Vietnamese PM pushes reform ahead of free trade commitments
Prime Minister Phan Van Khai has called on the financial sector to shoulder a larger burden of Vietnam's
economic reform programme as it moves towards regional free trade commitments.
The country's 70,000 private companies and more than 5,600 state enterprises should focus their resources on
producing high-quality, low-cost products to improve economic competitiveness, Khai told a budget meeting on
Tuesday.
The financial sector "has to reserve investment capital for
developing education, training, science and technology with a
view to accelerating the process of national industrialisation
and modernisation," the Vietnam News Agency reported him
as saying.
Efforts to improve competitiveness will become even more
crucial when import duties decline as Vietnam moves
towards honouring its commitments under the ASEAN Free
Trade Agreement (AFTA), Khai said.
Under AFTA, which was launched in 1993, the six senior
members of the Association of Southeast Asian Nations --
Brunei, Indonesia, Malaysia, the Philippines, Singapore and
Thailand -- have until 2010 to remove all tariffs on trade with
each other.
Vietnam, along with other newer members Cambodia, Myannmar and Laos, has until 2015.
The prime minister also forewarned state enterprises -- of which some 80 percent are in debt -- to prepare for
the time when subsidies are completely removed.
With the help of international financial institutions, the country is undergoing a transition to a market economy, but
the process has been painful and slowed down by reluctance among Communist Party hardliners and endemic
corruption.
Nevertheless, since the Enterprise Law was passed in 2000 creating more favourable conditions for companies,
Vietnam's fluorishing private sector has generated revenues of four billion dollars, according to figures from the
Vietnamese Chamber of Commerce.
Khai said the struggle against tax evasion and fraud must be stepped up in order to raise state revenue. This
would require close collaboration between tax, customs, police and other authorities.
Eradicating graft and restructuring the administrative organs of power are among the key components of a
three-year World Bank- and IMF-assisted reform programme launched in 2001 to help integrate Vietnam into
the world economy.
In May, Vietnam announced its ambitious Comprehensive Poverty Reduction and Growth Strategy.
The plan commits the communist regime to repeating its unprecedented feat of halving poverty and doubling gross
domestic product between 1990 and 2000 by 2010. Analysts are sceptical the targets will be met.
Agence France Presse - July 17, 2002.
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