IS IT SUSTAINABLE TO KEEP GOINGS ON THE COMPETITIVENESS OF

VIETNAMESE RICE EXPORT IN THE ASEAN MARKET?

Trinh Thanh Thao1

Kim, Kyeong-Duk2

ABSTRACT

Rice productions and exports, an important sector in Vietnam’s economy, have beenconstrained by
Thailand as the major competitor. This study was undertaken with the objective of comparing the
competitive advantage of Vietnamese and Thailand rice exporters in the four biggest ASEAN rice import
markets for seeking suggestions to improve the competitive advantage of the Vietnam rice exporters.
Furthermore, this study calculating Total Factor Productivity and its growth rate of agricultural sector
and rice of Vietnam and Thailand, is generalizing to identify factors affectingthe rice importing value
per capita in target markets. The new approach is based on a panel data analysis and MCA index that
areutilized to properly model all the specific effects. Factors contribute to the competitiveness of
Vietnam rice exporters in the ASEAN market over the period of 1995-2016. The main findings from the
analysis have demonstrated that Vietnam has development accounting rise, higher TFP, higher
comparative advantages measured by MCA index. However,Vietnam is gradually losing competitiveness
in the ASEAN market compared to Thailand. For long-term sustainable competitiveness, Vietnamese
rice sector should increase technology and R&D.

Key words: Total Factor Productivity, Competitiveness, Market Comparative Advantages, Rice Export

1
Graduate Student, Kangwon National University
2
Professor, Kangwon National University

1
 I. INTRODUCTION

Rice export is a great economic value and has a positive impact on Vietnam’s economy, which helps
to exploit Vietnam's relative and advantages in the period of economic integration. With a high and
stable economic growth rate, the export potential of Vietnamese rice has been gradually increasing over
the years. At present, Vietnam has expanded its rice export market to more than 80 countries and
regions.
After more than 15 years since Vietnam officially became a member of Association of Southeast
Asian Nations (ASEAN), trade volume between Vietnam and ASEAN has increased rapidly,
contributing significantly to the economic development of Vietnam as well as members of the
ASEAN.Since joining ASEAN, the total value of trade between Vietnam and ASEAN has a high
average growth rate of 17% per year (Vietnamese Ministry of Industry and Trade). This is a big and
potential market of Vietnam. With the comparative advantages, rice exports have always been key
staples in Vietnam's agricultural export to the ASEAN market.Namely, Philippines, Malaysia, Indonesia
and Singapore are the four largest markets importing rice from Vietnam. In 2017, Vietnam exports to
Philippines 552,854 tons that were increased 40% compared to 2016. In Malaysia market, the volume of
importing rice from Vietnam is 532,226 tons that were increased 97.3% compared to 2016. Singapore is
the third biggest market with the rice import volume is 105,293 tons in 2017 that was increased 22.5%
compared to 2016 (General Department of Customs and Vietnam Food Association 2017).
However, the situation of export activities of rice products of Vietnam to the ASEAN market still
faces many restrictions and challenges. Indeed, Vietnam is competing Thailand the larger rice exporters
in the same markets, the value added is low, lack of brand name rice export, importing rice countries are
trying to boost their own rice production and have started getting good results, which have reduced their
independence on Vietnamese supplies. In order to find effective solutions to promote rice exports to
ASEAN countries, there should be a comprehensive and scientific analysis of the factors that affect the
export situation of Vietnam’s rice to the ASEAN markets and determine the impact of each factor to
compare with competitor Thailand. This study uses an estimated model to assess the magnitude of
impacts of important factors affecting Vietnam's rice exports to the ASEAN marketin the time period
from 1995 to 2016. In addition, this study gives suggestion and direction for the current rice export
situation of Vietnam to promote the competitiveness of Vietnam rice export to ASEAN market and
developing sustainably for the long term future.

2
 II. CURRENT SITUATIONS

Vietnam and Thailand were recorded as the main rice exporters in the world market. However, the
situations of trade competitiveness in rice exports to world markets between Vietnam and Thailand have
been different, consequently many challenges have existed. Therefore, understanding the export status
and market share competitiveness of Vietnam and Thailand rice export is necessary for trade policy
formulation to promote Vietnam rice exports to the world markets in the future.

