Big Opportunity for Vietnam's Growing Economy

In an interview on Vietnam Television on this occasion, Mr Ngo Quang Xuan, Deputy Chief of the National Assembly Foreign Affairs Committee and former chief of Vietnam’s delegation to WTO, said that the achievements Vietnam has obtained this year stem from WTO accession. “Vietnam has more opportunities than difficulties and challenges”, said Mr Xuan.

The achievements of Vietnam’s economy after one year in the WTO can be clearly shown through the export value and the record foreign investment. Foreign businesses have paid more attention to Vietnam than ever, and their interest will keep increasing in the coming time.

With export value of US$39 billion in the first ten months, the Ministry of Industry and Trade forecast this figure will reach US$48 billion this year, an increase of over 20 per cent on year.

Foreign investment this year is also very impressive, with total US413 billion, and the presence of more big investors and large-scale projects. The investment environment of Vietnam has been highly appreciated by world groups.

Along with the increase in foreign direct investment (FDI), the widespread participation of foreign investors in the local stock market has considerably increased foreign indirect investment in Vietnam. The stock market is one of the biggest beneficiaries of WTO accession, according to economic experts.

Ph.D Le Dang Doanh, former Director of the Central Economics Institute said, “It is clear that after Vietnam joined the WTO, a large number of foreign investors have flocked to the country.” Vietnam has created trust in the international community and among foreign investors with its WTO commitments, said the Chief Representative of the International Monetary Fund (IMF) to Vietnam Houng Lee at a recent conference on guiding Vietnam to carry out its WTO commitments, held in Hanoi. At the same conference, Mr Jean Pierre Achouche, Vice Chairman of the European Commerce of Chamber, commented that WTO membership has helped Vietnam stand out on the world map of investment attraction.

 

When asked about the specific impact of WTO membership on Vietnam’s market, Mr Ngo Quang Xuan said that Vietnamese people benefit from the integration as their products, especially agricultural products, have the right to equally access member countries and export volume and value have both increased.

However, the market opening requirement of the WTO also allows the world market to directly impact the market in Vietnam, and that is both an opportunity and a challenge. The majority of local people said that after one year of WTO membership, Vietnamese consumers have more choice in buying goods.

For domestic enterprises, this is actually a big challenge as they are facing severe competition from foreign businesses. Moreover, the capacity of Vietnamese businesses is still weak while the world economic structure has been radically changed, and the service and intelligence economy has strongly developed. In the context of the market opening of all WTO member countries, the low competitiveness of Vietnamese businesses is a weakness.

The roadmap to further open the service sector is creating strong competition on the local market, not only between domestic businesses and foreign ones, but also among local enterprises. Along with the banking and finance sector, real estate and distribution service sectors are also heating up, due to the participation of big foreign investors.

Therefore, local businesses have to equip themselves with the appropriate knowledge about the global integration context and set up cooperation chains to raise their competitiveness.

However, with the achievements of this year, the prospects for Vietnam’s economy in 2008 and the years to come is bright. “The prospect of high economic growth is real,” affirmed Ph.D Le Dang Doanh.

In updating the 2007 Asian Economies report, the Asia Development Bank (ADB) noted that GDP growth in Vietnam would reach an estimated 8.3 per cent and surge to 8.5 per cent if Vietnam keeps integrating into the global economic network, encouraging foreign investment, and maintaining domestic reform.

ADB Country Director to Vietnam Ayumi Konishi said that although WTO accession has not brought about a miracle, the economy of Vietnam has been developing strongly and healthily, and will continue growing.