Etude Impacts Sociaux - FSP I - En

8/13/2019 Etude Impacts Sociaux - FSP I - En

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SOCIAL IMPACTS OF VIETNAMS ACCESSIONINTO THE WTO

Dr. Ng V n imEconomic Expert.

Mr. Tr n Vi t Ph ngExpert on Social Issues, Hanoi

Ms V Th BchOffice of Governments Expert.

Etude ralise dans le cadre du FSP IntgrationSminaire de diffusion, le 24 aot 2007


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CONTENT

Page

Preamble: 1Chapter I:VIT NAMS INTEGRATION PROCESS 3A. Integration, not including the WTO accession 31. Bilateral Cooperation Agreements 32. Most important multilateral commitments 5B. WTO Accession 121. Common commitments 122. Opportunities and challenges 133. Big challenges to certain industries 144. WTOs next development steps 18Chapter II:IMPACTS OF INTERNATIONAL ECONOMIC INTERATION 191. Global impacts 192. Impacts on Vietnam 212.1 Positive impacts 212.2 Negative impacts 24Chapter III:SOME POLICIES AND SOLUTION 301. Determination of nation, government, business community and residents 302. Cultural solution 313. Continuing improvement of legal system 324. Some policies 335. Enhancing the national competitiveness 386. Improvement and protection of environment 44Chapter IV:Conclustion 4 5Reference 47


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INTRODUCTION

Entering the XXI Century, countries all over the world develop dynamically

within the context of global rapid, profound and complicated changes, in which there

has been emerged many important opportunities and challenge especially for poor and

least developed countries. Notwithstanding many intricate developments, moving

towards peace, stabilization and cooperation for development is still the dominant

tendency in the world, which affects international relations as well the development

strategy of each country.

Especially in the economic interconnections, the process of globalization and

integration has been the outstanding trend. And in that kind of development tendency,

Vietnam is now actively integrating into world economy, taking advantage of this

opportunity for the development of its own.

Accession into the WTO was our master work in order to implement the nationalpolicy of proactive integration into the international economy. It had been 11 years past

since Vietnam first submitted an application for the WTO membership and Vietnam

was admitted to the WTO on 07 November 2006 and then became a full WTOs

member on 11 January 2007.

The accession into the WTO largely affects Vietnams economy, both in

economy and social aspects. It gives us not only a number of opportunities but also

many challenges. The fact whether we are able to take advantage of those opportunities

and overcome challenges depends only on ourselves.

Many researches and reports published by Vietnams government have pointed

out the impacts of integration on Vietnams socio-economic life, but very few of them

that can bring out the systematic and comprehensive assessments of those impacts on

Vietnam economy upon accession into the WTO.

There are still many difficulties for making researches on social impacts, such

as:

- Social issues are usually very complicated, diversified, intangible and quite

difficult for measurement. Therefore, an in-depth and comprehensive research on the

social impacts of international economic integration needs a considerable investment,which has to be carried out continuously on large scale and long-term basis, taking into

account the experience and advanced skills of other countries in this area.

- Social issues usually associate with economic issues and at the same time are

deeply affected by historical, political, cultural, religious and other factors. These

impacts are often broad, deep, multidirectional and long-term; the solutions for social

issues must be comprehensive, adherent to economic, political and cultural issues in one


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hand and flexible and suitable to concrete conditions of a diversified developing society

in the other hand.

Within the constrains of time and human resources, this study is trying to

identify to some extend the social impacts of Vietnams accession into the WTO.

I. VIETNAMS INTERNATIONAL ECONOMIC INTEGRATION

A. Economic integration, besides the WTO

The process of Vietnams international economic cooperation has been

promoted since 1986 when it implemented the Renovation Policy, the policy of

multilateralization and diversification of economic relations, expansion of the economic

relations with all nations and multilateral economic institutions.

1 . Bilateral Cooperation Agreements

1.1 ImplementationUntil the late years of XX century, Vietnam had trade relationships with 70

countries/economies, signed more than 60 bilateral economic and trade agreements and

established investment ties with about 70 countries/economies.

Among the above-mentioned agreements, the most important are those that

Vietnam had signed with China (Trade Agreement signed in 1991, Economic

cooperation agreement signed in 1992, Investment Promotion and Protection Agreement

signed in 1992, Fishery Agreement for Tonkin Gulf), with Japan (Agreement for

Liberalization, Promotion and Protection of Investment signed in 1993, the 2003s

Vietnam-Japan Joint Initiative), with the US (Vietnam-US Trade Agreement signed in

2000, which covers trade in goods, intelectual property rights, trade in services and

investment), with the Russian Federation (Statement on Strategic Partnership between

Vietnam and the Russian Federation signed on March 01, 2001) and with the EU

(Framework Cooperation Agreement for Development of Trade and Investment signed

in 1995).