Fig. 1.The Logarithm Rice Exporting Value of Vietnam and Thailand

log (Y)
23.0
22.5 22.5 22.6
22.3 22.4 22.4
22.3 22.2 22.2 22.2
22.0 22.0 21.9 22.0 22.0
21.7 21.8 21.7 21.8 21.8 21.8
21.5 21.6 21.7 21.5
21.2 21.2 21.2 21.3 21.1
21.0 21.1 21.0
20.7
20.5
20.3 20.3 20.4 20.4
20.0
19.5
19.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Vietnam Thailand

The table 1 showed that ASEAN market is still the large and important target market of Vietnam.
One third of Vietnamese rice export value in ASEAN market; meanwhile, Thai rice export value in
ASEAN market account about 12 percent. Thailand has exported rice to the world wide while Vietnam
has focused to the ASEAN even though ASEAN ratios of recent figures have been declined.

3
 Table 1. The percentage of rice exporting value of Vietnam and Thailand in ASEAN
Unit: 1,000 USD
Vietnam Thailand
Year
% ASEAN % ASEAN
ASEAN World ASEAN World
market market
2012-2016 951,048 2,901,801 31.8 580,520 4,682,668 12.4
2012 1,479,992 3,677,939 40.2 441,945 4,632,270 9.5
2013 719,879 2,926,255 24.6 336,138 4,420,370 7.6
2014 1,064,830 2,936,931 36.3 680,093 5,438,804 12.5
2015 1,020,913 2,807,904 36.4 794,239 4,544,023 17.5
2016 469,627 2,159,977 21.7 650,185 4,377,871 14.9
Source: USDA

More than 70 percent of Vietnamese rice is exported to Asian countries, with China the
biggest buyer, followed by the Philippines, Indonesia and Malaysia. In the sticky rice market,
ratios of exporting to Asian countries are much higher, i.e. 96% above of total exports volume
was concentrated on Asian countries in 2016 (See Fig. 2 and Fig. 3).

Fig. 2. Destination of Vietnam White Rice in 2016

Newzealand Switzerland
3% HongKong 1%
3%
Others
UAE 6%
3%

Philippines
27%
Cuba
8%

Malaysia
9%

China
Singapore 16%
10%
Indonesia
14%

Source: General Department of Vietnam Customs, 2016

4
 Fig. 3. Destination of Vietnam StickyRice in 2016

Malaysia Indonesia U.S.A

3% 3% 0%
HongKong
4%
Taiwan
5%

Singapore
26% China
59%

Source: General Department of Vietnam Customs, 2016

Started to export rice from 1989, Vietnam has considered rice as the key commodity to export for
long-term. During 17 years from 1995, the volume of rice export was increasing significantly. The
portion of rice export volume in rice production from 8% in 1995 to 18% in 2012. Comparing to
Thailand, the average percentage of rice export volume in rice production is 28%, nearly double to the
portion of Vietnam between 1995 and 2011. In the year 2012, however, Thailand export volumes
sharply dropped. This is because the rice procurement program of Thailand government with higher
price than world price that makes less competitiveness in rice exports market. Then it started to recover
in 2013. Opposite to Thailand case, Vietnam rice export adjusted its rice export target in terms of
volume to focus on product quality. It makes the export volume of rice declining gradually in recent
years (See Fig. 4.).

5
 Fig. 4.The Ratio of Export Volume/Production of Rice
0.40
0.35 0.35
0.32
0.30
0.28 0.28 0.28 0.28 0.28 0.28
0.26 0.26 0.27
0.25 0.24 0.24 0.24 0.25 0.25
0.24
0.20
0.180.18
0.17 0.17 0.18
0.15 0.14 0.15 0.15 0.15
0.13 0.13 0.13 0.13 0.12
0.10 0.11 0.11 0.12 0.11 0.11
0.09
0.08
0.05
0.00
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Vietnam Thailand

Source: FAOSTAT

Fig. 5. Milled Rice Export Average Price of Vietnam and Thailand

USD/ton
600

500

400

300

200

100

0
1995199619971998199920002001200220032004200520062007200820092010201120122013201420152016

Thailand Vietnam

Source: USDA

In the Figure 5, Thailand’s average price of rice exports is a little bit higher than Vietnam’s. The
major reason is the quality of Thailand’s rice is higher than Vietnam’s. During the short period from

6
2009 to 2013, Thailand’s rice export average price is much higher than Vietnam about 100 USD/ton.
This is owing to a kind of Thailand’s government subsidize for Thailand’s farmers through the rice
procurement program of the Thailand government with higher price than the world price. However, for
long term, it could not be a good strategy; from 2014 until now Thailand’s rice price went down to the
world rice price level to compete in the global rice market.

