Drafting the Motorbike Master Plan
under Market Orientation and Globalization
Kenichi Ohno - Vietnam Development Forum - June 2007Topics(1) Introducing VDF(2) The master plan: method and issues(3) The content of “final draft”(4) Remaining issues and next steps

1(1) Introducing Vietnam
Development Forum (VDF)
Established in 2004 by Japan’s research grant Joint research project between National Graduate
Institute for Policy Studies (GRIPS) in Tokyo, andNational Economics University (NEU) in Hanoi
 Objectives: (1) Research innovation(2) Policy impact & networking(3) Mobilizing young talented VietnameseTokyoHanoi

Industrial Policy Supportby VDF
Research and surveys on electronics, motorbike,automobile, steel, power, supporting industries,infrastructure, business architecture, database, etc.
 Joint missions with Ministry of Industry (MOI) toThailand, Malaysia, Japan comparing policy drafting
method, master plans, business involvement
 Supporting Industry Master Plan—working with MOI
to conduct surveys and related research Motorbike Master Plan—VDF is a coordinator among
MOI, businesses and experts; new drafting method
 Study on Hanoi’s development2(2) The Master Plan: Method &Issues
Official drafting body – Industry Policy and Strategy
Institute (IPSI) of Ministry of Industry (MOI) VDF supports IPSI as facilitator
 Main purposes – correct two problems
Lack of business involvement--Unrealistic analysis & targets not supported by businesses

Lack of coordination within government--Listing policies without concrete action plans; no implementation
These problems are unique to Vietnam; they do not exist inindustrial policy formulation in Japan, Thailand or Malaysia

Thailand (Thaksin period, 2001-2006)
Tripartite coordination under industry-specific institutes and committees

Prime Minister

Policy direction
to be concretized

Order

Relevant
Ministry--Master plan--Implementation--Monitoring--Adjustment

Industry-specificCommittees

Directinputs

PrivateSector

Industry-specificInstituteExperts

3Malaysia:
Industrial Master Plan 3 (IMP3), 2006-2020
338 members + support staff; actual drafting time—about two years

Malaysia:
Drafting Process of IMP3
IPC: Industrial Planning Committee (headed by MITI Minister)
SC: Steering Committee (headed by MITI high official)
TRGs: Technical Resource Groups (headed by various experts)

Business opinions reflected through TRGs and brainstorming

4Vietnam: Traditional M/P Drafting Process
PrimeMinister
Review forapproval

Order

SubmitDraftingTeam

MinisterInterministerial
review

Submit

MPI & otherMinistries

DataInternalreview

MPI & otherMinistries

GovernmentAppeal letter toPrime Minister whenproblems arise

Contact
Ministry whennecessary

Interviews,
symposiums(sometimes)

Technicalassistance(sometimes)

International
experts

Business Community
No permanent channel for continuous policy dialogue(case-by-case, temporary, ad hoc)

Drafting Process
In Spring 2006, Joint Working Group (JWG) wasorganized to draft the Motorbike Master Plan 20 members—including IPSI/MOI, motorbike
assemblers, experts, and VDF
 Official recognition by MOI and Vietnam-Japan
Joint Initiative Phase 2
 MOI budget + VDF budget; in addition, METI
support for expert dispatch
 Final draft by May 2007 (about one year)
5

Drafting
Organization

Ministry of Industry
Master Plan for approval

Motorbike Joint Working GroupIPSI/MOI

Relevant
ministries
andagencies

VDF
Coordinator

Experts

Assemblers

Opinions
Assemblers

Partsuppliers

Information& analysis
Experts

Drafting Activities
Supporting Industry Survey in North & South (Feb-Apr 2006)
 Brainstorming sessions (May-Aug 2006)
 Hearings of assemblers & suppliers in N & S (Nov 2006)
 Japanese expert dispatch (Jan-Feb 2007)
Mr. Minato (air polllution)
Mr. Hiroe (supporting industries)
Mr. Kawashima & Mr. Nakagawa (industrial property rights)
Discussion with related ministries and agencies
MOTransp, MOTrade, MOLISA, Police, 127 Committee, VN
Register, NTSC, MPI/TAC, researchers and universities, etc

VDF consumer survey (in-street & on-line) (Mar.2007)
 VDF Motorbike Symposium (Mar.2007)
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(3) The Content of “Final Draft”(As of May 24, 2007)

Introduction
1. The role of motorcycles in Vietnamese society **2. Industrial structure & production orientation
3. Demand forecast
4. Supporting industries & industrial human resources
5. Urban planning & transport modes **6. Reducing traffic accidents **7. Environmental protection *8. Intellectual property rights*
9. Policy measures** Non-supply issue* Non-key issue in traditional format

General Remarks
 Top priority was joint work.
 User concerns are featured in addition totraditional supply-side issues.
 Two large Japanese assemblers participatedactively.
 Chapters were drafted anonymously byofficials, experts, researchers, etc.
 VDF edited for content, style and consistency.
 Somewhat academic and explanatory(disseminating basic ideas, educational purpose).

