Vietnam Construction on the Path of Integration and Development

Vietnam Construction on the Path of Integration and Development

Pursuant to the renewal policy of the Vietnam Communist party, the construction industry of Vietnam has become more organised recently through ceaseless efforts and the development of guidelines for urban infrastructure development. Works in inspecting and approving urban planning and building management have been put in good order as well. Many policies for urban development and building management have been widely implemented, with the positive progress helping to change the face of Vietnam's urban and rural areas.

Construction industry on the verge of international economic integration

In international economic integration, almost all countries are interested in the construction industry and its related services, as it affects tremendously the quality and effectiveness of project and construction investment as well as the country's overall economy.

Together with the country's overall international economic integration, Vietnam's construction industry has agreed to share the market opportunities, with a national favour system for ASEAN nations in terms of architecture and urban scenery services. The cooperation in building technical consulting services, installation services, the Vietnam - US trade agreement in terms of architecture and urban scenery services are just some examples of the trend. Officials in the construction industry are preparing for progressing APEC business and for the future entrance to WTO.

Leaders in the Ministry of Construction have shown deep concern about the issue of integration preparation. Development strategies have been created from now to 2010 in such fields as: Science and technology; water processing and supply; building material manufacturing; and implementation in planning, consulting and building. These strategies have been developed after careful study of present and future global markets and application of the particular context and situation of Vietnam.

Especially, there has been a complete international economic integration strategy for services related to construction industry: architecture services, building technical consulting services and complete building consulting services, tourist and scenery services and building and real estate services, with a clear path towards full integration envisioned from today to 2020. The ministry is examining the system of regulations and policies in the construction industry and making necessary adjustments and additions, which had been suggested to the government for approval. Other documents and articles cited in bilateral and multilateral agreements have also been reviewed with the aim of implementing a standard system of construction works in Vietnam.

Implementing programmes consistent with CEPT/AFTA, and for competitiveness in the face of integration, proposals are considered carefully along with the contributed ideas of many industry enterprises in the creation of a complete international economic integration strategy for Vietnam's construction industry. Generally speaking, construction enterprises have acknowledged and applied the objectives, principles, processes and international economic integration guidelines of the strategy, in the implementation of their projects. They are also acknowledging the opportunities and challenges at the present as well as in the future on the path towards effective integration.

At the present, the ministry is standardising the system of legal policies in order to mesh with international construction laws so that Vietnamese enterprises can raise their ability and competitiveness in comparison with foreign firms whilst guaranteeing every commitment made in integration agreements already signed.

Advantages and Challenges in the construction industry on the path of international economic integration:

Advantages

For the construction industry, international economic integration offers the opportunity for Vietnam's construction, consulting and implementation enterprises to get in touch with advanced and modern construction technologies (especially high tech and high quality works). They will also have the chance to go further into overseas markets and to build more international cooperative relations which are genuinely beneficial to their operation and development.

Thanks to reduced and free customs tax on important commercial goods, Vietnam's building material manufacturers will have good chances to broaden their export markets to many countries around the world. As for the building material market itself, there will be a diversified range of all products at lower prices and higher quality, helping to bring tremendous profits for construction investors as well as contractors. On the other hand, such a purely competitive environment will create pressure for each enterprise to transform itself and unceasingly improve its ability to perform in order to survive.

Challenges

Although Vietnamese enterprises are now capable of such tasks as surveying, designing, monitoring small and medium civil engineering works, and some industrial plants or infrastructure works, with support from inside and outside the country, their ability and competitiveness are still rather limited and there has been no strict and formal management of consulting services. The system of laws and standardised techniques in the industry also remains inadequate. There are still many unreasonable taxes and fees imposed, which heavily burden construction firms. Moreover, domestic businessmen have insufficient knowledge of international trading customs and their capacity in foreign languages is very limited.

After a long period of cooperation with strong foreign partners through many significant projects, Vietnamese construction enterprises have gained a great deal of knowledge and experience in implementation, but not yet enough, though their advantage in plentiful labour forces is clear. Vietnamese construction enterprises still lack capital, advanced technology and their implementation methods are still not of international standard. Besides, their capacity to effectively use machinery, equipment and human resources is not as great as needed for big projects and works, with labourers awareness of working disciplines being low. Moreover, cooperation between domestic contractors is not developed enough to make a strong force for significant works which require the collaboration of multiple contractors, instead, there have been many unclear and black bidding businesses. Due to weak competitiveness, Vietnamese construction enterprises have mainly operated as sub-contractors for foreign construction firms. With the recently more open and equitable construction market with many 100 per cent foreign capitalised enterprises, domestic contractors are not able to compete equally with foreign firms. Especially, with suitable long-term development strategy, these companies have attracted many Vietnamese qualified experts and staff.

As for building material products such as cement, ceramics, sanitary porcelain and construction glass, quality standards are adequate thanks to well equipped advanced technology production facilities meeting international standard, however, prices are still not competitive on the market . For example, the prices of almost all these products are higher than similar types imported from other countries in the region and across the continent. The regional economic crisis still affects the country generally and the construction industry in particular. As a result, there are still abundant amounts of building materials, so it is difficult for Vietnamese enterprises to find expanding markets for consumption. Under the framework of CEPT/AFTA, goods imported to Vietnam will have tax reduced to only 5 per cent in the period from 2003 to 2006. This means that imported goods will become even more competitive. If Vietnam enterprises cannot succeed in restructuring, managing improvements, staff training and lowering prices, they will not be able to keep pace with development progress and lose not only overseas markets but also domestic ones.

Building and proclaiming trademarks

In the process of international economic integration, the work of trademark building and proclamation is extremely important, especially for construction enterprises as it helps enterprises not only build a reputation for their products in the marketplace but also reminds them to safeguard and promote their quality and reputation.

Protection of intellectual property rights, in which trademark protection is included, is extremely important in international trading. Therefore, in the agreements of WTO and other regional and international agreements, intellectual property rights occupy a high priority position. At the moment, almost all of our international markets are progressing favourably. Vietnamese enterprise's rights have been protected adequately. However, some recent litigation cases have warned Vietnamese enterprises about the dangers of trade mark infringement in the context of wider free trade in the world.

• P.V