TRADE FACILITATION IN SINGAPORE AND LESSON LEARNT FOR VIETNAM

MINISTRY OF EDUCATION AND TRAINING FOREIGN TRADE UNIVERSITY MASTER THESIS TRADE FACILITATION IN SINGAPORE AND LESSON LEARNT FOR VIETNAM Major: International Trade Policy and Law TRAN THUY LINH HANOI - 2016 MINISTER OF EDUCATION AND TRAINING FOREIGN TRADE UNIVERSITY MASTER THESIS Trade facilitation in Singapore and lesson learnt for Vietnam Major: International Trade Policy and Law Full name: Tran Thuy Linh SUPERVISOR: Dr Trinh Thi Thu Huong Hanoi - 2016 ACKNOWLEGEMENT I would firstly like to express my gratitude to my supervisor Dr Trinh Thi Thu Huong for her useful comments, remarks and encouragement through the researching process of this master thesis This thesis is a much work better thanks to her supervision My thanks must also go to Master of International Trade Policy and Law‟s lecturers who gave me aspiring guidance, invaluably constructive criticism and friendly advice throughout the course I am sincerely grateful to them for sharing their truthful and interesting views on a number of issues related to the thesis Finally, I would like to thank my family and friends for all their precious support TABLE OF CONTENT INTRODUCTION .1 CHAPTER 1: OVERVIEW OF TRADE FACILITATION 1.1 Conceptualization of trade facilitation 1.1.1 Definition 1.1.2 TF Main Indicators 10 1.1.3 Impact of Trade Facilitation 15 1.2 Relevant International Organizations’ Agreements/Initiatives on Trade Facilitation 22 1.2.1 WTO's Trade Facilitation Agreement .22 1.2.2 The Facilitation Agenda in Regional Integration Initiatives .23 1.2.3 Other international organizations promoting trade facilitation 24 CHAPTER 2: THE CURRENT STATUS OF TF IN SINGAPORE 27 2.1 Overview of the Singapore economy in main trade indicators 27 2.1.1 Recent overall economic development .27 2.1.2 Foreign direct investment 28 2.1.3 International Trade 30 2.2 Transportation and logistics infrastructure in Singapore 33 2.2.1 Road infrastructure 33 2.2.2 Railway infrastructure and network 35 2.2.3 Maritime and Ports infrastructure and network 36 2.2.4 Airport infrastructure and network 38 2.3 Cross border administration 41 2.3.1 Customs overall performance 41 2.3.2 Information Technology (IT) 43 2.4 Trade facilitation performance of Singapore through indicators .46 2.4.1 Doing Business 46 2.4.2 Corruption perceptions index 48 2.4.3 Global Competitiveness Report 2015 - 2016 49 2.4.4 Global enabling trade index 50 2.4.5 Logistics performance index (LPI) 51 2.4.6 Liner Shipping Connectivity Index (LSCI) .53 2.5 The experiences behind Singapore’s performance in TF 55 2.5.1 Early awareness of TF issue and actively taking actions .55 2.5.2 Keeping transparency and efficiency in government‟s trade regulation and policies 56 2.5.3 Maintaining world-class transportations physical infrastructure 58 2.5.4 Taking advantage of advanced technological capability 59 2.5.5 Building excellent global connectivity toward a preferred Asia logistics and supply chain management hub 61 2.5.6 Government and Private sectors are pro-active in co-operation .61 CHAPTER 3: CURRENT STATUS OF TRADE FACILITATION IN VIETNAM .64 3.1 Overview of the Vietnam’s economy in main trade indicators 64 3.1.1 Recent economic development 64 3.1.2 Foreign direct investment 66 3.1.3 International trade 67 3.2 Transportation Physical Infrastructure .70 3.2.1 Road Subsector 70 3.2.2 Railway Subsector .72 3.2.3 Inland Waterway Subsector (IWT) 72 3.2.3 Seaports Subsector 73 3.2.4 Air Subsector .75 3.3 Cross border Administration 79 3.3.1 Overall of Customs performance 79 3.3.2 Adoption of Modern Approaches to Customs Administration 80 3.3.3 Information Technology 83 3.3.4 ASEAN and National Single Window 86 3.4 Trade facilitation in Vietnam through international indicators .87 3.4.1 Doing Business 87 3.4.2 Corruption Perception Index .89 3.4.3 Global Competitve Index 90 3.4.4 Global Enabling Trade Index 91 3.4.5 Logistics Performance