Transcript Hoang Van Thanh

Competition Law and Policy
in Vietnam
The focuses of this presentation :
1. The current competition situation in
Vietnam
2. Perspectives on competition policy
1. The current
competition situation in
Vietnam
a) Some major features of Vietnamese
Economy
b) The competition policy in Vietnam
c) Market structure and competition
1.a. Some major features of
Vietnamese Economy
 In the transition to the market economy
since 1986;
 In 1990s, because the economy was at a
very low starting point and with the
participation of private and foreign
invested sectors, the high growth rate of
GDP has been reached;
 The competitiveness is still low;
1.a. Some major features of
Vietnamese Economy (Con’t)
 The economy is actively integrating into
the world and regional economy, however
it is still defined as a non-market
economy. Among many comments, some
are:
1) The VND is not freely convertible;
2) The SBV remains under state control;
3) The competition Law was not be enacted until
October of 2003;
4) The government owns all the land and does not
recognize private property rights;
5) The State sector accounts for about 40% of GDP;
1.a. Some major features of
Vietnamese Economy (Con’t)
6) 70% of bank lending went to SOEs in 2001,
thus severely restricting the credit available to
private enterprises;
7) The Government Pricing Committee directly
sets prices in many industries;
8) The SBV controls the 4 state-owned
commercial banks, which comprise 80% of the
banking sector;
8) The rule of law is underdeveloped, and so on.
1.b. The competition policy in
Vietnam
 Before Nov. 2004, there was no the
competition law in Vietnam;
 However, the competition regulations have
been embodied in various policies and laws
(e.g., the 1992 Constitution, the commercial
law, criminal code).
 The level playing field is still not created for
market players: SOEs are given more
preferential treatments (see Example 1);
 The establishment of GCs has restricted the
competition.
Example 1
The realized capital investment under
the preferential treatment
Total number
(Billion VND)
Share
The jobs created
Total number
Share
In the whole country
42,001
100%
331,354
100%
In the SOE sector
25,757
61.3%
96,365
29.1%
In the private sector
16,244
38.7%
234,989
70.9%
1.c. Market structure and
competition
 State sector dominates in the production of goods
viewed as natural monopoly and of strategic goods;
 Non-state sector dominates in the production of
necessity goods;
 Foreign invested sector dominates in the production
of goods with the higher technology level;
 The dominant position in production of some goods
has changed from one sector to another;
 The import of consumer goods is restricted, so
consumption goods produced domestically have not
to compete much with imported goods.
2. Perspectives on Competition
Policy
a) Background and Methodology
b) Field survey results
c) The main findings
2.a. Background and
Methodology
 3 types of questionnaires were designed for 3
types of respondents: officials, enterprises, and
customers.
 The list of 50 respondents for each types was
randomly selected before the questionnaires
were sent to them
 The sample size was too small, so Hanoi was
chosen as a place for the survey and the direct
interviews were carried out in the second
round.
2.b. Field survey results
 Many concepts related to the competition policy
and law seem to be new in the transition country
like Vietnam.
 The majority of respondents feel that unfair
practices are prevalent in many business
activities; the level playing field is only in paper.
 Many respondents (enterprises and customers)
said about the existence of the anti-competitive
practices, but they could not describe them in
detail.
 Many respondents (officials and enterprises) said
that the competition policy and law alone cannot
solve the unfair aspects in doing business.
2.c. The main findings
1. The perception about the prevalence of anticompetitive practices is different among three
types of respondents.
2. Many respondents think that resale price
maintenance is prevalent, but it should not be
considered as the anti-competitive practice.
3. The prevalence of anti-competitice practices
depends on the market conditions.
4. The long-run effect of anti-competitive
practices should be compared with their
short-run effect.
2.c. The main findings (Con’t)
5. Many respondents said that the dominance
position may have both the positive and
negative effects. However, they didn’t know how
to determine and when the dominance position
is defined as abused.
6. Some respondents suspected about the
efficient implementation of the competition law.
7. The capacity building on the competition law
and policy is very necessary.
Thank you very much for your
attention