Local Press highlight 15th Jan 2008
A post WTO deluge in FDI is forecasted
Economists have predicted that at least $20 billion in foreign direct investment will flow into Vietnam this year as the country opens its market after its World Trade Organization accession.
The flood in foreign direct investment is expected a make a big splash across the nation
At the Vietnam Trade and Investment Forum in Hanoi last week, one year after Vietnam entered the global trade body, investors and economists said foreign direct investment (FDI) had jumped and would continue to rise.
Gannon Vietnam managing director Walter Blocker, who is also vice chairman of the Asia-Pacific Council of American Chambers of Commerce, predicted that Vietnam would continue to attract more than $20 billion in FDI in 2008 after the country opens more sectors per WTO commitments.
“WTO accession had spurred confidence for investment in Vietnam because the country had committed to adhere to an international system,” he said.
Vietnam has been serious about implementing commitments by improving the regulatory climate to make its laws conform more to international practices and to WTO regulations. The country has revised about 30 laws and ordinances.
“The government has proven its constructive economic course in the past. We are convinced that this course will be continued and build a strong foundation for future investment and success,” said Metro Group vice president Henry O.E. Birr.
Last year, Vietnam recorded $20.3 billion in FDI, a 69.1 per cent increase against 2006.
Ashok Sud, European Chamber of Commerce executive committee member, said it was an astounding figure that had far exceeded domestic and foreign commentators’ expectations.
Deputy Prime Minister Pham Gia Khiem said 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 the Vietnam economy’s adaptability to the tremendous changes in the business environment as well as about its ability to deal with international integration. Khiem said that 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,” he said.
However, World Bank lead economist in Vietnam Martin Rama said that the country had to improve its investment environment, particularly in tackling piracy, copyright infringement and trademark violations. It also needs to strengthen public investment processes and allow the private sector to take part in infrastructure investment, he said.
“Longer-term planning is needed for social infrastructure, such as in education, vocational training and health systems since Vietnam will continue to attract labour intensive industries. But it will also begin to attract the higher-quality investment requiring a higher quality workforce with higher wages,” said Blocker.
VIR 15.01
PM puts billions towards education
Prime Minister Nguyen Tan Dung approved a national target programme on education and training through 2010 with an investment totaling VND20.3 trillion (US$1.26 billion) last weekend.
Of the figure, VND2.08 trillion or $130 million, will come from official development assistance funds (ODA).
The three-year programme is aimed at boosting the education sector to better serve the nation’s socio-economic development.
It includes seven projects. These are the expansion of secondary education; strengthening of primary education; renovation of educational programmes and curriculum; IT training and application in schools; training and retraining of teaching and management staff; support for education in mountainous, ethnic and disadvantaged areas; and improvement of educational facilities and training capability.
Under the programme, the Ministry of Education and Training will be in charge of the first six projects while the Ministry of Labour, Invalids and Social Affairs will oversee the training improvement project.
The Prime Minister requested ministries to work with the beneficiaries to promptly devise tailored-made plans and disburse investments for these projects. The officials will be required to report to the Prime Minister on the implementation of the projects on an annual basis.
VNS 14.01
Four measures target growing trade deficit
The Trade and Industry Ministry has signalled four key measures to curb Viet Nam’s trade deficit that totalled more than US$12.44 billion last year – an increase by more than 140 per cent as compared to the previous year.
The first will be to make domestic enterprise more internationally competitive, says deputy Trade and Industry Minister Nguyen Thanh Bien.
The others will be to:
Check the list of high and fast-growing imports to see which can be made or produced in Viet Nam;
Devise a system to monitor imports; and
Build a barrier to imports based on the requirement of acceptable technology standards that accord with international regulations.
Export, import forecasts
The Trade and Industry Ministry wants to boost exports by 22 per cent or $US59.03 million, this year to meet the national growth target of 8-9 per cent set by the Government and approved by the National Assembly.
But the year-on-year increase for imports is forecast at 25 per cent or about $76 billion.
This will mean a trade deficit of almost $17 billion – a jump of 36.9 per cent over 2007.
Deputy Trade and Industry Minister Nguyen Thanh Bien says the ministry expects export such as fine arts and handicrafts, plastic products and electronic cables surpass $1 billion in export revenue this year.
These exports will supplement such traditional revenue earners as garments, footwear and seafood.
Imports are forecast to be driven by machinery and accessories, 26.3 per cent, raw materials, 66.2 per cent, and consumer goods, 7.5 per cent.
Policy makers, economists and export-import enterprises agree that competitive enterprises are essential to reducing the trade deficit.
