Competition Law Key to Accelerating Economic Reforms

10 Sep 2002

Ha Noi - Viet Nam needs to adopt an effective competition policy to improve its economic competitiveness and accelerate its market reforms, urge UN officials who are gathering for a 2 day-round table from 11-12 September in Ha Long.

The meeting, jointly held by the Ministry of Trade, the UN Development Programme (UNDP) and the UN Conference on Trade and Development (UNCTAD), is expected to put final touches to the Competition Law and Policy of Viet Nam.

The two UN agencies are helping Viet Nam draft its first ever Competition Law ahead of negotiations on Competition Policy as part of Viet Nam's entry to the World Trade Organisation.

"We are in a race against time to effectively integrate into the world economy" says Dr. Le Danh Vinh, Vice Minister of Trade and Head of the Interministry Compiling Committee of the Law on Competition and Anti-Trust. "If we want Vietnamese firms to be treated fairly abroad, we should treat foreign businesses equally at home".

"This Competition Law is the missing link in the institutional framework needed to develop a competitive market economy in Viet Nam'says Jordan Ryan, UNDP Resident Representative. "It's essential to create a level playing field for businesses of all sectors. It's also very important to get Vietnamese businesses well prepared to compete with foreign businesses both at home and abroad".

Since the Doimoi or reform process initiated in 1986, Viet Nam has gone through a remarkable transformation of the economy which has become more globally oriented, as evidenced by rapid growth of both exports and imports.

Viet Nam has been praised for maintaining a stable socio-political environment in recent years, but to develop a strong and healthy domestic business sector and to attract more foreign investors, the country needs to dismantle monopolies. Costs are still too high in important sectors such as telecommunications, cement, motorbikes and sugar - all of which still have State-run monopolies in place.

The drafting process to date has identified two key areas where efforts to create a "level playing field"can be made.

The first challenge is a mapping exercise of sectors subject to exemptions to the law and the time-frame for phasing out preferential treatment. The final list of these sectors will be decided by the Government. The Government also has to decide whether and for how long "infant industries" should be protected from intense foreign competition.

"Viet Nam needs to strike a balance between competition and protection" say Mr. Hassan Qaqaya from the Competition and Consumer Policies Branch, UNCTAD. "Experience around the world shows that lack of competition keeps local firms weak and uncompetitive, and distorts the economy".

The second important area for action is in the development of the authority responsible to enforce the new Competition Law. Experts emphasize that it needs to be led by professionals competent in law and economics, who act with independent authority, beyond the influence of vested interests. The proceedings of such an authority should be kept completely open to public debate so that the views of all stakeholders can be taken into account to best ensure that Viet Nam's economy develops into a world class competitor. Consumer associations, for example, can act as a watchdog to ensure independence of the Competition Authority.

"Prime Minister Phan Van Khai has emphasized on many occasions over the past five years that strengthening the economy's competitiveness is a top priority for the nation, and the Competition Law, backed by an independent authority, will contribute to Viet Nam's ability to participate in the global economy" adds UNDP's Ryan.

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