Supply Chain Competitiveness

    India's supply chain competitiveness has arisen significantly over the last decade, The following tables give a flavor of its current position, with India ranking better than Vietnam in virtually every available index (including Infrastructure, Cross border trade & customs)). India and Vietnam also have the lowest wage rates in Asia. India has the only country that compares with China in terms of the size of its domestic market and the size of its Human Resources, a fact attested to by the fact that every Fortune 500 company has an R&D laboratory in India as do many of the Asian countries. It therefore seems that lack of credible information with potential supply chain investors is an important reason for India receiving a fraction of the FDI diversifying from China during the last 12-18 months.

 

Ease Of Doing Business : Rank
Economy	Global Rank	Global Score	Protecting Minority Investors	Getting Electricity	Getting Credit	Construct-ion Permits	Resolving Insolvency	Trading across Borders	Paying Taxes	Starting a Business	Register Property	Enforcing Contracts
Malaysia	12	81.5	2	4	37	2	40	49	80	126	33	35
Thailand	21	80.1	3	6	48	34	24	62	68	47	67	37
China	31	77.9	28	12	80	33	51	56	105	27	28	5
India	63	71.0	13	22	25	27	52	68	115	136	154	163
Vietnam	70	69.8	97	27	25	25	122	104	109	115	64	68
Indonesia	73	69.6	37	33	48	110	38	116	81	140	106	139
Philippines	95	62.8	72	32	132	85	65	113	95	171	120	152

 

LOGISTICS Rank
Country	Aggregate LPI		Customs	Infra-structure	International shipments		Logistics competence		Tracking & tracing		Timeliness
	Rank	Score
China	27	3.6	30	24		18	27			28		29
Thailand	34	3.36	37	41		32	35			35		36
Malaysia	35	3.34	38	33		30	34			38		46
India	42	3.22	43	48		38	39			37		50
Vietnam	45	3.16	51	54		45	40			44		47
Indonesia	51	3.08	62	61		51	48			45		49
Philippines	64	2.91	70	71		39	64			58		83

Conclusion

      According to Economist Trinh Nguyen of Netexis, possible reason for Vietnam's success is targeted attraction & facilitation of key firms in the Global supply chain and successful creation of Demonstration and Cluster effects: 

       "Vietnam targets specific sectors (labor intensive like textile & electronics). To do so, it provides incentives like cheaper taxes, clearing land sites & building infrastructure (roads & access to airports etc). It targets big projects to get cluster effects. For example, identify a Massive Global firm like Samsung Electronics and give it tons of incentives. The bet is that if Samsung is successful other Korean firms will follow and smaller firms that are part of the supply chain’ll follow. After Samsung came to Vietnam, other South Korean firms like LG followed. Japanese firms have been around but big projects like Intel & Samsung Electronics are key as PR tools for smaller Taiwanese & other firms to follow.

      That, in turn pushes demand for trade infrastructure. Then you get investment in energy/electricity/transport/port/air infra, because people anticipate the sectors linked to production will demand more supply of electricity/better roads/deeper ports/etc. Cluster effect!"