Lessons from Vietnam: Cheap internet, huge tax cuts and support to SMEs

From a country ravaged by war to an economic powerhouse in South-East Asia

Vietnam1Papua New Guinea is small, compared to other neighboring economies.

Many of the development challenges facing the country have not yet been resolved as the it takes on the huge responsibility of hosting the Asia Pacific Economic Cooperation (APEC) meetings in Port Moresby.

High on the points of discussion is the “digitization” of APEC economies. Simply put, it means access to internet technology, mobile phones and communications.

But access alone achieves very little unless the people use it to empower themselves and raise their standard of living.

In the Asia region, economies have harnessed the power of internet technology, with larger economies creating conducive environments that enable small businesses to trade with others around the globe.

In a rather simplistic outlook, the internet has changed the meaning of globalization. In the 21st century, globalization isn’t about large companies taking over smaller organizations and becoming “multinationals.” It is about small scale industries reaching a global market from the comfort of a mobile phone.

In Danang City, where the APEC meetings are being held, the power of internet technology and access to communications has drastically transformed the economy.   New industries have risen and are thriving. The demand for gadgets and associated items has increased significantly over 15 years.

Free wifi is accessible. Data costs are relatively cheap.

Customers who buy high end mobile devices also choose to buy Bluetooth headsets or personal boom boxes. Gadgets have become smaller and personal.

On another front, the government of Vietnam is currently on a path to reduce import taxes.

Online newspaper, VietnamNet reported that that “import duties are down from 5% to zero for 1,715 more tariff lines, including those for farm produce and fuel products. Together with 6,859 tariff lines removed between early 2012 and late last year, 90% of the tariff lines in ATIGA are now brought down to zero.

“Vietnam will cut 7% of tariff lines, or 669 items, including steel, paper, cloth, autos, auto components, machines, equipment, building materials and furniture in 2018.”

The government decision has triggered various results including an increase in vehicles imports. Despite fears that the tariff reduction would kills jobs, local manufacturers have increased investments and the job market has remained relatively stable.

Broadly speaking, the lives of ordinary Vietnamese are better.

While Papua New Guinea may not be able to repeat the successes of Vietnam, it is starting with plans to slash internet costs by half and to “support SMEs” at least on paper.

It is no secret that more needs to be done.

Reducing internet and mobile phone costs has to be supported with a reliable power supply.   SME owners   must have the training and finance. Bureaucratic and political obstacles have to be removed.

But most importantly, Papua New Guinean businesses have to be given the incubation space to grow and the people have to own their economy with strong support their government.

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