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Vietnam Investment Review, May 13, 2002

 Nation identifies hurdles to WTO membership

 No one denies that opportunities and challenges are facing Vietnam on its voyage to become full member of WTO.

 At a recent national conference on Resolution 07 on international integration, the ramifications of economic and the principle elements of the task ahead were defined and clarified to representatives of 61 provinces and cities

 At the meeting, Deputy Prime Minister Nguyen Manh Cam, Chairman of the National Committee of International Integration, highlighted the benefits already seen from the country’s drive toward to an open economy

 Chief and obvious amongst these rewards were increased export earnings and foreign direct investment

 Export earning increased rapidly from $2.4 billion in 1990 up to $15.1 billion last year with the average annual growth rate of 20%

 The country has attached $42 billion in over 3,000 FDI Projects, of which about 21 billions has been disbursed. The flow of capital plays an important role in the economy, accounting for 30% of the social investment, 35% of industrial production value and 20% of export turnover

 The international integration process, Cam highlighted, has also helped the country gain around $20 million in Oversea Development Assistance ODA

 However, “the integration process is not smooth. It will be a difficult path posing both external and internal challenges”, Cam warned.

 These obstacles included a lack of understanding and awareness of the process by ministries and local government and absence of an effective roadmap for integration with the region and the world, he said

 Private enterprise also appeared to have only very basic awareness of integration. Although the business environment has been improved, the country’s legal system was not yet ready for the process, he added

 A Central Economic Board report recently revealed that of enterprises which contacted the board for information, 16% claimed to have little understanding about the integration process and 50% lacked any information at all abut the Bilateral Trade Agreement

 In the context of global integration, raising the competitiveness of the economy as a whole and local products are issues of prime importance

 Deputy Minister of Industry Nguyen Xuan Chuan said: “Alarm bells around should be rung whenever we examine the comparative advantages of Vietnamese goods in the world market”

 In the terms of economy, Vietnam is still rated in a group of countries with low competitive positions, despite the considerable progress it has made in the areas of market orientation, increasing efficiency and subsidy elimination

  Unfortunately it (the economy’s rating) has continued to drop over the last three years”, Chuan said

 As rated by the Global Competitive Forum magazine, 1998, Vietnam ranked 43rd among 59 East Asia countries in the terms of competitive edge

 In 1999, it slipped down to 48th position, and in 2000, to the 53rd place. The rankings are made on the basis of criteria such as production technology, research and development costs, quality of business environment and access to capital markets

 In the context of international integration, some sectors are still considered too reliant on state protection by way of taxes and subsidies. The necessary withdrawal of much of this support will pose a major challenge for a number of industries such as the motorcycle industry, tiles and textiles and garments

 At the conference, the Deputy PM discussed generalities behind the plan for international integration. He said: “The roadmap to open our market to the world must be taken step-by-step with rational and gradual moves”

“If we are too hasty and take step in terms of level and time which the economy can’t absorb, the country could incur irrecoverable losses, lose a web of enterprises and trigger a myriad of other unforeseeable outcomes”, Cam pointed out

 On the other hand, stretching the integration process for too long would delay Vietnam’s WTO accession and could generate apathy on state subsidies and protectionism amongst enterprises

 

 

FIRST STEP TO GLOBAL INTEGRATION

 

On the sidelines of the International Integration Conference, VIR spoke with Deputy PM Nguyen Manh Cam, Chairman of the National Committee of International Integration, about what the nation must do to integrate into regional and global trading systems

 The task of international integration was set by firmly in Resolution 07 by Politburo. How is this to be implemented?

 The first step is to enhance coordination among localities, ministries and branches on the basis if programmers masterminded by the government and certain contents specified in Resolution 07 of the Politburo. This way, centrally managed and locally managed enterprises can be made aware of the integration process and better prepare themselves

 Currently, Vietnam is participating in regional and intercontinental organizations. It is a long process. For example, the country will complete membership of AFTA in 2006. APEC membership will be completed in 2020, and, of course we are seeking WTO accession ASAP

 China took 15 years to gain accession while Russia is now in its eighth year but has not been made a member of the trading system yet. Vietnam filed the application letter for accession in 1995 and has undergone four negotiation rounds for making policies clear.  This has been in order to clarify 1,500 queries regarding transparency of economic and trade policies.  Now, fundamentally, we have completed the transparency requirements, and will go in to essential negotiations.

 When do you expect Vietnam will gain accession into WTO?

 WTO’s members at first often make high demands on potential new members.  However, during the process of negotiation, the two parties may reach a sympathy and requirements maybe lowered.  In working rounds with WTO and other international organization in the next few years.

Some advised us to try for membership in 2003.  But I  think we are making efforts to be member by the end of 2004, which means before WTO’s current negotiation rounds ends.  The longer Vietnam stays out, the higher hurdles will become to getting in.

 Much depends on the capacity of the economy.  The Resolution of the Ninth Congress clarifies that the country must continue to accelerate reform aimed at industrialization and modernization.

 Fruitful results from WTO negotiations are expected to speed up the nation’s reform process too.

 

 

VIR No. 552/ May 13-19, 2002