At a seminar on Vietnamese businesses one year after the country’s admission to the World Trade Organisation (WTO) held recently by the Ho Chi Minh Institute for Economic Research and Doanh Nhan Sai Gon (Sai Gon Entrepreneur) Newspaper, economic experts, lawyers and leading businesses in production, trade and retail gave their assessments and analyses of the WTO’s membership impact on Vietnamese enterprises.

Dr Le Dang Doanh, a senior economic expert, said that 2007 showed the positive signs of Vietnam’s economic development such as the strong attraction of foreign direct investment (FDI) (FDI predicted to reach US$17 billion), sharp increases in investment capital on the securities market, a high export growth and Vietnam’s increasing international position.

Despite finding it difficult to analyse the impacts of joining the WTO, the Vietnam-US Bilateral Agreement (BTA), the ASEAN Free Trade Area (AFTA) and Central America Free Trade Agreement (CAFTA), there is no denying that Vietnam’s WTO membership has had certain direct and indirect impacts. As a result, foreign investors have made thorough preparations so they can operate in  Vietnam as some products have enjoyed tariff cuts and businesses are treated more equally since joining the WTO.

Last year, the private economic sector developed very strongly, attracting more than 38,550 newly-establshed businesses with a total registered capital of VND303 billion, up 320 percent from the 2006 figure. The ammount of investment capital in the economic sector also rose by 28 percent, accouting for 17 percent of the country’s GDP and serving as the driving force behind the national economy. The sector’s level of investment capital was higher than that of foreign investment and nearly equivalent to that of the State including ODA funding and Government bonds. Furthermore, more than 90 perccent of new jobs created by the sector in various areas throughout the country have significiantly contributed to reducing poverty.

In general, businesses took a positive view on the country’s international intergration process through their determination to seize invsetment opportunties, boost export actiivites and improve professional skills in business and competittion.

Export enterprises and many others withstanding the impact of the opening up of the market made drastic changes. For exmaple, private joint stock commercial banks cooperated with foreign commercial banks to become strategic investors instead of trying to compete with them to attract more investment capital, learn about new technlogy and gain management experience in order to expand the scale of their operations.

Businesses involved in telecommunications, restaurants and hotels competed in a healthy manner, creating more convinient services for consumers such as providing free Internet access and opening different kinds of retail outlets. In addition, courses on management and marketing, sales have captured the attention of enterpreneurs.

Businesses be more active in the integration process

Business progress is partly attributed to changes in investment environment.

Luong Van Tu, former Deputy Minister of Trade and former head of the Vietnamese delegation during the WTO negotiations said that after one year, the legal system to implement the WTO commitments has finally been completed. Thirty laws and ordinances have had to be adjusted to fit in with WTO regulations. The decree to guide the implementation of the Investment Law is almost finished and will be issued soon and any overlapping regulations from central to local levels are being checked and modified. In addition to completing the legal system, the dissemination of WTO commitments has been carried out by running through training courses to help each locality build its own integration roadmap. Thanks to these activities, businesses can now take the initiative, and under WTO regulations, build development strategies and work with each other to create a stronger domestic business environment. However, Mr Tu emphasized that businesses should pay special attention to human resources training and invest in areas with big potential such as services, real estate and exports. The focus should be on agri-forestry and seafood processing, shipbuilding, mining, and environment-friendly products along with developing the technical infrastructure for e-commerce.

Associate Professor and Doctorate Tran Dinh Thien, vice rector of the Vietnam Economics Institute said that domestic and foreign businesses have different strategies when taking advantage of integration opportunities. The strong increase in FDI demonstrates that foreign businesses are looking for long-term investments in Vietnam.

However, many domestic businesses are attracted by securities investments as they can make quick and huge profits. The State-owned sector has also made significant progress in coordinating different economic fields and assisting big companies to form powerful corporate groups. This is a new development. There’s also a tendency to expand the scale of market operations and to reply on a partner’s strength and experience when investing in new fields, which domestic companies are not specialized in. However, this is not a good way of doing business, especially for those state-owned enterprises which are financially weak and have a low technological capacity. However, the tendency seems to be dominant. Economic groups tend to establish their own banks and securities companies to invest in real estate and securities, and to push forward with joint ventures in new fields.

Businesses’ activities show that Vietnam’s economy is developing strongly and diversely as well as revealing its strengths and weaknesses. These signs must be evaluated carefully in order to realize the importance of preparing well for the integration process and having the ability to take opportunities and overcome challenges.

Production, services and the retail sectors are forecast to face fierce competition, but, with further effort, they will gain a firm foothold in the market. This will provide a firm foundation for them to integrate deeper into the global market in 2008 and the years to come.