US Ambassador Michael W. Marine has recently addressed the International Economic-Cultural Exchange Club on "US-Vietnam Ties: Opportunities and Barriers". Following is an interview with the Ambassador on this important occasion.
What should Vietnam do in its competition with neighbouring countries on investment attraction and export markets ?
To succeed, Vietnam must create an efficient, transparent, rules-based economy that is free from corruption. This means providing foreign firms and investors with access to Vietnam’s growing markets and industries within a predictable legal and regulatory system. It means establishing a financial sector that mobilizes capital efficiently and loans it out responsibly to support the budding private sector. And , it means protecting intellectual capital, usually referred to as intellectual property rights or IPR, through strong laws and effective enforcement. At the same time, it also means that Vietnam must invest now in infrastructure improvements needed to support economic expansion, while at the same time taking steps to protect this beautiful country’s environment.
Another area that Vietnam cannot neglect is its infrastructure. The quality and cost of Vietnam’s telecom, ports, transportation, waste management and supply of fresh water are a concern for any investor. In today’s world, unless there is inexpensive, high speed and unhindered access to the information highway, many investors will not come to Vietnam. The foundation of the information highway is a competitive telecommunications system, a glaring weakness here in the year 2005. Electricity blackouts are also a major disincentive for any new investment. And of course, with further economic growth, there will be a rising demand for electricity. Computers and servers, after all, need air conditioning even if people do not. At the same time, Vietnam must also deal with solid and industrial waste in order to protect its environment and the health of its citizens.
According to experts, there remain some barriers that prevent big American firms investing in Vietnam ?
Vietnam is still considered a relatively more expensive and riskier investment destination because unanticipated problems occur more frequently here than elsewhere. For example, Vietnam’s customs valuation process remains unpredictable and arbitrary. Land use disputes here can drag on for months, even years. The legal system remains weak and under-utilized.
Inadequate protection of intellectual property rights is a significant deterrent for potential investors. Law enforcement remains a key deficiency. Piracy and counterfeiting are serious concerns, whether the product in question is movies, music, books, software, pharmaceuticals or brand-name products. Inadequate IPR protection is a serious impediment to knowledge-based investment in key sectors including software development, an area in which Vietnam offers much promise. I hope that the governments of the United States and Vietnam, as well as their business communities and organizations like the VCCI, will work together to improve protection of IPR through the effective enforcement of existing laws.
What should Vietnam do to accelerate the transformation to a market economy and encourage economic integration ?
By creating a level playing field in the financial sector, the government will encourage the establishment of a capital market that can pull savings out from under mattresses and into banks, allow stock and bond markets to attract both foreign and domestic investment, all of which will provide capital for Vietnam’s private sector. Vietnam should learn from its neighbors. For example, Vietnam should develop and expand its commercial banking system, not its postal savings system. This, together with the development of the private capital markets, will ensure that more capitals goes to the most profitable firms.
Could you explain why Vietnam should expand its commercial banking system, not its postal savings system ?
Vietnam has now a private banking system, both joint stock and joint venture. It is important that the banks must be expanded to create more opportunities for private enterprises to have access to loans for development.
Vietnam has completed negotiations with major partners for WTO admission, however the negotiations with the United States is still unfinished. What are the barriers to this?
In reality, Vietnam has not completed negotiations with other important partners such as Australia and New Zealand. Vietnamese and American negotiators have worked hard and in June, before the visit of Prime Minister Phan Van Khai, completed Round 7. To complete the negotiations, the two sides have to undertake a big volume of work with complicated issues including those in agriculture, industry, services and market access. Presently, under consideration are problems on IPR, trade, distribution, telecom. However, the most important thing is to negotiate with goodwill to ensure Vietnam’s admission to the WTO as early as possible.
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