Independent National Economic Research director Nguyen Quang A says higher competitiveness is the most stable and effective measure to narrow the deficit.
"Administrative measures, including limiting and monitoring imports or setting standard barriers are short-term and difficult to enforce," he says.
Although the director recognises the necessity to improve the capacity of domestic enterprises, he emphasises the need for them to give more attention to the domestic market and not become too dependent on exports.
"This will not only help them avoid the risks caused by the fluctuation of international prices, it will also help reduce imports," he says.
When former Trade Minister Truong Dinh Tuyen analysed the import-export figures for the first six months of last year and found that the difference between export revenue and import costs had exceeded the threshold of 20 per cent, he emphasised that increased domestic productivity and competitiveness were crucial to narrowing the gap.
Planning and Investment Ministry senior economist Vo Tri Thanh argues the deficit should be assessed by more than just the figure.
"A trade deficit for a developing country like Viet Nam is not a disaster," he says.
"More important is whether the increase in the trade deficit will create greater capacity and effectiveness for domestic enterprises for the long-term development of the economy."
Viet Nam recorded high trade deficits during the 1990s, he says.
These were mostly offset by foreign direct investment capital; today direct and indirect capital as well as remittances do the same job.
"This is more dangerous because indirect capital is not as stable as direct capital."
The Ha Noi Trade Corporation’s Northern Export Centre, Hapro, director Nguyen Thi Hai Thanh says the inadequacy of domestic enterprises has sometimes stopped her company from winning better markets and more investment.
"We’ve had to let export opportunities go because domestic products didn’t meet customer requirements in quality, hygiene or environmental standards.
The key to increased export and fewer imports is in the competitiveness of domestic enterprises.
"Measures such as setting a barrier to imports based on the requirement of acceptable technology standards may have limited effectiveness because most imports are of high quality," she says.
Hapro recorded a 30 per cent increase in export revenue last year after having targeted 17 – 18 per cent growth.
It major exports are agricultural produce, fine arts and handicrafts, steel and machines.
But increasing competitiveness might prove easier said than done.
Viet Nam Electronics Industry Association General Secretary Tran Quang Hung says it’s very difficult for electronic enterprises, which import as much as 90-95 per cent of their materials, to reduce imports for domestic replacements.
"This would require major investment in capital and technology, both of which we seriously lack, he says.
VNS 14.01
Economists have predicted that at least $20 billion in foreign direct investment will flow into Vietnam this year as the country opens its market after its World Trade Organization accession.
The flood in foreign direct investment is expected a make a big splash across the nation
At the Vietnam Trade and Investment Forum in Hanoi last week, one year after Vietnam entered the global trade body, investors and economists said foreign direct investment (FDI) had jumped and would continue to rise.
Gannon Vietnam managing director Walter Blocker, who is also vice chairman of the Asia-Pacific Council of American Chambers of Commerce, predicted that Vietnam would continue to attract more than $20 billion in FDI in 2008 after the country opens more sectors per WTO commitments.
“WTO accession had spurred confidence for investment in Vietnam because the country had committed to adhere to an international system,” he said.
Vietnam has been serious about implementing commitments by improving the regulatory climate to make its laws conform more to international practices and to WTO regulations. The country has revised about 30 laws and ordinances.
“The government has proven its constructive economic course in the past. We are convinced that this course will be continued and build a strong foundation for future investment and success,” said Metro Group vice president Henry O.E. Birr.
Last year, Vietnam recorded $20.3 billion in FDI, a 69.1 per cent increase against 2006.
Ashok Sud, European Chamber of Commerce executive committee member, said it was an astounding figure that had far exceeded domestic and foreign commentators’ expectations.
Deputy Prime Minister Pham Gia Khiem said 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 the Vietnam economy’s adaptability to the tremendous changes in the business environment as well as about its ability to deal with international integration. Khiem said that 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,” he said.
However, World Bank lead economist in Vietnam Martin Rama said that the country had to improve its investment environment, particularly in tackling piracy, copyright infringement and trademark violations. It also needs to strengthen public investment processes and allow the private sector to take part in infrastructure investment, he said.
“Longer-term planning is needed for social infrastructure, such as in education, vocational training and health systems since Vietnam will continue to attract labour intensive industries. But it will also begin to attract the higher-quality investment requiring a higher quality workforce with higher wages,” said Blocker.
VIR 15.01
PM puts billions towards education
Prime Minister Nguyen Tan Dung approved a national target programme on education and training through 2010 with an investment totaling VND20.3 trillion (US$1.26 billion) last weekend.
