Eyeing WTO membership, Vietnam girds for change
HANOI — Vuong Cam Van, a marketing manager at a private food company here, could receive four months' paid maternity leave after giving birth in a few weeks.
But the 28-year-old says she will rush back to her job after a month.
Blame it on the WTO.
With Vietnam expected to join the World Trade Organization in the fall, companies and individuals are scrambling to prepare for economic upheaval. Some enterprises, such as Vietnam's state-owned telecommunications giant, are gearing up for mass layoffs.
But many Vietnamese see a golden opportunity ahead. They are polishing up their resumes and taking crash courses in hopes of contending — and perhaps flourishing — in a more open economy.
Vuong's employer, Trung Thanh Co., for the first time sent managers abroad to learn how Chinese and Japanese companies distribute their food products nationwide. Vuong recently completed six months of studies on business law.
There's too much to do to take a longer leave, Vuong said. "The WTO forces us to compete," she said, moving gingerly in the company's office on the southern outskirts of the city.
For this nation of 84 million people, the WTO could provide the biggest economic test since Hanoi introduced doi moi in 1986. That policy of "renovation" dismantled collective farms and opened up trade, setting the socialist country on a path toward market reforms much like those of its northern neighbor, China.
Vietnamese leaders want to secure their WTO bid by November, when they host President Bush and Asian leaders for this year's gathering of the Asia-Pacific Economic Cooperation forum. Together, APEC and WTO are seen here as Vietnam's coming-out party.
Although membership in the 149-nation trading body will open up markets for Vietnam, it also will require the nation to remove barriers to foreign companies in banking, retail and other industries.
"My single biggest fear is Vietnamese competitiveness," said Tran Dinh Thien, associate professor at the Vietnam Institute of Economics, a state-run think tank. "The problem is, how do we compete with other, stronger countries? How do we take advantage of the opportunities?"
Vietnamese, young and old, regard entry to the WTO as a source of national pride, evidence that the country has emerged from its colonial and war-torn past.
When asked about the WTO, Danh Dang, 91, let out a stream of thoughts in French and Vietnamese. "The French invaded and dominated here over 80 years," said the emaciated man, sitting cross-legged outside his home in the Old Quarter district on a steamy summer night. "Then the war against the U.S. made Vietnam poorer and poorer. But when Vietnam joins the WTO, it means we can upgrade the whole society and achieve a higher standing in the world."
"I will have more job opportunities and my pay will increase," said a 25-year-old woman who gave her name as Hien. Her friend, sitting nearby on the steps of the elegant French-built Opera House, nodded in agreement.
They hope the WTO will bring more foreign employers, which are highly sought out by young Vietnamese because they generally pay more and offer better benefits.
Hien earns about $125 a month as an accountant for a Vietnamese logistics firm, but the Hanoi native says she cannot save much. She spends a fifth of her wages filling the tank of her Suzuki motorbike. (Gasoline costs about $2.60 a gallon here.)
"I know it will be good," Hien said of Vietnam's membership in the WTO.
Not everybody shares her optimism. Despite efforts to reform government-run companies, many remain bloated and inefficient. Economists say the state sector accounted for 38% of the nation's economy last year but created just 11% of the jobs. And now, it is hurrying to reorganize before competition heats up.
At Vietnam Posts and Telecommunications Group, managers are in the process of splitting up their mail delivery systems and telecom services. About 15,000 of the group's 90,000 jobs will be eliminated, starting in the fourth quarter, said company spokesman Bui Quoc Viet.
"Certainly we will shrink down, but we will reduce very slowly," he said.
Vinatex, Vietnam's largest state-owned textile and garment enterprise, has moved to privatize 40 of the 57 companies in its group, aiming to raise money from capital markets and operate more efficiently.
But Le Quoc An, Vinatex's 55-year-old chairman, spoke grimly about the entire industry's future. The nation's garment industry has boomed in recent years — it now employs about a million workers. Foreign investors have relocated here from China because of Vietnam's low labor costs and cheap land and because of export quotas imposed by the West on Chinese-made clothing. But under pressure from U.S. negotiators, Hanoi agreed to phase out all government subsidies for exporters, including preferential tax rates.
Le complained bitterly that American politicians misunderstood the size of Vietnamese government subsidies and the state of the nation's garment industry.
"We cannot compete with China. We are trying to survive next to China," said Le, who was appointed to his post by the prime minister.
Ly Ngoc Minh, chairman of Minh Long I Co., a ceramics maker in Ho Chi Minh City, has less to fear. In 1990, Ly received the first export license issued by Hanoi to a private company. A year later, the former cabbage and papaya farmer shipped ceramic renderings of "The Last Supper" to France.
Today, Ly employs more than 2,000 workers who produce ceramic figurines and collectibles for Walt Disney Co., Warner Bros. and other customers in Europe and the United States. The 56-year-old learned the trade from his father and grandfather, who moved to Vietnam from south China's Fujian province.
Chinese ceramic makers now loom as a threat to Ly in his home turf. After the WTO entry, ceramic companies in China will see an end to the 40% to 60% tariffs that they face exporting to Vietnam. "There will be some pressure on us," he said.
Despite problems with corruption and political restrictions, Vietnam's economy expanded by 8.4% last year, the best growth rate in Asia behind China. Private enterprises are rising rapidly, and the country is racing to build roads and airports. Vietnam has a highly educated workforce and a large pool of young workers. Six out of 10 Vietnamese were born after 1975.
Two years ago, Le Khac Hiep quit his job as a senior executive at Prudential Insurance Co.'s office in Hanoi. The 50-year-old, who has a doctorate in physics from Ukraine, teamed up with a few friends living in Russia and Ukraine and raised about $38 million to build two towers for offices and shopping near the Grand Cathedral in the central city.
The partners named their company Vincom Joint Stock Co., to make it clear it was a private firm.
On the top floor of his 22-story building, the tall and swarthy Le stood by the window, peering over the northeast end of downtown. Le could see streets of narrow boxcar houses and short buildings crammed together, with keg-shaped water tanks on rooftops. There wasn't an office tower anywhere near as tall as Le's.
In the last decade of Vietnam's market reforms, Le has made a good living, enough to send his daughter to college in San Francisco. He has even higher hopes for his 12-year-old son.
"WTO brings more benefits. Companies will use more services and we can buy goods cheaper," Le said. "It will be a chance and a challenge."
By Don Lee - The Los Angeles Times - August 19, 2006.
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