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The Vietnam News

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Vietnam will reform economy at own pace

HANOI - Vietnam is committed to opening up the economy and reforming the country's business environment but will not be rushed, a senior economics minister said.
Planning and Investment Minister Tran Xuan Gia, in a rare interview late on Friday, said Vietnam would also sign a stalled trade agreement with former enemy the United States, but he refused to be drawn on when that might happen. Gia said Hanoi had to examine carefully the impact on Vietnam from a trade deal that would send the clearest signal in years that the communist-ruled country was ready to lift protection and engage the world economy.

``Economic reform in Vietnam is a continuous process but...it must be suitable to our situation. No leader wants to embark the country on something that would be disastrous,'' Gia said without elaborating. He was speaking ahead of key talks between the government and foreign investors scheduled for Monday, and which will be followed by an annual meeting with officials and the country's foreign aid donors on Tuesday and Wednesday.

Gia will chair Monday's meeting and also attend the donor gathering. Donors and investors will urge Vietnam to step up economic reform or becoming increasingly irrelevant to international business and see gains in poverty reduction slip away. The World Bank has said unless Vietnam stepped up reform, economic growth could be 3.5 percent next year and then three percent thereafter -- the lowest rates in a decade. But financial sources have said that message would fall on deaf ears because the ruling Communist Party was riven by indecision, struggling to decide if opening up to the world economy was worth the risk it posed to one-party rule.

VIETNAM DEFENDS POLICIES, FAULTS FOREIGN FIRMS

Indeed, Gia said Hanoi planned no announcements on fresh reforms at the meetings, although a review of policies would be conducted with donors under the World Bank Consultative Group. He defended Vietnam's efforts this year, saying the government had met regularly with foreign investors and announced various measures to reform the economy.

But for investors offered increasingly enticing prospects elsewhere in Asia, those reforms have not been enough. Gia rattled off a list of complaints he expected to hear from foreign investors. Those ranged from discriminatory pricing of utilities for foreign firms to expensive land costs, tough foreign exchange management rules and high income taxes.

DILEMMA ON ECONOMIC PROTECTION

But Gia also blamed the international business community for saddling Vietnam with a dilemma on economic protection. Certain foreign companies, which Gia did not identify, wanted Hanoi to put off signing the trade agreement with Washington because it would hurt their businesses, he said.

``Some have asked us to delay the signing of the commitments (on the trade deal)... For the benefit of the country, we need to examine carefully these issues,'' he said. ``We will do all we can to soon sign the pact. Whether that will be accepted by our partner or not is another matter,'' he said without elaborating. The United States, Hanoi's enemy during the Vietnam War, has said it would not renegotiate the deal. Donors have pledged more than $13 billion in project aid to Vietnam and will also make new commitments next week.

Reuters - December 10, 1999.