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Update No: 06 - (28/05/02)

Vietnam is rapidly moving towards a position where it will remain attractive to investors (both domestic and overseas) by being open-minded about the process of reforming inappropriate legal regulations, removing many barriers to business and foreign investment, and facilitating the operations of private sector. 
Both the Bi-annual Private Business Forum (PBF) and mid-year Consultative Group (CG) meetings that took place in May reaffirmed that the nation was starting to achieve a healthier growth path. 
Minister of Planning and Investment, Tran Xuan Gia said: "in previous meetings, we have been able to work out Vietnam's development strategy. Now the strategy is in place and it is time to move from ideas to action."
At this meeting, Prime Minister Nguyen Manh Cam, in a keynote address, confirmed that during the first four months of the year, the domestic climate for growth had improved and that the high growth reflected the government's efforts in improving policies. 
The Ministry of Planning and Investment report showed that in the first four months of the year alone, $550 million of foreign direct investment (FDI) was received, a year-on-year rise of 10 per cent. 
He also pointed out that the business climate was much better than in previous years. After more than two years of implementing the Enterprises Law, over 40,000 new enterprises had been established, with total registered capital of $4 billion, equal to the combined number of enterprises set up during the previous nine years. Some 160 sub-licences or mini permits had been abolished and 41 documents had been issued to implement the law, he continued. The average time and cost to set up a business had fallen to seven days from three months and to VND500,000 ($33) from VND 10 million ($700), respectively. The fifth Plenum resolution issued by the Communist Party, for the first time recognizes the important role of the private sector and paves the way for the sector's development. The amendment to the 1992 constitution has also contributed significantly to the development of the private sector. 
Among the measures to improve the business climate, the Ministry of Planning and Investment (MPI) is scheduled to issue a legal regulation allowing foreign investors to have more freedom in buying shares in domestic firms. Foreign organizations and individuals are to be allowed to buy shares from domestic firms operating in nine fields without prime ministerial approval including: agriculture, forestry and fishing, industry and processing, hotels and tourism, transport, storage, communications, technology and science, medical care and education. However, investment is permitted in only some areas within each field. Current laws allow foreigners to buy a maximum 30 per cent share but all transactions must be approved by the prime minister's office. 
Besides a package of measures to boost the economy, the government is currently struggling with a headache arising from waves of discontent from different communities. 
The country is facing the discontent of local people who desire democracy and also is the target of campaigns organised from abroad, accusing Vietnam of violating human rights. 
The communist party has continuously criticized the US for commenting on the human rights situation in Vietnam, and has accused the US of itself violating human rights, in a move to answer domestic disputes on the issues prior to the National Assembly election. 
The Quan Doi Nhan Dan (People's Army) daily reported that the US is using human rights issues to interfere in internal affairs, overthrow regimes and invade other countries. "Humanitarian interference and promoting democracy and human rights are the new reasons of the old robber," the newspaper said. 
It affirmed that democracy and human rights are central to the Party and regime, and that the foremost human right in Vietnam is development, including the country's independence, peace, security and a clean environment. 
In the Nhan Dan (The People) daily, prestigious lawyer, Ngo Ba Thanh, said that the main human rights in Vietnam are people's living rights. She criticized the US for violating these rights with its wars around the world and racial discrimination within its own borders. "It is tending towards developing neocolonialism and interfering in the internal affairs of other countries," she said. Nothing new about that!
She said predictably that the country is taking important steps to ensure people further participate in State works, such as expanding the National Assembly. 
The articles followed a series of propaganda writings on developing grassroots democracy that appeared in the local media before and after the fifth Central Party Committee's plenum, focusing on enforcing the Party's control over the grassroots levels. The move aims to calm down outbreaks of complaints and accusations over wrong- doings, the incapability of local authorities, unjust sentences by courts and to allay people's discontent over their lack of a voice in social works. 
Although the government sent six working groups to provinces to deal with citizen's complaints in late 2000, the number of petitions has continued to grow. Last year, administrative offices received 26,000 people submitting complaints and accusations, up 9.2% against 2000, and answered 186,000 of these. 
The Government Office and the State Inspectorate received 39,000 petitions, up 8%. In the government's open meeting in January, Prime Minister Phan Van Khai said: "As long as State staff cover up mistakes by their underlings in order to receive kickbacks, we will never solve complaints and accusations." 
The Quan Doi Nhan Dan (People's Army) daily also raised concerns over wrong sentencing, particularly in local courts. Provincial courts have abrogated sentences in 2,559 cases from district courts over the past five years. "The major concern is that no individual or office compensates people suffering from wrong sentences," the newspaper said .
Late last year, some tribal ethnic communities in the Central Highlands region had even organized serious rebellions in an attempt to overthrow the local authorities. Those activities were obviously exceptional and doomed to failure in this communist country. 
The government has had to take prompt action and design various policies to prioritise this region of citizen protest in many fields in the hope of calming down public feelings. However, the nation can only really solve this thorny issue as soon as it takes real steps to improve democracy as well as measures to reduce the gap between the rich and poor, which is mostly caused by misappropriation of public assets, kickbacks and other ills arising from a centrally planned economy.

