manual provided useful material for your workplace. 3. Tài liệu được dịch sang tiếng Việt dá»… Ä‘á»?c và dá»… hiểu. 0 1 9 18 11 (0%) (3%) (23%) (46%) (28%) The training manual translation into Vietnamese read well and made sense. 4. Mức Ä‘á»™ kiến thức của tài liệu là phù hợp vá»›i bạn. 0 0 8 22 9 (0%) (0%) (21%) (56%) (23%) The academic level of the training manual was appropriate for you. 1 = Poor 2 = Average 3 = Good 4 = Very Good 5 = Excellent Overall the training manual was well received with a very positive response to its content and being easy to understand, 85% of participants considered that the material in the training manual was ‘very good’ or ‘excellent.’ Notably, 80% of participants rated the level of academic training provided by the course as ‘very good’ or ‘excellent,’ a 19% increase from when we previously undertook the survey. 2.2.2 Delivery of Training Sessions Giảng dạy trong khóa há»?c 1 2 3 4 5 Delivery of Training Sessions 5. Các module trong các phần có gắn kết vá»›i nhau và sắp xếp hợp lý. 0 0 8 24 7 (0%) (0%) (20%) (62%) (18%) The modules in the training session were well linked and well organized. 6. Trong quá trình giảng có sá»± tÆ°Æ¡ng tác và tham gia giữa há»?c viên và giảng viên. 0 0 3 13 23 (0%) (0%) (8%) (33%) (59%) Delivery of the session was interactive and participatory. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 8 7. Các bài tập trong suốt khóa há»?c phù hợp vá»›i những gì há»?c được vá»? khái niệm, kỹ thuật và công cụ trong quy há»?ach tổng hợp tỉnh. 0 0 8 19 12 (0%) (0%) (20%) (49%) (31%) Exercises during the training session were appropriate in learning about the concepts, techniques and tools 1 = Poor 2 = Average 3 = Good 4 = Very Good 5 = Excellent The participants rated the delivery of the training sessions highly and considered Sessions 5 to 7 were well linked, organised and the tools and techniques taught were appropriate. The participants were particularly positive about the degree of interaction offered by the training course with 59% nominating this aspect as ‘excellent’. Generally results were very similar across the two blocks of training sessions. 2.2.3 Learning Environment Môi trÆ°á»?ng há»?c 1 2 3 4 5 Learning Environment Các phần há»?c Ä‘em đến cÆ¡ há»™i chia sẻ ý tưởng vá»›i bạn đồng nghiệp và há»?c há»?i. 0 0 6 23 10 The training session created opportunities for (0%) (0%) (15%) (59%) (26%) you to share ideas with your colleagues and to learn from them. Bạn được khuyến khích để há»?c qua ná»™i dung giảng dạy. 0 0 8 24 7 (0%) (0%) (20%) (62%) (18%) You were motivated to learn by the content and delivery of the training session. Trong suốt khóa há»?c, môi trÆ°á»?ng há»?c tập tốt. 1 2 7 18 11 A good learning environment was created during (3%) (5%) (18%) (46%) (28%) this session. 1 = Poor 2 = Average 3 = Good 4 = Very Good 5 = Excellent The learning environment was also considered positively by training course participants; with 80% of participants nominating that the motivation provided was ‘very good’ or ‘excellent.’ Generally, results were very similar across the two rounds of training courses. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 9 2.2.4 International Consultants Các chuyên gia nÆ°á»›c ngòai 1 2 3 4 5 International Consultants 11. Chuyên gia quốc tế trong khóa đào tạo tập huấn này có kiến thức trong lÄ©nh vá»±c của há»? giảng dạy. 0 0 3 11 25 (0%) (0%) (8%) (28%) (64%) The international consultants involved in the delivery of this session were knowledgeable in their field. 12 Các chuyên gia cÅ©ng linh há»?at trong việc giảng dạy và có đáp ứng các yêu cầu của há»?c viên cÅ©ng nhÆ° trả lá»?i các câu há»?i đặt ra. 0 0 4 13 22 (0%) (0%) (10%) (33%) (57%) The international consultants were flexible during the session and responded to participants learning needs and questions as they arose. 13 Các chuyên gia thÆ°á»?ng xuyên kiểm tra mức Ä‘á»™ hiểu biết của há»?c viên trong suốt khóa. 0 0 6 20 13 The international consultants frequently checked (0%) (0%) (16%) (51%) (33%) the understanding of participants during the training session. 14 Các chuyên gia giải thích ná»™i dung khóa há»?c má»™t cách rõ ràng và dá»… hiểu. 0 0 5 21 13 The international consultants explained the (0%) (0%) (13%) (54%) (33%) content of the training session in a clear and understandable manner. 15 The international consultants’ attitudes were 0 0 4 17 18 appropriate and culturally sensitive. (0%) (0%) (10%) (44%) (46%) 1 = Poor 2 = Average 3 = Good 4 = Very Good 5 = Excellent The participants responded most positively to the international consultants and considered they were knowledgeable in their field (64% nominated ‘excellent’ up from 61%) and flexible (57% nominated ‘excellent’ down from 58%). The international consultants were also well regarded in terms of clearly explaining the content of the course (33% nominated ‘excellent’ down from 45% ) and being culturally sensitive (46% nominated ‘excellent’ up from 45%). Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 10 2.2.5 Learning Application Ã?p dụng việc há»?c 1 2 3 4 5 Learning Application Các khái niệm, kỹ thuật và công cụ giảng dạy trong suốt khóa há»?c có thể áp dụng và/hoặc bổ sung cho công việc của bạn. 0 0 11 23 5 (0%) (0%) (28%) (59%) (13%) Concepts, techniques and tools taught can be applied to and/or modified for my workplace. Bạn cho Ä‘iểm mức hiểu biết của bạn vá»? ná»™i dung khóa đào tạo này thế nào ? 0 0 13 22 4 (0%) (0%) (33%) (57%) (10%) How would you rate your understanding of the content of this session? 1 = Poor 2 = Average 3 = Good 4 = Very Good 5 = Excellent Progress was made in ‘Learning Applications’ which was previously one of the weaker categories evaluated in the first block of sessions. By completion of sessions 5 to 7 a total of 67% of course participant nominated they had a ‘very good’ or ‘excellent’ understanding of the course material, up from 44% on the previous survey. The survey provided similar results regarding the relevance of the course, skill and techniques with 72% nominating ‘very good’ or excellent,’ slightly down from 79% when the survey was previously undertaken. 2.2.6 Quality of the Training Sessions Overall Poor Average Good Excellent Training Sessions Tập huấn ngày 5: 0 2 22 15 (0%) (5%) (56%) (39%) Training Session 5: Tập huấn ngày 2: Các Kỹ Thuật Phân Tích cho Quy Há»?ach Chiến Lược Tổng Hợp. 0 1 18 20 (0%) (3%) (46%) (51%) Training Session 6: Analytical Techniques for Integrated Strategic Planning Tập huấn ngày 3: Phân tích Cluster – từ lý thuyết đến thá»±c tiá»…n 0 1 16 22 (0%) (3%) (41%) (56%) Training Session 7: Analytical Techniques for Integrated Strategic Planning The most popular session was Training Session 7- Formulating Objectives and Actions to achieve the Vision for QNP with 57% nominating this course as ‘most relevant.’ Training Session 6 – Formulating a Vision for Quang Nam Province also rated highly with 51% of participants nominating ‘most relevant.’ These were the two most popular training sessions across the entire course. Training Session 5 – QNP cluster Action Teams (report back session) also rated well with 95% nominating the course as ‘relevant’ or ‘very relevant’ Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 11 2.2.7 Quality of the Interpreter Interpreter Poor Average Good Excellent Mức Ä‘á»™ chính xác tổng quát 0 0 26 13 (0%) (0%) (67%) (33%) General accuracy of interpreting Âm giá»?ng rõ 0 0 19 20 (0%) (0%) (49%) (51%) Voice clarity and voice projection Dịch các câu há»?i và các ý kiến của há»?c viên 0 0 21 18 Interpreting of participants questions and (0%) (0%) (54%) (46%) comments Thái Ä‘á»™ đối vá»›i há»?c viên 0 0 14 25 (0%) (0%) (36%) (64%) Attitude towards participants The participants also responded positively to the interpreter in sessions 5 to 7 with all participants nominating ‘good’ or ‘excellent’ in relation to the interpreter’s accuracy, voice clarity, attitude and response to participants. 2.2.8 Response to open ended questions What did you appreciate most about training sessions 1 to 4? ï‚· Cluster and SWOT Analysis (8 responses) ï‚· SWOT Analysis (6 responses) ï‚· Cluster Analysis – Theory to Practice (4 responses) ï‚· Strategic Planning in an open market (3 responses) ï‚· Strategic Planning and Cluster Analysis (1 responses) ï‚· SWOT Analysis and Action Agenda (1 response) ï‚· Strategic Planning, Value Chain, Cluster Analysis and SWOT Analysis (1 response) ï‚· Session 1-4 (1 response) ï‚· Session 1-3 (1 response) What changes, if any, would you suggest to improve training sessions 1 to 4? ï‚· Study tour (both in or outside QNP) to investigate aspects learned at the course (6 responses) ï‚· Share more experiences and examples of difficult problems and solutions. Examples of Vietnam are very useful (3 responses) ï‚· Important to recap all the context after the module to ensure understanding (1 response) ï‚· More practise of SWOT Analysis Techniques (1 response) ï‚· More illustrations (1 response) Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 12 ï‚· Tailor course to be more specific to QNP (1 response) ï‚· No need to change (1 response) ï‚· To make clearer the distinction between socio-economic development planning, master planning and regional planning (1 response) Briefly describe how you might apply what you have learnt in training sessions 1 to 4 in your work. ï‚· Useful for developing the new Socio-Economic Development Plan for QNP (11 responses) ï‚· Gained a better understand of how to attract investment (4 responses) ï‚· SWOT analysis to understand capacity of an agency and understand needs of entrepreneurs (2 responses) ï‚· The establishment of Clusters and new economic sectors (2 responses) ï‚· Improve knowledge in assessing, managing the planning and investment projects (1 response) ï‚· Use for developing Land Use Plans for QNP (1 response) ï‚· Useful for developing District Plans for QNP (1 response) ï‚· SWOT and Cluster will be useful to indentify the potential of local products (1 response) ï‚· To consult with leaders on urban planning (1 response) ï‚· Improved general knowledge (1 response) Would you like to make any other comments about training sessions 1 to 4? (delivery of sessions, administration, training venue etc) ï‚· Very difficult to balance course with work demands (2 response) ï‚· Training to be held in Hoi An (1 response) ï‚· Study Tour (1 response) ï‚· More illustrations should be used (1 response) ï‚· Need clearer explanations, for example in SWOT analysis I did not understand threats and weaknesses (1 response) ï‚· The training course should be extended (1 response) ï‚· The teaching method was appropriate and techniques should be useful for practical application (1 response) ï‚· Wonderful, improved knowledge, excellent chance to meet colleges (1 response) Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 13 2.2.9 Summary of Results from Training Evaluation When compiling the results across the first and second half of the course it is highlighted that in terms of Questions 1 to 17, which were each rated on a score of 1 to 5, almost one third of all participants considered that all elements of the course were ‘excellent’ and over half of the participants considered the course was ‘very good.’ Less than 1% of participants across the two surveys rated any aspect of the course as being ‘poor’ or even ‘average’ as shown in the summary table below. Q1-17 Ranking 1 - Poor 2 - Average 3 - Good 4 - Very Good 5 - Excellent Sessions 1-4 0.0% 0.9% 15.8% 50.8% 32.5% Sessions 5-7 0.2% 0.5% 17.5% 50.4% 31.5% Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 14 3 Participant Evaluation by the Consultant Team In the opinion of the consultant team the Training course for the TA was very successful. The attendance level at the course was very high across the seven days. Participants were enthusiastic, motivated and keen to be involved in the highly interactive sessions. Moreover, participants showed a very open mind and strong commitment to learning the material that was presented at each of the sessions. The Project Team believed an energetic and highly participatory TA Program was crucial to ensure the participants understanding of the material. The course therefore was essentially designed with specific tasks to be completed by each of the five groups or teams followed by presentations of their findings and ideas and Q&A sessions to test the understanding of participants. Questions were forthcoming as well as some relatively vigorous debate about some topics such as the identification of the clusters in QNP and the content of the powerpoint presentations from each of the CATs. There were some aspects of the manual that participants appeared to inherently struggle with over in terms of their level of understanding. The following is a summary of these matters. The Cluster Action Trams at work Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 15 3.1 SWOT Analysis SWOT Analysis was undertaken by participants as part of Training Session 2 and also by the Cluster Action Teams (CATs) in their presentations in Session 5. Generally, the SWOT Analysis undertaken by the CATs showed improvement which highlights the importance of consolidating newly learned skills through practical application. It was apparent that the teams were far more proficient in nominating strengths and weaknesses than opportunities and threats. Notably, the weakest of the four components was nominating ‘threats’. Some participants failed to understand the difference between ‘weaknesses’ and ‘threats’. Participants generally paid little attention to the external factors that could substantially impact on the future growth of QNP. This is an aspect of using this technique which should be explained further and tested during the preparation of the new SEDP for QNP. 3.2 Clusters Analysis The CATs were very proactive and the presentations made by each team were excellent. Whilst the ideas