Index .93 3.4.6 Liner shipping connectivity index .95 3.5 Overall assessment of TF in Vietnam 95 CHAPTER LESSON LEARNT FOR VIETNAM FROM SINGAPORE’S EXPERIENCES IN TRADE FACILITATION 97 4.1 Countries’ Performances Comparison 97 4.1.1 Soft Infrastructures 97 4.1.1 Hard Infrastructures 98 4.2 Lessons Learnt For Vietnam From Singapore’s Experiences 99 4.2.1 Setting the right mindset and attitude 99 4.2.2 Improving transparency and efficiency 100 4.2.3 Upgrading physical infrastructures 101 4.2.4 Enhancing public-private relationship 103 4.2.5 Increasing application of ICT 105 CONCLUSION 107 REFERENCES 109 ANNEX LIST OF TABLES Table 1: Definitions of trade facilitation .6 Table 2: Singapore international trade 2009-2015 31 Table 3: Trading Across Border in Singapore (DB 2015) 47 Table 4: Top 10 CPI 2015 48 Table 5: Liner shipping connectivity index top 10 countries in 2016 55 Table 6: Tangible benefits of TradeNet 60 Table : Vietnam National Accounts .65 Table : Vietnam international trade .68 Table : Vietnam main seaports characteristics, 2015 .74 Table 10 :Vietnam‟s annual CPI result .90 Table 11: Vietnam- Malaysia- Singapore LSCI .95 LIST OF FIGURES Figure 1: Buy-Ship-Pay Model Figure 2: The Global Competitive Index Framwork 11 Figure 3: Singapore GDP at 2010 Market Price .28 Figure 4: Stock of FDI as at Year End (in SGD bil) 29 Figure 5: Singapore Customs and Trade Facilitation 42 Figure 6: Singapore GCI scorecard 49 Figure 7: ETI 2014 top scorecard 51 Figure 8: Top 10 LPI economies, 2016 .52 Figure Vietnam in the areas measured by Doing Business 88 Figure 10: Vietnam GCI scorecard 91 Figure 11: Vietnam ETI scorecard 92 Figure 12: Vietnam‟s Logistics Performance Index (LPI) 2016 93 Figure 13: World Bank‟s Logistics Performance Index (LPI) 2010-Customs Performance 94 LIST OF CHARTS Chart 1: Road lane Length in Kilometres (end-of-year) 34 Chart 2: LPI of Singapore 53 Chart 3: Liner shipping connectivity index Singapore .54 Chart 4: FDI project licensed in Vietnam (2010-2015) 66 Chart 5: Exports and Imports of services in Vietnam .69 LIST OF SYMBOLS AND ABBREVIATIONS APEC : Asia-Pacific Economic Cooperation OECD : Organisation for Economic Co-operation and Development UNECE : United Nations Economic Commission for Europe UNCTAD : United Nations Conference on Trade And Development WTO : World Trade Organization WCO : World Customs Organization UN/CEFACT : United Nations Centre for Trade Facilitation and Electronic Business TF : Trade Facilitation LPI : Logistics Performance Index ETI : World Economic Forum‟s Enabling Trade Index GCI : Global Competitiveness Index LSCI : Liner Shipping Connectivity Index CPI : Corruption Perception Index GDP : GROSS DOMESTIC PRODUCT GETR : The Global Enabling Trade Report TI : Transparency International WB : World Bank EDI : Electronic Data Interchange IT : Information Technology TFA : Trade Facilitation Agreement TFAP : Trade Facilitation Action Plan ICT : Information and Communication Technology ASYCUDA : Automated System for Customs Data and Management CEFACT-UNECE : The Center for Facilitation of Procedures and Practices for Administration, Commerce, and Transportation GATT : General Agreement on Tariffs and Trade TTFA : Trade and Transport Facilitation Audit TFSP : Trade Facilitation Support Program FDI : Foreign Direct Investment FTAs : Free Trade Agreement LTA : The Land Transport Authority ITS : Intelligent Transport System ERP : Electronic Road Pricing systems MPA : Maritime and Port Authority of Singapore PPT : Pasir Panjang Terminal CAG : Changi Airport Group SIA Cargo : Singapore Airlines Cargo SC : Singapore Customs NPLs : Non-Performing Loans SOEs : State-Owned Enterprises TPP : The Trans-Pacific Partnership ASW : ASEAN Single Window in custom procedure VDR : Vietnam Development Report VPA : Vietnam Seaport Association IWT : Inland Waterway Subsector GDC : General Department of Customs VCCI : Vietnam Chambers of Commerce and Industry AEO : Authorized