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    TIẾN SĨ Development of urban service sectors in Vientiane capital city

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  6. Development of urban service sectors in Vientiane capital city

    Luận án tiến sĩ năm 2012
    Đề tài: Development of urban service sectors in Vientiane capital city
    1.1 Service sector development concept 9
    1.1.1 .Sejvice sector definition 9
    1.1.2. Types of seivice sectors 11
    1.1.3. Roles of seivice sectors 14
    1.2 Urban service sector development conditions 21
    1.3 International experiences in urban service sector development 24
    1.3.1 .Beijing transportation seivices 24
    1.3.2. Tourism development in Bangkok 26
    1.3.3. Logistics services in Vietnam (Hochimmh City) 28
    1.3.4. Lessons learned 30
    2.1 Introduction to Lao PDR social - economic 2001 - 2010 31
    2.1.1 Econom ic growth 33
    2.1.2 Current hm itations 38
    2.2 Overview on Vientiane social economic development 39
    2.3 Vientiane service sector development potentials 42
    2.4 Service sector contribution to the Vientiane economy 45
    2.5 Some important Issues in Vientiane Capital service sector development46
    3.1 Banking and finance sector 48
    3.2 Transportations 55
    3.3 Logistics 66
    3.4 Tourism 72
    3.4.1 Introduction to tourism in Lao pDR 72
    3.4.2 Tourism development in Vientiane 76
    4.1 Lao DPR economic trends toward 2020 83
    4.2 Vientiane economic trends toward 2020 89
    4.3 Vientiane service sector SWOT analysis 91
    4.4 Key visions and directions to develop service sectors in Vientiane 94
    4.5 Proposed measure to improve service sectors in Vientiane 96
    4.5.1 .Create more favorable legislative environment relating to the semice sector 97
    4.5.2. Enhance competitiveness of service sector 98
    4.5.3. Create linkages among service sectors 100
    4.5.4. Concrete measurement for selected service sectors 102
    4.6 Conclusion and recommendation 106
    1. Rationales of the research
    The services sector has gamed increasing importance over the last decade, contributing a growing share to gross domestic product (GDP) and employment in all countries Services have become a fundamental economic activity and play a key role in infrastructure building, competitiveness, poverty alleviation, employment creation and trade facilitation. While the services sector has matured in developed countries, it is the new frontier for the expansion of ừade, productivity and competitiveness, and for the provision of essential services and universal access in developing countries The sector represents about 50 per cent of GDP and 36 per cent of employment in developing countries, and the shares of developing countries in world services exports has been relatively modest and increased only steadily from 23 per cent in 2000 to 26 per cent in 2010 Therefore, while there are existing huge potential for these countries to develop their services sector, they face a variety of challenges to build viable services sector and services ừade to foster inclusive and sustainable development (UNCTAD, 2012).
    The potential of the services sector to induce growth in developing countries is great, but underutilized, often adversely affected by lacking regulation. While in the developed world this sector powers more than 70% of the economy and creates more than half of all jobs, in the developing counừies its contribution tends to be substantially lower (UNCTAD, 2012). In Lao PDR, the services sector has grown at a slower rate than the industry sector; its annual growth rate averaged at 8.4% during 2006-2010. Development of the services sector is critical for socio-economic development During this period (average for 2006-2010), the contribution of the services sector was 37.2% to GDP. Its major components are wholesale, retail ừade and repairing business, constituting 51%; public services 17.3%; and transport, warehousing, post and telecommunication 12.5%. The rest of its constituents are financial services, rental services and public services, including social and private services, hotels and restaurants, and others.
    Vientiane City is the capital of Lao P.D.R. and cenừe of adminisừation and economic activities in the nation is located at the centre of Lao P.D R It shared a border with NongKai province of Thailand along Mekong River. The total area is 3,920 km2 and designated for urban is approximately 210 km2 altitude of the ground surface range 160 m to 180 m above sea level, rainy season fall from May to September and dry season occurs from November to March. The population was recorded at 692,000 in 2005. Vientiane city is a cenừe of economic activities and also plays an important role in agriculture
    Figure 1.1: Location map of Vientiane City

    Source: Urban Development Master Plan sh tdy m Vientiane Capital (JICA March, 2011).
    Vientiane has posed great potential for service sector development. During the period of 2006 - 2009, along with fast economic growth of the Capital city, its service sector has also achieved accelerated pace with remarkable annual growth rate of almost 1%. There are many new modem service sectors that have gamed importance and growth such as banking, logistics, transportation and tourism which
    in turn contributed significantly into economic booming of Vientiane Despite of this success, the development of Vientiane service sector is still lot behind its potentiality and requirements of globalization. The overall contribution of the service sector is about 37 5% m 2010 and only second to industry sector. Revenue of some key service sectors is limited
    2. Research questions
    This research aims to answer the following questions:
    ã What is the role of urban service sector? Its development conditions? What are the lessons that can be drawn from international experiences for service sector development of Vientiane?