generated by teams provided a solid starting point for further work on the application of clusters as a concept for stimulating QNP’s economy, some teams had difficulty in indentifying potential sources of investment funding for these clusters. Notably, there was a great deal of reliance on funding from government and/or foreign aid agencies being a common dilemma for poorer provinces in Vietnam who still rely heavily on central government funds. Few teams sought to engage MNEs for potential investment. There were also very few groups who proposed projects that involved introducing new technologies to QNP. 3.3 Vision and Objectives for Quang Nam Province The participants undertook a visioning exercising for QNP as part of Training Session 6. The participants had some difficulty with this task confusing ‘goals’ with an actual statement of what QNP should be like in the future. Setting a Vision is perhaps best dealt with in the future with key stakeholder input as different groups will have varying aspirations and expectations of what the future holds in terms of their lifestyles, business investments and overall well being. This session was largely influenced by the examples of vision statements provided in the manual rather than the participants adopting a fresh approach focusing primarily on QNP. Also some of the attempts at a vision statement were more marketing slogans than actual vision statements per se and this was highlighted by the consultant team during session 6. In contrast, the groups responded very well to setting objectives for QNP. There is a good understanding of what an objective is, the use of ‘action’ words in preparing objectives and the need for objectives to embrace social, economic and environmental considerations as well as matters relating to good governance. 3.4 Implementation Plan As part of the final session (Session 7) each group developed an Implementation Plan based on objectives which they had identified in the previous session. The participants performed very well in developing their Implementation Plans in terms of formulating objectives for QNP, determining key actions and assigning relevant agencies responsible for each action. However, the participants struggled with the prioritisation of these actions and also with setting realistic timeframes for such Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 16 actions. This is understandable given there are many ‘urgent’ projects to be undertaken in the Province and they all are considered ‘important’. However, funding is invariably difficult to secure and hence a more pragmatic approach is needed to identifying which actions are most important (in terms of maximising the benefits to the community) and which are of lesser importance. The ability to look 10 to 15 years ahead is a struggle for some of the participants who tend to work in a workplace environment which is often reactive and retrospective in its actions rather than proactive and innovative. These are issues which may be endemic of some of the agencies where the participants work and hence the implementation planning of actions will need to embrace a more integrated, multi department effort Also QNP will need further assistance with balancing competing objectives so that the concept of sustainable development is reflected in the implementation plan and its priority actions. This emphasizes the need for the authors of the next SEDP for QNP to be a truly multi disciplinary team involving key personnel from the core agencies involved in preparing such plans and adopting a public participation program to engage key stakeholders. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 17 TECHNICAL ASSISTANCE AND TRAINING IN INTEGRATED PROVINCIAL PLANNING, QUANG NAM PROVINCE, VIETNAM PROJECT ___________________________________________________________________________________ EVALUATION OF TRAINING SESSIONS FROM 7 TO 10 OCTOBER 2008 BY THE PARTICIPANTS As part of the monitoring and evaluating of the training course, we would like you to assess the usefulness of the training and the performance of the training team over the past four days. This will help us improve upon the design and delivery of the next sessions of the course in November. Please rate the following items about the course using the rating system below: 1 Poor 2 Average 3 Good 4 Very Good 5 Excellent Tick the most appropriate box below for each of the training sessions. 1 2 3 4 5 Training Material Resources 1 The training manual for this session was easy to understand and the language, layout and content were clear and appropriate. 2 The training manual provided useful material for your workplace. 3 The training manual translation into Vietnamese read well and made sense. 4 The academic level of the training manual was appropriate for you. Delivery of the Training Session 5 The modules in the training session were well linked and well organized. 6 Delivery of the session was interactive and participatory. 7 Assessment exercises during the training session were appropriate in your learning about the concepts, techniques and tools in this session. Learning Environment 8 The training session created opportunities for you to share ideas with your colleagues and to learn from them. 9 You were motivated to learn by the content and delivery of the training session. 10 A good learning environment was created during this session. International consultants Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 18 11 The international consultants involved in the delivery of this session were knowledgeable in their field. 12 The international consultants were flexible during the session and responded to participants learning needs and questions as they arose. 13 The international consultants frequently checked the understanding of participants during the training session. 14 The international consultants explained the content of the training session in a clear and understandable manner. 15 The international consultants’ attitudes were appropriate and culturally sensitive. Learning Application 16 Concepts, techniques and tools taught during this session can be applied to and/or modified for my workplace. 17 How would you rate your understanding of the content of this session? 18 How would you rate the relevance of the training session to your current job using the following scores? 0 Don’t Know 1 Not relevant 2 Relevant 3 Very Relevant Tick the appropriate box below. 0 1 2 3 Training Session 1: Integrated Strategic Planning In A Market Economy Training Session 2: Analytical Techniques for Integrated Strategic Planning Training Session 3: Cluster Analysis – From Theory To Practice (Day 1) Training Session 4: Cluster Analysis – From Theory To Practice (Day 2) 19 Please comment on the performance of the interpreter during training sessions 1 to 4 by ticking the appropriate box. Poor Average Good Excellent General accuracy of interpreting Voice clarity and voice projection Interpreting of participants questions and comments Attitude towards participants Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 19 20 What did you appreciate most about training sessions 1 to 4? ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… 21 What changes, if any, would you suggest to improve training sessions 1 to 4? ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… 22 Briefly describe how you might apply what you have learnt in training sessions 1 to 4 in your work. ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 20 23 Would you like to make any other comments about training sessions 1 to 4? (delivery of sessions, administration, training venue etc) ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… PLEASE HAND YOUR COMPLETED FORM TO PROFESSOR ROZ HANSEN BEFORE YOU LEAVE THE TRAINING ROOM TODAY. THANK YOU FOR COMPLETING THIS TRAINING EVALUATION FORM – IT IS MUCH APPRECIATED!!! Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 21 TECHNICAL ASSISTANCE AND TRAINING IN INTEGRATED PROVINCIAL PLANNING, QUANG NAM PROVINCE, VIETNAM PROJECT EVALUATION OF TRAINING SESSIONS FROM 5 TO 7 NOVEMBER 2008 BY THE PARTICIPANTS As part of the monitoring and evaluating of the training course, we would like you to assess the usefulness of the training and the performance of the training team over the past three days. This will help us to measure areas of improvement since the earlier training course, as well as understand ways to improve upon the design and delivery of similar training sessions in the future. Please rate the following items about the course using the rating system below: 1 Poor 2 Average 3 Good 4 Very Good 5 Excellent Tick the most appropriate box below for each of the training sessions. 1 2 3 4 5 Training Material Resources 1 The training manual for this session was easy to understand and the language, layout and content were clear and appropriate. 2 The training manual provided useful material for your workplace. 3 The training manual translation into Vietnamese read well and made sense. 4 The academic level of the training manual was appropriate for you. Delivery of the Training Session 5 The modules in the training session were well linked and well organized. 6 Delivery of the session was interactive and participatory. 7 Assessment exercises during the training session were appropriate in your learning about the concepts, techniques and tools in this session. Learning Environment 8 The training session created opportunities for you to share ideas with your colleagues and to learn from them. 9 You were motivated to learn by the content and delivery of the training session. 10 A good learning environment was created during this session. International consultants 11 The international consultants involved in the delivery of this session were knowledgeable in their field. Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 22 12 The international consultants were flexible during the session and responded to participants learning needs and questions. 13 The international consultants frequently checked the understanding of participants during the training session. 14 The international consultants explained the content of the training session in a clear and understandable manner. 15 The international consultants’ attitudes were appropriate and culturally sensitive. Learning Application 16 Concepts, techniques and tools taught during this session can be applied to and/or modified for my workplace. 17 How would you rate your understanding of the content of this session? 18 How would you rate the relevance of the training session to your current job using the following scores? 0 Don’t Know 1 Not relevant 2 Relevant 3 Very Relevant Tick the appropriate box below. 0 1 2 3 Training Session 5: QNP Cluster Action Team Report Back Training Session 6: Formulating a Vision for QNP Training Session 7: Formulating Objectives and Actions to Achieve Vision for QNP 19 Please comment on the performance of the interpreter during training sessions 1 to 4 by ticking the appropriate box. Poor Average Good Excellent General accuracy of interpreting Voice clarity and voice projection Interpreting of participants questions and comments Attitude towards participants Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 23 20 What did you appreciate most about training sessions 5 to 7? ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… 21 What changes, if any, would you suggest to improve similar training sessions in the future? ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… 22 Briefly describe how you might apply what you have learnt in training sessions in your work. ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 24 23 Would you like to make any other comments about training sessions? (delivery of sessions, administration, training venue etc) ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………… PLEASE HAND YOUR COMPLETED FORM TO PROFESSOR ROZ HANSEN BEFORE YOU LEAVE THE TRAINING ROOM TODAY. THANK YOU FOR COMPLETING THIS TRAINING EVALUATION FORM – IT IS MUCH APPRECIATED!!! Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam 25 Appendix 4 Forestry in Rural Development Technical Assistance and Training in Provincial Planning | Quang Nam Province, Vietnam Ministry of Agriculture and Rural Development Vietnam Forest Sector Development Project MARD - WB Forestry in rural development Issues and discussion points Draft COPYRIGHT: The concepts and information contained in this document are the property of SKM Use or copying of this document in whole or in part without the written permission of SKM constitutes an infringement of copyright. This publication has been produced with the assistance of the Government of Vietnam and the World Bank. The contents of this publication are the sole responsibility of SKM and can in no way be taken to reflect the views of neither the Government of Vietnam nor the World Bank. LIMITATION: This report has been prepared on behalf of and for the exclusive use of the Government of Vietnam, and is subject to and issued in connection with the provisions of the agreement between SKM Report Number: 000 and the Government of Vietnam. SKM accepts no liability or responsibility whatsoever for or in respect of any use of or November 2008 Technical Assistance Package II reliance upon this report by any third party. Small-holder Plantation Forestry The SKM logo is a trade mark of Sinclair Knight Merz Pty Ltd. © Sinclair Knight Merz Pty Ltd, 2006 VIETNAM FOREST SECTOR DEVELOPMENT PROJECT Forestry in rural development SMALL-HOLDER PLANTATION FORESTRY Draft SKM Quality Assurance and Document Records Document history and status Revision Date issued Reviewed by Approved for Date approved Revision type submission by 01 October 02, 2008 E.O.Kofod E.O.Kofod Establishment Distribution of copies Revision Copy Copy number Quantity Issued to number 1.0 1 Electronic For translation and use by