Assoc' Prof' Nguyen Dinh Tai

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Closing the East Asia-Vietnam Economic
Development Gap Strategic Issues and
Prospect(Fourth East Asia Congress3-5 December
2006, Kuala Lumpur)  

• Assoc. Prof. Nguyen Dinh Tai
• CENTRAL INSTITUTE FOR ECONOMIC MANAGEMENT,
  vietnam

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Structure of the presentation

• Vietnam 20 years of Doimoi
• 1. East Asia-ASEAN Cooperation
• 2. East Asia competition
• 3. Affairs between Vietnam and East Asia
• 4. Closing the East Asia Vietnam Development
  Gap a Futuristic Outlook

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Vietnam 20 years of Doimoi

• 1986, Vietnam initiated "Doi moi" (Economic
  Reform) for the economy
• Shift central planning economy to market-oriented
• Eliminate the price subsidy system and free
  interest rate, exchange rate and goods prices
• Open the economy to the world
• - Develop multi-sector economy

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Vietnam 20 years of Doimoi

• 12/1987, Law on foreign investment in Vietnam
  institutionalized the open door policy set up a
  legal corridor for foreign investors
• 12/1990, Law on private enterprises and Law on
  companies set up a legal corridor for Vietnamese
  private investors
• 7/1992, New Constitution declared building up a
  state of rules and the right of business freedom.

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Vietnam 20 years of Doimoi

• 6/1999, Enterprise Law institutionalizing the
  right of business freedom
• 12/2003, Vietnam-Japan Joint Initiative to
  Improve Business Environment with a view to
  strengthen Vietnams Competitiveness
• 11/2005, (unified) Enterprise Law replacing
  Enterprise Law of 1999. The new Law is applied to
  private firms, SOEs and FDI enterprises.

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Vietnam 20 years of Doimoi

• 11/2005, (common) Investment Law replacing
  Foreign Investment Law (1996,2000) and Domestic
  Investment Encouragement Law (1998). The new Law
  is to set up one common and equal playing rule
  for all investors
• 11/2006, VN became 150th.member of WTO

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1. East Asia-ASEAN Cooperation

• VN joining ASEAN
• _at_1996-2000 Growth of VN's export to ASEAN 20,8
  on average
• _at_1991-2005 Growth of VN's export to ASEAN on
  average 15,8
• _at_FDI of ASEAN countries into VN 30/total FDI

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1. East Asia-ASEAN Cooperation

• 11/2002, China and ASEAN signed "Frame Agreement
  on Comprehensive cooperation" (customs duties
  reduction early havest removing non-tarrif
  barriers ACFTA ...)
• ASEAN-China Free Trade Area (ACFTA) ACFTA
  (2010), the largest free-trade area in the world,
  is thought to keep the highest economic growth
  in the next 10 years.
• ASEAN-Japan (AJFTA) AJFTA (2012) not only
  limited to "traditional" reduction of customs
  duties, but extended to improving the business
  environment, investment protection, technology
  transfer, property ownership, environment
  protection, and so on
• ASEAN-Korea Free-trade area (AKFTA,2009) ASEAN
  and Korea are mutual 5th largest trading
  partners, as for the FDI flows to ASEAN Korea is
  the third largest investor
• East Asia Free Trade Area (EAFTA, 2020)

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2. East Asia competition

• With stable economic growth, low political risk,
  better management alongside with new initiatives
  to attract FDI make Southeast Asia a specially
  attractive arrival point for foreign investors.
• Indonesia, Malaysia, Philippines, Singapore,
  Thailand and Viet Nam are all destinations for a
  new wave of capital investment from the U.S. The
  industries of great interests are information
  technology, biotechnology, and financial services
  sectors.

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3. Affairs between Vietnam and East Asia

• 3.1. Vietnam and Great Mekong Sub-region (CLMV)
•  Cooperation in reinforcing infrastructure for
  development
•  Cooperation in strengthening social and
  environmental infrastructure

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3. Affairs between Vietnam and East Asia

• 3.2. Vietnam and Thailand towards 2010s
• Viet Nam and Thailand have so far signed almost
  30 agreements making the framework for the
  relations between the two countries
• Both countries cooperate in fishing, measuring,
  biotechnology, electronics and PC technology
  sectors and have in plan to build a scientific
  and remote sensing park.

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3. Affairs between Vietnam and East Asia

• 3.3. Vietnam and North-East Asia
• Vietnams and Chinas economic integration to the
  world both countries unanimously consent to
  raise the target of the bilateral trade in 2010
  to a level of USD 15 billion and more building
  two economic corridors Con Minh Lao Cai Ha
  Noi Hai Phong and Nam Ninh Lang Son Ha Noi
  Hai Phong and an economic belt in Gulf of
  Tonkin consisting of Northeast Vietnamese
  provinces and the Hong K?ng

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3. Affairs between Vietnam and East Asia

• Prospect of forming an East Asian free-trade area
• The investment to high value added industries
  in East Asia
• The role of Japan The economic linkage between
  Japan and ASEAN will increase the GDP of ASEAN
  and export from ASEAN countries to Japan
• - Difficulties of forming EAFTA large
  differences in political system, economic
  development level, culture big income gaps
  (Japan, Singapore, Brunei and S.Korea gtUSD10,000
  per capita Malaysia, Thailand, Philippines and
  China USD1,000-10,000 Indonesia and VN USD
  500-1000 Myanma, Cambodia and Lao ltusd 500)

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4. Closing the East Asia Vietnam Development
Gap a Futuristic Outlook10 most significant
issues 4. Closing the East Asia Vietnam
Development Gap a Futuristic Outlook10 most
significant issues 4. Closing the East Asia
Vietnam Development Gap a Futuristic Outlook

• Opportunities for VN from Eat Asian linkage
• Increase trade transactions
• Access the mechanism in treating regional
  trade problems
• Reinforce the trust of investors in country's
  economic reform
• Chalenges
• Increased competition
• Pression on rapid trade liberalization,
  openness

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4. Closing the East Asia Vietnam Development
Gap a Futuristic Outlook

• The 10 most significant issues
• (1)- Human security
• (2)- Banking and financial reform
• (3)- Deeper integration
• (4)- Market reform
• (5)- Infrastructure development

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4. Closing the East Asia Vietnam Development
Gap a Futuristic Outlook

• (6)- Ageing population and mismatch
• (7)- Oil price and energy security
• (8)- Corporate governance
• (9)- Production networks
• (10)- Rapid reserves accumulation

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• thank you