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Introduction
 This master plan is drafted with new methodand content.
 The government’s role is to support thehealthy growth of industry by providing visions,rules and measures.
 Forecasts are indicative, not compulsory.

Ch.1 The Role of Motorcycles inVietnamese Society Vietnam is unique in intensive use of M/Cs,

urban concentration, riding style.
 Balanced use of 3 transport modes (cars,motorcycles, public transport).
 M/Cs should continue to be used provided
that problems of congestion, accidents,
pollution, and IPR are solved (no bans).
 M/C industry should be the core industry to
promote supporting industries.

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Existing Stock of Motorbikes
Currently, nearly 20 million motorbikes in use (annual sales about 2 million)
Hanoi and HCMC - 2 persons per motorbike (close to saturation)
Other areas - 6 persons per motorbike (room for growth)Million2018Motorcycles

16Automobiles

141210864201990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Motorcycles 2.77 2.81 2.85 2.90 3.28 3.58 4.21 4.83 5.20 5.60 6.48 8.36 10.27 11.38 13.38 16.09
Automobiles 0.25 0.30 0.29 0.30 0.32 0.34 0.39 0.42 0.44 0.47 0.49 0.56 0.61

0.68 0.77 0.89

Motorbike Density in Asia, 2000
Registered motorcycles per 1000 persons

600
500
4003002005

200

Pakistan

Philippines

China

Vietnam

Mauritius

Cambodia

Thailand

Malaysia

Taiwan0Indonesia

2000

100

However, ownership and riding frequency are not the same thing.

9Vietnam’s Uniqueness
Motorbike/Automobile Ratio
20

Motorbike/automobile
ratio is extremely high

18162005

14122000

108644

Malaysia

Mauritius

Philippines

TaiwanBangladesh

China

Pakistan

Cambodia

ThailandRural

6Indonesia

Vietnam

Persons per Motorbike
8India

20

Rural
Urban

Urban

Thailand 2003

Vietnam 2005

Urban-rural gap is large

20Motorbike and Automobile Density in Vietnam, 2005
Automobiles per 1000 persons
60

Saturation

50

Hanoi

HCMC

4030?
B. Duong?

20Danang

BR-VT
D. NaiK. Hoa10Q. Tri00100200300

400500600

Motorcycles per 1000 persons

10Two Alternative Scenarios
for Hanoi and HCMC
Automobile, motorbike and public transport are three pillars of urban transport.

Scenario A

Scenario B- Rapid motorization- Strong restriction on motorbikes- Slow construction of transport
infrastructure- Controlled motorization- Co-existence of multiple modes- On-time construction of transport
infrastructure
Travel dem andTravel dem andAutom obile
Automobile

Motorcycle
Motorcycle

Public transport

Public transport

TimeTim e

Motorbike Ban in Large Cities?
China bans motorbike use in major cities.
 Hanoi (& HCMC) restricted new motorbike registration in
2003-2005, but abandoned the policy subsequently.
 Motorbike ban usually has limited effectiveness andimposes serious burden on general public.
 In Hanoi and HCMC, where motorbike density isextremely high (2 persons/motorbike), banningmotorbikes without providing alternative transportmodes can be considered a policy failure.
 Traffic demand is predictable, and long-term policy
should cope with its increase.
11Ch.2 Industrial Structure andProduction Orientation
 Review of recent output, sales, exports, etc.
 Procurement survey of 3 Japanese makers.
 No numerical export targets are set.
 Business architecture—parallel developmentof modular and integral is acceptable, butgovernment should support integral
manufacturing.

Ch.3 Demand Forecast
 Using Thailand as benchmark, and studying

international experiences, the person-to-M/Cratio will be about 3 in 2020.
 This means 32-33 million M/Cs in use.
 This corresponds to annual sales of:High
3.35 million
Middle 2.58 million
Low1.86 million

12Stock Demand Forecast(Circulation)<Three approaches yield similar results>
Person-to-motorbike ratio, motorbike per household, urban vs ruralperson-to-motorbike ratio
By 2020, 33 million motorbikes in Vietnam, or 3 persons/motorbike
Urban: 2.8 persons/motorbike
Rural: 3.1 persons/motorbike
Million motorcycles
40Persons per motorcycle
1435

1230

1025

Approach 1
Approach 2
Approach 3

820

615

Approach 1

10

Approach 2

5

Approach 32

2015

0
2000

0
2000

2005

2010

42020

2005

2010

2015

2020

25

More Data on
Stock/Flow Ratio

Vietnam
20Thailand

1510Vietnam and Thailand52005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

