Vietnam has failed to reap expected benefits from joining the World Trade Organisation and has in fact seen slower growth since, experts say.
Their assessment was made at conference held earlier this week by the Central Institute for Economic Management (CIEM) to review the nation’s socio-economic situation five years after joining the WTO.
During the 2007-2011 five-year period since it joined the WTO, the country’s Gross Domestic Product (GDP) stood at 6.5 per cent, down 1.3 percentage points over the 2002-2006 period, the conference heard.
Delegates agreed that after it gained WTO admission, the country had come under strong pressure caused by tough competition with foreign companies in both the domestic and world markets.
They said that some companies operating in the insurance and distribution sectors had lost their shares in the domestic market.
During the post-WTO admission period, the service sector grew by just 0.1 percentage points to 7.5 per cent.
Pham Lan Huong, a CIEM expert, said that the service sector was not strongly affected because it had not been completely opened up to foreign investment.
Moreover, world recession has prevented foreign firms from investing in Vietnam’s service sector, she said.
The industry and construction sectors had also failed to reach growth targets. They were expected to grow by 9.5-10.2 per cent per year, but the actual rate was seven per cent, Huong said, adding that the average growth rate of the sectors in 2002-06 was 10.2 per cent.
Experts attributed this slow growth to strong competition from foreign companies and weak domestic production in terms of quality and efficiency.
Huong affirmed that the highest growth during the 2007-2011 period was recorded by the agriculture-fisheries-forestry sector.
She said average growth of this sector during this period was 3.4 per cent per year, 0.4 percentage points above expectations.
Overall investments during the post-WTO period grew by 8.3 per cent as against 13.4 per cent in the previous five years.
As expected, foreign-direct-investments (FDI) in Vietnam increased after it joined the WTO, with the number of FDI projects increasing 1.5 times and the registered capital up by 5.1 times over the 2002-06 period.
To reach higher growth in the near future, experts said it was necessary to further perfect the investment environment and improve competitiveness by using modern technologies.
Cooperating with foreign-invested companies to join regional distribution systems was another recommendation made at the conference.
Dinh Thu Hang, another CIEM expert, said Vietnam would continue to face challenges and slow growth in the coming months.
She said the government needs to adjust import-export policies towards increasing the quality of exported goods and limiting the export of raw materials. She stressed the need to find big import partners that can help stabilise exports.
Other experts at the conference spoke of the need to restructure Vietnam’s retail sector, ensuring greater transparency as well as creating conditions for domestic firms to increase their competitiveness.