he price increases in the last eight months, according to economist Pham Chi Lan, have been explained as reverse effects of Vietnam’s admission to the WTO due to shortcomings in the management of the national economy.
The consumer price index (CPI) has increased by 6.78% through August, and 8.57% over the same period last year. The most worrying thing is that rural areas have exceeded urban areas in terms of CPI growth rate: in August, the CPI increase in rural areas was higher than that in urban areas, 0.6% vs. 0.5%. The continued price increases have negatively impacted peoples’ lives.
The price increases seem to come contrary to peoples’ expectations that prices would decrease as a result of WTO membership.
However, as Economist Pham Chi Lan, a former member of the Prime Minister’s Research Team, has pointed out, the price increases were expected. This is called one of the ‘prompt reverse effects’ occurring right after Vietnam has joined the WTO and signals the process of more deep integration into the world’s economy.
Mrs Lan said that WTO membership had brought both active and inactive effects. The active ones include the increasing investment flow into Vietnam, while the inactive ones include the price increases.
According to Mrs Lan, since becoming an official member of the WTO, the vulnerability of the national economy has become clearer. The links connecting Vietnam and the world’s market have become closer, i.e. the world’s market fluctuations have more direct impacts on Vietnam. Vietnam, for example, has been influenced by the oil price increases. It proves to be quite different from 1997, when the financial and monetary crisis occurred. At that time, the outside happenings did not have negative impacts on Vietnam.
As Vietnam has opened its market, the national economy has shown some shortcomings. As Vietnam’s management skills are not good, it finds it hard to control the market and prices.
Moreover, Vietnam still lacks necessary factors to run a market in which prices are defined purely by the supply and demand basis. Let’s take petrol price as an example. Enterprises did not lower the selling prices of petrol even when the world’s prices went down and the government asked them to lower prices. Mrs Lan said that in this case, it was because Vietnam did not have necessary market forces which could create healthy competition. Vietnam has 11 petrol distributors, including nine state owned, and Petrolimex alone holds up to 60% of the market share.
Mrs Lan said that in the short term, Vietnam would have to bear reverse effects of WTO membership, and the undesired effects would gradually disappear when Vietnam improved its management capability.
Source: VNE
Showing posts with label WTO. Show all posts
Showing posts with label WTO. Show all posts
Tuesday, August 28, 2007
Monday, July 30, 2007
WTO spurs greater foreign investment
A remarkable wave of foreign investment in Viet Nam after it acquired membership in the World Trade Organisation six months ago has created a challenge for enterprises and the economy, according to local economists.
The big question is how the country efficiency uses the surge in capital to create real growth, they said.
There has been a wave of direct and indirect foreign investment in Viet Nam. For the first seven months of this year, foreign investors have registered total capital of 7.5 billion USD, an increase of nearly 50 percent in comparison with 2006.
That figure will rise if administrative procedures are reformed, according to some experts.
In addition, all export commodities have risen around 28.6 percent and officials expect the export market to increase by 20 percent for the whole year.
Implementation of WTO’s commitments has opened up new opportunities for the economy by eliminating some barriers on quotas and export prices, according to government reports.
Furthermore, foreign capital and development have encouraged mobilisation of local investment with private savings and capital from local enterprises.
Since the start of this year, 8 trillion VND (500 million USD) has been mobilised via issuing corporate bonds according to the Finance Ministry. It is expected that this figure will double during the second half of this year and surpass last year’s figure of 15 trillion VND.
However, the sharp increase in inflation can be detrimental for economic growth.
“Many people thought that when we joined the WTO, prices would be reduced. But facts show that the prices of many commodities in Viet Nam are now approaching international prices, and are increasing,” said Nguyen Tien Thoa, head of the Finance Ministry’s Price Management Bureau.
With an open market and lower taxes, foreign goods will flood into the local market and create a wave of lower prices. However, as Viet Nam strengthens exports for certain key agricultural products, prices for such goods will increase, said Thoa.
“In the future, taxes will be cut, more industries and services will be opened to foreign enterprises. Therefore, prices and the quality of products will improve,” he added.
Viet Nam must greatly increase its per capita savings ratio and efficiently mobilise capital sources to secure real long-term economic development.