III. RESEARCH METHODOLOGY

3.1. Growth accounting and Development accounting

Growth accounting is often used to pinpoint the ultimate sources of growth, whereas, in fact, it is
only an accounting decomposition. To see this point, consider a neoclassical economy in the steady state
by Robert J. (2014).
Assuming Cobb-Douglas function:3

Y = AK α L1−α , 0 < 𝛼 < 1

g Y = g A + αg K + (1 − α)g L
α
𝑌⁄𝐿 = A(𝐾 ⁄𝐿)
g y = g A + αg k
g A = g y − αg k

This formulation was first presented by Solow (1957), where Y is GDP, A is productivity, K is a
capital volume, L is a labor employed, and α is the dividend of capital in GDP. TFP growth is usually
measured by the Solow residual. Let gY denote the growth rate of aggregate output, gK the growth rate of
aggregate capital, gL the growth rate of aggregatelabor and alpha the capital share.
Y K
Let y = , k = L ; y is output value per labor and k is capital value per labor. Therefore, gy denote
L

the growth rate of capita output, gk denote the growth rate of capita capital. The value gA is described as

3
For more detail information, see the appendix A.

7
an estimate of Total Factor Productivity (TFP) growth.TFP is the portion of output not explained by the
amount of inputs used in production.4
The development accounting seeks to explain cross-country differences in technology level. More
specifically, development accounting consists in calculating the relative contribution of output and input
factors differences in explaining cross-country differences in technology levels by Rabahet.al. (2010).
Development accounting is calculated by the following formula:

AV YV ⁄YT
= αV 1−αV αT 1−αT
AT K L ⁄ K T LT
V V

Let AV and AT denote the technology level of Vietnam and Thailand respectively, YV and YT are the
output value (income) of Vietnam and Thailand, respectively. KV and KT are capital value input of
Vietnam and Thailand respectively. LV and LT are the number of labor of Vietnam and Thailand
respectively. Based on these formulations, we calculate the growth accounting and the development
accounting in the agriculture sector and the rice sector of Vietnam and Thailand.

3.2. Definition of Market Comparative Advantages (MCA)

Market Comparative Advantage Index is needed to analyze competitiveness in the (importing)
market.
AXic ⁄AXc
MCAic =
WXic ⁄WXc

AXci : Country A export value of commodity i to country C

AXc: Country A total export value to country C
WXci : Total world export value of commodity i to country C
WXc: Total world export value to country C

We apply the MCA formula to calculate comparative advantages in rice exporting of Vietnam and
her competitor Thailand in four target markets; Indonesia, Malaysia, Philippines and Singapore.

4
Therefore, TFP is called “a measure of our ignorance”(Abramovitz, 1956)

8
 The adjusted MCA in this study is the average of first 5 years is considered as the value of the fifth
year and continues with lagging one year until the end of the period. The purpose of the adjusted MCA
is flatting the fluctuation of raw data and the large fluctuation of MCA ratio between Vietnam and
Thailand.

3.3. Estimation Model with Panel Data

We will analyze regression models with panel data to investigate the competitiveness of two
countriesin the rice import market. We are assuming the following regression equation.5

ln PIMit = C + β1 ln PGDPit+ β2ln RA_PRICEit+β3DISij+β4PLANDi+ β5 CHI_DUM+ εit

PIMit : the rice import value per capita of importing rice countries
PGDPit : the GDP per capita of importing rice countries
RA_PRICEit : the ratio average of Thai rice types export price divides average of Vietnamese rice
types exporting price
DISij : geography distance between the capital of 2 countries i and j
PLANDi : the total land areaper capita
CHI_DUM : dummy variable with code 1is China 0 is non-China
C : intercept of the model
β1, β2, β3, β4, β5 is the impact of each factor on the model
ln :logarithm

IV. RESULTS AND DISCUSSIONS

4.1. Sustainable Development in term of Rice Exporting

During 1990-1995, the annual average growth rate of capita capital increased 4.2% on the annual
average. The contribution of the capital element is important when it is first unleashed on the land use,

5
We assume that there are no country-specific differences in the rice import market. So we will adopt random
effects models to estimate factors of the imported rice market values.

