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

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[Year 2002]

Vietnam dangles the reform carrot

HANOI - Not complacent about the five-year high in foreign investment last year, the Vietnamese government has pledged to implement a new series of reforms to attract more, including a further cut in costs for foreign investors. The plan was unveiled by Minister of Planning and Investment Tran Xuan Gia in an interview with Sai Gon Giai Phong (Liberated Saigon) daily of Ho Chi Minh City. Vietnam's next five-year plan calls for a total foreign investment of US$12 billion with an annual capital disbursement of not less than $2 billion. It means that the country should draw at least $3 billion of capital a year from foreign investors.

To reach that end, the government has pledged to issue licenses in the shortest possible time, reduce the application costs to the lowest rates, and help clear the ground as fast as possible, the planning and investment minister said. He added that his ministry has been working hard in reviewing the whole application procedure in order to close up unnecessary "doors", although the current procedure has already been viewed as very convenient by many project owners who have received their licenses on the same day they applied. It takes major projects capitalized at $70 million-$80 million each only a few days to have their licenses issued. Gia emphasized the need to speed up administrative reforms to help save foreign investors' time, money and energy. "The interests of foreign investors are also ours," said the minister.

A number of legal tools will be reformed to ease the hard currency circulation and remittance procedures, as well as reduce taxes and investment costs such as electricity and telephone charges, he said. The government has also planned to continue narrowing the gap between the Foreign Investment Law and domestic investment policies such as allowing joint stock foreign-invested companies and test-running partnership investments, said Gia. These forms of investments have been applied in the domestic economic sector. The last measure, according to Gia, is to speed up promotion campaigns. He quoted foreign investors as saying that Vietnam has not yet done well in introducing worldwide its improved investment policies and environment as well as its projects with incentives for foreign investors. "We will immediately focus efforts on this task," Gia said, citing a governmental-level working visit to the United States in early December as the start-up campaign for a series of follow-up activities in 2002. He emphasized personnel training as a must to fulfil the task. He said it was more urgent when the central government began granting more autonomy to the local administrations in issuing foreign investment project licenses.

The country is trying to raise its competitiveness amid world forecasts of an estimated 30-40 percent drop in foreign investments, while the demand for foreign investment in many countries will rise considerably. In 2001, Gia's ministry was busy until December 26 issuing a license for the Taiwanese Formosa Plastics Group's project worth over $245 million to produce synthetic silk. The project has brought the total of foreign investments licensed last year to over $3 billion, $200 million more than planned. Foreign invested businesses have also shown signs of making more profits. Last year, the sector netted over $7 billion in its gross revenue. Its export turnover increased 10 percent while its tax payment was up by 15 percent.

Double digits set for export growth rate

Vietnam has set itself an 11 percent export growth rate to earn $16.6 billion this year despite the current global economic downturn. In an interview with Lao Dong (Labor) newspaper, Deputy Trade Minister Mai Van Dau said that the target has been defined on the basis of the country's actual export situation as well as world market forecasts for 2002. To the total amount, earnings from the export of aquatic products will contribute $2.1 billion; textiles and garment, $2.4 billion; footwear, $1.9 billion; crude oil, $2.6 billion; electronic accessories, $750 million; and rice, $640 million, the deputy minister elaborated. He said that Vietnam plans to increase its exports to the United States by 50 percent, to post $1.55 billion in 2002 from $1.05 billion last year. Local exports to the US market are now subject to tariff rates around 4 percent as against the average level of 40 percent prior to enforcement of the bilateral trade agreement between the two countries last December.

China is another market eyed by local exporters, Dau noted. Vietnam is striving to raise its export earnings from the neighboring country by 20 percent to $1.9 billion. The deputy minister said that his ministry has proposed to the government a number of solutions to boost the country's export in 2002. Under those proposals, enterprises will be encouraged to sign direct contracts to buy farm produce with farmers who are likely to enjoy input support and lower petroleum and gasoline prices to reduce production costs. On the country's export activities last year, Dau held that 2001 was a year full of challenges and difficulties for local exporters. Sharp drops in prices of the country's major export items, namely crude oil, rice, coffee, cashew nut and pepper, in the world market reduced Vietnam's 2001 export revenues by $1.5 billion. In addition, local producers failed to keep up with steady market demand changes to timely restructure their production. Consequently, a number of Vietnamese products could not compete regionally and internationally, Dau noted.

He pointed out that the government last year promptly instructed relevant ministries and localities to carry out a series of packaged solutions to speed up exports. As a result, Vietnamese farm produce were well marketed. Staples that recorded increasing export volume growth rates in 2001 included rubber, 14 percent; coffee, 25 percent; cashew nuts, 20 percent; and pepper, 51 percent. Last year, Vietnam attained an export growth rate of 4.5 percent and an export revenue of $15.1 billion.

Asia Times - January 08, 2002.