the World Bank Project - Technical Assistance and Training in Integrated Provincial Planning in Quang Nam Province, Vietnam / Hansen Consult, Australia Printed 10/12/2008 12:28:00 Last saved 05/12/2008 15:09:00 File name Forestry in rural development Author E.O.Kofod Project manager E.O.Kofod Name of organisation Ministry of Agriculture and Rural Development Socialist republic of Vietnam Name of Project Vietnam Forest Sector Development Project Technical Assistance Package II Name of document Forestry in rural development Document version Ver 1.0 Project number SO90024 November 2008 2 VIETNAM FOREST SECTOR DEVELOPMENT PROJECT Forestry in rural development SMALL-HOLDER PLANTATION FORESTRY Draft List of contents 1 INTRODUCTION AND CONCEPTS.....................................................................................5 2 OBJECTIVES OF REGIONAL PLANNING ............................................................................6 2.1 BASIS FOR LIVELIHOODS ............................................................................................................6 2.2 ENVIRONMENTAL SAFETY AND PUBLIC HEALTH ...................................................................8 2.3 NATIONAL ECONOMY ................................................................................................................9 3 IMPACT OF FORESTRY .....................................................................................................9 3.1 ENVIRONMENTAL STABILITY ....................................................................................................9 3.1.1 The natural, primary condition .......................................................................... 9 3.1.2 Soil and water and air ...................................................................................... 10 3.1.3 Bio diversity...................................................................................................... 10 3.2 INCOME GENERATION .............................................................................................................11 3.2.1 Small holders and companies ........................................................................... 11 3.2.2 Value of sold products ...................................................................................... 12 3.2.3 Associated activities ......................................................................................... 13 3.2.4 Direct job generation........................................................................................ 13 3.3 NECESSARY SUPPORT MECHANISMS .......................................................................................14 3.4 NATIONAL ASPECTS ..................................................................................................................15 3.5 GLOBAL ASPECTS ......................................................................................................................15 3.5.1 Carbon sequestration ....................................................................................... 15 3.5.2 Combating illegal timber trade ........................................................................ 15 4 THE FOREST SECTOR DEVELOPMENT PROJECT .......................................................... 15 4.1 INTRODUCING COMMERCIAL FORESTRY ...............................................................................15 4.2 LAND REFORM ...........................................................................................................................16 4.3 ECONOMIC STABILITY ..............................................................................................................17 4.4 SUSTAINABILITY ........................................................................................................................17 LIST OF TABLES Table 1. Increases in Exports of Vietnamese Manufactured Wood Products (* estimates)....... 6 Table 2. Formal Timber Imports into Vietnam (US $ and m3) and Rates of Increase. ............. 7 Table 3. Woodchip and Processing Factory Gate in Central Vietnam..................................... 12 LIST OF FIGURES Figure 1 Rural, spatial planning ................................................................................................. 5 November 2008 3 VIETNAM FOREST SECTOR DEVELOPMENT PROJECT Forestry in rural development SMALL-HOLDER PLANTATION FORESTRY Draft Figure 2 Forestry in planning ..................................................................................................... 7 Figure 3 Melaleuca oil................................................................................................................ 8 Figure 4 The water resource needs protection............................................................................ 9 Figure 5 Hill and gully protection ............................................................................................ 10 Figure 6. Selected Tropical International Log Prices FOB (Highest grades - Sawmill & Loyal Merchant Quality) (US $ per m3). ................................................................................... 12 Figure 7 Resin from Dipterocarpus alatus used for boat building............................................ 13 Figure 8 Skilled harvester......................................................................................................... 14 November 2008 4 VIETNAM FOREST SECTOR DEVELOPMENT PROJECT Forestry in rural development SMALL-HOLDER PLANTATION FORESTRY Draft 1 Introduction and concepts Rural development is all about providing an environment conducive for economic and social development. The development may be spontaneous or planned. Figure 1 Rural, spatial planning The planning process for development may have followed a multitude of patterns or planning philosophies depending on culture, stage of development or prevailing political attitude. And even so, the various labels such as participatory approach, democracy, decentralised planning etc are also defined and applied very different in different parts of the world and may even be applied differently within different regions of a single country. Central planning tends to follow the principles of economic planning, whereas local planning increasingly becomes spatial and involves more and more stakeholders. When forests became a scarce commodity, forest planning at national and regional level moved from economic planning into spatial planning. It started operating on smaller units and involved an increasing number of participants. Forestry is by definition a long term activity compared with so many other land uses. It therefore plays an important role in providing stability and direction in the development. It may not be the optimal income generating activity but with the relative low risks, it is a safe bet. November 2008 5 VIETNAM FOREST SECTOR DEVELOPMENT PROJECT Forestry in rural development SMALL-HOLDER PLANTATION FORESTRY Draft There