9
market economy opening. The growth rate of per capita output, however, declined 2.5% on the annual
average because the growth rate of TFP declined 4.6% in this period.6

Table 2. Total Factor Productivity of Vietnam Agriculture Sector

Growth Rate Growth Rate of Contribution

Growth Rate
Year period of per capita per capita α from per capita
of TFP
output Capital Capital
0.023 0.009
1990-2015 0.032 0.046 0.500
(72%) (28%)
0.021 -0.046
1990-1995 -0.025 0.042 0.500
(-85%) (185%)
0.030 0.009
1996-2000 0.039 0.061 0.500
(78%) (22%)
0.029 0.004
2001-2005 0.033 0.057 0.500
(88%) (12%)
0.015 0.040
2006-2010 0.055 0.031 0.500
(28%) (72%)
0.018 0.027
2011-2015 0.045 0.037 0.500
(41%) (59%)
Source: FAOSTAT, ILO, The Conference Board 2016 www.conference-board.org/data/economydatabase/

The trend of contributing factors to Vietnam's agricultural growth were increasing in next stages
from 1996 to 2015 because capital production inputs such as fertilizers, pesticides, mechanization,
irrigation infrastructure and new varieties have been strongly invested.
Comparing to Thailand, the Vietnamese growth rate of capita output in agriculture is less than
Thailand’s. However, the growth rate of TFP of Vietnam is higher than Thailand during the whole
period. It means that the speed of Vietnamese technology rise in agriculture is faster than Thailand but
the outputefficiency is not really well compared to Thailand. Especially, within 10 years from 2001 to
2010, the performance of Thai growth rate in agriculture sector is very fast.The contribution from capita

6
The acceleration of growth will come primarily from growth in total factor productivity (TFP). Generally,
patterns observed in middle-income countries, more than 80 percent of growth will be due to TFP growth (World
Bank, 2016).Vietnamese TFP’s contribution to the economic growth could be lower than the average of those in
the middle income country. But the recent TFP in the agricultural sector contribute more than half to the
economic growth.

10
capital of Thailand is bigger than Vietnam. It means that instead of labor intensification, Thailand is
more capital intensification.

Table 3. Total Factor Productivity of Thailand Agriculture Sector

Growth
Growth Rate Contribution
Rate of per Growth Rate
Year period of per capita α from per capita
capita of TFP
output Capital
Capital
0.033 0.006
1990-2015 0.039 0.049 0.602
(84%) (16%)
0.061 -0.048
1990-1995 0.013 0.032 0.614
(151%) (375%)
0.032 -0.039
1996-2000 -0.007 0.053 0.609
(-452%) (552%)
0.021 0.058
2001-2005 0.079 0.035 0.605
(27%) (73%)
0.026 0.050
2006-2010 0.076 0.043 0.603
(34%) (66%)
0.045 -0.018
2011-2015 0.027 0.077 0.589
(167%) (-67%)
Source: FAOSTAT, ILO, The Conference Board 2016www.conference-board.org/data/economydatabase/
Note: Because of data source of alpha started from 1995; therefore contributions from per capita Capital and
Growth Rate of TFP only present for the year 1995.

According to the outcomes in Table 4, outputsofthe rice sector in Vietnamhave been growing 1.5%
on the annual average during the whole period. This index had dropped, however, -2.2% on the annual
average in recent years.
Vietnam’s total factor productivity in the agriculture has grown at a relatively rapid pace over the
past 25 years; meanwhile the trend in the growth rate of TFP inthe rice sector had been declining and
fluctuating during the whole period. This is because factors influenced such as stabilization of the
macroeconomic environment, reallocation of resources, capital human and technological innovation.
We are assuming the growth rate of labor in rice sector is equivalent with the growth rate of labor in
agriculture. Reducing the contribution of agricultural labor will increase growth rate of TFP. In the first
10-year-period, the large agricultural laborers who have difficulty moving to industrial and service
sectors have put pressure on the growth rate of TFP decline. However, from the year 2001 up to now,
the laborers have moved out agriculture sector that makes the growth rate of TFP started to rise.

11
 Table 4. Total Factor Productivity of Vietnam Rice

Growth Growth Contribution Growth Contribution Growth

Year
Rate of Rate of α from 1- α Rate of from Rate of
period
output Capital Capital Labor Labor TFP
0.022 -0.001 -0.006
1990-2015 0.015 0.044 0.5 0.5 -0.001
(144%) (-4%) (-40%)
0.026 0.005 -0.034
1990-1995 -0.004 0.051 0.5 0.5 0.009
(-688%) (-122%) (910%)
0.034 0.004 -0.016
1996-2000 0.022 0.068 0.5 0.5 0.008
(155%) (17%) (-72%)
0.022 -0.007 0.009
2001-2005 0.023 0.043 0.5 0.5 -0.014
(93%) (-30%) (37%)
0.014 -0.002 0.042
2006-2010 0.054 0.027 0.5 0.5 -0.004
(25%) (-4%) (78%)
0.017 -0.002 -0.038
2011-2015 -0.022 0.034 0.5 0.5 -0.003
(-75%) (7%) (167%)
Source: FAOSTAT, ILO, The Conference Board 2016 www.conference-board.org/data/economydatabase/

