Companies and WTO: Needing a New Approach in Thinking

 

Mr. Nguyen Manh Thuc, director of Tan Thai Agro-Forestry Products Import-export Co. Ltd, spoke uneventfully of his company’s preparation for the upcoming integration. “While not a few agricultural enterprises are worrying about going bankrupt and being annexed, we are seeking ways to apply internationally standardised packaging technology to our agricultural products as well as apply barcodes,” Thuc said.

 

Tan Thai mainly processes bamboo shoots, mushrooms, tea, longans and salted dry fruits. All products are carefully packaged to guarantee absolute safety and hygiene. “Without good packages, processed products cannot be good, competitive and exportable” Thuc said. Hence, while many places cannot sell bamboo shoots, Tan Thai products are sold very well. Its products appear on shelves of nearly all supermarkets and restaurants, and exported to Japan, France, China and other countries in large volume. “Technology investment is an important step for our integration. Smaller enterprises must have better and more systematic business strategies and must build the prestige for the quality of their products. I think Vietnam’s admission to the WTO will enable us to export more products because there is no market barrier while tax is reduced,” Thuc added.

 

Dr Le Dang Doanh, senior economist of Vietnam, also thought that enterprises, which lack knowledge and cling to “snatching” business routines, face more huge challenges and they will pay a heavy price. “The WTO is not a playground for subsidy-relying enterprises. The survival requires intelligence, innovative thought, bravery and fighting spirit,” Doanh said.

 

According to Dr Doanh, joining the opening 150-member WTO, the import tax rate imposed on Vietnamese goods will be reduced to 10-15 per cent from the current 30-40 per cent. The quantitative restriction will be removed. Legal proceedings and commercial disputes will be settled in accordance with the law of the WTO. Hence, the unfair discrimination will no longer exist. The export expansion dimension depends on enterprises themselves.

 

Scrupulous analyses into export capacity showed that products manufactured under the integrated technologies like apparels, leather, footwear, electronics, wood furniture and farm products will have more export expansion opportunities. Enterprises must organise market research, quality norms, measurements, hygiene and safety immediately if they want to gain benefits from the integration.

 

Former Deputy Prime Minister Vu Khoan used to said: “It is not easy to weigh, measure and count the “gains” and the “losses” of the WTO entry. However, the opportunity will not naturally lie in the hand of enterprises, but depend on efforts of enterprises, on quality and price of products and on business and investment environment.”

 

For example, when the EU removed the quota imposed on the Vietnamese garments and textiles, the export of these products to this market falls. ASEAN member countries lowered import taxes on Vietnamese goods to 0-5 per cent but the export growth remains sluggish. These statistics showed the trade liberalisation is a necessary not a sufficient condition if enterprises cannot work out their business plans.

 

According to Dr. Doanh, to grasp the opportunity, a lot of old but popular business routines must be eradicated. “For example, a duck monger trying to stuff rice flan into a duck to weigh it up, an enterprise injecting chemicals into shrimps to make them heavier or a farmer randomly cancelling contracts will be no longer comply with the WTO regulations. The WTO will strictly punish violators and none can repudiate contracts and no force and protect law-violating deeds,” Doanh said.

 

Enterprises, which only gain profits by underground relations and tricks not by technological renewals, human resource investment or organisational arrangement, will soon be defeated by law-following rivals. The WTO will change thought, routine and activity of enterprises in a more civilised and advanced way. Better enterprises will win.

Dr. Phan Minh Ngoc of Japan’s Kyushu University showed that to be a beneficiary of this commercial liberalisation process, all sectors and enterprises of Vietnam must fulfil at least three major tasks. The first task is to push up the human resource training: the human resource of enterprises and the country, and this will help reduce the grey and this will help reduce the brain drain, causing poorer competitiveness of domestic enterprises. Second, State-run enterprises must have more autonomy and progress to equitisation to improve productivity, efficiency and competitiveness. The final task is to speed up the expansion of the capital/stock market to mobilise capital for the integrating economy.

Vietnam joined the ASEAN in 1995, the ASEM in 1996, the APEC in 1998 and hopefully the WTO by the end of this year. The participation in these global institutions is a necessary prerequisite condition to open up the global commercial door for Vietnamese commodities and services. However, big opportunities are always accompanied by challenges to the economy on various facets and require the Government, enterprises and the entire economy to have suitable approaching thoughts and measures, and national economic development policies.

The Vietnamese Government has completed its macro economic policy system, created and managed a transparent and fair legal environment and an effective and efficient administrative apparatus and mechanism to facilitate the operation of enterprises. However, enterprises should associate to sharpen competitiveness of their commodities and services by market factors like better quality, lower price, and more attractive after-sales services. On the other hands, the maximum application of incentive policies on the tariff and non-tariff basis as well as suitable protection forms should be brought into full play.

 

The WTO will create common opportunities for all enterprises but generate huger challenges for military-run enterprises. Several international financial institutions have some regulations and barriers against military-run enterprises. For example, since 2004, the World Bank has limited the participation of military enterprises to its funded projects. In addition, military enterprises still have functions of manufacturing and supplying products for national defence requirements; hence, the production and delivery for civil purposes will be affected.

 

In particular, the gradual reduction in state investment will put more burdens on our military enterprises. To date, two opposite trends still coexist in the awareness and action of military enterprises. Many are unconcerned about the defeat on the home market and some others are longing for the admission to the WTO to improve themselves without full understanding of the WTO entry.

 

The severe competition will team up small and medium enterprises. The cooperation of enterprises in the fields of basa catfish and shrimp rearing and processing; tea and coffee growing and processing; and garment and textile in market expansion and international dispute resettlement in recent years is a clear-cut evidence. The Vietnam Small and Medium Enterprise Association will take initiative in boosting up cooperation and association in this direction.