are many types of forestry: Fast growing forests of high risk plantations, slow and safe natural forests providing more than just timber or all possible intermediaries. We grow local species and we grow imported (exotic) species or we may mix them. But all models of forests have to be maintained so they grow into what we expect. This is the concept of silviculture. How to manipulate nature to produce the products and provide the services, we want. 2 Objectives of regional planning 2.1 Basis for livelihoods The major reason for governments to be involved in regional development planning is to ensure the people have their daily necessities in the form of food and shelter. This may in the rural areas primarily be provided through support to the agricultural sector where households provide for themselves but where they need agricultural in the form of land tenure, market access, market support, access to agricultural inputs. But rural development is not only the agricultural households. The rural economic life may equally be concerned with industries linked to the rural primary production, whether they are producers themselves, buyers of the production or concerned with further processing. The monetary side of the livelihoods for the individual may be sale of products but may equally be wages earned from involvement in the sector. Table 1. Increases in Exports of Vietnamese Manufactured Wood Products (* estimates) 2001 2002 2003 2004* 2005* 2006* 2007* 2008* Manufactured Wood Exports from Vietnam (million US $) 460 609 1,102 1,561 2,186 2,951* 3,984* 5,378* % increase (* estimates) 32% 81% 42%* 40%* 40%* 40%* 40%* November 2008 6 VIETNAM FOREST SECTOR DEVELOPMENT PROJECT Forestry in rural development SMALL-HOLDER PLANTATION FORESTRY Draft Table 2. Formal Timber Imports into Vietnam (US $ and m3) and Rates of Increase1. 2001 2002 2003 2004* 2005* 2006* 2007* 2008* Timber imports (a mix of logs 161 253 351 474* 640* 864* 1,166* 1,574* and sawn timber) (million $) % increase (2000 – 2003 actual, 2004 – 2008 projected at stated 34.1% 57.1% 38.7% 35.0%* 35.0%* 35%* 35%* 35%* rate of increase*) There is always a need to improve livelihoods. However, one should not just provide any arbitrary form of economic activity as they may not be viable or sustainable. One should identify a market opportunity, carefully study its magnitude and the associated risks and benefits before deciding whether this opportunity is worth aiming at. The opportunity may be indirect. If for example, there is a boat building tradition in the area but all raw materials come from outside, there might be an opportunity in providing the right timbers, providing the resin for the bamboo boats, etc. Figure 2 Forestry in planning But the danger is that other provinces have made the same discovery and the market will be flooded with the new commodity. This is a high risk in forestry. Currently, thousands of farmers see an opportunity in forestry because there is a shortage of raw material for pulp wood as well as of quality timber. But if everybody produces the same products, there will be too much and the market will collapse. 1First row of data from United States Department of Agriculture (2005) Solid Wood Products Update. GAIN Report Number: VM5008, second and third rows based on author’s calculations. A conservative growth rate of 35% is used although the average actual growth rate of 41.2% is calculated for years 2000 - 2003 November 2008 7 VIETNAM FOREST SECTOR DEVELOPMENT PROJECT Forestry in rural development SMALL-HOLDER PLANTATION FORESTRY Draft Figure 3 Melaleuca oil We need to study the demand for the commodity, we want to produce as part of our livelihoods improvement. We need to study the factories and their need for the commodity and we need to see the trend in production elsewhere or by ourselves, add price forecast and a bit on risk analysis. 2.2 Environmental safety and public health Another driver for rural development planning is to ensure the rural environment supports the environmental services and safety that is the basis of all life, whether rural or urban. All water harvesting is done in rural areas, the air, we breath is renewed in the rural areas, the food, we eat is produced in the rural areas. Destruction of the physical or biological conditions may disrupt these services: Water may become polluted or scarce; land failures may destroy productive areas or access; floods may do the same. November 2008 8 VIETNAM FOREST SECTOR DEVELOPMENT PROJECT Forestry in rural development SMALL-HOLDER PLANTATION FORESTRY Draft Figure 4 The water resource needs protection Water pollution will bring diseases; destruction of vegetation may destroy ecological and biological networks and relations that are necessary for soil formation, pollination systems, natural pest control etc. 2.3 National economy The regional development planner should not only look at the needs within his own region but must also look into the role the region plays in a national or even international context. There are items and products that are sold over the regional or provincial borders out of necessity and there are national or international opportunities that can be utilised profitably within a province. 3 Impact of forestry 3.1 Environmental stability 3.1.1 The natural, primary condition Most areas of the world would revert to forest cover if left alone. They may have to go through a succession of different forest types (secondary forests) but they would eventually end in a stable form of forest: Primary forest. The primary forest is a closed ecosystem that does not export anything over its boundaries. Even the flow of water is a careful balance between what comes in November 2008 9 VIETNAM FOREST SECTOR DEVELOPMENT PROJECT Forestry in rural development SMALL-HOLDER PLANTATION FORESTRY Draft and what goes out. The air, the carbon, the oxygen, the soil nutrients are al balanced within the system. The system cannot afford losing soil to the rivers and will establish dense root layers to maintain stability and to keep nutrients in the system. 3.1.2 Soil and water and air Forests bind the soils and even reconstitute degraded soils if managed for that purpose. However, if forest products are repeatedly removed from the areas, the net loss may be large. Forest may be established on riverbanks and steep slopes as bank and slope protection and dense vegetation may even be used as filters for agro-pollution in run-off surface water. Figure 5 Hill and gully protection Forests and other vegetation will slow down surface water movement and thus prevent flash floods. While forests of course utilise some water, they are also known to soak up water in the surface soil layers from where they slowly release the water, thus preventing streams and watercourses from running dry or experience severe fluctuations. 3.1.3 Bio diversity Most agricultural systems are poor in natural species and thus not in harmony with themselves. They need pollinators and predators for pests. But some of these are dependent on a cycle of different species that is only found in forest areas. Plantation forests are most often like agricultural areas poor in diversity but recent research and other experience point clearly to the fact that introduction of species diversity, even in its most minute forms, supports soil November 2008 10 VIETNAM FOREST SECTOR DEVELOPMENT PROJECT Forestry in rural development SMALL-HOLDER PLANTATION FORESTRY Draft formation, a good meso-climate and prevention of pests and diseases as well as healthy pollination systems. Biodiversity in commercial forestry is still a hot topic. Considerations for effectiveness 3.2 Income generation 3.2.1 Small holders and companies Small holders are almost by definition vulnerable. They are risk conscientious and must carefully weigh risk with the need for a quick return on any investment. They are normally hard working seeking their daily subsistence but some members of the households may be available for off farm employment provided it gives immediate returns. Seen from a planning point of view, there is a risk of little stability among small scale farmers as they are opportunistic and may sell their products-at odd times, even at sub-optimal prices, if an opportunity is sufficiently tempting and the need is there. In the small-scale farmer’s search for immediate benefits, he may not be able to see himself in a larger picture, where thousands of other farmers are seeking to satisfy the same market as him. Forest companies or other large owners (estates) on the other hand may be willing to invest in more long term, stable activities. They may also have capital, management capacity and experience to experiment or to aim at very specialised market niches. There is not much experience in Vietnam with companies in forest production. However, the SFE reform has changed this as the SFEs now give up their state funded conservation activities and must focus on business and commercial production. Large processing companies, such as the Da Nang based VijaChip have started stabilising their supply of raw material by directly supporting farmers, who will provide their products to the company. In intermediate of it all is the formation of forest farmer groups, where groups of small scale farmers group together for management activities, planning, procurement and marketing. It is foreseen, the groups and companies in the future may provide stable centres of experience around which small scale forest farmers link themselves to get support and advice. The larger entities are needed for this stability and the self-educating effect that lies within the system. November 2008 11 VIETNAM FOREST SECTOR DEVELOPMENT PROJECT Forestry in rural development SMALL-HOLDER PLANTATION FORESTRY Draft 3.2.2 Value of sold products Prices in forestry have in general been on the rise over the past years. In South East Asia a major factor has been Indonesia’s successes in curbing illegal cutting and trading in forestry products.Once this process has completed, stability may be reached. Figure 6. Selected Tropical International Log Prices FOB (Highest grades - Sawmill & Loyal Merchant Quality) (US $ per m3)2. Wood chip prices have also been on the rise in Vietnam for the past years, almost doubling since the turn of the millennium. However, if this price increase shall truly benefit the farmers, a reliable and honest trading system must be established. Currently, most forestry products are sold to contractors on the stump, i.e. as standing trees. The farmer normally have no clue on how much standing stock, he has or what the real price is. The formation of forest farmer groups is expected to help on this issue. Table 3. Woodchip and Processing Factory Gate in Central Vietnam3 2003 2007 2008 Woodchip Prices (VND) 480,000 550,000 800,000 Calculated % increase 14.29% 33.33% 2 International Tropical Timber Organisation (May 2008) Tropical Timber Market Report 3 Data collected from woodchip mills in early May 2008. November 2008 12 VIETNAM FOREST SECTOR DEVELOPMENT PROJECT Forestry in rural development SMALL-HOLDER PLANTATION FORESTRY Draft 3.2.3 Associated activities Nursery production is large all over central Vietnam. Plants are produced in large, accredited nurseries and in small roadside nurseries outside governmental control. The nurseries are seasonally employing large numbers of unskilled labour and will thus contribute positively to livelihoods improvement of the poorest segments of the society. The downstream processing is not only large factories but will also include small and medium enterprises such as small sawmills, furniture makers, builders, boat builders or even cottage industries producing oils and other non timber forest products. Figure 7 Resin from Dipterocarpus alatus used for boat building The small scale industries are mostly for local markets whereas the large chip mills and furniture makers are geared towards export markets. Downstream processing normally employs staff and workers on a stable basis throughout the year. But where furniture manufacturing is labour intensive, chip mills do not provide large amounts of employment opportunities compared with the turnover. 3.2.4 Direct job generation The primary forest production may as long as the labour cost in Vietnam remains low be seasonally labour intensive. The farmers may opt for using his own household labour force for clearing and establishment, for weeding and other maintenance activities, while most harvesting will be done by trained labour. November 2008 13 VIETNAM FOREST SECTOR DEVELOPMENT PROJECT Forestry in rural development SMALL-HOLDER PLANTATION FORESTRY Draft Figure 8 Skilled harvester However, there is a trend to contract most work to companies employing mechanized means for clearing and land preparation. The machine costs are taking most of the budget, wherefore these funds actually leave the country as the machines are imported. 3.3 Necessary support mechanisms There is little forestry experience among the farmers in Central Vietnam. The general belief that forestry is just planting trees and then wait to get rich has been dominant for a long time but has finally been proven to be wrong. Extension services are being built up and protection mechanisms for flood, storm and fire established. Extension systems are particularly important to assist the farmers make species choice, business plans and maintenance schedules. November 2008 14 VIETNAM FOREST SECTOR DEVELOPMENT PROJECT Forestry in rural development SMALL-HOLDER PLANTATION FORESTRY Draft In addition, strict monitoring of nurseries is needed in order to prevent investment in bad planting material. Such bad material may result in badly shaped stems, sick trees or slow growth. This is not in the national interest, so the government is currently supervising the production and marketing closely. 