The Delegation of European Commission has recently announced European Union’s (EU’s) latest commercial analysis on economic situation and business and investment environment in Vietnam. VIB Forum exchanged this issue with Mr Sean Doyle, Ambassador, Head of the European Commission to Vietnam.
Dear sir, what does EU pay high attention to Vietnam’s economy?
EU hope to push up all-sided cooperation with Vietnam including the fields of trade and investment. All 27 EU member countries are interested in a mutual cooperation project with Vietnam to show European style in Vietnam.
EU hopes to complete and enter into the Free Trade Agreement with Vietnam by the end of 2008 or in 2009 for latest. Hence, EU shall promote its member countries, Vietnam’s Government, Ministries and sectors to speed up the negotiation to achieve a mutual agreement soon. This is a double-process in which EU party shall report negotiation contents to its member countries for unanimity and Vietnam’s ministries and sectors shall conduct negotiations and report thereof to the Prime Minister to submit to the National Assembly for consideration and approval.
However, is that the big volume of FDI capital flown into Vietnam which has caused the high inflation that Vietnam has to face in the recent time?
Upon the adherence into WTO, Vietnam’s economic reform has attracted high attention from investors, which resulted in a big volume of investment flown into Vietnam. Therefore, if it does not take quick reaction measures, Vietnam shall bear higher pressure caused by inflation. FDI capital flow has more or less affected the inflation in Vietnam in the recent time. Anyway, big amount of FDI flown into the country is not a negative or serious problem as people may think. Many countries in the world are envious with such big FDI capital attracted by Vietnam. However, a considerable proportion of FDI capital which has not been realised represents a resonant factor causing inflation. Many factors may be blamed for inflation but inflation is also in return to growth and development.
Do you think that Vietnam’s economy is facing difficulties?
Vietnam’s inflation rate reached 25 percent in May. Merrill Lynch Investment Bank of the US undervalued the stability of Vietnam’s economy and even released its worry about a monetary crisis to be happen in Vietnam… However, in my opinion, many regional countries have fallen into such situation and I believe that Vietnam’s Government can catch the point and shall take sound steps.
Moreover, people easy get inspired by or worried about a situation without waiting for its result. I believe that Vietnam has made great effort and achieved high adaptability for example in the case of footwear anti-dumping proceedings in US. In this case, amid the very high anti-dumping tax rate, Vietnam made rational adjustment in production and obtained high increase in its footwear export – which can be seen as a fantastic success achieved by Vietnam. The 7 percent growth rate expected to achieve in 2008 is lower than the previous year but much higher than other countries in the world. Vietnam also obtained another achievement in export with an increase by 25 percent in seafood export to Europe, which has proved that Vietnam is on the right direction.
Will EU invest more in Vietnam in 2008 and in the future?
EU is Vietnam’s second FDI biggest investor following Japan. EU realised capital is reimbursed in various fields: natural resource exploitation, infrastructure construction and development and real estate. In addition, EU and its member countries are leading the list of ODA providing partners for Vietnam in the recent years. The reimbursement of more than US$ 5 billion (including both loans and grants) has shown the attention of the international community paid to Vietnam.
Within the framework of the unofficial mid-term CG meeting in Sapa at the beginning of June, donors shall listen to and discuss about measures to support Vietnam to adapt with the new conditions. Upon its change and development, Vietnam shall prematurely stand on the list of countries with high per capita income and medium national income. However, there may be a change in EU’s support reserved to Vietnam. Support in the traditional fields such as education and training and infrastructure may be adjusted as Vietnam has been able to undertake. EU is Vietnam’s second FDI biggest investor following Japan. EU realised capital is reimbursed in various fields: natural resource exploitation, infrastructure construction and development and real estate. In addition, EU and its member countries are leading the list of ODA providing partners for Vietnam in the recent years. The reimbursement of more than US$ 5 billion (including both loans and grants) has shown the attention of the international community paid to Vietnam.Within the framework of the unofficial mid-term CG meeting in Sapa at the beginning of June, donors shall listen to and discuss about measures to support Vietnam to adapt with the new conditions. Upon its change and development, Vietnam shall prematurely stand on the list of countries with high per capita income and medium national income. However, there may be a change in EU’s support reserved to Vietnam. Support in the traditional fields such as education and training and infrastructure may be adjusted as Vietnam has been able to undertake.
Policies issued by Vietnam’s Government to better off its business environment such as the issuance of the circular to ensure the rights to import and distribute for foreign invested enterprises; abolishing the 3 percent quota in the number of foreign employees working in an enterprise in Vietnam, etc... are attractive messages to investment from EU.
What are barriers to EU enterprises to do business in Vietnam?
Bureaucracy and corruption are big obstacles to EU investors. The stagnation in granting investment license has taken time and caused discouraged feeling. Investors shall be eager to invest into a Vietnam with transparent and quick investment procedures. It is important for Vietnam to open more in the field of banking and to ensure the transparency in the Government’s activities for the purpose of stable economic development. Regardless of negative indexes in Vietnam’s economy in the recent time, EU’s commercial counselors have still given out optimistic assessment about its economic development.
What do you think about Vietnam’s “market economy”?
I strongly believe that with the current conversion rate, EU shall soon recognise Vietnam as a country with market economy. However, there are un-qualification or shortcoming in certain fields in Vietnam. So, our premature recognition of Vietnam as a country with market economy shall first put bad impact to your economy and then ours. Therefore, we have to put this into consideration to make the most convenient for both Vietnam’s and EU’s economy. Vietnam is deserved for a higher position in the international socio-economic life thanks to its favorable natural conditions and profuse labour force.
Anh Phuong
Vietnamese
