The year 2007 has passed and we now walk through the door into 2008. Vietnam is moving along the path to international integration. The year 2008 is considered to be very important because it is the third year into the 2006-2010 socioeconomic development plan and will be the country’s second year as a WTO member. With the achievements recorded in the past year and conditions at present, it is expected that Vietnam is able to do quite well in 2008 –Year of the Rat.
Opinions from the Government and experts
Deputy Prime Minister Pham Gia Khiem: WTO accession created more of a driving force for Vietnam to reform its internal legislative system to come more in line with international practices, creating a favourable and equal business environment for all economic sectors. Before WTO accession, there was much anxiety and doubt about Vietnam economy’s adaptability to tremendous changes in the business environment as well as about its ability to deal with international integration. Outside partners had not really believed in Vietnam’s determination to fully and seriously implement its integration commitments. Our great achievements in economic development over the past year have wiped out all those concerns and doubts.
Mr. Ngo Quang Xuan, former chief of the Vietnamese Mission to the WTO and deputy head of Vietnam National Assembly Committee for External Relations: Since Vietnam became a member of the WTO it has welcomed many high-ranking delegations that have come to discuss development. Over the year, many foreign investors and tourists have come to Vietnam and progress is being made regarding investment, exports and tourism, among other things.
Dr. Le Dang Doanh, former director of the Central Institute for Economic Management (CIEM): a new wave of foreign investment is coming to Vietnam since the country became a member of the WTO and that Vietnam has gained foreign investors’ trust by implementing WTO commitments since being admitted.
Mr. Ayumi Konishi, Vietnam Country Director of the Asian Development Bank (ADB): We all know that Vietnam continued to record notable economic progress in 2007 and WTO membership contributed to this success. Yet, we must see that Vietnam’s WTO accession was somewhat sourced from local economic reforms in the 1980s, during the early stages of “Doi Moi” (renovation process)
I think WTO accession will help Vietnam pursue its reform process, modernize its trade laws, facilitate trade and business environment as well as improve transparency and publicity.
Additionally, Vietnam’s WTO accession not only influences trade, but other policies as well, thus achievements in 2007 are a combination of the reform process and WTO accession
Mr. Jonathan Pincus, UNDP senior economist: Vietnam’s WTO commitments will be gradually implemented in the next few years. The most difficult ones are still ahead, including many service-related commitments. Vietnam has to prepare for fiercer competition in the service sector, for example retailing, distribution, and financial services. Vietnam also needs to improve the quality of education if it wants to continue attracting both domestics and foreign investors.
Positive changes resulted from WTO membership
The year 2007 could be considered to have been the country’s first year of actually playing on the global economic playing field. With the GDP of 8.5% higher than its was in 2006 and remarkable increase in exports and FDI and other steady macroeconomic indexes, financial and monetary market changes did not result in any considerable bad effects. Thanks to the rather well management of the Vietnamese Government, the Vietnamese economy continued to grow given that the country had to cope with the negative impacts of natural disasters and sharp price rise in oil and most of goods and services in the country’s market. The nation remains secure, which creates a firm foundation upon which Vietnam can expect to succeed on the global playing field.
The achievements attained by Vietnam in 2007 were due to the reform that was carried through by the Vietnamese Government and the trade liberalization that is occurring as the country implements its WTO commitments.
Vietnam currently is integrating more deeply into the global economy. The country continues its reform policy that is to build a socialist oriented market economy and improve the country’s position in the international arena. In 2007, Vietnam’s exports reached a record of US$48 billion. More importantly, Vietnamese people, especially farmers, benefit as more products are exported to WTO member countries. There are also many more quality imported goods for people to choose from. The lives of Vietnamese people have improved and Vietnamese companies are expanding in both domestic and international markets.
Since it joined WTO, Vietnam has become more attractive to foreign investors as is shown by the US$20.3 billion in FDI that came into the country in 2007. There are also foreign investment projects with proposed total capital of US$450 million that have not yet been approved. These include many large-scale and high technology projects. The large inflow of FDI resulted in a surplus of foreign currency, the first time for Vietnam. More investments were being made in the financial market. The securities market grew tremendously (total share value, five percent of the country’s GDP in 2007). Investment in private sector companies rose to VND118 trillion, a 78.5 percent increase in 12 months. Investment in State-owned companies totaled 44.4 trillion, 72 percent higher than in 2006.
Vietnam’s position in the international arena has improved with its increased reputation in the business world. Foreign investors and tourists see Vietnam as a safe country. The economy is growing rapidly and the lives of people are improving. Furthermore, the international community’s appreciation of Vietnam is reflected in its non-permanent membership of the United Nation’s Security Council for the 2008-2009 tenure.
Weaknesses and Difficulties to be resolved in the coming time
Change, even when it brings about many improvements, always carries new challenges.
There are certain socioeconomic challenges in Vietnam that thus far have slowdowned the full implementation of WTO commitments and have hindered economic development. In 2007, inflation took hold as the CPI rose 12.63 percent in just 12 months, faster than it has in 10 years. And this in spite of the fact that many import taxes were reduced or eliminated, the trade deficit has continued to grow and now exceeds US$12.5 billion, an amount equal to 25.6 percent of revenue. This is higher than it’s been in five years.
Foreign investment has increased tremendously but over the years the percentage of committed investment that’s actually spent has been low against the potential. And there still is a big gap between the demand for and the supply of strategic investment.
The obstacle in general infrastructure also should be dealt with soon. Education must be improved to meet the needs of the businesses and requirements of the country’s development.
To perform effectively in the global playing field, Vietnam must work to resolve all these difficulties. The Party and the Government of Vietnam are reviewing what they have done and they are thinking seriously of what they have to do to lead Vietnam into a prosperous future. With strong determination of all the nation, it is believed that Vietnam will overcome the challenges and make full use of opportunities for further success.
(Source: Vietnam Economic News, Jan 29-Feb 12, 2008; Vietnam Net Jan 2, 2008 website: www.ven.vn, www.vnep.org.vn)