0

Motorcycle Stock/Sales Ratio
25

Motorcycle intensive country

20

Automobile intensive country
15
105

USA

Philippines

Canada

China

India

FranceIndonesia

ThailandHungary

Vietnam

GreeceMalaysia

Italy

Japan

Taiwan0Germany

International
comparison 13

Flow Demand Forecast(Annual Sales)
Stock in 2020: 33 million - What will be annual demand?
Million
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0

2005

2010

2015

2020

High

1.65

2.43

3.18

3.35

Middle

1.65

2.21

2.65

2.58

Low

1.65

2.02

2.12

1.86

<Stock/sale ratio>
High 10Middle 13
Low 18(Now at 9.7)

Ch.4 Supporting Industries andIndustrial Human Resources Vietnam’s M/C industry is now large enoughto attract suppliers.
 Japanese assemblers about to reachsaturation in part localization (70-80-90%).
 Non-Japanese FDI suppliers actively invest inVietnam in recent years.
 Human resource is key: (i) managers, (ii)multiple-skill workers, (iii) responding tocurrent problems.

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Measures for SI & IHR
M1—Incentive measures for pressing, casting,forging, welding, die & mold
M2—New mechanism to receive foreign
experts, incl. Japanese retirees
M3—Strategic FDI marketing for SI (ex., Hoa
Lac HTP, rental factories)
M4—Building SI database in conjunction withbusiness matching service

Measures for SI & IHR
M5—Creating pilot institutions for practicaltechnical & vocational education and training(TVET)
M6—Testing centers for assembly-type
manufacturing industries
Details of action plans are not yet agreed ordrafted into the master plan.

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Ch.5 Urban Planning andTransport Modes HAIDEP, HOUTRANS—projected trip demandand shares of cars, M/C, public transport.
 Positive roles of M/C—mobility & accessibility,space efficiency, cost efficiency.
 Public concern over safety, travel distance.
 Simulations of alternative traffic situations(current, mixed, car increase, with UMRT) M/C should play roles in short and medium
distance and as feeder to UMRT

Measures for Transport
M7—Time-based parking fees on roads andsidewalks in urban centers
M8—Vehicle entry regulation in Hanoi’s AncientQuarter

16Ch.6 Reducing Traffic Accidents
 M/C leads in accidents, aggressive &disorderly behaviors, inter-provincial roads.
35,000

Data problem-injuries andaccidents areunder-reported

30,000

Fatalities

25,000Injuries

Fatalities > Injuries

10,00020,00015,000

5,000
2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

0

M9—Revise regulation on M/C licensing & riding

Ch.7 Environmental Protection
 Available data on urban air pollution (notsystematic), current regulations.
 Place total M/C emission on declining trend,
and attain meaningful (not small)
improvement in urban air quality by 2020
 Establish a long-term roadmap based onEURO standards, but inclusive of M/C
M10—Prepare necessary conditions for EUROroadmap (fuel quality, vehicle inspection, airquality monitoring)17

Ch.8 Intellectual Property Rights
 Importance of IPR and current situation in VN(industrial design infringements are rampant).
 Review current enforcement framework--newlaw, decentralized authority, light penalties,
role of civil court, producers’ actions
M11—Establish Vietnam Motorcycle Industry
Association (to receive international help, etc)
M12—Eradicate illegal domestic parts by 2010,
eradicate all violations by 2015

Ch.9 Policy Measures(12 measures as shown above)
 Ministry of Industry (MOI) and the industrial
association monitor this master plan (MOIalone at first).
 First review—one year later Second review—three years later.

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(4) Remaining Issues
 One year was too short for innovation—businesses were involved but intra-ministerial
discussion was insufficient.
 As content and method were new, manytime-consuming procedural problems arose(MPI/MOI format, budgeting, data collection).
 Currently, there is no mechanism for policy
implementation after M/P approval.
 “More industrial analysis and targets”?

Next Steps Submit JWG final draft to MOI (May 31).
 MOI circulates draft to other ministries forcomment.
 MOI-sponsored workshop (mid June).
 Submit revised draft to Prime Minister (Jun 30).
In parallel, VDF/JWG will plan small meetings on
specific issues with relevant ministries/PCs.
MOI proposed to Japan to draft two more masterplans following the same joint working style.

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VDF Reference Materials
Website:www.vdf.org.vn/jwg.htm
Publications: Industrial Policy Formulation in Thailand, Malaysia andJapan (Eng & Vn, Sep.2006).
 Industrialization of Developing Countries: Analyses ofJapanese Economists (Eng & Jpn, Nov.2006; Vn 2007).
 Supporting Industries in Vietnam from the Perspectiveof Japanese Manufacturing Firms (Eng, Vn & Jpn, June2006).

Improving Industrial Policy Formulation (Eng & Vn, 2005).
 Building Supporting Industries in Vietnam, vol.1 (Eng2007, Vn forthcoming).

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