Drafting the Motorbike Master Plan
Methodology, Content and Issues

Kenichi Ohno

VDF & Motorbike JWG
Oct. 2006

TopicsBackground New methodology
 Highlights of proposed contents
 Remaining issues
(1) Background

Changing policy environment
From economic planning to market
orientation under integration

Increasing role of private and FDI
sectors; equitization of SOEs
 Global and regional competition
 A large part of industrial activities are
now taking place outside MOI’s directsupervisionVietnam’s Industrial Policy
Formulation
Two major weaknesses

1. Stakeholder involvement is weak (lack of close
cooperation with businesses).
2. Inter-ministerial coordination is also weak(for deciding & implementing policy measures).

ÎPolicy drafting method must be reformed toovercome these weaknessesÎMotorbike Master Plan should make the firststep toward this goal

Experiences in Other Countries
VDF missions to Thailand, Malaysia, Japan None of these countries have serious
problems in stakeholder involvement or interministerial coordination.
 Vietnam needs to study international
experiences.
 But new method must fit Vietnam’s reality.
Î Selective adoption and modification, notsimple copies

Thailand (under Thaksin)

Tripartite coordination under industry-specific institutes and committees

Prime Minister

Policy direction
to be concretized

OrderRelevant
Ministry

Industry-specificCommittees

Directinputs

PrivateSector--Master plan--Implementation--Monitoring--Adjustment

Industry-specificInstituteExperts

Thailand:

Drafting Automobile Master Plan
Drafting time—about one year; PM approval is not required

PrivateSectorMarketinfo,
targets

Policyconcerns,
measures

Joint process

ExplainThailand
AutomotiveInstitute
Coordination& drafting

PolicyMakersPrivateSectorGovernment& PrimeMinisterSubmitReportThai MOI(Official author)

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Japan:Ministry of International Trade & Industry (MITI)(Now called METI)In the 1960s, MITI had many contact links
with Japanese companies.
 Now, private sector leads and METI only
supports, when necessary.
 Two most important policy channels are:--Deliberation councils--Industrial associations (JAMA, JEITA, etc.)(2) New MethodologySolve Vietnam’s two problems:(1) lack of stakeholder involvement(2) lack of inter-ministerial coordination



Task is new and ambitious, while ourtime and people are limited
Î We do not aim at perfection, butwant to make a meaningful first step.

Joint Working GroupIn Spring 2006, Joint Working Group (JWG)
was organized to draft Motorbike Master Plan.
 17 members from IPSI/MOI, motorbikeassemblers, Japanese experts, VDF.
 MOI-VDF agreement for cooperation indrafting Motorbike M/P (Sep.2006).
 Vietnam-Japan Joint Initiative (Phase 2)
requests JWG to support Motorbike M/P.
 VDF acts as coordinator and facilitator.
JWG Work Schedule
2006
Apr.-May Preliminary meetings (done)
May-Aug. Brainstorming sessions to share basic
information (done)
Sep.
“Skeleton draft” and assignment ofmain drafter for each chapter (done)
From Oct. Drafting chapters
End Nov “Preliminary draft”
2007 Mar. “Final draft” by JWG
However, delay may occur since process is new and proceduremust be discussed and agreed as we proceed.

Supporting Industry Survey
and BrainstormingSupporting Industry Survey (Feb-Apr 2006)
MOI & VDF, Japanese firms in North & South visitedÎSee VDF ReportBrainstorming (May-Aug 2006, 9 sessions)--International and regional data review & analysis--Traffic accident data and analysis--Future urban transportation strategy--Urban air pollution--Forecasting demand--Industrial property rights
Î See VDF website

Stakeholder Involvement
From the beginning, active participation ofJapanese motorbike assemblers as coremembers
 Participation of other stakeholders throughhearings and comments (scheduled)--Non-Japanese assemblers--Parts producers (supporting industries)--Users/consumers--Relevant officialsTransparency--progress and documents
uploaded in VDF website (sensitive materialsexcluded) www.vdf.org.vn/jwg.htm

Japan’s METI Technical Assistance Division isinterested in cooperating with Motorbike JWG:--Japanese expert dispatches--New survey?
--Before Feb.2007

Inter-ministerial Coordination(Scheduled) Data collection
 Relevant ministries and agencies will be
consulted for:--Drafting chapters--Proposing concrete policy measuresKey issue: how to get other ministries
involved in substantial policy discussion

(3) Highlights of Proposed
Contents
Skeleton Draft (as of Sep 2006)
0. Introduction
1. Role of motorbikes
in VN society **2. Industrial structure& production
3. Forecasting demand
4. SI & Industrial HR
5. Urban Transport **6. Traffic accidents **7. Environment *8. Industrial property *9. Policy measures** Non-supply issue* Non-key issue in traditionalformat