    ã What is the current status of service sector development in Vientiane? What are the key achievements and limitations?
    ã What is the situation in Vientiane main service sectors including transportation, logistic, tourism and banking?
    ã What are appropriate policies and measures to develop service sector in Vientiane Capital City.
    3. Scopes of the research
    Due to time and capacity constraints, the research has the following scope:
    ã Time the research will focus on the period from 2000 - 2010 This time frame will provide sufficient data and analysis of service sector development in V ientiane.
    ã Besides overall service sector analysis, this research will study in detail 4 selected service sectors including transportation, logistics, tourism and banking. These are the most dynamic and have great potential for Vientiane They are also among the largest service sectors.
    ã Geographical boundary: mainly Vientiane Capital City
    ã Others limitations numerous deep interviews with the leaders, managers in related organizations have been taken Due to some limitations, economeh'ics modeling is not applied
    This research was conducted in Vientiane Capital City and collected data from internal and external government and private organization. With above scope, tins research is able to answer above mentioned questions
    4. Research methodology
    Three major processes were systematically developed which consist of data collection, data analysis, conclusion and recommendation which the detail of each process are ìllusừated in the following sections. To achieve the objective of this research, not only primary data but also secondary data had to be collected in order to use such data for analysis and comparison. The consequent details were proposed to explain the methods used m each type of data Figure 1 shows the comprehensive process of data collection.
    Figure 1.2: Overview of methodology
    1. Data collection
    Primary Data Secondary Data
    2. Data analysis
    Type and composition of Urban Service Sector Development
    Recommendations For Implementation on further

    Primary Data collection; In this study, urban services Sector Development were sampled from selected information from the different parts of the Vientiane Capital City. The samples from each point were taken from different sector of service The author had deep personal interview with different managers and leaders of related organizations m Vientiane and Lao PDR.
    Secondary' Data Collection; The data in tins research was obtained from different sources, but was mainly obtained from the research work done by various people in Vientiane Capital City. All, information related to the urban Service Sector Development.
    5. Literature overview
    Along with the development of economies in all over the world, the trend in developing service sectors has also increased remarkably, and contribution of these sectors in GDP have gradually improved Service sectors have been formed and developed for a long tune, deriving from reality demand of economies. Therefore, studies on service sectors to fulfil and enhance them for the economy of each country have been earned out extensively.
    In the project for “Vientiane Capital Urban Development Master Plan” by Public Works and Transport Institute (PTI) & JICA, March 2011, the researched team implemented in the whole area of Vientiane Capital and showed that it has been required to strengthen its urban economy and improving living standards under rapid population growth. Vientiane Capital needs to improve its urban economic functions, particularly, in commercial and business, industry and logistics, and improve living standards at the same time A concept of “Multi-core structure” is proposed in consideration of location and size of necessary functions to accommodate them In this sense, three determinants are taken into account: Centralized pattern or decentralized pattern; location of required urban function, conservation of natural environment and higher productive agricultural land.
    Dr. Aruna Shekar, in her research “An Innovative Model of Service Development: A process guide for seivice managers” (The Innovation Journal: The Public Sector Innovation journal, Volume 12 (1), article 4) has presented the results into the early stages of developing new services for a local government body. She based on four case studies with the local council in a city in New Zealand. The purpose of this research was to develop a framework for the process of MSD and test it out empirically in order to create a new model for the first stage of service development, which incorporates the participation of users and service staff. Ms. Shekar also emphasized that a service development framework incorporating the participation of users and service staff m the development process was created
    based on the literature and the characteristics of services. The model provides a systematic process guide to service managers and providers, for developing and improving services systematically. This research highlighted that the participation of users as well as service staff are beneficial in the first stage of development, as each group brings requirements for the new service from their perspective In general, the modification to the user techniques used in service development should focus on providing tangible stimuli where appropriate (especially at the idea generation stage) and enhance the participation of users and service staff.
