The term “Dutch disease” says about apparent relationship between the increase in exploitation of natural resources and a decline in the manufacturing sector. The countries living on natural resources exports have been warned that they would have to pay a heavy price in the future for their overexploitation activities today.

Digging the earth, undermining the future

The Ministry of Industry and Trade (MOIT) has recently granted tens of export licenses to the mining enterprises in 13 localities, saying that this was a temporary solution to help the enterprises clear their big stocks and take back the investment capital.

However, the explanation by MOIT cannot calm the people down. They believe that the ministry’s decision has neutralized the government’s instruction No. 02 released in January 2012 on strengthening the state management over the exploration, exportation, processing and export of minerals.

The instruction said that Vietnam stops exporting many types of minerals under any forms.

In fact, the decision to stop exporting raw minerals was made many years ago already, while the regulations on tightening the control over the mineral exports have been promulgated every year. However, the regulations have also been removed many times.

Mining enterprises were told that they could export inventory ilmenite from titanium mining until the end of June 2012. However, later, the green light on was turned for enterprises to continue the export

Some documents said that enterprises must not export iron ore, unless they needed to export iron ore to exchange for coke coal. However, in most cases, the ore exports were not for the exchange of coke coal, but just to help enterprises clear the inventories.

Nguyen Thanh Son, Director of the Song Hong Energy Corporation, affirmed that the Dutch disease has been raging in Vietnam. He has many times warned that the easiest source of income is the sale of minerals, but it is not a sustainable source of income.

The trap in the future

He compared the two different development models of the two localities, Quang Ninh province which has been relying on natural mineral exploitation, and Vinh Phuc province, with no minerals, to prove his argument.

Quang Ninh now ranks the fifth in the country in terms of the income for the state budget. However, it lags far behind Vinh Phuc if considering the income for the state budget on the total investment.

A report of the National Assembly’s Steering Committee showed that the number of mining enterprises has been increasing continuously from 427 in 2000 to nearly 2,000 in 2011. Meanwhile, more than 4,200 licenses for mineral exploitation have been licensed in 62 provinces and cities.

The figures show the rapid development of the mining industry, which has resulted in the natural resources loss and the devastation to the environment.

Though the number of enterprises keeps increasing, the contribution of the mining industry to the state budget has not increased accordingly. A report showed that in 2008, the mining industry ranked the fifth in terms of the investment capital, but ranked the 8th only in terms of the contribution to the GDP growth.

The problem is that Vietnam has been mostly exporting raw materials, not processed products. Meanwhile, it has to import processed products which are the input materials for many manufacturing industries.

Thời báo Kinh tế Sài Gòn - March 31, 2013