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.
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