Hanoi seeks to join WTO to consolidate economic growth
The country registered an 8.4% growth rate in 2005 and foreign investments are on the rise. But there are obstacles: widespread corruption, heavy bureaucracy, strikes by underpaid workers and abuses of freedom of worship.
Hanoi (AsiaNews/Agencies) Vietnam wants to join the World Trade Organisation (WTO) before the year is out to consolidate its strong economic growth. But it faces structural problems like corruption, shortage of infrastructure and services, heavy bureaucracy and workers' protests because they are underpaid.
In 2005, the Gross Domestic Product rose by 8.4%, despite serious natural disasters and bird flu (which damaged the important poultry sector). Exports increased in value by 21.6% and direct overseas investments shot up by at least 40%. Premier Phan Van Khai told the South China Morning Post: "We want to maintain an annual growth rate of least 8% so as to turn Vietnam into a medium-income country with income per capita of US,000 per year by 2010."
In January 2006, industrial production increased by 21% and the services sector saw a 25% increase compared to January 2005. Inflation has however gone up, with a rise in the consumer price index in January (+1.4% for food). At the moment, 76% of the population still lives off farming.
Production is divided between the large foreign companies and myriad small and medium sized local enterprises, specialised in covering the niches neglected by the big companies, and therefore functional.
"Our policy is to, on one hand, promote the private sector, and on the other, expedite the process to improve the efficiency of the state-run economic sector. We attach great importance to external resources ...we continue to improve the investment environment," said Phan Van Khai. The government has cut import taxes on electronic components (from 9.57% to 6.31%), thus making production cheaper than in the west. This has encouraged large global electronic firms to set up in Vietnam. On 28 February, Intel, which produces computers, announced the allocation of 300 million dollars to build a factory employing 1,200 people near Ho Chi Minh City, as well as computer courses for more than 30,000 teachers and helping the government to disseminate the use of computers more in rural areas.
Overseas investments (from the United States, Europe, Japan and South Korea) depend above all on the minimal cost of labour. Here, it costs three dollars to produce a sweater which will sell for 43 dollars in the United States. In Vietnam, a worker earns 35-45 dollars per month (the lowest salary in China is 63 dollars) and salaries have been frozen since 1999. At the end of 2005, many workers employed with foreign campaigns went on strike and obtained salary increases, better occupational cleanliness and safety and better meals at the company canteen.
Widespread corruption has led to many arrests and trials against public officials, including the arrest of Luong Cao Khai, head of the anti-corruption section of the government's Inspections Department in October 2005. The official was accused of accepting bribes from the state petroleum company, Petro Vietnam; already under investigation, its running had been entrusted to this department. On 28 November 2005, the National Assembly approved a new law which hands down severe penalties, including capital punishment, to those who appropriate public funds. The law also obliges state officials and their relatives to declare their assets and show where they are coming from.
The country has a proactive foreign policy: in 2005, there was the first visit of a Vietnamese premier to the United States and visits were exchanged with Beijing. On 4 January 2006, the Vietnamese Foreign Affairs Minister announced the opening of the first stretch of highway, with eight lanes, which connects Hanoi to Nanning, the capital of the industrialized Guangxi, in less than five hours.
To consolidate its economic growth, Vietnam wants to join the WTO. "I'm convinced accession to the WTO will help increase Vietnam's attractiveness and bring about many investment and business opportunities to foreign investors," said Phan Van Khai.
But Hanoi must overcome opposition posed by the United States. Any agreement must be approved by the US Congress, but many MPs have already said they want guarantees of freedom of worship. In November, the US State Department listed Vietnam as one of eight "countries of particular concern because of religious freedom". Also featuring on this list are China, already a WTO member, and Saudi Arabia, admitted this year, so many experts say the US government cannot impose a veto. In 2005, Vietnamese exports to the United States were valued at 6.5 billion dollars.
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