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With the sustainable development objective of Hanoi as Vietnamese political, cultural, trade and economic center with potential population of 8 million in 2020 and 9 million in 2030, potential rate of urbanization of 65-68% in 2030, developing trade toward modern, advance and sustainability is necessary in order to coordinate the linkage between production and consumption, which helps to create balanced development of urban and rural areas, traditional and modernly trade. As a result, Hanoi will become the trade center in the region and the world. This study focuses on analyzing the practices of sustainable development of trade in Hanoi from 2011 to 2017, indicating the weaknesses and suggesting solutions for future sustainable trade development of Hanoi such as interventions for enterprises, implications for industrial associations, and measures for the local government.
DEVELOPING HANOI TRADE TOWARD SUSTAINABILITY Associate Professor Phan To Uyen, uyenpttmai@gmail.com Dr Nguyen Bich Ngoc National Economics University Abstract: With the sustainable development objective of Hanoi as Vietnamese political, cultural, trade and economic center with potential population of million in 2020 and million in 2030, potential rate of urbanization of 65-68% in 2030, developing trade toward modern, advance and sustainability is necessary in order to coordinate the linkage between production and consumption, which helps to create balanced development of urban and rural areas, traditional and modernly trade As a result, Hanoi will become the trade center in the region and the world This study focuses on analyzing the practices of sustainable development of trade in Hanoi from 2011 to 2017, indicating the weaknesses and suggesting solutions for future sustainable trade development of Hanoi such as interventions for enterprises, implications for industrial associations, and measures for the local government Key words: Hanoi trade, sustainable development Introduction Hanoi Municipal Party Committee (2012), in the Decision No 2757/ QD-UBND dated 20 June 2012 of the Committee, has approved the Hanoi Trade Development Plan until 2020, toward 2030, with the determination “To build Hanoi as a major trading center, a center of trade and economy of the country and the Southeast Asia To establish, enhance and develop goods distribution channels in the direction of civilization, modernity, elegance and sustainable development" Thus, the city has organized many promotion programs and activities to support and promote trade However, researches show that the level of trade development in Hanoi has been so far lower than its potentiality Globalization trend is reflected through regional trade integrations, which is created all over the world This trend will eliminate restrictions on the movement of goods, services, knowledge, and technology to each region and spread across the globe Hanoi‘s development orientation toward trade and services of Hanoi in the coming years poses new development requirements on the quantity and quality of services as well as on the structure, scale, mode of business and level to lead the city to the center of trade, the market space and the commercial infrastructure, from which Hanoi truly becomes the trade center of the country The paper focuses on analyzing the sustainable trade practices of Hanoi from 2011 to 2017, identifying weak constraints and suggesting solutions for sustainable trade in Hanoi in the future 335 Theories of sustainable trade development 2.1 About sustainable development Development is a process of growth both in terms of quantity and quality The development objective of nations is to improve the conditions and quality of living standards such as income raising, poverty reduction, better demand satisfation of goods for production and consumption, less relying on natural resources, fair and equal life among members Economic development must, however, take social and environmental considerations into account because of the need for society development and future generations All of these requirements lead to a new concept "Sustainable development" The new concept of sustainable development is discussed in the book "Not just economic growth Introduction to Sustainable Development" by Soubbotina (2005), that sustainable development can also be understandable as to develop "equality and balance, that is, to sustain the development forever, it is necessary to balance the interests of groups in the same generation, and to so simultaneously on all three important inter-related areas: economic, social and environmental development This concept also emphasizes the comprehensiveness of the three main goals that sustainable development must achieve, they are economic, social and environmental goal In 2012, the United Nations Conference on Sustainable Development (Rio+20) took place in Rio de Janeiro, Brazil The