At present, Viet Nam converts local savings into investment at a rate of 17-20 percent of GDP, half the number in China.
Increases in foreign direct investment and higher efficiency in FDI usage will decide Viet Nam’s competitive edge in the near future.
Viet Nam should improve the quality of its human resources, reform its management systems and increase the proportion of savings, said Resident Representative of the International Monetary Fund, Il Houng Lee.
“Threat to development will be greater if the government only focuses on economic growth but forgets these three factors.” Lee said.
Pham Chi Lan, a senior economist, warned that enterprises should familiarise themselves with WTO regulations.
“Understanding these regulations will help enterprises survive and win in a fierce competitive international market,” she said.
Source: VNA
The big question is how the country efficiency uses the surge in capital to create real growth, they said.
There has been a wave of direct and indirect foreign investment in Viet Nam. For the first seven months of this year, foreign investors have registered total capital of 7.5 billion USD, an increase of nearly 50 percent in comparison with 2006.
That figure will rise if administrative procedures are reformed, according to some experts.
In addition, all export commodities have risen around 28.6 percent and officials expect the export market to increase by 20 percent for the whole year.
Implementation of WTO’s commitments has opened up new opportunities for the economy by eliminating some barriers on quotas and export prices, according to government reports.
Furthermore, foreign capital and development have encouraged mobilisation of local investment with private savings and capital from local enterprises.
Since the start of this year, 8 trillion VND (500 million USD) has been mobilised via issuing corporate bonds according to the Finance Ministry. It is expected that this figure will double during the second half of this year and surpass last year’s figure of 15 trillion VND.
However, the sharp increase in inflation can be detrimental for economic growth.
“Many people thought that when we joined the WTO, prices would be reduced. But facts show that the prices of many commodities in Viet Nam are now approaching international prices, and are increasing,” said Nguyen Tien Thoa, head of the Finance Ministry’s Price Management Bureau.
With an open market and lower taxes, foreign goods will flood into the local market and create a wave of lower prices. However, as Viet Nam strengthens exports for certain key agricultural products, prices for such goods will increase, said Thoa.
“In the future, taxes will be cut, more industries and services will be opened to foreign enterprises. Therefore, prices and the quality of products will improve,” he added.
Viet Nam must greatly increase its per capita savings ratio and efficiently mobilise capital sources to secure real long-term economic development.
At present, Viet Nam converts local savings into investment at a rate of 17-20 percent of GDP, half the number in China.
Increases in foreign direct investment and higher efficiency in FDI usage will decide Viet Nam’s competitive edge in the near future.
Viet Nam should improve the quality of its human resources, reform its management systems and increase the proportion of savings, said Resident Representative of the International Monetary Fund, Il Houng Lee.
“Threat to development will be greater if the government only focuses on economic growth but forgets these three factors.” Lee said.
Pham Chi Lan, a senior economist, warned that enterprises should familiarise themselves with WTO regulations.
“Understanding these regulations will help enterprises survive and win in a fierce competitive international market,” she said.
Source: VNA
Wednesday, July 18, 2007
M&A trend arouses monopoly fears
Economists are concerned that the growing number of merges and acquisitions (M&A) - the latest trend in the market as smaller companies learn to be lean and mean - will progress unabated, giving way to monopolies and anti-competitive behaviour.
According to First Asia Finance Group, a Hong Kong based financial advisor, more than half of the roughly 300,000 small and medium-sized enterprises (SMEs) currently in the market will either close or merge with other companies over the next six years due to stronger competition and the rich environment for M&A activity.
There have already been some major deals signed this year. The Dai-ichi Group acquired Bao Minh-CMG Life Insurance in a coup de main to quickly breach the Vietnamese market.
In addition, VinaCapital purchased a 70 per cent stake in both the Metropole Hotel and the Sai Gon Ommi earlier this year through its VinaLand fund. Executives say the fund is hunting for other high-end hotels to buy.
Don Lam, director of VinaCapital, said the recent wave of M&A in Viet Nam may be a necessary step to improve the efficiency of many poorly run companies and create better economies of scale.
M&A could also lead to improved brand recognition on a national and international scale, say experts, as companies use their combined strengths to reach more consumers.
"Mergers and acquisitions has also proven to be a new and important channel to attract foreign investment," said Nguyen Thi Bich Van, deputy director of the Ministry of Planning and Investment’s Foreign Investment Agency.
There are concerns, though, that if left unchecked M&A activity could lead to anti-competitive behaviour and the emergence of monopolies.
Legal regulations to ensure competition should, therefore, be streamlined, especially as Viet Nam opens its market under the WTO agreement to well-funded multinational corporations, says Nguyen Nhu Phat, deputy chairman of the State and Law Institute.
M&A activity is currently regulated under several laws - the Investment Law, Enterprise Law and Securities Law - which causes regulatory overlaps.
The Ministry of Trade’s Competition Administration Department will have to take a bigger role in preventing unwanted monopolies, says Phat. He also worries that regulators may be restricted given the department has three roles: administrator, investigator and executor.
Dinh Thi My Loan, director of the Competition Administration Department, says there are plans to streamline regulatory procedures for mergers and acquisitions. The department, though, will have to co-operate closely with the State Securities Commission, the Ministry of Planning and Investment.
Source: VNS
According to First Asia Finance Group, a Hong Kong based financial advisor, more than half of the roughly 300,000 small and medium-sized enterprises (SMEs) currently in the market will either close or merge with other companies over the next six years due to stronger competition and the rich environment for M&A activity.
There have already been some major deals signed this year. The Dai-ichi Group acquired Bao Minh-CMG Life Insurance in a coup de main to quickly breach the Vietnamese market.
In addition, VinaCapital purchased a 70 per cent stake in both the Metropole Hotel and the Sai Gon Ommi earlier this year through its VinaLand fund. Executives say the fund is hunting for other high-end hotels to buy.
Don Lam, director of VinaCapital, said the recent wave of M&A in Viet Nam may be a necessary step to improve the efficiency of many poorly run companies and create better economies of scale.
M&A could also lead to improved brand recognition on a national and international scale, say experts, as companies use their combined strengths to reach more consumers.
"Mergers and acquisitions has also proven to be a new and important channel to attract foreign investment," said Nguyen Thi Bich Van, deputy director of the Ministry of Planning and Investment’s Foreign Investment Agency.
There are concerns, though, that if left unchecked M&A activity could lead to anti-competitive behaviour and the emergence of monopolies.
Legal regulations to ensure competition should, therefore, be streamlined, especially as Viet Nam opens its market under the WTO agreement to well-funded multinational corporations, says Nguyen Nhu Phat, deputy chairman of the State and Law Institute.
M&A activity is currently regulated under several laws - the Investment Law, Enterprise Law and Securities Law - which causes regulatory overlaps.
The Ministry of Trade’s Competition Administration Department will have to take a bigger role in preventing unwanted monopolies, says Phat. He also worries that regulators may be restricted given the department has three roles: administrator, investigator and executor.
Dinh Thi My Loan, director of the Competition Administration Department, says there are plans to streamline regulatory procedures for mergers and acquisitions. The department, though, will have to co-operate closely with the State Securities Commission, the Ministry of Planning and Investment.
Source: VNS
Wednesday, July 04, 2007
Draft decree takes stab at fulfilling WTO commitments
Vietnam's accession to the WTO on January 11, 2007, was viewed as a significant step towards strengthening and stabilising the nation's business climate. However, concerns have been raised that these expectations have not been met in the five months since accession.
A draft decree being circulated to the public by the Viet Nam Business Forum would go some way toward erasing this perception by formally regulating the nation's compliance with many of its commitments made to the WTO and WTO trading partners.
The draft is still rough, however. Many of the detailed provisions for implementing WTO commitments to be spelled out in an annex to the decree has yet to be drafted or circulated.
Some WTO commitments are also not fully and or correctly expressed in the draft. For instance, trading rights and the ENT (Economic Needs Test) are expressed differently between the WTO Accession Report and the draft decree.
Phrases such as "Vietnamese enterprise" and "foreign-invested enterprise" are not used consistently between the two. Definitions of the latter in the draft decree includes a domestic Vietnamese company with only a minority foreign shareholding.
Under the unified Enterprise Law, both foreign-invested and domestic companies are organised under the same business forms. Over time, the controlling stake in a company could shift between foreign and domestic shareholders as stocks change hands.
