Reports about the provincial competitiveness index (PCI) released by the Vietnam Confederation of Commerce and Industry (VCCI) every year show a noteworthy factor: surveyed foreign investors do not mention infrastructure when citing the competitive edge of Vietnam in comparison with other countries, despite considerable improvement recently.

Most infrastructure has been slow to be upgraded. Infrastructure items remain unchanged or have degraded in recent years.

A report from the World Economic Forum (WEF) on the infrastructure quality of countries also showed Vietnam’s weak competitiveness in comparison with other regional countries.

Vietnam ranks 77th in general infrastructure quality, 103rd in road transport, 83rd in seaports, 103rd in air transport and 87th in power supply. With these positions, Vietnam is at a lower grade than China, India, Indonesia, Malaysia and Thailand – countries Vietnam competes with when attracting FDI.

The growth rate created by every dollar of Vietnam’s investment is lower than China, South Korea and Singapore at the time when they had the same income per capita and development level.

The current problem is that the implemented investment capital is always lower than the estimates, with only 77 percent of estimates disbursed from 2017 to 2022. The gap between the estimates and the real disbursed capital was 23 percent.

The problems in public investment management can be seen in slow project execution and the increase in required investment capital compared with initial estimates.

According to the World Bank, which analyzed several transport infrastructure projects, found that 15 projects had been behind schedule for up to five years, while the required investment capital was double the initial estimates.

The serious electricity outages in the north of Vietnam in May and June 2023, causing damages to production and people’s daily life, is a typical example showing bad infrastructure conditions.

The rotating electricity cuts occurred in many localities in the north, and the cuts also occurred in industrial zones.

The electricity shortage led to a decrease in enterprises’ production capability and caused difficulties for them to fulfill orders on schedule.

The electricity cuts also caused other production costs to increase dramatically, as businesses had to re-arrange working shifts and restructure the workforce, which all caused negative effects to Vietnam’s business environment.

Experts all agree that infrastructure quality has been upgraded, but it cannot keep up with economic development. Therefore, accelerating infrastructure development, especially transport infrastructure, is a must.

Hoang Lan