Economic Operator BPR : Business Process Reengineering VCIS : Vietnam Customs Information System NSW : National Single Window PPP : Public-Private Partnership 108 other hand, forth recommendation is the authorities must also focus on improvement of transparency and efficiency of government‟s policies and practices by reducing corruptions and bribes, which now have been undermining many of Vietnam‟s efforts in TF Last but not least, learning from the experience of Singapore, increasing ICT application is also a key issue that Vietnam should take in to consideration along with development of well-trained human resources However, the results in of Portugal-Perez and Wilson (2012) showed that improvement in infrastructure quality would bring the greatest benefits in terms of export growth Among our four indicators, physical infrastructure has the greatest impact on exports in almost all specifications, and samples Furthermore, they found evidence that the impact of physical infrastructure is decreasing with the income level, whereas the opposite occurs with ICT, for which the richer the country, the greater its marginal impact on export performance As a result, in short term Vietnam should focus on the first forth recommendations, which is now currently more suitable with a lower middle income country 109 REFERENCES Anderson, J E and E van Wincoop, (2005), „Trade costs‟, Journal of Economic Literature, 42, 3, 691-751 Asia-Pacific region, the Asia-Pacific Economic Cooperation (1999) Assessing APEC Trade Liberalization and Facilitation: 1999 Update Economic Committee, September 1999 APEC: Singapore Australian Department of Foreign Affairs and Trade and Chinese Ministry of Foreign Trade and Economic Cooperation (2001) Paperless Trading: Benefits to APEC Commonwealth of Australia Commonwealth of Australia (2002), „APEC economies: Realising the Benefits of Trade Facilitation‟, report prepared for the APEC ministerial meeting, Los Cabos, Mexico, 2002 Dennis, A (2006), „The Impact of Regional Trade Agreements and Trade Facilitation in the Middle East North Africa Region‟, World Bank Policy Research Working Paper No 3837 Francois, van Meijl, and van Tongeren (2003) Francois, Joseph, Hand van Meijl, and Frank van Tongeren (2003) ”Trade Liberalization and Developing Countries Under the Doha Round.” CEPR Discussion Papers 4032 Gunawansa, A., 2010 Is there a need for public private partnership projects in Singapore? Paper presented at the Proceedings of the Construction, Building and Real Estate Research Conference of the Royal Institution of Chartered Surveyors, Paris, France Hertel, Thomas W., Terrie Walmsley; and Ken Itakura (2001) “Dynamic Effect of the "New Age" Free Trade Agreement between Japan and Singapore.” Journal of Economic Integration v16, n4: p 446-84 Hummels, David (2001) “Time as a Trade Barrier.” Working Paper, Department of Economics, Purdue University: West Lafayette Mattoo, Aaditya, and Arvind Subramanian “The WTO and the Poorest Countries: Stark Reality.” Working Paper April 110 10 Kim, S., H Lee and I Park (2004), „Measuring the Impact of APEC Trade Facilitation: A Gravity Analysis‟, paper presented at the APEC EC Committee meeting 30 September 2004 in Santiago, Chile 11 Kleitz, A (2003) „Costs and Benefits of Trade Facilitation‟, in Cosgrove-Sacks and Apostolov (eds), Trade Facilitation: The Challenge for Growth and Development, United Nations Economic Commission for Europe (UNECE), Chapter 3.6 12 Matthias Helble & Catherine Mann & John Wilson, 2012 "Aid-for-trade facilitation," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol 148(2), pages 357-376, June 13 OECD (2002), „Business Benefits of Trade Facilitation‟, OECD Trade Directorate, Paris: TD/TD/WP(2001)21/FINAL 14 OECD (2003), „Quantitative Assessment of the Benefits of Trade Facilitation‟, OECD Trade Directorate, Paris: (TD/TC/WP(2003)31/FINAL) 15 Portugal-Perez, A and Wilson, J (2015), “Foreign Direct