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Planners Envision Modern Markets
08 | 06 | 2007
There are in Vietnam now 9,266 markets - places at which many people gather on a regular basis to sell goods of any kind. For these markets to be able to survive the arrival of foreign retail shops, it is necessary to put in place a master plan and encourage companies/individuals from all economic sectors to invest in upgrading the markets.
There are two kinds of markets in Vietnam, rural markets and urban markets. In 2003 Government Decree 02 came into effect and some 1,016 markets (most being third-class markets) have been built, improved or upgraded since then. Markets contribute considerably to the distribution of agricultural products and other kinds of goods. At present, the value of goods that are sold in 9,266 markets accounts for about 40 percent of the country's total retail sales of goods.

Of the country's markets, 6,940 (74.9 percent) are rural. The link between these rural markets and farmers is closer than in urban markets. Businesses and households in rural areas get their products consumed mostly via the markets. Three rural markets at which large amounts of agricultural products are sold are the Hau Thanh Dong Market in Long An province, the Thanh Binh Market in Dong Thap province, and the Phu Cuong Market in Tien Giang province. In addition to those, there is the Binh Dien Market in Ho Chi Minh City that wholesales agricultural products and food, the Hai Duong Market wholesaling vegetables and fruit, the Dak Lak coffee market, and 34 provincial wholesale markets, 18 of those are operating effectively.

As many as 2,326 markets (25 percent of the total) are operating in urban areas. Not only retailing goods directly to consumers, those markets also function as wholesale centers.

Markets concentrate mostly in cities, towns and townships where the economic growth rate is high. In rural and mountainous areas where the economic growth rate is low, markets are scattered and most of them operate as kermises. Most of markets in Vietnam are small and have poor infrastructure (roads, water supply and drainage systems and wastewater treatment facilities are lacking). Due to the lack of capital, many markets have not been upgraded though provinces/cities such as Hai Duong, Hanoi, An Giang, Dong Thap, and Hau Giang have promulgated some preferential policies related to land, finance and credit to encourage individuals/companies from all economic sectors to invest in upgrading markets.

However, the above policies are not persuasive enough to make individuals/companies willing to invest in upgrading markets. In fact, all incomes of markets go to the State Budget. And therefore there is almost no capital for reinvestment in the markets.

Awaiting post-planning action

Urban markets need to be

modernly equipped and be in

harmony with existing supermakets

Under Decision 1371/2004/QD-BTM dated September 24, 2007 of the Trade Ministry (hereinafter called Decision 1371) regarding the development and the management of markets, supermarkets and trade centers, markets will be developed at different levels suitable to the actual conditions of each particular area. Accordingly, markets in rural areas must be upgraded/improved/built/relocated in order to ensure that there are enough markets to serve the needs of inhabitants in each commune. Markets must be developed in close relation with cultural, social and tourism activities. Markets that are located in towns or in border-crossing areas will be upgraded/improved/built as central markets of districts or a sub-region as a whole.

Urban markets are to be taken in a different direction. Some are to be improved or upgraded to become the central market of a district, town or city. They are to be modernly equipped, and be in harmony with existing supermarkets and shopping centers. Investment in those markets will be mobilized from companies that are operating in all economic sectors, joint-venture companies, households and individuals. Wholesale markets and specialized markets are to be built or upgraded adjacent to a good road, or perhaps on the outskirts of the city or town. The decision specifies that 5-7 wholesale markets are to be built in Can Tho, Lam Dong, Dak Lak, Nghe An, Hai Duong, and on the outskirts of Hanoi and Ho Chi Minh City. If investors could be found that wish to build these markets, the State will cover part of the cost of the infrastructure that would be required for these markets.

In order to encourage investment in developing markets, especially in the areas where the economic growth rate is low, it is necessary to reduce the enterprise income tax for those who invest in upgrading/improving markets. In addition, city and provincial authorities can offer other preferences that could apply to land, taxes and loans, all completely within the law. Hoang Tho Xuan, the director of the Department of Domestic Market Policies of the Ministry of Trade, said that ODA (official development assistance) capital can also be used to build supermarkets and shopping centers, and build and upgrade markets.

The Ministry of Trade recently held a meeting in Ho Chi Minh City to review the implementation of Decision 1371. At the meeting, Deputy Trade Minister Nguyen Thi Kim Ngan said that to withstand the competition that large foreign retailers will be bringing to Vietnam in the next few years, Vietnamese markets need to be upgraded and improved.

Vietnam Economic News Online
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