The cooperation with China, Japan, the US, Russia and EU, which are

considered as Vietnams major partners during the recent years, has made an important

contribution to the results of our activities in the foreign economic relations as well aspromotes our process of industrialization, mordenization and therefore improves

Vienams positon and strength in the international arena.

In 2005 the ratio of Vietnams exports to 4 bigest markets accounts for more

than a half of the exports (of which, the EU and US each account for 18.4%, Japan-

13.7%, China-9.2%) and increases at the rate 18% higher than the overall export rate.

Above all, it is worth mentioning the remarkable extension of the US market share as

result of the positive impacts of Vietnam-US Trade Agreement. The average increase


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rate of Vietnams exports into the US market during 2001-2005 reached a record high of

51.9% 1. In 2006 the imports from Vietnam into the US account for USD8.566 billions

(in 2005 - more USD 6.631 billions). According to the US Statistical Agencies, US

exports to Vietnam account for more than USD 1.1 billions in 2006 compared to USD

1.193 billions in 2005.

The above 5 big partners are also the bigest investors of Vietnam. Theirinvestment prevails over that of other partners in capital, technology and distribution

network all over the world. They are also the investors who transfer the most advanced

technology and management into Vietnam and make up the high ratio in exports of

main industrial goods such as garments, footwears, electronic appliances, computers,

electric wires and cables. Particularly, the Vietnam-Russian Oil and Gas Joint Venture

largely contributes to the development of oil and gas industry with export ratio of crude

oil accounts for more than one-fifth of total exports and about one-third of goverment

revenue. Japan is the largest ODAs supplier of Vietnam compared to other donors both

bilateral and multilateral.1.2. Towards future cooperation:

To adapt to the trend of increasing the bilateral free trade agreement (FTAs- it

was estimated that by the end of 2005, if FTAs reportedly planned or already under

negotiation are concluded, the total number of FTAs in force might well approach 300),

Vietnam is now negotiating FTAs with many countries, firstly with the main partners.

In whole, FTAs increase in number, aiming at further liberalization and addressing

those constrains that can not be resolved by mutilateral commitments.

At present, Vietnam and China continue their economic coperation in the spiritof mutual supplement, mutual benifit and win-win cooperation, expanding the scale,

improving quality and economic cooperation skills. Constructrion of the infrastracture,

manufacturing industry, development of human resoures, effective exploitation of

energy, mineral procession (including DacNongs boxit ore) are the areas of long-term

cooperation. Other fields of coopration are also the exceleration of the construction of

Two Corridors, One Economic Belt , improvement of cooperation within

international, intraregional and regional institutions, promotion of comprehesive

cooperation between Vietnam and China.

Japan is a trustable partner of Vietnam. Up to now, Japan becames the biggestODA supplier to Vietnam. At the same time, Japan is also one of the biggest investor as

well as among the 3 biggest export markets for Vietnam. The attraction of Japan

investment is quite effective. Japanese investors have the capital potential, advaced

technology and markets. Moreover, Vietnam and Japan have the similar culutures and

1 Statistics Department, General Socio-Economic Situtation and Dynamic in 2001 - 2005,Statistics Publisher, pp 109-110.


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Japanese investors always respect the tradition, customs, psychology of Vietnamese

people, respect Vietnamese workers. In the near future, Japan plans to focus it

cooperation with Vietnam in builiding and development of economic infrastracture,

construction of North-South highway and North-South high-speed railways,

development of Hoa Lac Hi-tech Park. In January 2007, Vietnam began talks on

concluding an economic partnership agreement with Japan.

In the end of 2006 the US Senate passed the Bill on Permanant Normal Trade

Relations (PNTR) for Vietnam and allowed Vietnam out the List of Countries of

Special Concern over Religiuos Freedom. Since the beginning of 2007, the accession of

Vietnam into the WTO has broungt the diplomatic and economic relationship between

Vietnam and the US into a new stage. Besides, the requirements of quota and electric

visa system relating garment export into the US have also been removed for Vietnam

since 11 January 2007. The economic cooperation between Vietnam and the US has

been promoted by both countries in lines with bilateral agreements that are already

signed or planned to be signed in the future on the principles of mutual respect for eachothers independence, sovereignty and territorial integrity; non-interference in each

others internal affairs; equality and mutual benefit; peaceful resolvement of disputes

and grievences; strivence for peace, independence and development to achieve benefits

for both countries.

The comprehensive cooperation between Vietnam and Russia has maximized

the strength and potential of each country in the priciples of equality and mutual benefit,

continuing improvement in quality and effectivness of cooperation to achieve the name

of the benefits of both peoples. Vietnam and Russia will prioritze the promotion of

bilateral coopearation in fuel-energy, including joint exploration and exploitation of oiland gas in Vietnam.

