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
``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
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
Reuters - March 25, 1999.