Main Points
1. User-side concerns (safety, environment,congestion) are featured in addition to supplyside issues (output, skills, technology).
2. Government role is to support healthy growthof motorbike industry--Indicative projection and guidance--Realistic and meaningful standards for quality, safety,environment, industrial property--Enhancing supporting industries and industrial humanresources

3. Policy objectives in Motorbike M/P(1) People’s mobility and convenience(2) Quality of life (congestion, traffic safety, clean air)(3) Ensuring reasonable cost and timing of building
transport infrastructure(4) Leveling-up of Vietnam’s industrial capability

4. Conditional promotion of motorbike use“Motorbikes should continue to be used in Vietnam to ensure
people’s mobility and reducing infrastructure cost, provided thatsound and sustainable solutions are found and implemented in (i)traffic congestion, (ii) traffic accidents, (iii) environment, and (iv)industrial property protection.”5. Leveling-up of industrial capability
Option 1 – Official investment and protection (notneeded for motorbike industry?)

Option 2 – National brand motorbikes (?)
Option 3 – Export (subject to producer strategy & ability)
Option 4 – Enhancing supporting industries andindustrial human resources
Comment 1—Motorbike Strategy accepts entry of any producer
who satisfies standards in quality, environment, industrial
property, etc. This is a fair and reasonable policy (neither
rejecting nor promoting local assemblers).
Comment 2—If local producers are to export (low-price models),
their capacity and marketing must be enhanced. If FDI producers
are to export (high-price models), we need to check if theirglobal strategy is consistent with exports from Vietnam.

6. Learning integral manufacturing
Japanese motorbikes are integral and Chinese motorbikes aremodular.
Vietnam should become a partner in integral motorbike
manufacturing in order to (i) upgrade technology; and (ii)compete effectively with Chinese products.

7. WTO consistency--High tariffs, import bans & quotas, localization requirement
are WTO inconsistent. They are not needed for Vietnam’s
motorbike industry.
--Promotion of supporting industries and industrial humanresources are WTO-consistent.
--Industrial property protection is highly consistent with WTO.

(4) Remaining Issues
Old format vs. new content
 Relations with other documents
 Time constraintOld Format vs. New Content
MPI regulates contents of all master plans; MOI also
has internal guideline.
< MPI’s model content >--Overview of industry andglobal situation--VN’s potentiality (SWOT)--Domestic situation: production,investment, technology, etc.
--Factors affecting developmentof sector such as party view,integration, competitiveness,GDP, export, import, etc.

--Development master plan
Vision, orientation, objectives
Key products, supporting
industries
Regional distribution--Policy measures--Responsibilities of ministriesMOI Guideline for Master Plans
Introduction
I. Potentialities—resources,infrastructure, market,competitiveness, etc.
II. Current situation—
structure, products,technology, labor, etc.
III. Domestic and foreign
factors affecting sector
development

IV. Development master
plan--Vision, orientation andobjectives--Options for development--Regional distribution--Investment capital andtargeted projects--Socio-economic impacts

V. Measurement, policies
and implementation
Conclusion & proposals

Problems with Current Format
Supply-side orientation, with quantitative
targets and concrete projects (who will ensure orcarry out these targets & projects?)

Uniform and easy to fill, but little room forcreativity or clear message
 Difficult to highlight specific needs of eachsector (eg. motorbike—user concerns, traffic safety, clean air,urban planning, etc)

Î Possibility for more flexible format?

Motorbike Master Plan
vs. Other Documents?
Motorbike Strategy (approved Sep.2006)
With quantitative targets for production, localization andexports in 2010, 2015, 2025

Supporting Industry Master Plan Overall Industrial Master Plan Policies of other ministries


FDI attraction, environment regulation, urban infrastructure,traffic regulation, quality standard, industrial property,
education and training, etc.

Time Constraint
Master plan drafting is governed by Vietnam’s
budget cycle
 Overloading--not enough time or staff
 The case of Motorbike Joint Working Group--Less than one year for developing new method--Much time spent for procedural discussion--JWG members working on part-time, voluntary basis
Cf. Thailand, Malaysia

Î Longer time for better results?

Relevant VDF Reports
Industrial Policy Formulation in Thailand, Malaysia andJapan (Eng & Vn, September 2006).
 Industrialization of Developing Countries: Analyses ofJapanese Economists (Eng & Jpn, October 2006).
 Supporting Industries in Vietnam from the Perspectiveof Japanese Manufacturing Firms (Eng, Vn & Jpn, June2006).

Improving Industrial Policy Formulation (Eng & Vn, March2005).

Building Supporting Industries in Vietnam (Eng & Vn,forthcoming in early 2007).