Investment, Regulation, and Trade Costs: a Focus on Landlocked Developing Countries”, unpublished Retrieved from: http://www.researchgate.net/publication/265072436 16 Rodrik, Dani (2002) “Trade Policy Reform as Institutional Reform.” In B Hoekman, A Mattoo, and P English (eds) Development, Trade and the WTO: A Handbook Washington, D.C.: World Bank 17 Walkenhorst, Peter, and Tadashi Yasui (2003) “Quantitative Assessment of the Benefits of Trade Facilitation.” Organization of Economic Cooperation and Development (OECD) 18 Wilson, J.S., C.L Mann and T Otsuki (2003), „Assessing the Potential Benefit of Trade Facilitation: A Global Perspective‟, World Bank Policy Research Working Paper No.3224 111 19 Wilson, John S., Catherine L Mann, Tsunehiro Otsuki (2004) “Assessing the Potential Benefit of Trade Facilitation: A Global Perspective.” World Bank Working Paper #3224 The World Bank : Washington, D.C 20 World Bank (2003) Global Economic Prospects 2004: Realizing the Development Promise of the Doha Agenda Chapter “Reducing Transport Costs in an Era of Security” World Bank Washington, D.C 21 World Bank 2010 Trade and Transport Facilitation Assessment: A Practical Toolkit for Country Implementation 22 World Trade Report 2015 - World Trade Organization 23 Logistics Performance Index 2007, 2010 and 2012, 2014, 2016 www.worldbank.org/lpi http://www.worldbank.org/lpi 24 Enabling Trade Index 2014 https://www.weforum.org/reports/global-enablingtrade-report-2014/ 25 Doing Business 2016 http://www.doingbusiness.org/economyrankings/ 26 See also the full Doing Business Report 2016 at: http://www.doingbusiness.org/reports/global-reports/doing-business-2016 27 Global Competitiveness Index 2015-2016 http://reports.weforum.org/globalcompetitiveness-report-2015-2016/ 28 World Competitiveness Report www.imd.ch/research/publications/wcy/upload/scoreboard.pdf 29 Corruption Perceptions Index 2015 http://www.transparency.org/cpi2015 30 Liner Shipping Connectivity Index (the latest till 2016) by UNCTAD, see e.g http://unctadstat.unctad.org/TableViewer/tableView.aspx?ReportId=92 31 T a Trade Policy evie ( iet Nam http://www.intracen.org/country/viet-nam/Trade-Facilitation http://english.vietnamnet.vn/fms/business/150174/five-highlights-of-vietnams-economy-in-2015-and-outlook-for-2016.html Five highlights of Vietnam‟s economy in 2015 and outlook for 2016 32 General statistics office of viet nam https://www.gso.gov.vn/Default_en.aspx?tabid=491) 112 33 Key Indicators for Asia and the Pacific 2016 (https://www.adb.org/publications/key-indicators-asia-and-pacific-2016) 34 Yearbook of statistics singapore, 2016 (www.singstat.gov.sg) 35 Singapore‟s direct investment abroad 2014 (www.singstat.gov.sg) 36 Singapore in figures 2016 (www.singstat.gov.sg) 37 Singapore Department of Statistics (www.singstat.gov.sg) 38 Economic survey of singapore 2015(www.singstat.gov.sg) 39 Ministry of Trade and Industry Republic of Singapore www.mti.gov.sg ANNEX ANNEX I: The detail scores of Singapore and Vietnam business environment SINGAPORE DOING BUSINESS SCORES Rankings on Doing Business topics - Singapore (Scale: Rank 189 center, Rank outer edge) Distance to frontier scores on Doing Business topics - Singapore (Scale: Score center, Score 100 outer edge) Source: Doing Business 2016, World Bank (http://www.doingbusiness.org/rankings) VIETNAM DOING BUSINESS SCORES Rankings on Doing Business topics - Vietnam (Scale: Rank 189 center, Rank outer edge) Distance to frontier scores on Doing Business topics - Vietnam (Scale: Score center, Score 100 outer edge) Source: Doing Business database ANNEX II: Vietnam’s Business report year from DB2011 to DB2016 REFORM IN STARTING BUSINESS DB2011 Vietnam eased company start-up by creating a one-stop shop that combines the processes for obtaining a business license and tax license and by eliminating the need for a seal for company licensing DB2013 Vietnam made starting a business easier by allowing companies to use