Vietnam, Eu trade relations fail to reach their potential
HANOI - Although achievements have been made during their past 15 years of diplomatic relations, Vietnam and the European Union (EU) need to make a greater effort to tap the development potential of bilateral economic and trade relations, said participants at a seminar held in Ho Chi Minh City last week.
Vietnam has recognised the EU as a strategic market that can help it to better integrate into the global community. Conversely, the EU has not chosen Vietnam for big investment projects, said participants at a Vietnam-EU relations seminar jointly held by the Ho Chi Minh City University of Social Sciences and Humanities and the European Commission delegation in Vietnam.
Dr Nguyen Van Trinh, vice rector of the Ho Chi Minh City Economics College, said Vietnam has always enjoyed a trade surplus with the EU, while the EU has not yet taken measures to narrow its trade deficit with Vietnam.
He went on to say that the EU had great potential in machine and equipment manufacturing, but that few measures had been taken to turn Vietnam into a big market for its machine and equipment in the years to come.
To date, investors seeking to move their investment projects out of the EU due to the sharp increase of the euro against the US dollar have rarely considered relocating to Vietnam.
Since its expansion from 15 to 25 member countries, the EU has focused its financial capacity on political and legal reforms and the restructuring of the new EU members' economies.
The financial sum available for these reforms could amount to US$70 billion by 2007. Trinh said the EU's official development assistance (ODA) loans will also be allocated primarily among its 10 new members.
Meanwhile, European investors have concerns about the investment environment in Vietnam, citing complex administrative procedures and high investment-application costs.
Milton Lawson, deputy chairman of the European Business Association, said Vietnam needs to improve its investment environment and investment laws, in addition to speeding up administrative reforms in the coming year.
Foreigners are not allowed to invest in the import and distribution sectors in Vietnam, while foreign investment in State-owned enterprises is limited to under 30 per cent of the enterprise's total capital.
Lawson said Vietnam's investment environment has been improving while its neighbours have tried their best to enhance the competitiveness of their investment climate.
Seminar delegates agreed that Vietnam and the EU must help each other to promote bilateral relations.
Dr Le Van Quang, vice rector of the Ho Chi Minh City University of Social Sciences and Humanities, said Vietnam must maintain political and economic stability during its transition to the socialist-oriented market economy, otherwise, bilateral relations between Vietnam and EU would suffer.
He believes that Vietnam must also better its infrastructure, accelerate administrative reforms to create a favourable legal framework for investors, and enhance the competitiveness of the local market.
Andrew Jacob, an official from the EU Delegation in Vietnam, said the EU has prepared a strategy to support Vietnam in the period 2007-13, scheduled to be ratified in 2006.
The strategic plan will identify which Vietnamese sectors will receive EU support, including health, trade, poverty alleviation and programmes to enhance the Government's management capacity.
Lawson said the EU would try its best to help Vietnam turn itself into one of the most attractive destinations for foreign direct investment.
The most important consideration is whether Vietnam's business and investment environment can be improved. Otherwise, he said, foreign investment would be allocated to other countries that offer more favourable conditions.
The EU became Vietnam's biggest trade partner in 2004, with two-way trade amounting to 7.5 billion euros (about $9.5 billion).
It tops the list of foreign investors in Vietnam, with some 450 projects capitalised at $7 billion, accounting in 2004 for 18 per cent of total foreign direct investment in the country.
Vietnam News Agency - May 17, 2005.
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