Development history
In the past 60 years, the trading sector of Vietnam can be divided into three major phases: assistance war (1946-1975), reunification and pre-doi moi (1976-1985) and doi moi (1986-2006). In each phase, although the trading always has certain difficulties, it significantly contributes to the national construction and defence.
During the wartime, the trading sector mainly served the fights against the French colonists and American imperialists for the national liberation. The trading sector provided sufficient assistance to the southern battlefield and ensured the essential demand for commodities of the people.
During the pre-doi moi period, the sector carried out its distributional function - a bridge to link production and consumption - and contributed to the production expansion process. The trading sector built up a trading network throughout the country, from the central to local levels, and the backbone was the State-run and cooperative trade.
However, Vietnam remained centrally run and planning economy and subsidy. The market was segmented and the commodities were not freely circulated. The market participators were only State-owned companies and marketing cooperatives.
In the doi moi (renovation) period, the economy in general and the trading sector in particular have made great leaps forward and obtained many important achievements. The trading not only serves national production and livelihood demands but also develops exports commodities and services to other countries.
The outlook is very promising. The market participators now have other economic sectors, especially the private and foreign-invested sectors.
Vietnam now not only exports its products and services to only former Soviet Union and Eastern European bloc but also has commercial relationship with 221 countries and territories. The export goods structure is also being changed, from materials to processed commodities with higher technological content and grey matter. Its major current exports are garments, textiles, footwear, seafood, rice, wooden furniture, electronics and computer parts, electrical wires and cables and plastic products.
However, the Vietnamese trading sector still has to overcome many limits because Vietnamese companies now have small sizes and weak competitiveness and they find it hard to grasp opportunities to penetrate markets Vietnam has inked bilateral or multilateral agreements. The trade deficit remains high but Vietnam still lacks thorough control solutions, export structure is irrational and export commodities have low added values.
Vietnam becomes the 150th WTO member - 10-year development tendency
The WTO admission is a result of 11 years of efforts and 14 negotiation rounds. In each round, Vietnam not only strictly obeys WTO principles but also calculates the general benefit and compatibility of its economy, especially providing information and giving Vietnamese economic overview to its partners. This is consistently applied to all negotiations. Then, Vietnam could give commitments but ensure benefits of its partners and of Vietnam itself. This is the foundation for the equality in any negotiation.
Vietnam has become an official member of the WTO and Vietnamese import-export companies have opportunities to approach large markets at minimum tariff and non-tariff barriers. Enterprises will operate in a very favourable environment thanks to the bilateral and multilateral agreement signatures. This promises strong changes to Vietnamese import-export activities, contributing to the overall development of the country.
In addition to traditional markets, Vietnam is reaching new markets. Asia remains its largest market but the export proportion to this market is downsizing and the European, American and African will gradually take higher total turnovers of Vietnam’s import and export.
In the coming time, apart from the key exports of seafood, apparels, textiles, footwear, electronics and computer parts, wooden furniture, rice, coffee, pepper and cashew nuts, Vietnam will also export high-value products with higher technological contents and grey matters like ships, transport means, adapters, dynamos, office tools and mechanical structures. Among exports, industrial goods and handicrafts will grow strongly and overwhelm the export of agricultural, forestry, aquatic, fuel and mineral products.
Together with the foreseeable soar in foreign investment after Vietnam joined the WTO, the foreign-invested sector will continue raising its proportion in the Vietnamese export turnover in the coming years. By 2010, the foreign-invested sector is forecasted to contribute 67 per cent to the national export earnings. This proportion will certainly change in the following years.
Apart from challenges of the WTO entry, Vietnam will have great chances to expand its market, increase its exported commodities and raise export revenues to make more contributions to the success of the Vietnamese economy in the future.
The WTO is a 150-member global trade club with a system of multilateral and bilateral agreements to form a largest “playing field.” This game will bring in not a few development opportunities as well as expose challenges. Enterprises will the largest beneficiaries but also the heaviest sufferers.
After the WTO entry, all remaining members of the WTO must apply tariffs on Vietnamese goods at the MFN (most favoured nation). The Vietnamese companies are protected by dispute resolution mechanism of the WTO, or in other words, limiting unilateral impositions by trade partners as before. The foreign investment attraction will be carried out through the transparent mechanism and the tariff will be cut in accordance with the commitments. Besides, companies in Vietnam will also encounter challenges and hardships: strong competition in the homeland markets. Of course, many will go to bankrupt due to weak competitiveness.
Hopefully, Vietnamese companies with a 60-year tradition can absolutely implement the strategies and solutions to raise the competitiveness of its goods and services; adjust management methods to a more efficient level; and prepare for a competition without State supports as stipulated by the WTO. The development of trademark is essential to widen market-approaching capability after the admission.
The Trade Promotion Agency - Ministry of Trade
Vietnamese