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FINANCIAL NEWS

Keys for Vietnam to Join WTO

Information and biological technologies are the keys for Vietnam to improve its economic competitiveness to cope with competitive pressure when the country joins the World Trade Organization (WTO), said Deputy Prime Minister Nguyen Manh Cam. 
"We can follow a shorter development road by applying advanced sciences, firstly in information and biological technologies," Cam said before his trip to Switzerland to begin negotiations with the EU on April 9th to join the WTO. 
This round of negotiations includes talks on detailed market opening plans. Cam insisted that the application of information technology (IT) will be a major driving force for production and that biological technologies will be useful in the pharmaceutical industry and in agriculture.
To effectively apply the technologies, the country needs to improve the literacy rate of its population, particularly by implementing a programme to eliminate illiteracy and expanding compulsory education, he said. His opinions, however, seem unrealistic, given that the country has a low education level, and underdeveloped training and infrastructure in the two technologies. Seven hundred and eighty thousand people between the ages of 15-35 are illiterate. Seventeen per cent of people of working age have not finished primary school, according to the Ministry of Education and Training. Only 0.25% of the Vietnamese population use the Internet, the lowest rate in the world. 
Most Vietnamese residents are still struggling with manual work to earn living and have little mind for information. Ninety per cent of enterprises are small and medium size, and lack both the financial and intellectual capacity to effectively use the Internet in their business activities. Internet fees are also high in comparison to the small income of a major part of the population, as there are too few Internet service providers in the market, and they impose monopoly prices. 
Dozens of universities, colleges and training centres are booming in IT courses but few have updated programs and proper training facilities. Up to 12% of IT graduates are unemployed because they are unable to meet the job requirements of employers. Consideration being given to applying bio-technology in the patchy agriculture sector with low-knowledge farmers and primary cultivation techniques is ironic. 
Most farmers do not know which crops to grow to make a profit and have never received training on cultivation methods. Domestic fields are cut into 100 million tiny allotments, which prevent mass production with high technology applications. 
The fields of biotechnology will need 3,000 experts in the next ten years, but the Ministry of Education and Training is only able to train 100 masters and 40 doctors in the field each year.

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FOREIGN ECONOMIC RELATIONS

British Commercial Enterprises to Seek Business in Vietnam

The London Chamber of Commerce and Industry (LCCI) will send a delegation of 13 British firms to Vietnam on May 20th-24th to seek business opportunities.
The foreign entrepreneurs are expected to meet with partners from the Vietnam Chamber of Commerce and Industry (VCCI), representatives of the Mekong Program Development Fund, the Trade and Investment Promotion Centre and other organizations.
Earlier LCCI and VCCI signed a memorandum of understanding on facilitating trade promotion activities. 

Poland enthusiastic over potential for bilateral ties with Vietnam

Polish ambassador, Weislaw Scholz, speaking from Ha Noi on the occasion of his country's National Day, told the national English language daily 'Viet Nam News' (VNA) that there exist many possibilities for political and economic cooperation between Poland and Vietnam, New Europe has reported.
"The Poland-Vietnam relationship has been exceptionally successful over the past decade," he noted, further stating that he was convinced that the increasing number of governmental and ministerial delegations would have a constructive benefit and help both sides to exchange experiences and create favourable conditions for economic cooperation.
Also, he added, the two countries should aim to increase the exchange of contacts between financial institutions such as banks, stock exchanges and research institutions.
He went on to say that it was of utmost importance to develop closer trade relations between the two countries as the present level of trade is not satisfactory. The number of Polish-Vietnamese companies needs to be increased, with the Vietnamese community in Poland taking on a significant role in this regard, VNA reported.
"Two-way trade between Vietnam and Poland is on the rise but it is still a long way from its full potential," Scholz was quoted as saying. Last year Polish exporters shipped goods amounting to US$16.5m to Vietnam, led by powdered milk, pharmaceuticals, machinery and equipment. Vietnam exported goods worth US$115m over the same period. Products were mainly coffee, rice, tea and footwear.
The ambassador expressed his hopes that with the assistance of Vietnam's friends, Poland could over the next few years achieve a new level of cooperation. He said he had been witness to marked progress in Vietnam since his arrival four years ago, with many officials and friends from Poland also having expressed the same view. Scholz stated that the reforms coupled with the hard work of the Vietnamese would, in the coming years, transform the nation into a modern developed state.

