The Ministry of Planning and Investment has completed the first draft decree offering guidelines for the implementation of some of Vietnam’s commitments to the WTO.
It is seen as an important legal framework highly anticipated by the foreign business community. The draft decree, however, caused much debate as it still fails to satisfy mandatory WTO rules and enhance Vietnam’s competitiveness in a new global context.
Fred Burke, leader of Vietnam’s Business Forum’s Manufacturing and Distribution Working Group, has compiled 28 pages of comments on the draft decree, with inputs from several business chambers, law firms and the STAR project. The length of his comments is even five pages longer than the draft decree, which he received from MPI legal officials.
“In the absence of clear guidance, it seems most officials will tend to take the narrowest interpretation of the rules, which in many cases means the current environment for foreign investment has become more difficult than it was before WTO accession,” Burke said.
“This was certainly not anyone’s expectation or plan, so it is important that clearer guidance is provided to encourage faithful implementation of Vietnam’s WTO commitments,” he said.
Burke, who is Baker & McKenzie’s managing partner in Vietnam, said most of the draft decree’s articles had not provided proper responses to the business community’s requirements.
He said the definition of economic needs tests (ENT) given in Article 2 of the draft decree resulted in the commentator’s confusion. This term is important because the General
Agreement on Trade in Services (GATS) prohibits any form of “economic needs test” as a criterion for licensing foreign service suppliers. However, in Vietnam’s case there is an unusual exception in its commitments in specific service sectors for foreign-owned retail establishments.
Specifically, according to the draft decree, Vietnam reserves the right to subject foreign-owned retail establishments, after the first one, to an economic needs test.
“If the term ‘economic needs test’ in the draft decree is intended to refer to retail service establishments only, which we believe it is, then the definition should not be different from what Vietnam has agreed to in the services schedule,” Burke said.
“Given that the concept of economic need may be subjective, and no governmental authority is omniscient, we therefore suggest that a finding of ‘economic needs’ for the purpose of this test should be able to be produced for any ministry or ministerial level organisation relevant to the proposed retail establishment.”Trading rights is another concern as the draft decree defines trading rights as “the right to import and export by foreign businesspersons, [and] enterprises with foreign invested capital in Vietnam”.
The definition also left an EU delegation representative confused.
“We understand that trading rights include the right to import goods. Can the government confirm if once the goods are imported, the importer can sell to only one local distributor, or can it be sold to more and does this distributor need to be a wholesaler or can it be a retail distributor,” said the EU representative.
Burke criticised the limitations of trading and distribution rights of Vietnamese enterprises with foreign investment, which are clarified in the Article 8 and 10 of the draft decree.
According to the Article 8, foreign investors are not permitted to make capital contributions or purchase shares in a Vietnamese enterprise involved in:
(i) Import of crude oil, petroleum, aircraft, aircraft parts and aviation means and equipment, feature films, newspapers, cigarettes, cigars and other processed cigarette products;
(ii) distribution of cigarette, cigars, books, newspapers, magazines, articles with recorded images, precious metals, precious germs, pharmaceutical products (except for non-pharmacy nutrition products in forms of tablets, capsules or powder), explosives, crude oil and processed oil, rice, sugar made from sugar canes and from beet;
(iii) supply of mining-related services including: provision of supplies, equipment chemicals, base services, ship services, livelihood services, flight services to serve petroleum activities, and
(iv) other service sectors/sub sectors stipulated in the Schedule for Commitments on Services that Vietnam is permitted to apply restriction measures due to national security and social order reasons.
“This article prohibits foreign investors from buying into certain protected industries at all. This will give rise to some problems for ongoing and planning projects if the rule is not cast more flexibly.” “For example, import of aircraft and aircraft parts are prohibited for enterprises with any foreign investment at all. This means that if a foreign investor were to buy say 30 per cent of Pacific Airlines, then that airline would henceforth be prohibited from importing its own aircraft and aircraft parts. That may be a significant disincentive to the investment for both parties,” Burke said.
Tran Tuan Phong, a lawyer with Vilaf Hong Duc law firm, shared similar sentiments. He said that foreign investors had been waiting a long time for guidance documents of the Decree 23/2007/ND-CP stipulating in detail the Commercial Law in direct relation to the trading rights of foreign-invested companies in Vietnam.
“We came to work but nobody did anything as they had to wait for guidelines on that law. It is evident that congestion will take place when the number of investors having to wait increases. This modus operandi is very inefficient and will discourage investors,” he said.
Phong was also concerned that several changes included those for strict application of commitments, which had been announced, or application of these rules in accordance with Vietnamese laws, or application of the practical cases.
“The reason for differing views is because of time it took for Vietnam to negotiate WTO admission was too long - about a decade. During this period of time, there were many changes in Vietnamese policies and conditions,” he said.
Source: VIR
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment