Aiming to explore the impact of Vietnam’s WTO accession after one year, Vietnam Business Forum talked with Mr Luong Van Tu, former Vice Minister of Trade and Head of Vietnam’s WTO working group.
Vietnam was officially admitted to the WTO in November 2006. In your opinion, what are the most outstanding achievements Vietnam has gained after 12 months of WTO membership?
Generally speaking, Vietnam’s international status has been firmly reinforced; particularly Vietnam’s economy has shown many important changes in the last year. Many credible organizations also proved Vietnam’s political and economic status, for example, UNTAC ranks Vietnam 61st in terms of investment attraction, Vietnam’s stock exchange was also ranked 4th in the world and Vietnam was one of the leading countries in conducting administrative reforms. Especially, Vietnam won a UN General Security Council seat in November, 2007.
Clearly, Vietnam’s economy has seen many changes since Vietnam’s WTO admission. One of the most impressive of these achievements was foreign investment. In the period of 11 months of 2007, Vietnam has attracted more than US$ 11 billion and total 2007 investment capital is expected to exceed US$ 13 billion. Exports are being sped up with the annual growth of 20 per cent and Vietnam’s garment and textile sector was ranked as one of the top ten producers.
Have inadequacies emerged in the one year WTO integration period?
It is apparent that inadequacies begin occurring in economic sectors when Vietnam shifted from direct management to indirect, through laws and state documentation. Time is needed to overcome these difficulties. Domestic price increases are directly affecting people’s lives. Frankly speaking, we should admit the causes of that, one of which is speculation measurements. These measurements are really weak and inefficient. One typical example is that prices of all domestic goods, from medicines to apartments, are on the rise. Particularly, in the auto market, although the Government tried to lower prices through reducing import taxes, enterprises still kept determining the prices.
Many people argue that one of the most first and worrying consequences of WTO entry is import growth over exports. Vietnam has not been able to control the trade gap and the imbalance between imports and exports has become an epidemic in the eyes of some.
It’s right. Vietnam’s current trade gap is serious. Beyond the rhetoric, we should find a resolution for that. Vietnam’s economy has been opened since the early 1990s. During 15 years of opening economy, Vietnam’s imports have been continually exceeding exports. This is likely to continue in the coming years. We should bravely address specific plans for the next five years, for example, that exports can exceed imports. By having an import excess, Vietnam can pay its debts including ODA loans.
I think our price rise is a normal phenomenon, since it is the beginning point for long term targets. Even China faced a lot of hardship after entering WTO. In administration alone, it took China at least five years to amend 2,500 documents to make its economy catch up with the global market and comply with WTO regulations.
I presume that Vietnam’s economic growth will be higher than the current rate of 8.5 per cent in the next 3 years after Vietnam’s WTO membership. If so, Vietnam can meet the requirements of integration. To reach this point, Vietnam’s Government should apply relevant, flexible and suitable development policies which can help Vietnam overcome inadequacies and bring its advantages into full play. I would like to give an example. Although Vietnam has abundant sources of iron, as well as materials for processing foodstuff for cattle along with a potential consumption market, Vietnam still spends millions of dollars to export steel and cattle food. Why do we export something which is in demand here?
In the recent question- answer session of the National Congress, Minister of Trade and Industry, Mr Vu Huy Hoang addressed another problem saying, “Forecasts of the two way impacts of Vietnam’s WTO admission are still limited.” What do you think about this statement?
It is true that most ministries and sectors have their own forecasts. In general, Vietnam still lacks a national, general forecast. Moreover, many sectors’ forecasts are quite irrelevant. Forecasts must be at least 60-70 per cent accurate. During the National Congress meeting, many representatives stated that our forecast was weak resulting in worries and uncertainties. We spent a lot money building roads and bridges, but traffic jam and congestion in urban centres like Ho Chi Minh and Hanoi were not resolved. Plans to build sea ports and airports may have the same destiny.
In my opinion, to have standard forecast, it is necessary to have a long term, strategic view. Forecasts for energy should extend at least 15- 20 years, or even 50 years. A delegation of intellectuals along with a reasonable mechanism is needed to work out projects. In short, we have many things to do.
Vietnam’s “WTO story” is no exception to the pattern. I think this statement that “Vietnam’s two- way forecast is still limited” is quite judicious, however, it is just the first year Vietnam has joined WTO, our future path is still long.
Reported by Thanh Tam
Vietnamese