self-printed value added tax invoices DB2016 Vietnam made starting a business easier by reducing the time required to get the company seal engraved and registered REFORMIN DEALING WITH CONSTRUCTION PERMITS DB2011 Vietnam made dealing with construction permits easier by reducing the cost to register newly completed buildings by 50% and transferring the authority to register buildings from local authorities to the Department of National Resources and Environment REFORM IN GETTING AN ELECTRICITY DB2016 The utility in Vietnam reduced the time required for getting an electricity connection by reducing delays and increasing efficiency in approving connection applications and designs for connection works DB YEAR DB2011 REFORM IN GETTING CREDIT Vietnam improved its credit information system by allowing borrowers to examine their own credit report and correct errors DB2014 Vietnam improved its credit information system through a decree setting up a legal framework for the establishment of private credit bureaus DB2015 Vietnam improved its credit information system by establishing a new credit bureau DB2016 Vietnam guaranteed borrowers‟ right to inspect their credit data while the new credit bureau expanded borrower coverage, improving the credit information system REFORM IN PAYING TAX DB2011 The government of Vietnam eased paying taxes by reducing corporate income tax rate DB2014 Vietnam made paying taxes more costly for companies by increasing employers' social security contribution rate DB2015 Vietnam made paying taxes less costly for companies by reducing the corporate income tax rate DB2016 Vietnam made paying taxes less costly for companies by reducing the corporate income tax rate—and made it easier by reducing the number of procedures and documents for filing VAT and social security contributions, reducing the number of filings for VAT and replacing quarterly filings of corporate income tax with quarterly advance payments On the other hand, Vietnam increased the rate for social security contributions paid by employers REFORM IN RESOLVING INSOLVENCY DB2016 Vietnam made resolving insolvency easier by clarifying and simplifying reorganization, provisions modifying on liquidation and the standard for commencement of insolvency proceedings, changing provisions on voidable transactions, regulating the profession of insolvency trustees and establishing the rules for enterprise asset managers REFORM IN INVESTOR PROTECTION DB2012 Vietnam strengthened investor protections by requiring higher standards of accountability for company directors DB2014 Vietnam strengthened investor protections by introducing greater disclosure requirements for publicly held companies in cases of related-party transactions Source: Doing Business database.
Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports for these years, available at http://www.doingbusiness.org ANNEX III: Singapore’s infrastructures score The Global 2013 - 2014 Competitiv e Index 2015 - 2016 The Enabling Trade Index Source: The Enabling Trade Index and The Global Competitive Index database ANNEX IV: Singapore and Vietnam ETI comparison SINGAPORE VIETNAM Source: The Enabling Trade Index 2014 ANNEX V: Singapore and Vietnam GCI omparison THE GLOBAL COMPETITIVENESS INDEX IN DETAILS VIETNAM SINGAPORE ANNEX VI: Singapore and Vietnam trading across border comparison IMPORT EXPORT VIETNAM Source: Doing Business 2016 SINGAPORE ...MINISTER OF EDUCATION AND TRAINING FOREIGN TRADE UNIVERSITY MASTER THESIS Trade facilitation in Singapore and lesson learnt for Vietnam Major: International Trade Policy and Law Full... Trade Facilitation Chapter 2: The current status of Trade Facilitation in Singapore Chapter 3: The current status of Trade Facilitation in Vietnam Chapter4: Lessons learnt for Vietnam from Singapore s... protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency—are included in the distance to 11 frontier score and ease of doing business ranking