At the seminar on Vietnamese enterprises one year after WTO entry held by Ho Chi Minh City Economics Institute and Saigon Businessmen Newspaper on December 17, 2007, many state officials, economists, lawyers and businesspeople from production, trading and retail firms presented assessments, analyses and forecasts on the WTO effects on business operations.
Dr Le Dang Doanh, senior economist, said 2007 was a banner year for foreign investment inflows to Vietnam. Foreign direct investment capital may reach US$17 billion. Financial investments were injected to asset management funds to purchase stocks. The stock market and export activities significantly expanded. Therefore, the position of Vietnam in the world market is promoted. Although it is difficult to differentiate the real impacts from the WTO, Vietnam-US bilateral trade agreement (BTA), AFTA or C-AFTA, the effects from the WTO membership, either direct or indirect, are inevitable.
The private economic sector welcomed 38,550 new companies with a combined registered capital of VND303,000 billion in the first nine months of 2007, an on-year increase of 300 per cent. The investment value from this sector also increased 28 per cent. The sector contributed 17 per cent to GDP and became a driver for national economic development. Investments from the private sector are higher than those from foreign investors and nearly equal to state investment (including ODA and governments). Moreover, over 90 per cent of new jobs are created by the private sector, playing a crucial role in poverty reduction.
In general, domestic enterprises have been actively involved in integration and tapping opportunities, proven by the strong growth in investment capital and export and significant improvement in business performance. Competitiveness and integration is further promoted. Exporters as well as enterprises are directly boosted by the opening. For example, domestic joint stock banks strategically joined hands with foreign banks to draw capital, technology and business governance to modernise and expand operations, instead of competing with them. Also, some 200 young software outsourcing and offshore companies also enjoyed promising starts. Many telecom firms, restaurants and hotels professionally compete with each other by providing value-added services for clients, instead of joining discount races.
The development of enterprises is a significant result of the formation of a new healthier business environment. Mr Luong Van Tu, former Deputy Minister of Trade and chief of Vietnam WTO negotiators, said after one year Vietnam has revised 30 laws and decrees to comply with WTO commitments. The decree to instruct the implementation of the Investment Law will be issued shortly, and overlapped legal documents and procedures will be abolished. Giving deeper analyses on the response of companies in Vietnam, Dr Tran Dinh Thien, Deputy Director of Vietnam Economics Institute, said Vietnamese and foreign-invested enterprises have different policies to tap the opportunities from integration. The FDI capital flows are the evidence for foreigner’s pursuit of long-term investment opportunities and business interests in Vietnam. Meanwhile, many Vietnamese companies are attracted by the highly profitable but risky stock trading. The two options reflect different strategic visions.
The state-owned economic sector also has significant progress such as the expansive cooperation between giant economic groups to set up powerful concerns on the market. This is a new trend. Another tendency is the expansion of powerful firms to other fields, even new ones. This trend is popular now. Big economic groups tend to set up their own banks, securities companies and real estate firms, and then list them to the stock market in hopes of seeing higher share prices.
Anyway, these showed the dynamic and diversified economy of Vietnam. Vietnamese production, service and retail industries are predicted to encounter severe competition from foreigners. However, many have consolidated their market foothold and occupied market share. They are forecast to make greater feats in 2008 and following years.
Hai Nguyen
Vietnamese