Up to now, EU has been expanded to 27 members. The population of EU is now

more than 500 million people. And at present, the annual import demand of EU is more

than USD10 thousand billion, which makes EU not only a big, diversified but also

traditional market for Vietnam. The investors from EU have their advantage of source

technology, advanced technology, respect for law and need to broaden their investment

to Asia, in which Vietnam is the area of their special interest. Concurrently, Vietnam

and the EU have no historical conflicts. Therefore, we can enhance the quality in

Vietnam-EU cooperation.

2.Most important multerlaterla commitments

Vietnam joint the Asociation of South-East Asian Nations (ASEAN) in 1995; in

1996, along with other ASEANs member, Vietnam became one of the founder

members of Asia and Europe Meeting (ASEM); in 1998 - a member of Asia-Pacific

Economic Cooperation (APEC).


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Vietnam joint immediately after the accession into ASEAN. In the implementation of

CEPT, since 1986, Vietnam has been publishing its anual tariff reduction. From the

beginning, Vietnam had 1661 groups of goods under the Inclusion List (IL) accounting

for 51,6% and 1317 groups of goods under the Temprary Exclusion List (TEL)

accounting for 40,9% of the total goods items in Import Tariff Nomenclature applied at

that time. In 2001, 712 items were transfered from TEL into IL and tariff reduction this

time was below 20%. Tariff lines that were higher than 20% were cut down in 2001. In

2003 Vietnam continued to transfer more than 700 tariff lines from TEL into IL and

tariff rates were to be cut down to below 20%. It is the beginning of 2006 that Vietnam

fully implemented its commitment under CEPT/AFTA and more than five thousand

tariff lines were cut down to 0-5%.

Other ASEANs countries are also implementing their tariff redution. Thus,

ASEAN-6 (5 ASEAN founder members - Indonesia, Malaysia, Philipin, Thailand,

Singapore) and Brunei committed the tariff reduction for 99,55% items in the IL down

to 0-5% at 1 January 2003. And the average tariff rate of these 6 countries had reducedfrom 12,7% since they began to implement AFTA in 1996, to 2,39% in 2003, including

48% items in the IL with 0% tariff rate. The tariff reduction schedule of all goods under

IL, which need to be brought down to 0-5%, will be implemented by Myanmar and

Laos at a later date (in 2008) and by Campodia in 2010. 6 ASEAN member countries

committed also to eliminate 100% import tariffs by 2010, and 4 other members

(Vietnam, Laos, Myanmar, Campodia) by 2015.

Investment: the Framework Agreement on the ASEAN Investment Area has

signed to attract investor from ASEAN member countries and from other countries into

the ASEAN. On the basis of this Agreement, ASEAN countries have applied manymeasures in removing trade barries, shortening pre-market openning priod for some

industrial and services sectors, applying national treatment (NT). In general, the

investment environment has been improved.

Due to some constrains in historical relations, the differences in political regimes

as well as in religuos, culture and the gaps in Vietnams level of development in

comparision with the ASEAN-6, the Vietnam process of integration is not always

carried out smoothly; still, it also has to undergo many difficulties and obstacles.

In the long term, Vietnam needs a strong ASEAN, with a strong position in the

international arena. Thus, Vietnam will have to make more active contribution towards

building ASEAN into a more prosperous regional economic community.

2.2. Asia-Pacific Economic Cooperation(APEC)

APEC 3 is a multilateral forum/institution of 21 economies from Asia and Pacific

regions and Vietnam became an APEC member in 1998. APECs operations are based

3 Website http://www.apec.org


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on the principles of cooperation, economic fora and multilateral trade. APEC is the only

intergovernment institution in the world that committed to reduce trade barriers and

attract investment without any legally binding requirements for members. The Fora are

carried out in form of dialogues and the views of all participating members are equally

observed. Decisions are made in the consensus principle with a view to reaching the

goal of investment and trade liberalization.

The 3 main pilars of APEC activities are: Trade and investment liberalization;

trade facilitation; and economic and technical cooperation in order to implement the

Goals set in Bogor, Indonesia in 1994, which are trade and investment liberalization and

market opening by 2010 for developed members and by 2020 for developing members,

aiming at a free trade area in the region.

It is a common practice in APEC that 21 member economies take turns in

hosting the annual APEC's Summits and this hosting country will also be the APEC's

Chair. Until now, APEC has convened 14 Summit meetings in 14 countries.