objective of the Conference is to ensure that political commitments on sustainable development are made, assessing the progress and limitations in implementing the contents of the previous summits, particularly in Rio 1992; also identifing and solving emerging challenges in the recent time The two main contents of the conference are: Green Economy in the context of sustainable development and poverty reduction, and the institutional framework for sustainable development The Asian Development Bank (ADB) has introduced a more specific definition: “Sustainable development is a new form of development that integrates a production process with resource conservation and environmental enhancement Sustainable development must satisfy the needs of the present generation without compromising our ability to satisfy the needs of future generations" [2, p12] This definition addresses more specifically about the binding relationship between the current demand response and the future generation capacity, through the integration of production processes with conservation measures in order to maintain natural resources and improve the quality of the environment In Vietnam, Dr Ngo Doan Vinh has taken the concept of development: “Development must not destroy the environment, at the same time bring economic prosperity for the majority of people, solve social issues rationally Although there has been no exact concept, these scholars have warned of the unforeseen shortcomings of sustainable development and need to be aware of the reality Therefore, the clarification of theoretical and practical issues on sustainable development based on specific conditions of Vietnam to bring our economy to prosperity is extremely important 336 Thus, sustainable development is a way of social-economic development in order to better solve the relationship between stable, rational and sustainable development in terms of scale, quality, structure and level of environmental friendliness, which aims to better meet the needs of the present generation without obstructing the needs of future generations 2.2 About sustainable trade development Sustainable trade development must be ensured not only about commercial scale, but also quality in the development process However, the environment is increasingly polluted, resources are gradually exhausted, trade fraud increases Therefore, the new approach of sustainable trade development should pay attention to both quanty and quality aspects in the development process People are starting to focus more on how to exploit and use resources in a higher economical way with lower negative effects and higher effectiveness Commodity production focused only on product and profitability now considers more on waste and environmental pollution issues Commodity trading focused on sales and profits now concerns more about quality of goods and food safety, environment-friendly products, the labor right protection, improved income and working environment Trade development plans must be considered more comprehensively From the new perspectives, in the process of development, harmonized combination of economic, social and environmental factors may ensure greater growth, less polluting emissions, and contribute more to solve social issues Thus, trade development needs to follow the new sustainable ways According to Nick Robins and Sarch Roberts (2000) in "The Reality of Sustainable Trade", sustainable trade is the close linkage between environment, trade and development The research highlights practical issues, challenges for the sustainable trade development, creating great economic value, reducing poverty and inequality Bill Vorley, Dilys Roe and Stevebass (2000) refer to the standards of sustainable trade in the report ―Standards and Sustainable Trade." This report identifies opportunities for trade development linked to poverty reduction for sustainable development and addresses the issues surrounding sustainable trade standards Sustainable trade occurs when exchanges of goods and services create positive social, economic and environmental benefits, reflecting the four core indicators of the sustainable trade development: (1) Create economic value (2) Reduce Poverty and inequality (3) Restore environmental resources (4)To be implemented in an open governance system and be responsible for state management To measure these four criteria requires specific standards such as the technical specifications, terms, definitions and principles that the authors have provided, including: (1) Quality: taste, clean… 337 (2) Safety: healthy, safety of employees (3) Practical: reliability of goods (4) Friendly-environment: waste, environmental affects Therefore, “sustainable trade development is a stable, rational, long-term development of the scale, quality, structure and level of environmental friendliness of trade" In order to find solutions for sustainable trade development not only for Hanoi, many organizations