Viet Nam Human Rights
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Analysis-Comment
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Impacts of free trade agreements on Viet Nam’s economy (Part 3 and end)
Impacts of free trade agreements on Viet Nam’s economy (Part 3 and end)
14/8/16
Solutions
for the future
To implement the FTAs, to meet the
requirement of integration, in the future, efforts should focus on some urgent
work as follows:
Regarding economic institutions
International economic integration
requires acceptance to “play” by “the rules of the game.” Institutional
innovation is a breakthrough, linking domestic institutional reform with
harmonious, and smooth institutional integration. Reality shows that the
business environment has not much improved and therefore external
liberalization has not really come with the liberalization of internal
resources. Without appropriate legal system, and business environment,
advantages of the FTAs will not be harnessed. Besides, there must be a
specialized apparatus with clear mandates to monitor, supervise, and evaluate
the effectiveness of laws and institutions.
Reform of the institutional business
environment must take appropriate steps, and be placed in systematic relation:
prior work must pave the way for follow-up work, and not to create legal
conflicts and policy inconsistencies. With a low starting point, and limited
resources, the economy of Viet Nam “has its own characteristics,” how can Viet
Nam reach international standards and best practices that advanced countries
take several hundred years to gain.
Administrative institutions should
have provisions requiring agencies and administrative officials to bear
ultimate responsibility for administrative violations within their
jurisdiction. Therefore, administrative procedures must be institutionalized
and require strict enforcement. A team of capable systematically trained civil
servants with professional ethics is needed.
The Commercial Law, mechanisms and
management policies need to be supplemented and improved in order to facilitate
trade. The Law on Export and Import should be amended for consistency with
provisions of the Constitution and existing laws; compatible with commitments
and treaties to which Viet Nam has signed or is negotiating, the approved Strategy
on tax system reform in the period of 2011-2020. In addition, obstacles, gaps,
and overlaps must be removed to ensure consistency, completeness,
synchronization and feasibility.
On reform and business support
A survey in 2011 showed that 95% of
the 2,500 businesses in 10 provinces and cities were super small. This ratio
remained the same in 2014, the majority of them used outdated technology of the
previous 2-3 generations. Of these, 75% of machines, production lines were of
the 1960 to 1970; 75% of the equipment were fully depreciated; and 50% were
refurbished. Only about 30% of small and medium enterprises have had access to
bank loans, hence businesses of this sector have not had sufficient financial
capacity to invest in machinery, and technology. Expectation for foreign
investors’ transfer and roll out of technology is not a reality. Only 5% of FDI
enterprises have applied high-tech, 80% have had relatively low medium
technology. Contracts of technology, and know-how transfer are limited.
Centers and associations must have
responsibility to support small and medium-sized enterprises, and newly
established enterprises in the training of human resources, management skills,
administration, market access, provision of information on market as well as the
investment environment, and administrative procedures. In particular, these
centers must support businesses access to capital through close collaboration
with local Credit Guarantee Fund for small and medium-sized enterprises and
other financial funds for enterprises in this sector. It is urgent to quickly
adopt environmental management systems, such as ISO 14000, HACCP, good
management practices (GMP), and good agricultural practices (GAP).
There should be a law to support
small and medium-sized enterprises, connecting small and medium-sized
enterprises with global value chains. Address issues of exchange rates, lending
rates, and create favorable conditions for enterprises to have access to bank
loans. These are not only to lower interest rates but more importantly is to
improve lending procedures, enabling enterprises to get loans by the collateral
and giving them guidance to be creative and focus on potential projects and
sectors.
The possibility of being sued or
retaliated will increase in the future, so preparation and transparency of the
books, accounting, tracking information and coordinating information
disclosure, good understanding of the rules, lobbying and diplomacy should be
done by enterprises. Overseas Vietnamese can play a role in helping Vietnamese
commodities to set foot on the small and retail markets.
Renovating the provision of market
information and trade promotion
It is necessary to bring about
powerful changes to provide timely information on political situation, market,
policies and management measures for export and import, and barriers.
Accordingly, trade promotion activities, assistance of enterprises in finding
business partners, new markets, new products, penetrating into distribution
channels, participation in fairs and exhibitions can be done immediately. Make
full use of export portal of Viet Nam (www.vnex.com.vn) to promote the brands
of the businesses to foreign partners in a fastest manner with lowest cost.
Preparation of human resources
Within ASEAN, Viet Nam ranks low in the
Table on assessment of human resource development. To facilitate the
participation of Viet Nam enterprises in the global supply chain, there is a
need for a modern education system that turns out capable and skillful human
resources.
With the completion of 14 FTAs in
the coming time, Viet Nam will have free trade relations with 55 partners,
including 15 members of the G20. This is the foundation for Viet Nam’s
international integration at higher level, extending space for development
cooperation in future. There will be no market economy without people who fully
understand and operate well the rules of the market economy. This is the lesson
of the “Asian dragons” that Viet Nam needs to learn. Thus, the preparation of
human resources for the present and the future is very important.
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All comments [ 10 ]
The FTAs have so far contributed to improving the economy.
Along with policies to support private firms, it is crucial to strengthen the financial market structure and boost the comprehensive growth of all kinds of markets.
The country should enhance transparency, improve inspection to identify flaws, boost judicial and public administration reform as well as improve the investment climate.
Many market laws are still not fully applied making it hard for Việt Nam to compete with other similar ASEAN economies that have better technology, more skilled labour and stronger capital.
Việt Nam should continue to complete institutions related to ownership and development economic sectors as well as business types.
Việt Nam has economic relation with 224 countries and territories. According to the Việt Nam Chamber of Commerce and Industry (VCCI), 12 signed FTAs including the TPP, ASEAN, ASEAN-India, ASEAN-Australia/New Zealand, ASEAN-Korea, ASEAN-Japan, ASEAN-China, Việt Nam-Japan, Việt Nam-Chile, Việt Nam–Korea, Việt Nam-Eurasian Economic Union, Việt Nam-EU. Việt Nam was waiting for RCEP (ASEAN+6), Việt Nam-Israel and Việt Nam-EFTA.
Active integration will boost corporate competitiveness.
Difficulties are inevitable at first, thus enterprises ought to design their integration moves carefully.
Domestic enterprises have capitalised on only a fragment of the benefits brought about by FTAs, while the foreign-invested sector, especially manufacturing for export are earning the most advantages.
Businessmen need to ready themselves for relevant trade defence measures as well as quality and copyright regulations, among others.
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