Vietnam offers foreigners a second chance
TOKYO - Vietnamese Prime Minister Phan Van Khai has promised
improved legal and investment conditions for foreign firms operating in his
country, so much so he will ask back companies that have departed in
frustration over problems of doing business in the country.
In a speech at the seventh Future of Asia conference in Tokyo on Friday,
the prime minister stressed that Vietnam intends to ask back foreign firms
that left the country feeling the business climate was less than congenial.
He said the government is ready to take any measures to make the
business environment more favorable and to improve the export
competitiveness for foreign firms.
Meanwhile, the government is also set to accelerate plans to restructure
state-owned enterprises (SOEs), which will be re-organized through
equitization, transfer, sale, contractual production or lease.
Relevant ministries are drawing up plans to ensure employees made
redundant by the restructurings will receive vocational and professional
retraining for new assignments or will receive help in finding new jobs in
other economic sectors.
In his speech, the prime minister suggested the government will ease high
telecommunications costs, individual income taxes, rents and other
expenses. He also mentioned the administrative reforms under way to cut
red tape.
As for basic economic policy, Vietnam will seek to build a market
economy directed by socialism egalitarianism, he said. The country will
lower tariffs and abolish non-tariff barriers in accordance with the
timetable of the Association of Southeast Asian Nation's regional free
trade zone concept.
After adopting an economic reform policy in 1986, Vietnam enjoyed
about 20 percent growth per year in foreign capital inflows until 1996.
But the 1997 Asian currency crisis and the inflexible institutional structure
within the country, including an unfriendly legal system, have caused the
economy to stagnate.
Since the retirement in April of Le Kha Phieu, the conservative
secretary-general of the Vietnamese Communist Party, the leadership of
Phan Van Khai, who was deeply involved in implementing the opening
policy, and his economic reform efforts have strengthened.
While the premier promises a more congenial investment climate for
foreign firms, the government is busy making its financial restructuring
efforts stick. The Ministry of Planning and Investment (MPI) and related
authorities have been given the task of amending the bankruptcy law to
enable owners of enterprises to declare their bankruptcy. This will
provide a legal framework for the dissolution of loss-making SOEs.
The Ministry of Finance (MoF) is also re-examining the rules which
govern contractual business operations and the leasing of SOEs to
provide more preferential terms for contractors and lessees.
Under new regulations, lessees are eligible to buy SOEs in the final year
of the contract at a lower price than their market value. In addition, the
leasing time will be reduced to less than five years so that SOEs will not
miss opportunities to invest in the renewal of their property.
The relevant authorities will be provided with necessary information to
monitor SOEs' production and business transactions to be aware of
enterprises which can no longer satisfy their creditors, are possibly
violating the law, and are facing imminent bankruptcy.
They will also provide guidance and assistance to SOEs striving to
overcome financial difficulty and attempt to help avoid future trouble and
raise their economic efficiency. The state will spend some 50 percent of
corporate income taxes annually, 50 percent of profits from state
budget-based business operations, a percentage of the fund for SOEs'
restructuring and equitization and some of the cash rewards for
successful enterprises, on bolstering SOEs whose 100 percent state
capital must be preserved. The money will also be spent on enterprises
that are subject to equitization but have not yet been equitized.
At the same time, State subsidies given to SOEs will be limited, and
eventually abolished. The MoF has also been addressing the mechanism
through which SOEs will become corporate structures, responsible for
their own income and outgoings, as elaborated in the Enterprise Law.
In the process of the SOEs' restructuring, all outstanding arrears and bad
debts must be settled before they are equitized, transferred, contracted,
sold or leased. The MoF is requested to delegate its power to municipal
and provincial People's Committees to write off local SOE's arrears
below a set figure to the state budget.
The government will also establish a debts and property trading
company, which will handle the SOEs' debts and property during the
restructuring process. The number of SOEs is expected to drop
considerably in the next five years.
During this period, some 2,622 SOEs will be restructured, with 1,319
equitized; 565 transferred, sold, contracted or leased; 351 merged; 368
dissolved; and 27 changed into nonproductive units.
Some 150 SOEs with 100 percent state-owned capital will take shape
by 2005. In the next five years, the number of state-owned corporations
will go down from 24 to between 10 and 15 and some corporations will
reorganize into economic groups.
Asia Times - June 9, 2001.
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