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FOREIGN INVESTMENT

Projects calling for foreign investment in 2001-2005 

The government has released details of 228 projects calling for foreign investment in the 2001-2005 period. The list has been made public just prior to the Consultant Group meeting being held in Ho Chi Minh City on May 23rd-24th. The industrial and tourism sectors have garnered the highest priority on the list. Among the biggest projects are a $390m tourism complex in central Thua Thien-Hue province, a $360m sponge iron plant with annual capacity of 1.25 million tons, a $300m PET plastic fibre factory capable of producing 300,000 tons per annum, and a $110m integrated chips (IC) manufacturing plant. 

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SHIPPING

Vietnam to focus on upgrading seaports

The Vietnam Maritime Department plans to spend VND519.2 billion ($34.1m) on upgrading its seaports this year.
Of the total VND54.2 billion ($3.6m) will come from domestic sources, and the remaining VND465 billion ($30.56m) will come from foreign investors.
The money will go to building the 10,000 DWT Wharf No 4 at Cua Lo port in the central province of Nghe An, a wharf with a capacity of 30,000 DWT at Quy Nhon port in southern Binh Dinh province, upgrading the servicing ports of Thanh Hoa, Ca Mau, Phu My, and Van Phong and the installation of marker buoys at the ports of Nghi Son, Chan May, Sa Ky and Song Tien.
The department will also complete the detailed design of eight major groups of seaports, and speed up construction of the Cai Lan port.
This forms a part of 28 major on-going port projects worth $432m by the Vietnam Port Authority (VPA) to boost the annual cargo transport beyond the five million TEU level or 100 million tons by 2005.
VPA plans to pour $100m into Hai Phong, Quang Ninh and Da Nang Ports, and to purchase more vessels with a capacity of 2,000-3,000 TEU.
The authority will also improve trans-shipment, reloading and distribution services and to streamline customs procedures to compete with regional competitors.
The country's ports presently only handle delivery of 1.8 million TEU per year, according to Chu Quang Thu, head of Vietnam Maritime Department, adding that maritime shipping accounts for roughly 20% of the total cargo transport in Vietnam, while often accounting for 50-60% in regional countries.
Most shipping ports are incapable of receiving large vessels because of shortcomings in their infrastructure. Ports nationwide comprise 16 km of quays and 30 piers stretching over 5.5 km.
The country has so far been able to provide only limited services from the ports of Ben Nghe, Saigon and Hai Phong.
Ho Chi Minh City's Tan Cang Port is the most modern and has the largest listed capacity in the country, and plans to receive approximately 5.5 million tons and 440,000 TEU. But shipping to this port, which has just completed construction of Cai Lai and Song Than ports, accounts for 40% of the total cargo that passes through the city.
The country now has 90 seaports, 24,000 km of wharves, and 10 zones serving transport.

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TOURISM

Short-stay visitors may get visa exemption 

International visitors staying in Vietnam for less than five days will be allowed entry without a visa, according to a new policy soon to be issued by the government in a sweeping move to ease travel restrictions.
The policy, which is expected to become effective later this year, applies to all international travellers regardless of nationality or means of arrival. 
The new policy comes after the successful "Visa upon Arrival" programme in affect for over a year at Danang international airport in central Danang city. Guests of the five-star Furama Resort arriving in the city may process their visa upon arrival at a cost of around $30 per person through prior arrangement with the resort. This arrangement will remain available to those travellers spending more than five nights in the country. 
Earlier, Vietnam Airlines and the Vietnam National Administration of Tourism (VNAT) had proposed the Ministry of Foreign Affairs initially offer visa exemptions to visitors from major markets such as China, Japan and France for a period of less than 15 days. 
So far, Vietnam has only granted visa exemptions for tourists from the three regional countries of Thailand, the Philippines and Malaysia for a 30 day or shorter visits. It collects an average visa fee of $25 from citizens of other countries. However, the complicated and time consuming procedures to receive an entry visa have proven to be an even greater deterrent to international visitors.
Vietnam targets to receive 2.5 million international tourists and serve 12.2 million local vacationers and earn VND22-23 trillion ($1.46-1.52bn) from tourism services this year.

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