The draft decree also needs to make clear that full trading rights include the right to sell imported products to any individual or enterprise having the right to distribute such products in Vietnam. This is in order to avoid local officials restricting trading rights on the basis of the wording of the draft decree.
Conflicts with the WTO Accession Report, the Schedule for Commitments on Services and other provisions of Vietnamese law regarding implementation of WTO commitments abound.
For example, if a service is "unbound" according to the Schedule, it means that there is no commitment by Vietnam to an agreed level of restriction. In the draft decree, however, "unbound" is defined as "the application of market access restriction measures and national treatment in accordance with Vietnamese law (if any) with respect to the establishment or operations of a commercial presence in service sectors/sub-sectors stipulated in the Schedule."
If Vietnamese law is silent on an "unbound" service sector, i.e., there are no domestic regulations concerning market access and national treatment for that sector, the authorities are obliged to allow business registration or to issue a certificate of investment.
This is because, without restrictions applying to the registration or certification of an enterprise in that service sector, there is no basis for the authorities to deny registration or certification.
In reality, though, the authorities may well refuse to issue registration or a licence on the basis that there are no requirements set forth in the Schedule, the draft decree or other Vietnamese laws. Ideally, the draft decree should be worded to forestall such confusion.
The draft decree should also make it clear that a company licensed before January 1, 2007, that applies to adjust its investment licence to take into account the Schedule for Commitments on Services, the Ministry of Planning and Investment must not treat this as an application for a separate investment licence.
Another example of a potential conflict between domestic laws implementing WTO commitment and the original WTO commitment documents arises where the draft decree purports to import by reference certain paragraphs of the Accession Report and Schedule.
The draft Decree does not interpret those provisions but attempts to summarise them and thus runs the risk of Inadvertently changing the meaning of certain provisions.
Despite the draft Decree containing a provision stating that the original WTO commitment takes precedence over such summaries, this could lead to unnecessary confusion.
Another concern arising out of such incorporation by reference is that Vietnam's commitments contained in the report and schedule are quite general and require more specific implementation for them to be realised.
Source: VNE
A draft decree being circulated to the public by the Viet Nam Business Forum would go some way toward erasing this perception by formally regulating the nation's compliance with many of its commitments made to the WTO and WTO trading partners.
The draft is still rough, however. Many of the detailed provisions for implementing WTO commitments to be spelled out in an annex to the decree has yet to be drafted or circulated.
Some WTO commitments are also not fully and or correctly expressed in the draft. For instance, trading rights and the ENT (Economic Needs Test) are expressed differently between the WTO Accession Report and the draft decree.
Phrases such as "Vietnamese enterprise" and "foreign-invested enterprise" are not used consistently between the two. Definitions of the latter in the draft decree includes a domestic Vietnamese company with only a minority foreign shareholding.
Under the unified Enterprise Law, both foreign-invested and domestic companies are organised under the same business forms. Over time, the controlling stake in a company could shift between foreign and domestic shareholders as stocks change hands.
The draft decree also needs to make clear that full trading rights include the right to sell imported products to any individual or enterprise having the right to distribute such products in Vietnam. This is in order to avoid local officials restricting trading rights on the basis of the wording of the draft decree.
Conflicts with the WTO Accession Report, the Schedule for Commitments on Services and other provisions of Vietnamese law regarding implementation of WTO commitments abound.
For example, if a service is "unbound" according to the Schedule, it means that there is no commitment by Vietnam to an agreed level of restriction. In the draft decree, however, "unbound" is defined as "the application of market access restriction measures and national treatment in accordance with Vietnamese law (if any) with respect to the establishment or operations of a commercial presence in service sectors/sub-sectors stipulated in the Schedule."
If Vietnamese law is silent on an "unbound" service sector, i.e., there are no domestic regulations concerning market access and national treatment for that sector, the authorities are obliged to allow business registration or to issue a certificate of investment.
This is because, without restrictions applying to the registration or certification of an enterprise in that service sector, there is no basis for the authorities to deny registration or certification.
In reality, though, the authorities may well refuse to issue registration or a licence on the basis that there are no requirements set forth in the Schedule, the draft decree or other Vietnamese laws. Ideally, the draft decree should be worded to forestall such confusion.
