Vietnam as WTO member – advantages and challenges

Vietnam’s legal system and economic policies have improved since it joined the World Trade Organisation (WTO), said former Deputy Prime Minister Vu Khoan in an interview granted to a VOV reporter this week.

Reporter: What effect do you think about Vietnam’s joining the WTO has had on its economy?

Mr Khoan: There have been positive signs of growth since Vietnam joined the WTO in 2007. With export markets expanding, Vietnam has annually achieved a 20 percent increase in the total value of goods exported. Judging from the surge of foreign investment in 2007 and early 2008, Vietnam has become more attractive to foreign investors and its foreign exchange reserve has dramatically increased through export revenues, and overseas labour remittances.

By joining the WTO, Vietnamese businesses have gained opportunities to integrate into the global market, softening the negative impact of the economic crisis.

In the negotiation process to become a WTO member, Vietnam has improved its legal system and created favourable conditions for domestic and foreign businesses to develop.

What is more, Vietnam has constantly improved its status in the world. It was elected a non-permanent member of the UN Security Council for a two-year term from 2008 to 2009. This year, as ASEAN chair, it represented the group at the recent G20 summit in Toronto and last month, Ho Chi Minh city hosted the World Economic Forum on East Asia.

In general, by joining WTO, Vietnam has more opportunities for its economic development and integration. However, it is not a panacea and it even has some negative aspects.

Reporter: In addition to opportunities, there are also many challenges facing the national economy. What, in your opinion, are the challenges that Vietnam has not yet overcome?

Mr Khoan: The challenges come from the economy itself. They have become ever more evident especially after we joined the WTO.

For example, energy shortages, trade deficits, and the poor competitiveness of many businesses are worrying problems showing that we are not well-prepared for strong growth.

Only by improving its competitiveness, expanding its markets, and building its strong brand names can Vietnam overcome such challenges.

Reporter: To increase their competitiveness in the post-WTO period, do you think that a closer link should be set up among businesses, especially giant groups and State-owned corporations?

Mr Khoan: The international integration process has created a competitive environment for local businesses. Despite that, Vietnamese businesses have successfully overcome the negative impact of the recent global economic downturn and won great acclaim from the world. They have demonstrated their sharp competitiveness and operational effectiveness. However, they could have done even it better if they had had a close link. They should learn how to set up a close link from foreign firms.

Escape from crisis due to agricultural sector

Reporter: The agricultural sector is likely to be strongly affected in the post-WTO era. What do you think about that?

Mr Khoan: During negotiations I was always concerned about this issue so I strictly directed commitments relating to the field of agriculture. Vietnam has many advantages in developing its agriculture sector, which played a key role in helping the country weather from the global economic downturn. In the current process of industrialisation, we should pay due attention to this sector.

Reporter: The fact is that relatively little investment has been allocated to agricultural development. Many localities give priority to developing the industrial sector. How should we deal with this situation?

Mr Khoan: As a WTO member, Vietnam is allowed to use 10 percent of its investment capital to develop the agricultural sector. However, the country has not yet made full use of this money. Almost all provinces and cities across the country focus on developing the industrial sector, even though many of them have more favourable conditions for agricultural development. Those localities which do not have advantages in developing industry should concentrate on other sectors. The State should balance the agricultural and industrial sectors by implementing tax, subsidy, and poverty reduction policies.

Reporter: After opening the door to their economy, many countries are facing a growing gap between their rich and poor citizens. What is your assessment of this issue in Vietnam?

Mr Khoan: I’m very concerned about this issue in Vietnam. A big gap between the rich and the poor causes social instability. The question is how to create a balance between economic growth and social equality.

Reporter: Thank you.

Tags: WTO