3:26:37 PM | 7/8/2005
International integration is helping Vietnam learn more about the international economy, make full uses of preferential treatments from other countries to expand markets for its exported goods and services, attract more investment and acquire advanced technologies.
However, according to Ministry of Trade officials, Vietnam now still possesses factors that limit the expansion of Vietnam’s international integration. One of the core factors is weak business competitiveness and macroscopic policies that have not created driving forces for enterprises to promote competitiveness.
Vietnam is developing from an agriculture-dominated economy where three quarters of the population live on agriculture but it has not paid proper attention to industrialisation and modernisation of agriculture while industry has outdated production equipment and tools. In addition, technology, infrastructure and services are worse than other countries in the region. These factors have seriously triggered negative impacts on the competing capacity of the Vietnamese economy in the process of international integration.
According to the Trade Promotion Department of the Trade Ministry, Vietnam has always been rated as one of the 15 countries with the weakest competitiveness since 1997. Most Vietnamese enterprises are of small size with a humble investment and their products are of poor competitiveness. A large number of them were formed during the state-subsidy period.
Only a few of them have quickly shifted and caught up with the market economy mechanism while a majority have been quite slow at renewing technology, management, product models, designs and quality to keep up with new market trends. Furthermore, a humble financial potential has led to the low rating in international competition. A great deal of State-owned enterprises are performing poorly and are reliant on State subsidies.
On the other hand, the current State policy system and management mechanism have not created a competitive environment for enterprises of all economic sectors yet. The business environment still lacks proper structure in terms of the legal framework and institutions, market structure and competing capacity.
According to Mr. Tu, an official of the Ministry of Trade, an incomplete market economy can be seen in the lack of co-ordination between such market factors as the monetary market, land and real estate market, labour market and technology. Monopolies, protectionism and subsidies widely existing in the economy suppress the driving force of competition, make enterprises expect State subsidies, and form an unequal environment among enterprises, especially between State-owned enterprises with privately-owned ones, between large-scaled enterprises and small and medium-sized ones.
Legal documents have been slowly issued and amended. For instance, our country has not promulgated the law codes on competition and anti-monopoly and has not amalgamated separate law codes into a common one for all economic sector (it has not issued a common investment law for foreign partners and local enterprises, or an enterprise law for all business form).
In addition, the implementation of law codes is limited. Many proper governmental decisions and policies have not been fully carried out. Local authorities in several localities have failed to meet the demands of enterprises.
At a seminar on building the competing capacity of Vietnamese enterprises in the process of integrating into AFTA and WTO held recently in Hanoi, a representative from the Ministry of Trade said that in the fulfilment of ASEAN/AFTA commitments and negotiations of opening the market to the WTO, we have to continue to cut down tariffs and gradually remove non-tariff barriers, open goods and service markets, apply the most favoured nations (MFN) policies and national treatments (NT) for goods and commodities from other nations.
These will likely impede exports and domestic consumption if no measures to boost competing capacities of goods and services are introduced. In the meantime, loss-making enterprises will be a heavy burden to the economy. Therefore, according to Mr. Tu, to bring in business success and promote competitiveness in the world market, Vietnamese enterprises should sharpen their competitive edge with knowledge and information about the market, laws and common practices in business and should follow up international market trends.
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