and trade management agencies have researched and outlined policies such as: a study on natural resources and environment at the University of Hanoi (1995) This study shows that the concept of sustainable trade development has been adopted in the Brundtland Report as a process that simultaneously requires sustainable development in four areas: economics, humanities, environment and technology The study of the Ministry of Industry and Trade of Vietnam (2012) has clarified the scientific basis to develop and improve the policy of export and import development to meet the requirements of rapid and sustainable economic development in our country in 2011-2020 period and many works of Nguyen Duc Thanh (2010), Le Danh Vinh (2013), Dang Dinh Dao and their partners (2015) In addition, there are many related articles published in journals such as articles by Chu Van Thuan and Nguyen Duc Ha (2013), Hoang Tho Xuan (2016) These studies mainly analyzed the strategy, providing the scientific foundation, policies to create sustainable export conditions, promoting the trade sector to develop sustainably in the context of integration To be more specific, Hanoi government has developed the commercial development plan for the city such as Decision No 5058/QD-UBND dated 5/11/2012 of the Hanoi Municipal Party Committee for approval of the wholesale and retail network planning in Hanoi up to 2020, with the orientation toward 2030 However, these documents are only in the planning and defining the legal framework for sustainable development for Hanoi's socio-economic development policies but have not focused on studing contents and essential solutions for sustainable trade development in the city Therefore, the article will analyze and evaluate the current status of Hanoi's trade according to the criteria of sustainable development, point out the causes and propose measures to develop Hanoi's trade towards sustainable development in the coming years 2.3 Research methodology and data sources To analyze Hanoi's trade in a sustainable development aspect in the period 20112017, the method use disdescriptive statistics to compare the dynamics and changes of Hanoi trade over the years in terms of commercial scale, the number of Hanoi commercial enterprises, the total retail sales of goods and services, the turnover of import and export, the structure of high quality products friendly environment The source of data is from the General Statistics Office, Hanoi Statistical Office, General Department of Customs, Ministry of Planning and Investment, Vietnam Socio- 338 Economic Development Strategy, Planning Hanoi trade to 2020 toward 2030 and other sources The practice of sustainable trade development in Hanoi in the period 2011-2017 3.1 Contribution of trade and services to GDP growth and economic restructuring in Hanoi In 2017, the total output in Hanoi reached 519,568 trillion dongs, equaling 0.13 times the national GDP and 0.58 times the GDP of Ho Chi Minh City The growth rate of GRDP Hanoi is 7.32% per annum for the period of 2011 - 2015 and 8.5% for 2017, the highest level in the last years Particularly, the growth rate of trade and service sector always achieves high growth rate over the years, reaching an average of 7.47% in the 2011 - 2017 period, standing only after industry and construction reached 8.58% This shows the great role of the trade-service sector in contributing to Hanoi's GDP growth, employment and quality of life The development of the trade sector will help improve the level of economic development, offset the shortage of production and goods of the city, contribute to the socio-economic stability However, due to the impact of the general economy status, the contribution of trade is unstable over the years and has not reached the target of sustainability, creating insecurity in the roadmap for economic development in general and trade in particular Table 1: GRDP growth rate in Hanoi 2011 – 2017 Unit: % Year GRDP Agriculture, forestry and fisheries Industry and construction Service 2011 7,0 6,9 8,9 7,5 2012 6,9 3,0 12,8 6,0 2013 7,3 4,1 6,2 6,7 2014 7,5 2,0 7,2 7,5 2015 7,9 2,3 7,4 8,0 2016 8,2 2,2 8,3 2017 8,5 2,5 10,3 7,47 3,42 8,58 7,33 Average 2011-2017 Source: Statistical Year Book of Hanoi 2017 3.2 Total retail sales of goods in Hanoi * In terms of value and growth 339 According to General Statistics Office and Hanoi Statistical Office, in the period of 2011 - 2017, the total retail sales of goods in Hanoi has increased from 161,626 trillion dongs to 561 trillion dongs with average growth during the period reached 12.1% per year In the past two years, the growth rate of total retail sales in Hanoi has been stable at nearly 7% thanks to the government's policies to support and create favorable conditions for enterprises to boost production, focusing on attracting investment capital, raising the quality of goods, designs and beautiful packaging to meet consumer demands The growth