Fair Competition for Productive Market

According to Dr Warren Mundy (Commissioner, Productivity Commission of Australia), if Vietnam's economy wanted to achieve sustainable development, transparency and the capability of fair competition, then this is the time when policy-makers of Vietnam need to consider promulgating a fair competition law to stop the distortion that had been going on in the market.

 

Dr Warren Mundy quoted international experience from Australia as well as some other developed countries of close relationships and similar conditions as Vietnam like Singapore, Malaysia, New Zealand, the USA, Canada saying that building a framework of fair competition was inevitable for Vietnam or any country starting to build a market economy. The overarching objective of this framework was to have policies to support the people and consumers’ benefits to the maximum, aiming to promote market development and prevent the abuse of power from monopolistic behaviour of state enterprises, or the will of the state authorities.

 

Besides, a Competition Law should have wide application range of application. As for the priority and exemption cases, calculation should be done to ensure a minimum application. Fair competition should be taken as the invariant criteria, which is also the key to develop a sustainable market. Sanctions must be applied equally to both State enterprises and local businesses as well as government agencies at all levels. The law should stipulate clearly the exemption case, applying to which companies or group of companies in what kind of time frame, if this exemption serves the public interest.

 

Recommending the model of applying competitive structure, Dr Warren Mundy believed that a developed economy should have agencies taking on the responsibility of coordinating competitive activities such as: Competition Commission, Commission for Economic Management, Court of Competition Policy Review Committee, Supreme Court (collectively known as competition authorities). These agencies must not only work separately from each other but also from the policy-making bodies and ownership of state enterprises; they should have their own staff and budget; councillors and members of the Court shall be appointed by the government for a time-limited term. These organs also must take confidence and independence as the key for their activities. Sharing more experience from Australia, Dr Warren Mundy said that Australian competition agencies beside the duty of market controlling, also had the authority to prosecute if an individual or an enterprise violated market rules. This might not be applied in Vietnam in the near future but it’d be good if Vietnamese lawmakers took this knowledge into account and planned beforehand so that when the economic market developed to a certain sophisticated level, we would have all necessary administrative tools as well as legal sanction to make adjustment.

 

Acknowledging and appreciating international lessons and experience in managing a competitive market economy provided by Dr Warren Mundy, Dr Nguyen Dinh Cung, CIEM Director, said that for the last 30 years of economic construction, Vietnam has done well but only the part of market liberalisation, to ensure a market of fair competition, many factors were still missing. Academically speaking, Vietnam’s legal system was as complete as other countries. However, enforcement in Vietnam was weak in practice; legal tools were less than some countries and less than the number of breach, especially when comparing legislation documents on competition market.

 

This awareness points to another problem, which is a lack of distinction of the State function in the market economy of Vietnam. The concept of "state management" includes various meanings such as ownership, manager, policy issue, etc. and if one of those assigned tasks fails, so far there have never been any case of discipline. According to a raw statistics, there were nearly 3,000 business regulations are ultra vires under the current Investment Law, but still being applied in practice. For example, a locality could one-sidedly issue a decision for its people to use beer, cement from local enterprises only, or to use money from one specific bank to pay salary, insurance, etc for staff under local management. This kind of behaviour was truly killing healthy competition and transparency in the market, causing great damage to the beneficiaries, especially businesses, said Dr Cung.

 

Dr Le Dang Doanh also shared his opinion, saying that according to statistics, 32 percent of businesses now was state enterprises while household business was 32.2 percent. The question was as Vietnam integrated deeper into the world market economy, what could we do to protect the 32.2 percent of household business. If Vietnam didn’t upgrade competition surveillance and authorise bodies right now, as well as adjust the law of antitrust and competition, foreign enterprises would no doubt dominate the domestic market when coming to Vietnam. Dr Le Dang Doanh also said that, besides the middle income trap, Vietnam was currently facing with the trade liberalization trap. Integration was a good thing, but if we didn’t prepare properly, a developing country opening the door to integration might bring more harm than good, said Dr Le Dang Doanh.

 

Agreeing with this statement, Dr Nguyen Dinh Cung said that Vietnam still had space for further market liberalisation, but unfortunately it lacked a capable legal system to maintain fair competition. Therefore, the reform task in addition to market liberalization also entailed governance improvement and this was how we raise the market level of the economy. Otherwise, we would have a distorted market, inefficient resource allocation leading to an unproductive economy of weak competitiveness.