Experts examine WTO repercussions
The Ministry of Industry and Trade and a delegation from the European Commission met on Wednesday to discuss the challenges faced by Viet Nam since joining the World Trade Organisation one year ago.
"There was much progress made within 2007, including a sharp increase in export turnover and GDP, and especially a record-breaking amount of foreign investment," Nguyen Thanh Bien, deputy minister of industry and trade, said.
"At the same time, Viet Nam’s economy has faced a high trade deficit and skyrocketing inflation, which is getting worse this year because of the changes in the global economy."
Assessing the progress of WTO membership was difficult because other trade agreements had also affected Viet Nam’s economy before it entered the organisation, several experts said.
An economic expert with the EU delegation, Professor Claudio Dordi, said that determining the positive impact of WTO admission was very hard "and the negative effect is another side of the coin".
He said that reforms made upon joining gave Viet Nam’s economy more freedom. However, this also made the economy more vulnerable to such things as inflation or intense competition.
Consequently, the professor advised the Vietnamese Government to be cautious when rolling out any policy or plan related to trade or economy.
Antonio Berenguer, trade counsellor with the delegation of the European Commission to Viet Nam, said the country had earned more than half of its foreign investment from other trade agreements that it had signed, including the ASEAN Free Trade Area (AFTA) Agreement.
Viet Nam’s many bilateral and multilateral trade agreements, such as the US-Viet Nam Bilateral Trade Agreement and one with the EU, were already in force before the country joined the WTO.
Identifying the specific impact of WTO admission was not easy, Berenguer said.
"Other non-economic factors like the recent slowdown of the US economy, the political instability of many countries, and the Vietnamese stock market’s falling also create a remarkable impact on trade," he said.
Despite such confusion, most leading experts agreed that the country’s growth rate of 8.5 per cent in the first year after joining the WTO showed positive signs.
Le Dang Doanh, former director of the Central Institute of Economic Management, found that a more open market and, thus, a wider source of goods bringing more options for local consumers, were two pluses.
In addition, WTO membership had spurred the Government to further administrative reform, empowering its competitive competence in the international market.
Last year, Viet Nam attracted more than $20 billion in foreign direct investment, equal to the total of the previous five years.The nation’s export revenues also reached $48.4 billion, a year-on-year rise of more than 20 per cent.
The securities market also developed, with its capital accounting for more than 40 per cent of the nation’s gross domestic product.
Dang Duc Anh, an economic expert with the Vietnamese Ministry of Planning and Investment, said the high growth rate, a record for the past decade, was due to domestic investment and consumption.
The prices of Vietnamese goods remain competitive due to the depreciation of the greenback against the currencies of Viet Nam’s major trade partners.
If the inflation rate remains high, however, Viet Nam will lose its price competitiveness compared to regional rivals, especially when the US dollar regains its value, experts warned at the meeting.
To maintain a high economic growth rate, speakers suggested that Viet Nam accelerate reform and improve the growth quality and competitiveness of all sectors in the economy.
Viet Nam needs to maintain its competitive advantage in major staples like footwear, textiles and apparels and farm produce, experts said.
They also warned Vietnamese businesses to examine the WTO’s regulations to devise more effective business strategies.                                                                   
VNS 05-04

Tighter control over investment and prices should help the sluggish economy
The Politburo has recommended tighter price control and a stronger role for the State bank in overseeing investments, as part of a series of measures to overcome the challenges the national economy has been facing.
At a recent meeting discussing socio-economic issues of the year’s first quarter, it urged that relevant parties had to make concerted efforts to overcome challenges in developing the economy.
The Politburo stressed the importance of regulating financial and monetary policies, managing the emerging stock and real estate markets, strengthening market price controls, encouraging export and limit deficit.
It also asked relevant offices to ensure every measures was taken to ensure businesses could boost their production while strengthening social welfare policies.
As for the State’s financial policy, the Politburo said measures should be taken to increase the State budget’s revenues while implementing a tight financial policy, cutting down on regular expenses, and increasing the efficiency of investment that fell under the State budget.
It said it was essential to raise export taxes at an appropriate rate on some mineral resources, and increase import taxes and inland taxes on some non-essential and luxurious consumables. The Politburo continued that measures should ensure there was no loss of tax revenue.
Projects considered to be less efficient and not urgent will not be provided State funds this year, while efforts will be concentrated on key national projects.
The Politburo urged that the State bank have a stronger role in closely controlling payment instruments, outstanding loans, lending for trade on the real estate and stock markets which are implemented by commercial banks and monetary trading organizations. It also stressed that a flexible regulatory monetary policy was needed to ensure a sustainable growth rate and limit outstanding debts.
The importance of controlling foreign investment and exchange rates while implementing measures to anti-dollarise the local economy was also stated.
Concerning the control of securities and real estate markets, the Politburo agreed that it was necessary to closely control bank loans by companies investing in securities and real estate markets.
It continued that tax policy should discourage speculation of the real estate market and open policies were needed to ensure both markets grew at a healthy rate.
As part of an effort to strengthen the management of market prices and balance supply and demand for commodities, the Politburo agreed to strengthen the role of the State in controlling prices and that they would ask businesses not to increase the price of some strategic products such as electricity, oil and gas, cement, steel, coal and water.
It said a policy was needed to streamline measures for businesses to export while implementing strict measures to deal with contraband items and trade fraud.
The Politburo also put emphasis on implementing policies and ensuring rapid support for people stricken by natural calamities and epidemic diseases, to help them quickly re-stabilise their lives.
It said programmes to support the poor should be strengthened and it was necessary to increase salary rates for public servants, members of the armed forces and workers earlier than was originally planned.
Because this, efforts should focus on speeding up administrative reform and temporarily reducing business income tax for companies facing difficulties.
CPV/VNS 7.4