of total retail sales in Hanoi over the past few years shows that commercial activities in the city have developed well, ensuring the circulation of goods to meet the production and consumption demand, production and consumption towards modern ways It can be seen, however, that the capital city, the economic, political and cultural center of the country with many potentials can be exploited for commercial development such as: favorable geographic economy, the density of production establishments and agencies, large schools, high living standard of population, visitors, large tourists, early developed commercial activities, developed material and technical facility system, the growth of the trade sector over the past years is not matched The city's commercial GRDP growth rate is not as fast as the increase rate of the flow of goods Trade is largely based on the benifits from price difference with traditional trading methods New modern business forms and modes have not yet developed strongly so the added value created in commercial activities is not high * About trade structure According to the economic model, the largest contribution to the total retail sales in Hanoi in the past years is the non-state sector with the proportion of 85-90% which has been increasing over the years, particularly from 83% in 2011 to 86.5% in 2017 This proves that the non-state sector with dynamic and high competitiveness is always maintaining a dominant position in the field of retailing in Hanoi, contributing greatly in promoting the economic development of the city In addition, attracting the participation of large foreign retailers with great financial strength, prestige and brand needs to be considered seriously to change the appearance of the trade sector in the city toward modern direction Table 4: Total retail sales of goods in Hanoi in the period 2011-2017 Indicators 2011 2012 2013 2014 2015 2016 2017 Value (Billion dongs) I Economic type 161.626 168.885 199.881 225.319 240.237 256.510 286.885 State 18.563 Non-state 134.203 153.523 176.723 187.683 201.731 221.194 249.064 Collective 449 480 73 71 80 Private 60.865 69.983 85.164 95.673 101.054 110.876 124.846 Individual 72.889 83.060 91.486 91.939 100.597 110.249 124.141 FDI 8.860 9.200 13.906 10.137 8.977 II Commodity class 161.626 168.885 198.881 225.319 240.237 256.510 286.885 340 6.162 9.252 27.499 29.529 26.990 69 8.326 28.987 77 8.834 Indicators 2011 2012 2013 2014 2015 2016 Foods 30.775 31.423 53.778 60.615 53.172 57.555 Textiles 13.437 11.968 14.462 16.407 18.058 16.573 Home appliance 21.132 20.141 27.332 31.987 38.199 42.994 Item, culture, education 3.071 2.795 2.873 3.222 5.844 6.070 Wood and building materials 5.379 4.409 5.402 6.076 7.049 7.346 Automobiles with 12 seats or less and vehicles 20.956 19.791 24.552 30.084 35.787 38.529 Petrol and other fuels 43.502 41.215 39.353 40.467 43.122 Repair of cars, motorbikes and other motor vehicles 2.482 5.156 6.707 6.819 5.427 5.538 Other goods 25.526 29.700 22.560 30.756 36.234 38.783 I Economic type 100,0 100,0 100,0 100,0 100,0 100,0 100,0 State 11,5 3,6 4,6 12,2 12,3 10,5 13,4 Non-state 83,0 90,9 88,4 83,3 84,0 86,2 76,5 Collective 0,3 0,3 0,0 0,0 0,0 0,0 0,0 Private 37,7 41,4 42,6 42,5 42,1 43,2 38,5 Individual 45,1 49,2 45,8 40,8 41,9 43,0 38,0 FDI 5,5 5,4 7,0 4,5 3,7 3,2 10,1 38.868 2017 64.26 Percentage (%) Source: Hanoi Statistical Year Book 2014, 2017 3.3 Export - import status in Hanoi 3.3.1 Export * Turnover and growth In the period 2011- 2017, Hanoi export situation has strongly fluctuated Between 2011 and 2017, exports have increased steadily from $9.782 million to $11.779 million In general, the export growth rate is only 5.04% per year, a modest growth rate, lower than the national growth rate and not corresponding with the potential and strength of the capital city * Export structure Regarding to export structure by economic sectors, it can be seen that export activities in Hanoi in recent years have attracted many economic sectors At present, the foreign-invested sector is leading the share of the city's total export turnover by nearly 50%, followed by the non-state sector, then the state economic sector In the period of 2011 - 2017, the share of the foreign invested sector increased from 40.1% to 51.2%, the share of the non-state sector increased from 19.8% to 30.66%, and the proportion of the state sector decreased from 40.1% to 18.1% In general, the foreign-invested sector and the non-state economic sector, especially the foreign invested sector, are playing a key role in 341 export activities in Hanoi Table 5: Export turnover in Hanoi from 2011-2017 by economic sector and industry Criteria 2011 2012 2013 2014 2015 2016 2017 I Economic type 100,0 100,0 100,0 100,0 100,0 100,0 100,0 State 40,1 34,5 31,8 31,4 25,5 19,6 18,1 Non-state 19,8 17,1 18,7 20,2 24,7 31,5 30,66 FDI 40,1 48,3 49,5 48,4 49,8 48,9 51,2 II Product groups 100,0 100,0 100,0 100,0 100,0 100,0 