Minister: WTO membership not the cause of price escalation

15:48' 24/07/2007 (GMT+7)

VietNamNet Bridge – What has Vietnam yielded six months after it gets the WTO membership? Minister of Trade Truong Dinh Tuyen talked about this. Minister of Trade Truong Dinh Tuyen Six months prove to be a too short period to assess the impacts of the WTO membership on the national economy. However, I can say that what has been happening since then proves to coincide with what we anticipated when we submitted to the National Assembly for ratifying the protocol on joining WTO. At that time, we believed that the biggest opportunity the WTO membership can bring is the foreign investment attraction. In reality, as you may see, a new wave of foreign investment, both direct and indirect, to Vietnam has been taking shape. The total registered capital of foreign direct investment was very high in the first six months of the year, more than $5bil, and the figure may further increase if we can improve the administrative procedures. We also thought that the export markets would be expanded, but no sudden changes would be seen, and this has become true. However, in general, the exports have been increasing, though there have been no sudden changes: the non-oil exports have risen by 28.6%. It is expected that the export growth rate would be more than 20% for this year, higher than the target set by the National Assembly. The excess of imports over exports in the first six months of the year has reached 30%. Do you think that it was because of the WTO membership? I don’t think so. In fact, the higher trade gap was seen in the import items which did not see the tariff cuts in the last time, or just saw slight tax decreases under WTO commitments. Besides, I have to say that the imports were higher than exports because investors needed to import many goods to run their projects. The import volume of foreign investors increased by 30.6% in the first six months of the year. The imports were not for domestic sale, but for running their projects. Therefore, I don’t think that the WTO membership could have big impacts on the trade gap Besides, I think that one of the reasons behind the big imports in the last time was the low competitiveness of Vietnam-made products in the WTO period. For example, the existing local steel mills have big production capacity, but their products cannot compete with imports. Experts once predicted that consumers would be able to buy goods at lower prices after Vietnam joined WTO. But everything has been going in an opposite way. Could you give me the reason why? The price of food and foodstuff increased in the last time There were several reasons behind the price increases in the recent time: first, the prices of many products dramatically increased on the world’s market; second, the price of food and foodstuff increased. The higher export price of farm produce meant that exporters had to buy products from farmers at higher prices, thus making the domestic prices higher. Animal epidemics, such as bird flu, made the prices escalate. In addition, I think that the increased volume of cash in circulation (the state spent a lot of money buying foreign currencies) also led to the price increases. The policies by the State in adjusting the prices of electricity, petrol, coal has stimulated the increases of other products and services. It seems that barriers still exist in the implementation of WTO commitments as there still an absence of guiding documents? It is still necessary to have more guidance documents in some complicated sectors, for example, the right to do business, and the right to import goods. It took time to draw up the document guiding the import activities of foreign businessmen, and the document, as you may know, has been enacted. I don’t think that we are slow in implementing the WTO commitments, just in this sector. The right to distribute in the domestic market is always a tough problem, even at negotiations, and not only the problem of Vietnam. In principle, we should refer to the WTO commitments when making the decisions relating to the market opening. However, I don’t mean that we cannot open the market sooner than committed. The Ministries of Trade and Planning and Investment are compiling a draft decree on allowing several sectors to be opened sooner than committed. For example, we may open the education sector sooner. Is it necessary to follow the WTO commitments by allowing foreigners to invest in the field of science and technology training under the mode of 100% foreign owned projects as of January 1, 2009, or should we open the market sooner? What do you think the biggest success of Vietnam has been in the last six months since Vietnam has joined WTO? We have put enterprises into a business environment with stiffer competition. Attracting more foreign investment should be seen as the second biggest success, which can help adjust the economic structure, stimulate growth, and help boost exports. In a more competitive environment, enterprises have to change their management methods and business strategies to make them survive, which can help create a dynamic economy. That is the thing we need most when we enter the playing field, the field of WTO. (Source: TBKTVN)