    Nguyen Van Manh and Do Thi Hong Cam, in their study regarding "To develop unshakably tourism in Laos PDR”, (The International Conference in Vientiane, 2011) have shown some important issues on sừengths, weaknesses, opportunities and threats (SWOT analysis) in developing steadily tourism in Laos. Sừengths included: transportation facilities; locatmg nearby counừies which have a lot of cultural heritages admitted by UNESCO; diverse human culture in creating tourism products, rich labour force. Weaknesses: Laos has not any railway network and sea route, therefore they might not be able to improve two kinds of this product in Laos, strategies, policies and plans developing tourism have not been completed, quality and competitive capacity have been low. Opportunities: potential visitors’ markets, rapidly increasing tourism demand; develop mg infrastructure; locating on east-west and the north-south economic corridors. Threats: competitiveness in looking for cultural tourists, low quality of tourism service . Based on SWOT analysis, the authors have recommended some of key solutions: to evaluate timely steady level in developing tourism in Laos in order to adjust policies as well as mechanism of tourism sector management, to boost simultaneously tourism market, to enhance administrative tourism knowledge of enterprises and to be aware of the role of tourism with the Laos people class .
    Nguyen Ke Tuan, "Transferring structure of economic sectors during economic innovation process of Laos PDR” (The International Conference, 2011), has expressed his opinions regarding process of shifting economic sectors in Laos.
    He emphasized that service sectors have gradually played an important role in the SOCIO - economic development of Laos. Laos has been starting to prepare prerequisites to modernize and industrialize its economy. Service sectors expanded remarkably by 38 7 percent of GDP in 2009 compared with 24.1 percent of GDP in 1995. This improvement has been contributing to boost the economic development as well as to expand trading transaction among areas of this country and international economic relationship. Therefore, the author showed his main conclusions on economic structure of Laos PDR Firstly, the movement of economic structure is completely suitable with tending objective. Secondly, the process of fransference has been implemented based on exploring advantages of Laos to meet the needs of SOCIO - economic development. He has also given main directions in transferring economic structure and developing economic sectors, including enhancing service sectors. As for him, Laos should continue to improve trading activities being related to develop domestic markets and boost export; focus on developing some potential service sectors to bring into play its advantages and competitive capacity, such as: tourism, transhipment facilities, finance, banking.
    Briefly, studies at the time being have merely mentioned some particular aspects of all service sectors in Laos PDR. Most results used in those researches have based on the data of the whole country given by some of the largest international organizations such as World Bank (WB), International Monetary Fund (IMF), Asian Development Bank (ADB) and others. There have not been studies implemented intensively regarding the development of service sectors in Vientiane Capital City Therefore, a dissertation on “Urban Service Sector Development in Vientiane Capital City” has been chosen to become a useful research.
    1.1 Service sector development concept
    1. 1.1. Service sector definition
    Although the common av/areness of service is relatively identical, the concept of service is completely unclear. Every concept originating from recognition of service in a different aspect has a certain discrepancy
    Traditionally, a service is “an intangible product produced to meet some customer demand to make profit on purpose” Previously, according to economists’ opinion, the wealth of society were created by manufacturing sectors such as agriculture, industry and construction while service sector is not considered to create a new value and its product were considered to be intangible
    At present, another more common recognized definition is that: Service is an activity which changes condition and quality of an entity by effect of another entity in order to satisfyf that entity’s need. Thereby, the service will not occur if there’s no separation betv/een a consumer and a supplier. For instance, an enterprise itself performs a closed production stage In this case, service does not appear. On the contrary, that enterprise hires another one to perform a certain step among the manufacturing process such as disừibutions, design and auditing . and therefore the service appears. Together with development and high specialization of the social, separation between steps in a manufacturing process creates new services. Sometimes, it’s difficult to distinguish between a commodity product and a service product because of their mutual interlacement. All in all, from management view, countries accept to list a category of service products instead of purely originating from the concept, for example Central Product Classification (CPC) System of the United Nations.
    Annex 2 List of interviewers
    1. Mr. Viengsavath SIPHANDONE, Director General, Department of Transport (DOT), Ministry of Public Works and Transport (MPWT).
    2. Dr. Bounta ONNAVONG Director, Division of Plannmg and Budgeting, DOT, MPWT.
    3. Mr. Detsongkham THAMMAVONG Director, Department of Public Works and Transport of Vientiane Capital (DPWT)
    4. Mr. Ounneua SILAVONG Deputy Director, DPWT VTC.
    5. Mr. Khamphoune TEMERATH Director, Vientiane Capital state Bus Enterprise.
    6. Ms. Chitpasong LIDANONG, Director - Vlentiane Northern Bus Terminal and Chitpasong Nyotninyom Transportation
    7. Mr. Prachith SAYAVONG, Managing Director, Societe Mixte de Transport (SKIT), President of Lao International Freight Forwarders Association (LEFFA)
    8. Mr. Khanthavong DALAVONG, Secretary General, Lao National Chamber of Commerce and Industry (LNCCI).
    9. Mr. Toshinori TODA, JICA study Tearn Leader on Vlentiane Urban Transport Master Plan
    10. Mr. Atsushi SAITO, JICA study Team Leader on the Lao National Logistics Master Plan
    11. Mr Somphone PHASAVATH, Director General Lao Freight Forwarder Co., Ltd. Tel.: (020) 55515332.
    12. Mr. Viengphet KIHTTIYASO, Director General, Vientiane Shipping Co., Ltd. Tel: (020) 55511193
    13. Mr. keovanpone VONETHIVONGSI, Director General, state Land River Transport Enterprise. Tel: (020) 22212529.
    14 Mr Thongsamouth SILIOUDOM, Director General Lao Airlines Co., Ltd. Tel : (020) 55816489
    15. Mr. Chivone OUDOM, Director General, Thanaleng Express Forwarder Co., Ltd. Tel : (020) 5556254
    16. Mr Khampha THAMMAVONGSA Director General Transport Company No. 1. Tel : (020) 22235756
    17. Mr. Intong Oudom, Director General, Sene Oudom Transport International Co., Ltd. Tel : (020) 22213272
    18. Mr Phouvong KORASACK, Director General, Lao Samay Group Co., Ltd. Tel: (020) 55511342
    19. Mr. Boundeht SIPHANDONE, Director General, DHL Lao Co., Ltd. Tel 020 ) 22202464.
    20. Mr. Soon Manivong, Director General Department of Developmental Tourism, Ministry of Information, Culture and Tourism. Tel.: (020) 55290101.
    21. Mr. Ounthoung Kaophanh, Director General Depailment of Monitoring Tourism, Ministry of Information, Culture and Tourism Tel : (020) 55402426.
    22. Khampadith Kemmamth, Deputy Director General Department of Information, Culture and Tourism, Vientiane Capital, Tel : (021) 242763, (020) 22413459.
    23. Mr. Intee Deunsavanh, Director of Green Discovery tourism Company Ltd., Tel: (020) 55521447.
    24. Ml'. Bounthong Nanhthavong, Director of Viengchanpa tourism Company Ltd. Tel : (020) 55511862.
    25. Mr. Vanhkham Voravong, Managing Director General Banque Pour Le Commerce Exteneur Lao (BCEL) Tel.: (020) 55503789
    26 Mr. Onkeo Damlongboun, Deputy Managing Director General Banque Pour Le Commerce Exteneur Lao (BCEL) Tel : ( 020 ) 22221203.
    27. Mr. Boualien Phommavongsa Acting Managing Director General Lao Development Bank (LDB). Tel:. ( 020 ) 22340089
    28. Mr. Sengphet Mamvong, Deputy Managing Director General, Lao Development Bank (LDB) Tel : (020 ) 22220005.
    29. Mr. Donsathien Bounmyaphai, Deputy Managing Director General, Agricultural Promotion Bank (APB). Tel. (020) 22324794.
    30. Mr. Khamphouang Phaobouavong, Head of Cabinet office, Agricultural Promotion Bank (APB) Tel : (020) 22220210.
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    2. Bounchanh SINTHAVONG (2012), Development of Logistics of Vientiane Capital, The International Conference Proceedings on Vietnam - Lao Economic Cooperation Developing some key industries up to 2020, Vientiane, Lao PDR.
    3. Bounchanh SINTHAVONG (2011), Development of Sustainable Community- based tourism in Laos, The International Conference Proceedings on Socio- Economic Development of Vietnam and Lao in the period 2011 - 2020, Vientiane, Lao PDR
    4. Bourdet, Y. (2000), The Economics of Transition in Laos: From Socialism to ASEAN Integration, Cheltenham: Edward Elgar.
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    9. Government of the Lao PDR (2009), “Seventh National Socio-Economic Development Plan (NEDP) for 2011 to 2015”. Vientiane: Ministry of Planning and Investment
    10. JIC A (2008), The study of master plan on comprehensive urban transport in Vientiane Capital in Lao PDR, JICA and Katahira&Engineers.
    11 Kyophilavong, p (2010), “The Impact of Global Financial Crisis on Lao Economy - GTAP Model Approach”, Conference Paper, International Seminar on Skills Development for the Emerging New Dynamism in Asian Developing Countries imder Globalization, Cambodia, January, 2010.
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    13. Lao National MDGs Secretariat. 2010. Accelerating Progress Towards the MDGs. Innovative Options for Reaching the Unreached. http://www.unescap org/pdd/calendar/EGM-MDG-ZOn/Laos-MDG- Acceleration-Framework.pdf (Accessed 8 June 2012).
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    21. Vientiane Times (2010), Logistics park on the drawing board for Vientiane, Vientiane Times Newspaper, 23 October 2010.
    22. World Bank. 2011, Lao PDR Country Profiles, http://data.worldbank.org/country/lao-pdr (Accessed 19 July 2011).
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