Disappointed donors see Vietnam slowing reforms

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

Disappointed donors see Vietnam slowing reforms
HAI PHONG - International donors expressed discontent with Vietnam on Tuesday, despite pledges from the communist-ruled country to further economic and political reform.

``We are disappointed,'' said one western ambassador during a break in a mid-year meeting between the Hanoi government and its foreign backers. ``There was a reaffirmation that the state sector would keep a dominant role in the economy.''
Donors and foreign investors have in recent years become increasingly critical of Hanoi's perceived backsliding on promised reforms, including the promotion of the country's small but hamstrung private sector.
The meeting, held in Hai Phong, 105 km (62 miles) east of Hanoi, heard calls for quick action to arrest the country's economic slide.

``There's so much sympathy (for Vietnam) among the heads of delegations but the statements today seemed like a throwback in time,'' added the ambassador.
After a decade of stellar growth, the country's economic prospects have dimmed since 1997 as growth slows and other key indicators stall or turn negative.
The meeting gathered Vietnam and the World Bank Consultative Group (CG) of bilateral and multilateral donors in a mid-year review of reform and official development assistance (ODA).
Andrew Steer, director in Vietnam for the World Bank, said Hanoi had marked impressive progress since it launched tentative reforms in the late 1980s, but those gains could possibly be reversed.

``Last year we met at a time when we were very concerned,'' said Steer. ``Today the situation is more serious than it was last year.''
One participant in the meeting said many donor calls for concrete reform in key areas were rejected.
``The Vietnamese totally rebuffed any approaches...on most sensitive issues,'' he said.

Deputy Prime Minister Nguyen Manh Cam, who is also foreign minister and sits on the Communist Party's elite Politburo, told donors reform was needed to support economic growth.
He said efforts were being made to overcome problems arising from low efficiency and poor competitiveness, the Asian financial crisis, natural calamities and persistent management and administrative weaknesses, but gave few details.
Donors remained critical. ``There is no willingness to engage in a full dialogue,'' said one participant.

Since 1993, Hanoi has been pledged some $13.1 billion in development aid -- of which around $5 billion has been disbursed -- but donors say stalling reforms and other political problems may force conditionality on future pledges.
Planning and Investment Minister Tran Xuan Gia told donors that Hanoi was attempting to address 17 issues that the CG had devised, but that problems -- internal and external -- remained.

Participants in the meeting said no new pledges of aid would be made, but that recommendations on implementation and long-term development assistance would be devised for further consideration at the next full annual donors' meeting due in December.

REUTERS - June 15, 1999

Investor concerns presented to Vietnam

HAI PHONG - Foreign investors, in a meeting with the Vietnamese government on Monday, outlined a list of concerns they said should be urgently addressed if Hanoi was to improve its dimming economic prospects.

The meeting was part of a process initiated by the World Bank Consultative Group of Donors to communist-ruled Vietnam. Multilateral and bilateral donors will meet the government on Tuesday.
The following is a summary of main concerns raised by the so-called Private Sector Forum, which groups foreign business associations in Vietnam:

+ Enforcement of rules and regulations. Investors complain that enforcement is often inconsistent.

+ Banking sector reform. Vietnam's nascent financial sector is under-capitalised and over-regulated.

+ Increased transparency, including audits of state-owned enterprises. Few state firms, which hold a privileged position in the economy, have been audited.

+ Foreign exchange. Foreign companies are severely limited in their access to foreign exchange, and in some cases spot sales of forex are mandatory.

+ Voting rights in joint ventures. Minority local partners in foreign-invested joint ventures still hold the power of veto in some decision making.

+ Income tax. Income taxes for both Vietnamese and foreign employees are too high.

+ Removal of dual pricing. Foreign firms and individuals are forced to pay higher rates for some services such as utilities, transport and advertising.

+ Utilities costs. Costs for items such as telecommunications and electricity are too high.

+ Dollar denominated salaries. Salaries for Vietnamese workers in some foreign-invested firms are required to be stated in U.S. dollars.

+ Direct labour hire. Foreign firms are barred from hiring workers directly and are required to go through state labour agencies.

+ Rules for Build-Operate-Transfer (BOT) investments. This key form of investment remains mostly unattractive due to restrictive rules and regulations.

During the meeting, Hanoi agreed to the formation of joint working groups with foreign investors on banking and legal issues. Concerns would also be further considered and passed on to the country's legislature, participants said.

REUTERS - June 14, 1999