In table 5, compared to Vietnam, the Thai growth rate of TFP in the rice sector was analyzed. TFP of
the rice sector in Thailand has more declined than Vietnam’s. In the first periods from 1990 to 2000,
Vietnam inputs much more labor than Thailand; otherwise, Thailand inputs more capital than Vietnam
in rice production.

12
 Table 5. Total Factor Productivity of Thailand Rice

Growth Growth Growth Growth

Year Contribution Contribution
Rate of Rate of α 1- α Rate of Rate of
period from Capital from Labor
output Capital Labor TFP
0.023 -0.007 -0.009
1990-2015 0.008 0.034 0.60 0.40 -0.015
-302% (-87%) (-115%)
0.029 -0.020 -0.039
1990-1995 -0.03 0.014 0.61 0.39 -0.018
(-95%) (66%) (129%)
0.033 0.000 -0.021
1996-2000 0.013 0.054 0.61 0.39 0.001
(257%) (3%) (-161%)
0.015 -0.004 0.088
2001-2005 0.099 0.025 0.60 0.40 -0.01
(15%) (-4%) (89%)
0.019 -0.005 0.026
2006-2010 0.04 0.031 0.60 0.40 -0.012
(47%) (-13%) (66%)
0.024 -0.015 -0.099
2011-2015 -0.09 0.041 0.59 0.41 -0.036
(-27%) (17%) (110%)
Source: FAOSTAT, ILO, The Conference Board 2016 www.conference-board.org/data/economydatabase/

Figure 6 shows that the ratio of development accounting is increasing by the time, which means that
Vietnamese productivity level in the agriculture and the rice sector, are becoming better and better
compared to the productivity of Thailand during the whole period. Although the growth rate of TFP in
the rice sector declined, development accounting index has grown up significantly. It makes a sense that
productivity in the Vietnamese rice sector is over 2 times as much as compared with Thailand in 1995
and approximately 3 times in 2015.

13
Fig.6. Development Accounting: Vietnam and Thailand in the National Economy, Agriculture and
Rice Sector

Source: FAOSTAT, ILO

Table 6. Development Accounting Ratio of Vietnam compared to Thailand

Year period Whole economy Agriculture Rice

1995-2015 1.89 1.42 2.61

1995-2000 1.93 1.36 2.62
2001-2005 1.76 1.38 2.36
2006-2010 1.88 1.39 2.37
2011-2015 2.00 1.56 3.08
Source: FAOSTAT, ILO

14
 4.2. Competiveness in Rice Export

To analyze the competitive power in the importing markets, we are analyzing MCA index of major
importing markets in ASEAN 7 . MCA index is useful for the comparison analysis of market
competitiveness.
In Indonesia market, Vietnam has much more comparative advantages than Thailand during the
whole period from 1999 to 2016. Especially, in the period between 2004 and 2011, the MCA index of
Thailand still stable; otherwise, Vietnam’s MCA index was increasing significantly. In the last five
years, Vietnam’s MCA index had a sharp decline. One of the main reasons is that the reform in the
agricultural policy of Vietnam in recent years. Vietnam’s government aims to shift from cultivating and
exporting rice to other crops and aquaculture with higher value. However, Indonesia is still the
comparative advantage market of Vietnam comparing to Thailand in the near future.
In Malaysia market, the MCA index of Vietnam is higher than Thailand 4 times during the whole
period. The gap between Vietnam and Thailand was, however, becoming smaller and smaller. In the last
three year period, although Vietnam’s MCA index sharply decreased, Thailand’s MCA has a slight rise.
The MCA index of Vietnam and Thailand in Philippines market had shown the same trend as Malaysia
market.
As a whole, Vietnam was more comparative advantages than Thailand in three target markets
Indonesia, Malaysia and Philippines where consumers prefer the white rice from Vietnam to those from
Thailand. In contrast with other three markets, Singapore is a risky market for Vietnam comparing to
Thailand. Vietnam’s MCA index was fluctuating significantly during the whole period; meanwhile
Thailand’s MCA index was stable around 18 index level (See Figure A4).
Singapore is one of the targeted markets for increasing sales of Thailand’s rice as it is the main
staple in Singapore market, while Singaporean consumers have good purchasing power and prefer
healthy food and high-quality rice such as brown rice, aromatic rice and sticky rice than white rice. We
can say that Vietnam is not so much comparative advantage with Thailand in Singapore market.

