Transcript Preliminary country paper On Competition Scenario in Vietnam

Preliminary country paper
On
Competition Scenario in Vietnam
Prepared by
the Central Institute of Economic
Management (CIEM)
for the 7-UP MARK II Project Launch
Meeting
23rd-24th, April
Hanoi, Vietnam
1.1. Geographical location,
population
 Land territory: Total: 330,991 sq km.
 Borderline: Total 4,567 km, inclusive of
1,150 km bordering Cambodia, 1,350 km
with China, and 2,067 km with Laos.
1.1. Geographical location,
population (Cont.)
 Population: 80.7 million (in 2003)
Male Pop: 39.2 million, Female Pop: 41.5
million; Urban Pop: 19.9 million (or 20%)
 Population growth rate: 1.31%
1.2. Economic performance
The average growth rate for 91-95, 962000, and 2001-2003
Agriculture: 4.1%, 4.3%; 3.6%
Industry: 12%; 10.6%; 10.1%
Services: 8.6%; 5.7%; 6.3%
GDP: 8.2%; 6.9%; 7.1%
1.2. Economic performance
(Cont.)
Economic Structure of agriculture,
industry, and service
1990: 31.8%; 25.2%; 43%
1995: 26.2%; 29.9%; 43.8%
2000: 23.2%; 35.4%; 41.4%
2003: 21.0%; 38.5%; 40.5%
1.2. Economic performance
(Cont.)
The inflation has been kept at a low rate
since 1992. The inflation rate in 2000 was
-0.6%, in 2001: 0.8%, in 2002: 4%, and in
2003: 4%.
The fiscal deficit stayed at a level less than
5% of GDP.
The external debt is controlled at a level of
about 40% of GDP
1.2. Economic performance
(Cont.)
The average annual growth rates of
exports and imports during the period
1986-2003 are 20.9% and 15.5%,
respectively.
the exports and imports per capita are still
very low. In 2003 the export and import
values per capita are equal to USD 246.25
and 309.61, respectively.
2.1. Industrial Policy
Industrial development strategy is not
clearly set up. The “freeze” and “fever” are
alternated from year to year in commodity
market.
the leading role of the state sector is
emphasized
state corporations was established by
administrative measures (Decision 90/TTg
and 91/TTg), not by market forces
2.1. Industrial Policy (Cont.)
The non-state sector is at a more
disadvantageous in comparison with the
state sector.
A large share of investment spending has
concentrated on key capital-intensive
import-substitution industries.
2.2. Trade Policy
The extensive trade reform has been
undertaken since 1989.
The state monopoly on trade was
abolished. In 1989, quotas and
quantitative targets on all but seven
exports and twelve import items were
eliminated; all direct export subsidies were
eliminated.
2.2. Trade Policy (Cont.)
The new tariff schedule (Decision 110/2003/QÐBTC) has 4,200 additional tariff lines in
comparison with the old one.
The new tariff schedule has 15 tariff rates: 0%,
1%, 3%, 5%, 7%, 10%, 15%, 20%, 25%, 30%,
40%, 50%, 60%, 80%, 100%, less 5 rates than
the old schedule.
The average tariff rate is 18.2% compared to the
average rate of 16.8% of the old tariff schedule.
2.3. Privatisation and regulatory
reform policy
The 1992 Constitution recognizes the right
to business freedom of enterprises and the
development of a multi-sector economy.
In Vietnam the “equitisation” terminology
may be understood as a “quasiprivatisation”. It means that SOEs are
allowed to transfer to one of the ownership
forms defined by the Enterprise Law.
2.3. Privatisation and regulatory
reform policy (Cont.)
a five-year SOE reform plan was set in March
2001. 1800 SOEs are subject to SOE reform
measures, mostly through equitization (1440),
divestiture (140), or liquidation (220). An
additional 200 SOEs will be merged or
consolidated.
the idea to unify the enterprise law, the SOE law
into a common law is considered. The unification
of the law on domestic investment promotion
and the law on foreign direct investment is also
considered
2.4.Investment Policy
The domestic investment environment is
vitalized by the Enterprise Law. During
2000-2003, about 75 thousand of
enterprises were established, while in the
period 1991-1999 there were only 45
thousand enterprises. The total registered
capital was about USD 10 billion, much
higher than FDI and 4 times higher than
the investment of enterprises during the
previous period.
2.4.Investment Policy (Cont.)
Since 1997 FDI has reduced significantly. The
improvement has started since 2000, but not
reached the level before 1997.
Some improvements have been made in the
Law on Foreign Direct Investment in June 2000.
Its guiding document is Decree 24/2000/ND-CP.
The stock exchange market is still at the early
stage of its development; the size is very small.
2.5. Government Procurement
Policy
The process of establishing a modern
procurement framework for public expenditure in
Vietnam, based on the principles of open
competitive bidding, began after the first
procurement review in 1994.
Decree 66/2003/ND-CP on June 2003 amended
a number of articles in Regulation on Bidding,
attached to Decree 88/1999/ND-CP and Decree
14/2000/ND-CP.
2.5. Government Procurement
Policy
The process of establishing a modern
procurement framework for public expenditure in
Vietnam, based on the principles of open
competitive bidding, began after the first
procurement review in 1994.
Decree 66/2003/ND-CP on June 2003 amended
a number of articles in Regulation on Bidding,
attached to Decree 88/1999/ND-CP and Decree
14/2000/ND-CP.
2.5. Government Procurement
Policy (Cont.)
Some weaknesses of the legal and regulatory
framework in regard to the government
procurement: lack of clarity due to overlapping
and conflicting provisions; restrictions in the use
of open, international competitive bidding do not
allow for a level playing field; no regulation
concerning time limits and participation in bid
opening; lack of clear guidelines for advertising
the Draft Ordinance on Procurement is under
preparation
2.5. Labour policy
About 90% of total jobs are created in the
non-state sector; the rest 10% are created
by the state and foreign invested sector.
The new Labor Code implemented in 1995
and related Decrees cover three types of
labor regulations: minimum wages, nonwage compensation, and laws regulating
employment termination.
3. The further research issues
The issues needed the further research
are: a) Nature of market/competition; b)
Sectoral policies c) Anti-competitive
practices; d) Consumer movement
Thank you very much!