The draft decree should also make it clear that a company licensed before January 1, 2007, that applies to adjust its investment licence to take into account the Schedule for Commitments on Services, the Ministry of Planning and Investment must not treat this as an application for a separate investment licence.
Another example of a potential conflict between domestic laws implementing WTO commitment and the original WTO commitment documents arises where the draft decree purports to import by reference certain paragraphs of the Accession Report and Schedule.
The draft Decree does not interpret those provisions but attempts to summarise them and thus runs the risk of Inadvertently changing the meaning of certain provisions.
Despite the draft Decree containing a provision stating that the original WTO commitment takes precedence over such summaries, this could lead to unnecessary confusion.
Another concern arising out of such incorporation by reference is that Vietnam's commitments contained in the report and schedule are quite general and require more specific implementation for them to be realised.
Source: VNE
Monday, May 28, 2007
Draft of implementations of WTO commitments: improving environment for foreign investments?
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
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
Wednesday, November 15, 2006
WTO deal could hit agri-product exports
WTO entry commitments will help Vietnam attain good growth rates in its pivotal industries such as clothing, footwear, and other exports, said Jonathan Pincus, a senior economist from the economics department of UNDP Vietnam. “Given the removal of quotas, Vietnamese garments and textile products will have the opportunity to enter the larger world market. However, if the US Congress insists that it will approve permanent normal trade relations (PNTR) it will also move to restrict the growth and development of this industry in Vietnam. I am afraid it will create an unfortunate precedent for the implementation of our commitments ,” commented Pincus.
Moreover, the fact that US garment groups have asked to establish a mechanism to directly oversee the Vietnam garment industry is very likely to have adverse impact on the growth of the industry.Commitments on agriculture, according to Pincus, are challenges to local farmers.
However, they might not create negative changes because Vietnam agricultural products have been flooding onto the world market, Pincus said. It is forecasted that maize and cotton could be the most affected by the commitments.At present, the maize industry in the US, the worlds biggest exporter of maize, is subsidised to the tune of hundreds of millions of dollars every year by the US government. Given this colossal subsidy, maize exports from the US are more than easy to compete with Vietnam’s maize products. Consumers, processors, and livestock raisers will benefit while maize growers are likely to face harder times.Things might be similar in the cotton industry. The Vietnamese cotton industry is not very strong as production is small and it is low quality cotton at a high price. Given these weaknesses, cotton growers in Vietnam are finding it difficult to survive so it is certain that they could not compete with US growers who receive subsidies from their government.
Moreover, the fact that US garment groups have asked to establish a mechanism to directly oversee the Vietnam garment industry is very likely to have adverse impact on the growth of the industry.Commitments on agriculture, according to Pincus, are challenges to local farmers.
However, they might not create negative changes because Vietnam agricultural products have been flooding onto the world market, Pincus said. It is forecasted that maize and cotton could be the most affected by the commitments.At present, the maize industry in the US, the worlds biggest exporter of maize, is subsidised to the tune of hundreds of millions of dollars every year by the US government. Given this colossal subsidy, maize exports from the US are more than easy to compete with Vietnam’s maize products. Consumers, processors, and livestock raisers will benefit while maize growers are likely to face harder times.Things might be similar in the cotton industry. The Vietnamese cotton industry is not very strong as production is small and it is low quality cotton at a high price. Given these weaknesses, cotton growers in Vietnam are finding it difficult to survive so it is certain that they could not compete with US growers who receive subsidies from their government.
Thursday, October 05, 2006
WTO: Before the storm
Expecting an entry to WTO by end of this year many potential foreign investor come to visit Vietnam. Tran Dac Sinh, director of the HCM City Securities Trading Centre [the stock market], said some 20 groups of international investors came to visit his centre every month.
But as the Trade Minister Truong Dinh Tuyen said last week, there is no hurry to join the organisation and not at all costs. He implies that the APEC summit, hold in Hanoi in November 2006 is not considered as a deadline.
But as the Trade Minister Truong Dinh Tuyen said last week, there is no hurry to join the organisation and not at all costs. He implies that the APEC summit, hold in Hanoi in November 2006 is not considered as a deadline.
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