7
For the more detail information, see the appendix C.

15
 Fig.7. The Ratio of Adjusted MCA Vietnam/Thailand in Four Rice Target Markets

18.0

16.0
15.3

14.0
12.9
12.0 12.1
11.6 11.6
10.6
10.0 10.2
9.3 9.3
8.8 8.9
8.5
8.0 7.8
7.4
6.5 6.5
6.0 5.9 6.0 6.0 5.9
5.4 5.3 5.3 5.4
4.9 5.0
4.7 4.7
4.2 4.3
4.0 3.8 3.8 3.9 3.7 3.9 3.8 4.0
3.6
3.3 3.4 3.4
3.1 3.0
2.0 1.6 1.8
1.3 1.5 1.6
1.0 1.2 1.3 1.0 1.0 1.3 1.2
0.8 0.8 0.8 0.8 0.7 0.7
0.0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Indonesia Malaysia Philippines Singapore

Source: UN COMTRADE

The Figure 7 summarizes MCA index to indicate that within four target markets, Philippines is the
market that Vietnam has the highest comparative advantages. Otherwise, the least comparative
advantage is Singapore market. Regarding Indonesia and Malaysia market, Vietnam has higher
comparative advantages than Thailand about 5 times. As a whole, the comparative advantages gap
between Vietnam and Thailand became smaller and smaller in recent years. It means that Vietnam could
not keep their higher position comparative advantages in term of rice export compare to Thailand in the
future.

4.3. Regression Analysis of Rice Import

According to the Table 7, the estimated results indicate that with 1% increments of GDP per capita
in rice importing countries, the rice import value per capita from Vietnam could increase 0.425% and the
rice import value per capita from Thailand increases 0.597%. It means that demands for (or consumption
expenditure of) Thai rice is more elastic with respect to the consumers’income than those of Vietnamese

16
rice. According to the estimation of this model, Thailand has more gain than Vietnam when
consumers’incomes in ASEAN have been increasing.
The second independence variable is the logarithm of the average exporting price ratio of Thai rice
compared to those of Vietnamese rice. An estimated result indicates that 1% increases in relative
exporting price of Thai rice compared to the Vietnamese will lead to 3.458% increase inper capita
import value of Vietnamese rice, and 1.755% decline in those of Thailand’s rice in rice importing
countries. It means that import demands for Vietnamese rice with respect to price is much more elastic
than those of Thai in the ASEAN market.
Although the average export price of Thai rice types export price is a little higher than Vietnam,
Thailand is still less negatively affected by the rise in rice exporting price than Vietnam. It means that
Thailand has more loyal consumers in the ASEAN market than Vietnam. According to the estimation of
this model, Vietnam loses their comparativeness with Thailand in term of exporting price in ASEAN
markets.

Table 7. Estimated Results

ln PIMit
Vietnam Thailand
Coef. Std. Err. Coef. Std. Err.
ln PGDPit 0.425** 0.143 0.597** 0.123
ln RA_PRICEit 3.458** 1.332 -1.755 * 0.716
DISij -0.001** 0.000 -0.002** 0.000
PLANDi 9.345ns 26.377 -54.163** 19.980
CHI_DUM 3.095** 0.420 7.524** 0.512
Constant -2.099ns 1.475 -0.164ns 1.754
R2 0.503 0.917
# observations 93 95

# markets 5 5

Note: ** statistically significant at 1 percent level

* statistically significant at 5 percent level
ns
statistically insignificant

17
 As expected, increases in distance between exporters and importers could lead to decreases in
importing values of rice per capita,which means the higher logistics and transport costs could discourage
the rice importing. In target markets, rate of changes in import demands for Thai rice with respect to
distance is more sensitive compared to those of Vietnamese. Import demands for Thai rice could be
more sensitive on the conserving conditions. Import demands for Thai rice are likely to lean on the high
quality, processing, and conserving conditions.
Increases in the land area per capita in rice import countrieswere estimated to reduce rice import
value from Thailand. However, it is not significant in Vietnam case.The more land could imply the more
opportunity and experience for cultivating, companying better capabilities and knowledges to produce
rice by themselves. Therefore, per capita land size of importing countries could affect adverse impacts
on the rice imposing. 8
Although China is not included in the ASEAN market, China is the biggest importing rice market
from both Vietnam and Thailand, and strongly affects rice exporting values of Vietnam and Thailand in
ASEAN market. Therefore, China is coded a dummy variable. The outcomes show that if having China
market, it could increase 3.095% of the export value from Vietnam and 7.524% of the export value from
Thailand. It means that Thailand could be much more affected by the China market than Vietnam.

