Measures Sought to Increase Telecom Competitiveness

A seminar entitled 'Increasing competitiveness of the telecommunication service' was held in Hanoi on November 10 by the Vietnam Competition Initiative (VNCI) and the Central Institute of Economic Management (CIEM). At the seminar, VNCI announced the results of its research on Vietnam telecommunication service’s competitiveness.

Dr David Ray, deputy director of VNCI, remarked that for developing countries like Vietnam, competition offered an important added value to increase its investment attraction while financial investment was extremely necessary for Vietnam. VNCI's research assessed competition in Vietnam's telecommunication service, saying that over the past decade the service had experienced rapid development with significant changes. Modern technologies have been applied rapidly. The digitalisation of the country’s telecommunication infrastructure began in 1990 and so far, all switch systems have been digitalised. Now, Vietnam has good telecommunication infrastructure facilities. The country seems to have achieved its target for 2005 with ten telephones for every 100 people. Most telephone services, including new ones such as GPRS, VPN and Wi-fi Internet, have become available. In the last four years, telecommunication charges have been significantly reduced to a level that is lower than the average level of ASEAN countries. This has resulted from Vietnam’s open policy for telecommunication via liberalisation.

The Vietnam Post and Telecommunication Corporation (VNPT) is no longer the only supplier of international gateways after the Saigon Postel and Viettel corporations became two additional suppliers. Talking about competition, Dr Le Dang Doanh at the consulting board of the Governmental Office said that according to reports by the Ministry of Post and Telematics, total revenues of the service were put at VND 27,000 billion (about US$1.711 billion) in 2003. Of the figure, VND 24,900 billion (or US$1.6 billion) went to VNPT, VND 1,000 billion (US$64.2 million) went to the Viettel Corporation, VND 700 billion (about US$44.8 million) to Saigon Postel, and VND 6 billion (about US$384,000) to One Connection Internet. According to this analysis, Vietnam already has a competition structure in telecommunication. Dr Ray said that although many activities had been implemented to promote liberalisation and competition, Vietnam still had to go a long way to create an effective competition structure for telecommunication services. Although the private sector has been allowed to join the telecommunication market with added value services, the sector’s participation remain constrained.

The research mentioned legal weaknesses and other constraints to competition. Although Vietnam has formed a policy and legal framework for competition with important policies and documents, such as the Ordinance on Post and Telecommunication, the country still lacks concrete regulations on the implementation of these documents and policies.

Foreign investment in telecommunication in Vietnam remains constrained to the business co-operation contract (BCC) even though such investment played an important role in developing some major projects on telecommunication in the country. In fact, BCC has constrained activities and effectiveness of projects investing in telecommunication, especially in management and rights to investors' assets. Pham Quang Thanh, consulting expert at the Vietbid Law Company suggested better ways to boost foreign investment in telecommunication in Vietnam with the conversion of BCC companies into joint stock companies. However, foreign investors have so far been allowed to hold a maximum of 30 per cent of a companies' stake. Another way is the transformation of BCC companies into joint ventures. This method is preferred by investors although the Government's decrees will have to be amended for this to become possible.

• Kim Phuong