3.4 National aspects Forestry takes up large proportions of the land and require permanent land tenure systems. Forestry also binds investments at a national level for a very long time and in the case of small scale farmers’ forestry involves a large number of vulnerable families. It is therefore an issue of national concern to maintain the social safety that lies in the forest establishment. At the same time, any increased production reduces import dependence. In the case of forestry in Vietnam, the timber industries import about 80% of their raw material, meaning that they export mainly energy and labour input. With an increased domestic production, the export will also include a renewable source of raw material. 3.5 Global aspects 3.5.1 Carbon sequestration Vietnam is the only SE Asian country, which currently has a net increase in its forest cover. There is therefore a realistic opportunity for Vietnam to receive support for its reforestation through carbon trading under the Kyoto protocol. 3.5.2 Combating illegal timber trade Vietnam has a rising export of timber products, which is 80% based on imported raw material. However, much of this timber comes allegedly from dubious sources including from countries, where log export is banned. An increased domestic production will decrease this dependency on imports and will assist Vietnam maintaining an untarnished face in global timber trade. 4 The Forest Sector Development Project 4.1 Introducing commercial forestry The Forest Sector Development Project has the objective to introduce commercial forestry to small-scale farmers in order to improve livelihoods, November 2008 15 VIETNAM FOREST SECTOR DEVELOPMENT PROJECT Forestry in rural development SMALL-HOLDER PLANTATION FORESTRY Draft environmental balances and decrease national dependency on imports for the nation’s growing wood processing industries. The project introduces the idea of obtaining bank loans for the long term investment in the forest establishment and maintenance. Bank funding is common for agriculture and ‘estate crops’ such as rubber and cashew. The Government of Vietnam has for this purpose borrowed a large sum in the World Bank and placed these funds in trust in the Vietnam Bank for Social Policy. This bank shall then lend the money at subsidized lending rates to farmers that get land through the project and who subsequently wish to establish forest plantations. The loans are based on standard cost norms, currently 15 million VND per ha for a simple monoculture. There is a grace period corresponding to a normal rotation of the planned plantation and the interest rate is currently 0.65% per month. The loans are standard bank loans, where collateral must be presented – normally in the form of the land use right certificate. And where loans are to be paid back even if the plantation for some reason fails. The bank disburses the loan in three portions based on inspection in the field to see if the investment is well tended. Here is thus a serious incentive for the farmers to do it right. There are in Quang Nam several badly maintained Eucalyptus plantations established by earlier grant based projects. The owners now wish to convert these into new plantations utilising the loan facilities of the Forest Sector Development Project, quoting the lack of interest in tending the earlier plantation with no commitment when it was a grant. 4.2 Land reform The Government has for several years pressed for issuance of land use right certificates to farmers. This is now done through the Forest Sector Development Project, which aims at distributing 66,000 ha in four provinces based on land availability. The farmers are given minimum 0.3 ha, maximum 10 ha with a red book. The land is production forest and the user right is for establishing forest plantations and maintaining them. The five basic rights of the red book are maintained. This means that the book can be given as collateral, can be sold or may be given away. The holder of the user right may also chose the plantation model as he pleases: short rotation plantation, long term rotation, mixed species, monocultures etc. But if he receives bank loans, MARD regulations and a number of project regulations will apply. November 2008 16 VIETNAM FOREST SECTOR DEVELOPMENT PROJECT Forestry in rural development SMALL-HOLDER PLANTATION FORESTRY Draft 4.3 Economic stability Most farmers, who participate in the project have sufficient income to cater for their daily needs. They are looking for increased cash income in the medium or long term. Forests plantations may provide this but may also provide emergency funding if the farmer needs this. Stems may be harvested or they may be kept till later without losing value. Being forest owner thus gives economic flexibility and freedom, safety in bad years and savings in good ones. 4.4 Sustainability The Forest Sector Development Project works to teach farmers sustainable forest management. The degraded Eucalyptus plantations show that sustainability does not come by itself and that the environmental services the forest may bring are not enough to entice the farmers to maintain their forests.. An economic incentive such as a bank that wants a return on the investment is needed. The sustainability of the economy in the plantation is not enough. Biological sustainability is import and as is physical and social sustainability. The project thus teaches minimum disturbance land preparation, use of harmless fertilisers to replace what is removed during clearing and harvest, zero burning, balanced species application, secure land tenure, respect for social and traditional values, environmental protection as well as protection of the forest resource itself from human or natural destruction. If this is done correctly, the forest owner may obtain an international certificate for sustainable forest management and he can sell his products at a premium price through certified channels to factories, which only process such sustainably produced forest products. Only one entity, the Qui Nhon Plantation Forest Company has so far received certification for sustainable forest management in Vietnam. There are a few companies, even in Danang, that purchase certified products. There are several factories in Vietnam processing certified timber and 150 traders or processing facilities are currently certified to handle certified products: They are holders of ‘Chain-of. Custody’ (CoC) certifications. There is, in other words ample access to the market for certified forestry products. Certification is both costly and complicated, where fore it is not suitable for individual small farmers to pursue certification. The project therefore assist the farmers organising themselves in management groups, who on behalf of all members will hold certifications if the management can come to that level. The project aims at getting 10,000 ha certified for sustainable management under group schemes. November 2008 17