V. IN LIEU OF CONCLUSION

Vietnam could be remained as a leading country among one of rice exporters in the world market.
But the degree of competition has been becoming increasingly fierce by showing itself on the ASEAN
market. This study has provided a comprehensive overview of Vietnam’s position in ASEAN’s rice
markets when compared to its most important competitor, Thailand. Although Vietnam has developed
more inputs and higher TFP, higher comparative advantages measured by MCA index; Vietnam is
gradually losing competitiveness in the ASEAN market compared to Thailand. Specifically, estimated
by models, Vietnam already loses Thailand in term of exporting price and income rise of consumers in
importing countries.

8
To fix endogeneity problems, we introduced a country’s size variable, per capita land size as an instrument
variable. For details, see Frankel and Romer (1999)

18
 According to the above-mentioned, markets with high GDP per capita tend to be less likely to import
rice from Vietnam, their demand will be requiring better and higher quality, less hybrid rice varieties, as
well as the standard of production (in terms of fertilizer, chemical etc.) will be kept higher. Therefore, it
is necessary to improve the quality rice to reach consumers in ASEAN market.
According to FAO’s forecast, in the world rice market, global demand for rice will increase up to till
2030 and rice trade expansion will continue increasing. Therefore, Vietnamese rice sector should
increase outputs in order to increase revenue and compete with other competitors, especially Thailand in
rice markets. However, increasing output means increasing input that results to affect negatively to the
environment and this is not sustainable development.
For the sustainability, to enhance the competitive and sustainable development for the long term, the
Vietnam rice sector should increase its total factor productivityinstead of more inputs of capital and
labor. It means technology and efficiency should be increased and promoted to alleviate the negative
effects on the environment.
By linking the growth rate of total factor productivity to innovation, the public investment for the
innovation in the rice sector should receive more attentions. The Vietnam government should take
market oriented policies to improve the agricultural productivity and assure the sustainable development
of the agricultural sector with public investments on R&D and the environment.With climate change
expected to place downward pressure on yield growth of many crops (OECD, 2017); the role of
agricultural R&D and innovation systems will become increasingly important in the future agricultural
development to help safeguard future levels of productivity growth and mitigate some of the expected
negative effects of climate change over the next decade and beyond.

19
REFERENCE

Abramovitz, Moses, 1956, “Resources and Output Trends in the United States since 1980,”American
Economic Review 46 (May), pp5-23.

Barro, Robert J., and Xavier Sala-i-Martin, 2004, Economic Growth, 2nd edition

FAO., 2018. FAOSTAT.http://faostat.fao.org

Frankel, J. A., and D. Romer, 1999, “Does Trade Cause Growth?,”American Economic Review, Vol. 89.
No. 3, pp379~399

ILO., 2018. International Labor Organization.http://www.ilo.org/ilostat

Le ThiBich Lien and Luo Xiao Feng, 2017.“A Comparison on Rice export between China andVietnam:
A constant market share analysis,”E3 Journal of Business Management and Economics Vol. 9(1). pp.
001-011 Jan, 2018

SomphoomSawaengkun, 2014.“Economic Factors Affecting Rice Export of Thailand,”International

Journal of Economics and Management Engineering, Vol.8, No.9, 2014

SonthayaSampaothong, 2016. “Factors affecting export performance of Thai rice exporter in the Chinese
market,”Res. J. Business Manage.,10: 74-85.

