JWH Vietnam-economy
HANOI - The head of the World Bank in Hanoi said on Friday that
despite the regional economic crisis, Vietnam's
annual growth could continue to grow at
between seven and nine percent if new reforms
were quickly implemented.
``If Vietnam does the right thing, it has the
instruments and levers to pull that could
compensate for the regional downturn,'' said
Andrew Steer, the bank's director in Vietnam.
``We believe the economy could grow by
7.0-9.0 percent per year if (Vietnam)
implements serious reforms of the state-owned
enterprises, the financial sector, trade policy and
domestic deregulation,'' he added.
Steer was speaking at a luncheon for members
of the American Chamber of Commerce in
Hanoi.
Gross domestic product is forecast to grow at
6.64 percent in the first six months of the year.
The official figure for GDP growth in 1997 was
8.8 percent.
The IMF and Asian Development Bank have
predicted Vietnam's GDP growth this year at
5.0 percent.
Steer emphasised that Vietnam, which has
been spared the full brunt of the regional turmoil,
needed to move quickly to capture new markets
before other East Asian countries began to
grow again.
``Countries in the region are reforming faster
than most expected and a year from now they
will be lean, mean and world class competitors,''
Steer said.
He said communist Vietnam had made
structural changes to help take it down the
reform path, but more was needed.
``We have seen significant progress but that
doesn't add up to what is needed to take the
country over the threshold,'' Steer said.
An official source told Reuters on Thursday the
government would present a report to the elite
communist party politburo on Friday that
outlined dark days ahead for the country if it
failed to move faster on economic reform.
Steer said Vietnam this year was facing a
slump in hard currency inflows as high as $1.5
billion as export growth had slowed and
disbursements from foreign direct investment
had fallen considerably.
He highlighted attempts to speed equitisation --
Hanoi's preferred term for full or partial
privatisation -- as proof Vietnam understood it
could not allow itself to be stuck in political and
economic inertia.
Hanoi announced a policy to sell off state firms
in the early 1990s, but only 17 had been
equitised by the end of 1997. There are about
6,000 state-owned firms in Vietnam.
In the last three months, Steer said the rules for
equitisation had been simplified and 189
companies had been earmarked for partial
privatisation. Of the total, 84 were currently
undergoing the process and 11 had been sold
off.
But he warned that over the next two to three
years, Vietnam had to stop subsidies and
preferential treatment for state-owned
enterprises, restructure large and lumbering state
firms, and develop a safety net for fired
workers.
The World Bank was ready to help finance such
initiatives, Steer said.
He added that trade policy liberalisation needed
to be accelerated.
``There is not nearly enough progress. There
needs to be a much lower level of effective
protection,'' along with tariff reductions, a
narrowing of tariff bands and a reduction in
quantitative import restrictions, Steer said.
Vietnam is working towards World Trade
Organisation membership and is negotiating a
comprehensive trade agreement with the United
States that would lead to Most Favoured
Nation status and privileges for Vietnamese
goods in the U.S. market.
``We estimate that if Vietnam had MFN now,
export earnings (from the U.S.) could increase
three-fold by as much as $800 million a year
three years from now,'' Steer said.
By Andy Soloman - REUTERS, June 19, 1998.
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