Vietnam
in 2004 continued to develop industry and competitiveness but also
faced many
challenges. At the end of 2004, the IMF
said Vietnam’s real GDP growth is expected to remain relatively
unchanged in
the 7% range in 2005, with inflation
which has been a problem in 2004 expected to ultimately decline to the
5-6%
level (it is currently nearly 10% -
for more on this please see www.fetp.edu.vn/events/theFilename/E041117e1E.ppt
Export growth is expected to decline as Vietnam
faces the effects of the end of the Worldwide Multi Fibre Agreement
which ends
textile quotas for existing WTO members. This
will mean much increased competition for Vietnam
textile and garment makers who are likely to lose out to Chinese
textile mills
and garment factories.
Tourism remains a bright light for Vietnam. Vietnam
had welcomed some 2.63 million foreign tourists over the first 11
months of
2004 according to the Vietnam National Administration for Tourism
(VNAT). This figure was over 23% greater
than the
same period a year earlier.
In respect to Foreign Direct Investment (FDI), Vietnam
is expected to secure nearly $4 billion in FDI in 2004 – this would put
Vietnam
fourth behind Singapore,
Malaysia
and Thailand. A continuing issue in Vietnam
with FDI is the quality of the capital source which remains lower than
in many
countries in the region.
Vietnam
continues with good reason to get increased attention as a potential
lower cost
alternate to China
for certain industries. It also is
increasingly being looked as a way of diversifying the risk of having
too much
of a company’s investments tied up in one country – China,
which seems smart in terms of spreading risk. To
stimulate this, the Vietnamese government has taken a
number of well
received steps to simplify and speed up investment and land acquisition.
Despite the above which is generally favorable, Vietnam
still has considerable room for improvement in terms of its business
climate. According to a survey just
released at the end of 2004 on business sentiment based on responses of
115
foreign and 80 domestic businesses and conducted by the World Bank, The
Ministry of Planning and Investment (MPI), the Vietnam Business Forum
and the
International Finance Corporation (IFC), a significant number of
existing
businesses expressed concerns on uneven rules and regulations,
bureaucracy and
poor legal enforcement as the main discouraging factors for an existing
business in Vietnam. Forty percent of
respondents wanted to see simpler start up and administrative
procedures, and
less emphasis on access to land, financing and law enforcement. Also when asked what actions should be taken
to improve the business environment, the respondents said prevention
and control
of corruption were issues that needed even more emphasis in 2005. The second priority was enforcing laws evenly
and strictly. Third was greater
transparency and efficiency for the civil service.
Current
businesses have also expressed concern about the government’s
introduction in September 2003 of what is called Decree 105 which
imposed a 3%
cap ratio for specific businesses and additional procedures for
approval for
expatriate employment. The main effect
of this decree seems to be in the service industry.
The Vietnamese government is considering
amendments to the above Decree which has been criticized by the
European
Chamber of Commerce in Vietnam
(Eurocham), the Australian Chamber of Commerce in Vietnam
(Auscham) and many other groups
Reported
by: Christopher W. Runckel,
a former senior US diplomat who served in many counties in Asia, is a
graduate of the University of Oregon and Lewis and Clark Law School. He
served as Deputy General Counsel of President Gerald Ford’s
Presidential Clemency
Board. Mr. Runckel is the principal and founder of Runckel &
Associates, a Portland, Oregon based consulting company that
assists businesses expand business opportunities in Asia.
Until April of 1999, Mr. Runckel was
Minister-Counselor of the US Embassy in Beijing, China. Mr. Runckel
lived and worked in Thailand for over six years. He was the first
permanently assigned U.S. diplomat to return to Vietnam after the
Vietnam War. In 1997, he was awarded the U.S. Department of States
highest award for service, the Distinguished Honor Award, for his
contribution to improving U.S.-Vietnam relations. Mr. Runckel is one of
only two non-Ambassadors to receive this award in the 200-year history
of the U.S. diplomatic service.
