Joining WTO brings Vietnam new opportunities and challenges

 

In this speech, the PM said that the Communist Party of Vietnam and the Government have carried out the “doi moi” renewal process since 1996, having expanded relations with many countries and joined different bilateral and multilateral economic and trade organizations of the region and the world in the principle of respecting each other’s independence, sovereignty, territorial integration and mutual profits. This is an important step towards its international integration.

 

The PM pointed out the opportunities and challenges when Vietnam enters WTO as well as solutions to overcome the challenges. According to the PM, the experience of the past years has showed that at the beginning when the market door was opened, there were mountains of difficulties. However, domestic businesses always ended up surviving and grew. Delivering on its commitment to the ASEAN free trade area, Vietnam has cut tariffs and removed trade barriers. Up to now, 10,283 tariff lines, accounting for 99.43% of the total, have undergone tax cut to range from 0-5%. Despite strong competition from imported goods, domestic businesses still grow strongly with annual industrial output rising 15-16%.

 

What is important and will have permanent impact is that the renewal process to the market economy principle and international integration has produced a class of young people with high professional skills and good command of foreign languages and an army of knowledgeable, dynamic and confident entrepreneurs.

 

Joining WTO, Vietnam stands a chance to access all WTO members’ goods and service markets on lower tariffs. For an economy with exports accounting for 60% of GDP like Vietnam, this is of great significance.

 

The perfection of economic legislation to the socialist-oriented market economy and the making known of management institutions in compliance with WTO regulations has made the domestic business environment better, helping to fulfill the domestic economy’s potential and attract foreign investment. Foreign investment has been playing a crucial role in the national economy. In 2006, foreign-invested businesses account for 37% of industrial production value, 56% of export value, 15.5% of GDP and employ over 1 million workers.

 

Admission to WTO will make Vietnam equal to other WTO member countries in making global trade policies, helping it to protect domestic business’s interests.

 

Meanwhile, revising domestic economic institutions in line with WTO rules also contributes to boosting the State’s current administrative reform.

However, according to the PM, after its entry to WTO, Vietnam will also face several challenges such as fierce competition triggered by the cut of the average tax rate from 17.4% currently to 13.4% over the next 3-5 years. Competition will not only occur between products and products, between companies and companies, but also among countries vying to attract foreign investment.

 

Joining WTO and getting involved in globalization will put a portion of business at the brink of bankruptcy and result in higher unemployment rate and widened rich-poor gap, demanding that State have proper welfare and social security policy.

 

The country is supposed to improve its capacity to predict and respond to world market developments in order to guard against their negative impacts.

 

PM Nguyen Tan Dung informed that the 4^th meeting of the 10th Party Central Committee will meet at the end of this year to discuss and approve some lines and policies after the country’s entry to WTO. The meeting will discuss actions to eliminate price subsidy, apply market prices to goods and services, boost financial and banking reforms, perfect the land and property management systems, reform the accounting and financial systems, remove export subsidy, fasten administrative reform, renew human resources (young people account for 70% of the population), and pool every resource, including foreign investment in building transportation and energy infrastructure facilities.

 

Agriculture will be the most sensitive area upon reaslising commitments to cut farm produce tariffs. The meeting will discuss ways to speed up economic structuring, gradually move agricultural labour to industrial production and services, bring businesses using large numbers of unskilled labour to rural areas, develop handicraft villages, increase State budget allocations to agriculture and rural development, encourage export of farm produce, invest more in irrigation development and building rural roads.

 

The meeting will also seek ways to develop financial, banking, consultation, accounting, and audit services and design support policy for small and medium businesses, now accounting for 95% of the country’s total. Compared to the population size and demand for economic growth, the existing number of businesses remains small. They mostly operate on small scale, limited capital, outdated technology and poor management.

 

According to the PM, to overcome these short-comings, businesses should identify for themselves strategic products and markets, creating their own identity so as to attract customers, and developing their own trademarks.

 

Finally, the PM stressed that what decides the successful implementation of these solutions is to ensure the Party’s leadership, maintain independence, self-reliance and development orientations, promote the people’s unity, the traditional patriotism, the sense of self-reliance of the Vietnamese people in order to make use of opportunities, rise over challenges for faster and sustainable growth and meet the goals of rich people, strong nation and fair, democratic and civilized society.

Pham Quang Vinh