Of the figure, VND2.08 trillion or $130 million, will come from official development assistance funds (ODA).
The three-year programme is aimed at boosting the education sector to better serve the nation’s socio-economic development.
It includes seven projects. These are the expansion of secondary education; strengthening of primary education; renovation of educational programmes and curriculum; IT training and application in schools; training and retraining of teaching and management staff; support for education in mountainous, ethnic and disadvantaged areas; and improvement of educational facilities and training capability.
Under the programme, the Ministry of Education and Training will be in charge of the first six projects while the Ministry of Labour, Invalids and Social Affairs will oversee the training improvement project.
The Prime Minister requested ministries to work with the beneficiaries to promptly devise tailored-made plans and disburse investments for these projects. The officials will be required to report to the Prime Minister on the implementation of the projects on an annual basis.
VNS 14.01
Four measures target growing trade deficit
The Trade and Industry Ministry has signalled four key measures to curb Viet Nam’s trade deficit that totalled more than US$12.44 billion last year – an increase by more than 140 per cent as compared to the previous year.
The first will be to make domestic enterprise more internationally competitive, says deputy Trade and Industry Minister Nguyen Thanh Bien.
The others will be to:
Check the list of high and fast-growing imports to see which can be made or produced in Viet Nam;
Devise a system to monitor imports; and
Build a barrier to imports based on the requirement of acceptable technology standards that accord with international regulations.
Export, import forecasts
The Trade and Industry Ministry wants to boost exports by 22 per cent or $US59.03 million, this year to meet the national growth target of 8-9 per cent set by the Government and approved by the National Assembly.
But the year-on-year increase for imports is forecast at 25 per cent or about $76 billion.
This will mean a trade deficit of almost $17 billion – a jump of 36.9 per cent over 2007.
Deputy Trade and Industry Minister Nguyen Thanh Bien says the ministry expects export such as fine arts and handicrafts, plastic products and electronic cables surpass $1 billion in export revenue this year.
These exports will supplement such traditional revenue earners as garments, footwear and seafood.
Imports are forecast to be driven by machinery and accessories, 26.3 per cent, raw materials, 66.2 per cent, and consumer goods, 7.5 per cent.
Policy makers, economists and export-import enterprises agree that competitive enterprises are essential to reducing the trade deficit.
Independent National Economic Research director Nguyen Quang A says higher competitiveness is the most stable and effective measure to narrow the deficit.
"Administrative measures, including limiting and monitoring imports or setting standard barriers are short-term and difficult to enforce," he says.
Although the director recognises the necessity to improve the capacity of domestic enterprises, he emphasises the need for them to give more attention to the domestic market and not become too dependent on exports.
"This will not only help them avoid the risks caused by the fluctuation of international prices, it will also help reduce imports," he says.
When former Trade Minister Truong Dinh Tuyen analysed the import-export figures for the first six months of last year and found that the difference between export revenue and import costs had exceeded the threshold of 20 per cent, he emphasised that increased domestic productivity and competitiveness were crucial to narrowing the gap.
Planning and Investment Ministry senior economist Vo Tri Thanh argues the deficit should be assessed by more than just the figure.
"A trade deficit for a developing country like Viet Nam is not a disaster," he says.
"More important is whether the increase in the trade deficit will create greater capacity and effectiveness for domestic enterprises for the long-term development of the economy."
Viet Nam recorded high trade deficits during the 1990s, he says.
These were mostly offset by foreign direct investment capital; today direct and indirect capital as well as remittances do the same job.
"This is more dangerous because indirect capital is not as stable as direct capital."
The Ha Noi Trade Corporation’s Northern Export Centre, Hapro, director Nguyen Thi Hai Thanh says the inadequacy of domestic enterprises has sometimes stopped her company from winning better markets and more investment.
"We’ve had to let export opportunities go because domestic products didn’t meet customer requirements in quality, hygiene or environmental standards.
The key to increased export and fewer imports is in the competitiveness of domestic enterprises.
"Measures such as setting a barrier to imports based on the requirement of acceptable technology standards may have limited effectiveness because most imports are of high quality," she says.
Hapro recorded a 30 per cent increase in export revenue last year after having targeted 17 – 18 per cent growth.
It major exports are agricultural produce, fine arts and handicrafts, steel and machines.
But increasing competitiveness might prove easier said than done.
Viet Nam Electronics Industry Association General Secretary Tran Quang Hung says it’s very difficult for electronic enterprises, which import as much as 90-95 per cent of their materials, to reduce imports for domestic replacements.
"This would require major investment in capital and technology, both of which we seriously lack, he says.
VNS 14.01
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