~ Le ViÍt Nam, aujourd'hui. ~
The Vietnam News

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Hanoi pledges reform, investors want action

HANOI - Vietnam pledged on Thursday to improve the country's tough business climate and announced a series of measures designed to boost sagging competitiveness.
But some investors said the incentives, unveiled at a meeting between government officials and 500 foreign businessmen, were vague and did not address the critical concerns of restrictive foreign exchange and employment rules.
Foreign Minister Nguyen Manh Cam announced the measures, which focus mainly on cutting business costs from July 1.

After this date Vietnamese wages would be determined in the dong currency, some services and utilities would have a unified price and be denominated in dong, overseas phone charges would be cut by 10 percent and electricity prices reduced.
Investors welcomed in principle the move away from discriminatory pricing for foreigners and the practice of quoting some services and local wages in dollars, but urged the government to release more details.

``These changes are piecemeal and vague and do not attack the core problem of the currency or labour regulations,'' said one foreign company director who declined to be identified.
Once Cam had finished his speech numerous foreign investors addressed the meeting and reeled off a litany of complaints and urged the government to act decisively on economic reforms.
They said the communist-ruled country was an expensive place to make money and in danger of lagging further behind its leaner, more competitive Asian neighbours.

The International Monetary Fund has said it anticipated $600 million worth of direct investment funds were disbursed last year in the communist country from $2 billion in 1997.
In particular investors urged Hanoi to repeal a 1998 legal provision that forces many firms to immediately convert into dong any hard currency deposited in current bank accounts.
They also said the government should roll back a rule that took effect on January 1 which requires foreign companies to hire local staff through state-run labour bureaux.

``This requirement is complicated, time consuming and costly...It makes Vietnam less competitive,'' Jacques Ferriere, general director at Unilever in Vietnam, told the meeting.
Cam said that as part of the July 1 measures, Hanoi would allow foreign companies to hire directly if labour bureaux had not found a suitable local candidate within 30 days.
Other complaints included high income tax rates for foreign and local workers, the inability of investors to get large scale mining or build-operate-transfer (BOT) projects operating, favouritism accorded to state firms, an opaque legal system and difficult export/import conditions.

Vietnam would do its ``utmost in taking positive and drastic steps to make Vietnam's investment climate more attractive and competitive'' said Cam, a comment echoed by Prime Minister Phan Van Khai, who also spoke at the meeting.
Cam also took some unidentified foreign companies to task for failing to pay minimum wages and abide by other rules. Investors had been asked to market products at appropriate prices for local consumers, he added without elaborating.
Kazi Matin, chief economist for the World Bank in Vietnam, told Reuters that the most positive development from the meeting was an initiative to hold quarterly gatherings between the government and foreign investors.

Reuters - March 25, 1999.