United Nations Commodity Trade Statistics Database (http://comtrade.un.org),

The Conference Board (https://www.conference-board.org/data/economydatabase/),

USDA., 2018. United State Department of Agriculture.https://www.fas.usda.gov

UN COMTRADE Database, 2018.https://comtrade.un.org/data/

World Bank Group, 2016.Transforming Vietnamese Agriculture: Gaining More from Less, Vietnam
Development Report 2016

World Bank, 2018, World Bank Data Open.https://data.worldbank.org/

20
 APPENDIX A: Formula calculate Growth Accounting

lnY = lnA + αlnK + (1 − α)lnL

dlnY dlnA dlnK dlnL
= + α + (1 − α)
dt dt dt dt
Y K
ln ( ) = lnA + 𝛼ln ( )
L L
Y K
Let y = , k=
L L
lny = lnA + αlnk

dlny dlnA dlnk

= + α
dt dt dt

APPENDIX B:Growth Accounting of Vietnam and Thailand whole economy

Table A1. Growth Accounting of Vietnam economy

Growth
Growth Rate Contribution
Rate of Growth Rate
ofpercapita α from percapita
percapita of TFP
Capital Capital
GDP
0.035 0.010
1990-2015 0.046 0.071 0.500
(78%) (22%)
0.103 -0.044
1990-1995 0.060 0.207 0.500
(173%) (-73%)
0.031 0.013
1996-2000 0.044 0.061 0.500
(70%) (30%)
0.036 0.009
2001-2005 0.045 0.071 0.500
(79%) (21%)
0.027 0.016
2006-2010 0.043 0.054 0.500
(63%) (37%)
-0.006 0.045
2011-2015 0.040 -0.011 0.500
(-14%) (114%)
Source: World Bank Data Open, The Conference Board 2016 www.conference-board.org/data/economydatabase/

21
Table A2. Growth Accounting of Thailand economy

Growth
Growth Rate Contribution
Rate of Growth Rate
of percapita α from percapita
percapita of TFP
Capital Capital
GDP
-0.003 0.032
1990-2015 0.029 0.002 0.602
(-9%) (109%)
0.064 -0.002
1990-1995 0.062 0.063 0.614
(103%) (-3%)
-0.084 0.075
1996-2000 -0.009 -0.140 0.609
(918%) (-818%)
0.061 -0.022
2001-2005 0.039 0.101 0.605
(158%) (-58%)
-0.004 0.033
2006-2010 0.029 -0.008 0.603
(-14%) (114%)
0.003 0.028
2011-2015 0.031 0.005 0.589
(9%) (91%)
Source: World Bank Data Open, The Conference Board 2016 www.conference-board.org/data/economydatabase/
Note: because of data source of alpha started from 1995; thereforealpha, Contribution from capita Capital and
Growth Rate of TFP only present for the year 1995

22
 APPENDIX C: Graphs display MCA index in 4 target markets

Fig. A1.MCA Adjust of Vietnam and Thailand in Indonesia Market

60.0

50.0 51.1 51.3

48.4 49.4
45.0 45.7 44.8
42.1 42.8
40.0 41.1
36.3
33.5 32.6
30.0 29.7 30.7
27.4 27.3 26.7

20.0
15.9
13.5
11.9
10.0 9.7 8.7
8.0 7.3 7.7 8.2 8.0 7.7 8.3 8.5 8.3 7.0
5.5 5.1 5.3
0.0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Vietnam Thailand

Source: UN COMTRADE

Fig. A2.MCA adjust of Vietnam and Thailand in Malaysia Market

50.0
45.0 44.4
42.4 41.8
40.0 40.1 40.2 40.8 40.8
37.4 37.9
35.0 36.1

30.0 29.2
25.0
23.4
20.0 19.0
15.0
13.6 12.6
10.0 11.4 10.9 10.2
8.6 7.7 7.1
5.0 5.2 4.5 4.7 5.2
3.9
0.0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Vietnam Thailand

Source: UN COMTRADE

23
 Fig. A3.MCA adjust of Vietnam and Thailand in Philippines Market

60.0
54.4 53.9 54.5
52.7
50.0
48.3
42.1
40.0
36.2
30.0 31.2
27.8 27.9 26.4
24.7
20.0 21.8

10.0
6.2 6.2 5.1 5.4 3.8 2.7 3.1 3.3 2.4 3.0 3.8 4.1
2.3
0.0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Vietnam Thailand

Source: UN COMTRADE

Fig. A4.MCA adjust of Vietnam and Thailand in Singapore Market

35.0

30.0 30.9
28.5 27.7
25.0 25.7
23.8
22.2 22.6 22.4
21.2
20.0
18.7 18.5 18.5 18.3 18.0 17.8 19.2
17.5 17.5 17.7 18.1 18.2 18.3
17.3 17.4 17.7 17.8 17.6 17.5 17.5 17.5
15.0 15.4
13.6 14.1 14.9
13.2 12.7
10.0

5.0

0.0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Vietnam Thailand

Source: UN COMTRADE

24