100,0 Agricultural products 9,5 10,4 9,8 9,6 10,1 9,0 8,4 Forest products 0,9 0,9 1,5 1,6 1,8 1,9 Seafood 0,1 0,1 0,1 0,1 0,1 0,1 Garment, textile 11,1 10,7 13,2 13,3 15,6 14,4 13,56 Footwear and leather products 2,0 1,9 1,8 2,2 2,3 2,2 1,8 Electronics 3,1 3,6 2,9 5,9 5,5 4,0 5,4 Computer accessories and peripherals 15,9 18,9 18,5 14,2 13,7 13,3 13,86 Handicrafts 1,2 1,5 1,7 1,7 1,7 1,6 1,5 Petroleum (Temporary import, re-export) 16,4 12,6 7,8 6,9 5,1 4,7 5,17 Coal 2,9 1,9 1,0 0,9 0,3 0,2 Others 36,9 37,5 41,7 43,5 43,8 48,6 31,78 Source: Hanoi Statistical Year Book 2014, 2017 The export structure of Hanoi has shifted in a more diversified way, boosting exports of new goods such as electronics, metal, software In addition, exports are not different from neighboring countries, the competitiveness of goods is low, this is also the main cause of the trade deficit of Hanoi in the past years Export structure of Hanoi has been improved thanks to the economic restructuring and the process of industrialization and modernization The proportion of processed products and groups has gradually increased, and the quality of export goods has been raised considerably * Export markets: Beside traditional export markets such as ASEAN, China, the EU, the United States and Japan, many exporters in Hanoi over the past few years have actively sought and penetrated new markets Along with support programs from the government in understanding market information, laws, business policies of importing countries, trade promotion, many enterprises have actively invested in technology, quality, product design to increase the competitiveness of goods, to create advantage to enter the market However, penetration of new markets is also difficult because most of them are difficult to access due to far geographic location, new business policies of the country, and the requirements for adjusting products to suit consumer tastes 342 3.3.2 Import * Turnover and growth: In the period of 2011-2017, Hanoi's import turnover has increased from $25,345 million to $29,829 million In general, the import turnover growth rate over the years has been unstable, the highest reached 18.2% in 2011 and the lowest is -4.7% in 2012, average growth rate of imports in the period of 2011 - 2017 is 3.2% It can be seen that the growth rate of Hanoi's import turnover is lower than that of the export turnover and also lower than the growth rate of import turnover of the whole country in the same period Table 6: Import turnover in Hanoi in 2011 - 2017 Criteria Đơn vị tính 2011 2012 2013 2014 2015 2016 2017 Import turnover Million USD 25.345 24.144 23.441 24.399 25.713 25.238 29.829 Development indicator % 118,2 - Domestic import Million USD 10.259 10.140 9.962 10.492 11.057 11.188 13.383 - Proportion % 40,48 42,00 42,50 43,00 43,00 44,33 44,86 In detail: 95,3 97,1 104,1 105,4 98,2 118,2 Source: Hanoi Statistical Year Book 2014, 2017 * Import structure: In the structure of imported goods of Hanoi, the leading group was consumption goods with the proportion of nearly 50%, the second was the group of raw materials and finally the group of machines, equipment, component parts Therefore, it can be seen that domestic consumption products are increasingly subject to competitive pressure from imports The bright spot in the import structure of Hanoi is that the proportion of imported raw materials is declining, showing less dependence on exports of imported raw materials, helping manufacturers and exporters to be active in business strategies and export product prices In addition, the proportion of imported machinery, equipment and accessories is also increasing, showing that businesses are increasingly focused on investing in production technology Table 7: Import turnover in Hanoi in 2011-2017 by economic sectors and commodity groups Criteria 2011 2012 2013 2014 2015 2016 2017 I Economic type 100,0 100,0 100,0 100,0 100,0 100,0 100,0 State 64,0 63,0 62,5 61,5 62,0 61,2 61,0 Non-state 17,0 17,0 17,0 17,5 17,0 16,7 16,62 FDI 19,0 20,0 20,5 21,0 21,0 22,1 22,78 II Product groups 100,0 100,0 100,0 100,0 100,0 100,0 100,0 Machinery, equipment, 19,3 component parts 22,7 22,6 21,0 25,4 28,8 Raw materials 34,3 34,5 35,5 26,1 24,0 32,8 23,03 33,7 343 Consumption goods 47,9 42,9 42,9 43,5 48,5 47,2 43,0 Source: Hanoi Statistical Year Book 2014, 2017 This shows a high level of centralization on the import of raw materials, machinery and equipment for business and production and export processing of the city, according to sustainable targets with the proportion of satisfied products more than 60% of the total import value, but the import value should be more ensured in the process of sustainable development Conclusions and policy implications Sustainable trade development is a stable, rational, long-term development in terms of scale, quality, structure and level of environmental friendliness of trade Applying the specific assessment of trade in Hanoi in the