Vietnam’s 5-yr WTO entry brings opportunities, challenges
After 5 yrs joining the World Trade Organisation (WTO), Ys 2007-2011, Vietnam has enjoyed a lot of merits from its economic global integration, however it also faced with numerable challenges, said Vietnamese officials and experts Wednesday.
Vietnam will take full advantage of WTO membership to develop the national economy in a rapid and sustainable manner, now that Vietnam has become a WTO member, said Vietnamese prime minister Nguyen Tan Dung at a conference held in capital Hanoi on Tuesday to review the country’s commitments to the WTO after five years as the organisation’s membership.
The Vietnamese leader assessed that in the bi-lateral field, the country’s commitments to the WTO have been almost fulfilled.
Regionally, Vietnam has integrated more intensively into Asean, heading towards the building of the Asean Community by Y 2015.
It is now actively negotiating or preparing negotiations on several important free trade agreements such as the Trans-Pacific Partnership (TPP) agreement and a bi-lateral free trade agreement with the EU, said the Vietnamese PM.
With WTO entry, Vietnam has enjoyed both opportunities and challenges, which impacts to one another, said Vietnamese minister of Industry and Trade (MIT) Vu Huy Hoang.
Basically, the country has established a comprehensive legal system that is appropriate with the WTO regulations, providing an ever more equal, transparent and foreseeable business environment. It has taken full advantage of the WTO membership to mobilise both domestic and foreign capital for development, expand exports of commodities, services and labour forces, Hoang said.
According to MIT, after 5 yrs of WTO admission, Vietnam’s gross domestic products (GDP) increased nearly 2.3 times, and GDP per capita up with over two times. The 5-yr average economic growth rate reached nearly 7 percent; the export turnover rose by over 3 times; and foreign direct investment (FDI) has increased. The number of FDI projects increased 1.5 times, registered FDI capital with 5.1 times, and FDI implemented capital with 3.3 percent over the Y 2002-2006 period.
Vietnam now ranks among the top 15 countries worldwide with the most FDI attraction. Currently, it has 51 big international donors, including 28 bi-lateral donors and 23 multi-lateral donors.
Highlights of the fastest growth during the Y 2007-2011 period was recorded by the agriculture-forestry-fisheries sector, with an average growth of 3.4 percent per yr, 0.4 percentage points above expectation.
According to data from the Ministry of Labour, War Invalids and Social Affairs, the country’s access to the WTO helped provide more jobs to the Vietnamese labourers. The employment rate increased 2.88 percent compared to the previous five years. During Y 2011-2020, the rate is estimated to increase to an average 2.4-2.8 percent per year, while unemployment rate will decrease down at 4.78 percent by Y 2015 and 4.23 percent by Y 2020.
However, experts from the Central Institute for Economic Management (CIEM) said the above-mentioned benefits that the country has enjoyed from the WTO entry are far behind expectation.
After gaining the WTO membership, Vietnam had come under strong pressure caused by tough competition with foreign companies in both domestic and world markets, they said.
During Ys 2007-2011, the country’s GDP stood at 6.5 percent, down from 7.8 percent during the Ys 2002-2006 period. The service sector grew slightly by just 0.1 percentage points to 7.5 percent, because the sector has not yet opened up to foreign investment, while world recession has prevented foreign firms from investing in the service sector.
Industry and construction sectors reached only 7 percent per year, compared to their set targets of between 9.5-10.2 percent per year. In Ys 2002-2006 period, they gained an average growth of 10.2 percent.
Overall investments during the post-WTO period grew by 8.3 percent, against 13.4 percent in the previous 5 yrs.
Experts attributed those slow growths to strong competition from foreign companies and weak domestic production in terms of quality and efficiency.
They said that to reach higher growth in the near future, the country should further perfect the investment environment and improve competitiveness by using modern technologies. Cooperating with foreign invested companies to join regional distribution systems should also be boosted.
Vietnam will continue to face with challenges in the near futures in fulfilling its commitments to the WTO. The government needs to adjust import-export policies toward increasing the quality of exported goods and limiting the export of raw materials, as well as find big import partners that can help stabilise exports. The country’s retail sector should be restructured, ensuring greater transparency and creating conditions for domestic firms to increase their competitiveness, recommended CIEM experts.