The Government is encouraging the private sector to invest in telecommunications. However, many difficulties and obstacles remain, which discourage foreign from promoting their investment in the industry.
Prior to 1990, Vietnam did not allow foreign investment in the telecommunication industry. However, since early 1990, the Vietnamese Government has allowed foreign investors to join the local telecommunication industry in the form of business co-operation contract (BCC). So far, no foreign investor has been licensed to provide telecommunication services.
At present, two out of seven BCCs have been terminated. These include a 12-year BCC signed between Telstra (Australia) and the Vietnam International Telecommunication Company (VIT) on fixed telephone international services, which terminated in 2002; and a 10-year BCC, which is under negotiation for further extension, between Comvik International Vietnam AB and VMS, that has recently terminated. Five other BCCs, three for fixed telephone and two for mobile phone services have not yet become operational or are valid for several years more.
The two terminated BCCs with Telstra and Comvik are evaluated as successful projects in terms of effectiveness and financial profits for both Vietnamese and foreign partners.
However, BCC investors said that they faced more risks as they had to pay all investment costs while the operation and control of the project belonged to the Vietnamese side. After 15 years’ operation, foreign investors said that in time Vietnamese partners shared risks with them. Accordingly, foreign partners will invest their capital and provide training and technical services. The Vietnamese side, the Vietnam Post and Telecommunication (VNPT) will be responsible for managing, operating and maintaining the system. The two sides will divide profits according to a certain portion, according to their contracts.
Jeffrey Noble from the Working Group on Infrastructure of the Vietnam Business Forum said that foreign partners are prevented from controlling and managing, event operating the system as well as contributing inputs and comments to business strategy and asset management. This will cause difficulties to the implementation of some articles in the contracts. Once emerging problems are not settled in a timely manner, they do not want to invest more in the projects.
Many foreign companies complain of poor governance among Vietnamese partners. Basic information about business data and strategies are not shared foreign companies. Vietnamese partners control all enterprise governance rules including the financial and accounting system, network security, revenue control, payment procedures, and bidding and commission decisions.
In particular, enterprises have to complete many procedures and wait for approval from many relevant agencies. Korea Telecom, for example, had to wait for one year to get a licence, instead of the usual three months. It took France Telecom nine years to develop its project in Vietnam while the stipulated time was seven years.
Jeffrey Noble said that the Government should provide some solutions or at least reduce emerging problems to attract foreign investors in the industry. Accordingly, foreign investors should be given a role similar to their Vietnamese partners. Alongside the implementation of international agreements and commitments, the Vietnamese Government should promote the amendment and revision of its legal system, so foreign investors operating in the Vietnamese telecommunication industry would become strategic partners and share the operation of the systems.
A simplification of administrative procedures would help company manage assets and operate better. The Government should issue unique legal documents to facilitate the implementation of contracts in the telecommunication industry. The Government should also encourage the development and application of information effectively, so as to attract more foreign investors.
Quynh Chi
Vietnamese