period of 2011-2017 shows that: regarding the scale of trade development, the number of enterprises in the area has increased, but unstably in the period Total retail sales have increased over the years but are mainly in non-state economic field Import-export turnover in the period has increased, the market has been expanded but the increasing rate is not stable About the quality of trade development, on average in 2011-2017, the contribution of trade per service in Hanoi is 57%, GDP is 41,81%, which can be seen that this proportion is still modest, and not match with the potentials of the city, and strongly influenced by the general economic fluctuations The structure of high quality products tends to increase but still makes up a small proportion The issue of environmental protection has been addressed but the effectiveness of management of resource exploitation for production and waste treatment from commercial activities is not high In general, the scale of trade growth is quite high but the quality of trade growth is low and unsustainable In the context of international and regional integration, our country in general and Hanoi in particular have had many opportunities to expand export markets, increase import of machinery and equipment, it is important to serve the sustainable development of trade in the area This is a favorable opportunity for Hanoi to improve the competitiveness of many industries and products by reducing production costs However, Hanoi‘s economy is still weak and small, and depends on the world economy, which brings Hanoi the challenges and difficulties in implementing sustainable trade development The commercial regime in Hanoi is implementing a lack of strategic, scientific, heavy on immediate benefits, lack of longterm vision Policy mechanism is lack of synchronism and not practical From the research, in order to develop sustainable trade in Hanoi, the city leaders need to: Firstly, entirely exploit benefits from the process of globalization and international integration, and it is necessary to have specific solutions and roadmaps to realize development strategies for each commodity category in order to ensure that international trade is not only for turnover or growth rates but also sustainable Hanoi is a capital city with many advantages to promote international economic relations, including investment attraction and trade development Therefore, it is necessary to constantly improve and create a favorable environment for attracting foreign investment At the same time, the 344 markets of China, the European Union (EU), Japan, the Association of Southeast Asian Nations (ASEAN) should be maintained and promoted, actively seeking new international markets, integrate international and regional economics Secondly, to facilitate enterprises in accessing information, penetrating and expanding the market, it is necessary to enlist the help of Vietnamese counselors and embassies overseas in assisting enterprises to market research and seek foreign partners To support human resource training activities for the trade sector to encourage the potential development of entrepreneurs, build a team of policy makers, international trade experts, market leaders in each industry, laws, import-export marketing To organize training courses to equip the necessary knowledge for businessmen, focusing first aid on business start-ups, owners of small and medium enterprises, owners of household economy home, farms Thirdly, to standardize the trade regime, promulgate trade policies to encourage the development of trade and expand the trade scale while paying attention to raising the quality and efficiency of trade Facilitate businesses to diversify their exports and multilateralize their international trade, actively integrate into the regional and world economy Hanoi Industrial and Trade, the state management agency in charge of commerce, is responsible for organizing and guiding the implementation of legal documents guiding the Commercial Law and other provisions of the law on trade development, to ensure the sustainable trade development in the context of international economic integration, the State's regulations on market management, inspection and combat against smuggling and trade frauds…in order to match with the local situation Fourthly, scientific and technological development is one of the solutions to improve the quality and brand name of goods and meet the requirements of sustainable development Prioritizing to import advanced and modern technologies, new-generation machinery and equipment Strengthening and speeding up the transfer of technology, especially specific technologies in manufacturing, processing, etc To renew the approach to statistical work according to international guidelines and standards for better management in the process of international integration To apply modern scientific achievements 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