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WTO Commitment Implementation: Need for Consensus between Vietnam and Donors
13 | 06 | 2007
Vietnam Business Forum, an annual event prior to the Consultative Group (CG) meeting, was held in Hanoi on May 30, 2007. This forum was the first after Vietnam officially joined the WTO. Therefore, the issue of reform to carry out the WTO commitments was the hottest topic for investors and international donors
Constructive ideas from investors

The issue of legal reform was the hottest point of discussion at the forum. Many foreign investors said they were eager to enter Vietnam to seek business opportunities, but the promulgation of instructive documents was slower than expected.

Mr Gunwhan, representative of the Korea Chamber of Commerce and Industry (Kocham) in Vietnam, said Vietnam should quicken the process of issuing and validating laws and regulations to match its WTO accession commitments. Many regulations have been issued to implement Vietnam’s WTO commitments, but they seemed incomplete, unclear at some points, and sometimes contradictory.

Mr Alain Cany, Chairman of European Chamber of Commerce (Eurocham), said one concern is when foreign companies will be permitted to carry out exporting and distributing. This seems to be moving more slowly than expected. This lateness is attributed to lack of coordination in issuing instructive decrees, regulations and circulars enclosed with the laws.
AusCham emphasised Vietnam’s implementation of commitments in the service sector has so far made little progress. Laws executing commitments have still not been issued in many fields. The Vietnamese Government needs to speed up the issuance of clear instructive documents for foreign investors to follow.

On behalf of investors, Auscham recommended that a “package” system of legal documents, including laws, decrees, circulars and instructions, should be issued at the same time, creating a synchronous and convenient system for investors as well as governments of different tiers.
Mr Fred Burke, leader of Manufacturing and Distribution Workgroup, said, according to Decree 23 on amendments to trading, import, export and distribution activities of foreign investors, foreign investors will have to settle so many sub-licences and this is actually a hurdle.
Another area of concern is the instruction for the establishment of wholly foreign-owned banks in Vietnam, effective from April 1, 2007. Government decree 22 also mentioned this issue.

However, this commitment has not been realized, because no instructive document for implementation has been introduced.
The decree instructing the execution of WTO commitments is now under compilation and it is crucial to the implementation of WTO commitments. Thus, investor anxiety is understandable.

Vietnamese authorities’ voices

At the sidelines of the forum, Minister of Planning and Investment Vo Hong Phuc said Vietnam would implement WTO commitments in accordance to the “mental development” philosophy. In the coming time, the Ministry of Trade and the Ministry of Planning and Investment will send instructive documents on executing WTO commitments in the fields of market opening, service, commodity distribution, branch opening, and retail supermarkets, to local governments. The Ministry of Planning and Investment is compiling and will submit to the Government by July or August for approval the decree instructing the execution of WTO commitments.

The slowness in issuing circulars on decree implementation is a normal phenomenon in Vietnam, because of the sluggish document compilation. However, this problem will be solved in the coming time, said Mr Tran Quoc Khanh, Director of Multilateral Trade Department under the Ministry of Trade.

Mr Khanh affirmed the investors’ opinion that the variety of sub-licences from Decree 23 (on amendments to trading, import, export and distribution activities of foreign companies) is inaccurate because this decree does not require the issuance of new sub-licences. The circular to instruct the implementation of this decree has been sent to the ministries and will soon be posted on the Ministry of Trade’s website to collect more ideas. In addition, the roadmap related to the trading of goods and related activities, released by the Ministry of Trade May 21, is also an important document to decentralize the implementation of the Decree to provincial levels.
Vietnam confirms no discrimination between domestic and foreign enterprises. However, the Vietnamese Government will allow certain preferential tax for domestic small and medium enterprises. Vietnam consistently holds the viewpoint that any preferential treatment for foreign investors that exceeds WTO commitments will not be retroactive, Khanh added.

Mr Pham Manh Dung, Director of the Legislation Department under the Ministry of Planning and Investment said, “We look at the WTO commitments in the process of development. We all know that Vietnam has opened several fields for many years to an extent wider than the commitments. Therefore, to meet the development demand, the decree also treated both early and late opening fields to fit Vietnamese economic conditions.”

Regarding WTO commitments to service, the Ministry of Planning and Investment will fully abide by the commitments to 108 service sectors. However, this does not mean that foreign investors cannot invest in sectors unlisted in the WTO accession commitments. In other words, the opening of uncommitted service sectors is dependent on economic development needs.

A Ministry of Planning and Investment representative said his ministry advocates the viewpoint that if Vietnamese laws provide higher preferential treatment than WTO commitments, they should be maintained not lowered to the rates in the commitments. This showed that Vietnam respects, protects and facilitates investors who have contributed to Vietnamese economic development.

The philosophy of Vietnam is to execute WTO commitments without rigid observance, but based on Vietnamese law and the practical situation in Vietnam. This shows the goodwill of the Vietnamese Government in protecting the interests of investors who have set up long term business with Vietnam.

Vietnam Bussiness Forum
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