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The year 2002 gives the Communist rulers in Vietnam a great hope of higher economic growth after some favorable indications. The most optimistic view must have been based on the Bilateral Trade Agreement signed between Hanoi and Washington last year.
Most recently, the visit of Japanese Prime Minister Junichiro Koizumi on April 28 to Hanoi might have been another reason for such a hope. Japan is the largest donor and investor in Vietnam. However, Mr. Koizumi did not promise more help in general from Japan as Hanoi had expected although he said Japan would maintain the current Official Development Aid (ODA). The Japanese prime minister did not approve Hanoi’s call for trade negotiation in the near future.
Japan has invested in Vietnam more than US$ 4 billion in 330 projects.
At the same time, in a report of Saigon Economic Magazine, Mr. Shigo Narause, executive officer of a Japanese trade office in the former South Vietnam capitol says though situations in Indonesia and the Philippines are not politically stable, trade environment in the two countries is more favorable for investors than in Vietnam. As he knows, infrastructures in Indonesia and the Philippines are more reliable and costs of transportation and telecommunications are even much lower.
As to the Taiwanese businessmen, foreign investors are still facing troubles caused by Communist authorities. In a report on Nguoi Lao Dong (Workers) April 23 issue, Taiwanese investors voice their complaints in a meeting with Saigon City authorities, held on April 22. They say there is much red tape, complicate and troubling administrative procedures that hinder more investments from Taiwan. Even a minor problem such as huge traffic jam in rush hours on the road to Tan Thuan suburb every day nearly paralyze all of their businesses in the area.
Ill-management by the partners on the Vietnam side has caused serious losses to many joint Vietnam-Taiwan ventures, one of them is the Saigon-Ve Wong company. Besides, Taiwanese firms also suffer considerable losses by rampant thievery that local authorities seem unwilling to actively deal with.
Taiwan has invested in about 200 projects in Vietnam during the last 10 years.
Foreign sources in Hanoi estimated last week that a number of foreign investors have withdrawn their commitments of nearly 401 million dollars. These are among 407 projects of 944 million dollars that have not been implemented. About 300 projects are expected to start soon in the future while the remaining 107 projects are lacking in favorable conditions and could be cancelled.
According to Hanoi’s official statements made earlier this year, foreign investors are returning to Vietnam after last year’s cessation. However, many investors disagree, saying that investment in 2002 has increased very little.
Hanoi government sets a target of 7 to 7.3 percent for its economic growth this year. The International Monetary Fund and Asia Development Bank estimate it at nearly 6 percent. But according to the World Bank, Vietnam’s GDP growth rate could be only about 5.2 percent in 2002, down from its previous estimate of 5.5 percent because of decreasing exports.
The bank said Hanoi should enact more reasonable regulations regarding investment and business, as well as providing accurate economic and trade information. Moreover, the bank advises Hanoi to make national budgets public, not to classify government fiscal statistics as state secrets.
Probably Hanoi really wants to take the advice, but it’s easier said than done. Transparency in budget and expenditure could pose particular troubles for the Party and its government. How could the leaders conceal large expenses to support the covert political security system and the activities of the Party if budget in details is made known to the public?
It’s the impossible task that is similar to the equitization of a large part of the failing state-run enterprises.
Though Hanoi has promised to accelerate the state sector reform, it confronts resistance from inside the Party and difficulties of re-employing workers and officials who are faithful Party members. Only about 1/10 of the 5,000-plus state-owned enterprises have been equitized, many of those only changed their titles but the legal shareholders are still government agencies.
Vietnam could be the best place in South East Asia for foreigners to invest. Besides cheap and industrious labor, Vietnamese technical workers acquire better training than workers in most developing countries. While they are intelligent, they even enjoy the advantages of their Vietnamese language written in Roman alphabet. It takes them only 3 years of their childhood at school to be fluent in wring and reading Vietnamese, so they can learn technical lessons easily in Vietnamese books with not much effort.
Nevertheless, the problems lie in the Communist Party leadership. Most of the directors and executive officers leading state-owned firms are selected among the most faithful and obedient party members, disregarding their capability of economic, especially industrial management. Most of them had acquired little formal education from 2 to 5 years at elementary schools before they joined the Communist Party ranks.
After ascending leader’s jobs they have to attend the so-called supplementary accelerate courses of general education. They are given 4 hours a day to complete 4-grade-a-year courses to get high school diploma in 2 or 3 years. Such diploma mainly serves as justification paper to consolidate their appointment to high positions in the state sector. Still, a large number of high school diplomas and college graduate certificates of the directors are fake, according to a government probe late last year.
In a report published in Dien Dan Doanh Nghiep (Business Forum magazine) on March 27, 2002, Deputy Minister Tran Van Ta of the Ministry of Finance frankly admitted that 70 percent of all directors of state-owned firms in Vietnam are not able to read and understand financial reports.
Recently, Hanoi has just graduated a course of financial management comprehension for about 100 students who are directors, deputy directors and chief accountants from state-owned enterprises. However, how much the students have really apprehended was not mentioned in the news report.
Beside corruption, that’s the root of many failures in the current ill-managed economy. Vietnam, after almost 15 years of economic reform with abundant international aids, is still one of the poorest countries in the world.
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