In the 14th APEC Summit held in Hanoi from 18 - 19 November 2007, on the

theme Towards a dynamic community for sustainable development and prosperity,

the Leaders from 21 member economies committed to continue the promotion of trade

liberalization put forth in Hanoi Declaration. In the meeting, the main issues in the

Hanoi Declaration were also endorsed by the APECs Leaders, which can be read as:

Firstly, determined to reopen the Doha round of negotiations with the view to

continuing the global multilateral trading liberalization that is stuck in the current

deadlocks. The success of Doha negotiation round will contribute to the global

economic development and proverty reduction.Secondly, endorsed the Hanoi Action Plan to implement the Busan Roadmap

towards the Bogor Goals on trade, investment liberalization and market access. This is

also the basis for trade and economic cooperation within APEC until 2020 and will

contribute to the improvement of the cooperation mechanism in APEC.

Thirdly, endorsed the recommendations on APEC reforms, including concrete

measures with a view to make APEC more vivid, dynamic, and effective.

Forthly, prevention of disease, disaster, energy sercurity, corruption prevention

of and counter-corruption, cutting down the risks affecting peoples lives.

Fifthly, endorsed the Statement of Joint Ministerial Meeting and statement of

other sectoral ministerial meeting held in Vietnam in 2006, including Statements of

Meeting of Ministers Responsible for Trade, Meeting of Ministers Responsible for

Avian and Pandemic Influenza, Finance Ministers Meeting, Small and Medium

Enterprises Ministers Meeting, Tourism Ministers Meeting.


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APEC has contributed to the relatively high development of its member

economies and made this region the most dymamic economic are in the world. The

economic development made positive impacts on the social progress in the region.

During the last century, the index of human resources development in APECs low

income countries had increased by 18%. The number of poor people in East Asia had

reduced by 1/3 (165 million people). New jobs were created for 195 million peoople,

including 74 million people with low income. The downward trend of infant mortality

rates and upward trend of longevity showed the improvement in sanitary conditions,

clean water supply and the expansion of public service supply. Consumers of member

countries enjoyed benefits from APECs activities. And the position of Vietnam in the

international arena has been improved.

2.3. Asian Europe Meeting (ASEM)

ASEM is the cooperation forum between partneres from Asian and Europian

continents. In November 1994, both France and Singapore required the convention of

Asia and EU Summit in view to enhancing relations of partners between these tworegions. On the basis of this initiative, ASEM first had its summit in Bangkok in 1996.

Since then, Summits have been held in every two years (in London, England in April

1998; Seoul, Korea in October 2000; Copenhagen, Denmark in September 2002; Hanoi,

Vietnam in October 2004 and Hensinki, Finland in September 2006).

At present, ASEM has 27 member countries from EU and 13 from Asia

(Brunei, Myanmar, China, Campodia, Indonesia, Japan, Korea, Malaysia, Laos,

Philippines, Singapore, Thailand and Vietnam).

ASEM take its interest in the discussions on issues of mutual concerns of tworegions. Besides, it also carries out talks on international issues, such as the reformation

of the United Nations, elimination of weapons of mass destruction, terrorism,

immigraion and WTO opperational issues.

It was a great honour for Vietnam to host the 5th ASEM Summit in Hanoi, from

7 - 9 October 2004. In this Summit, the Heads of State/Government of ASEM countries

took into their consideration the international issues, global challages and development

situation in Asia and Europe, emphasising the promotion of multilateral economic

cooperation commitments.

In this very Summit, with the diplomatic exertion of hosting country, ASEM

reached consesus on the issue of Myanmar participation in ASEM. This victory had

very much enhanced Vietnams position as well as position of ASEAN in ASEM. On

the accasion of this Meeting, the Vietnam-EU bilateral agreement on Vietnam accession

into WTO was also signed. Thus, the activities of ASEM have contributed to the

development of trade relationship between Vietnam and EU (from 2001- 2004 the


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Markets of goods, services, labour, science and technology, real estate have

developed in conformity with the conversion of mechanism. Capital markets,

particularly robustly developing stock market, are in the early stage of creating a new

channel to attract capital, to encourage the formulation of capital and the distribution of

capital for the economy in long term.

By implementing independent, self-controlled foreign policies in order todiversify international relations, actively integrate into international economy, Vietnam

has expanded foreign economic relations, has overcame difficulties in terms of markets

caused by instabilities in former Soviet Union and East Europe, has established

favourable international environment for the countrys development and defense

mission, has enhanced the countrys position on political arena and world market, has

limited negative impacts of regional financial and economic crisis in the end of 1990s.

All types of Vietnamese enterprises are important components of the economy,

willing to prosper together in long term, cooperate and compete healthily with each

other. State enterprises are being rearranged, modernized in the way of diversifying theownership essentially through privatization, at the same time reorganize state

enterprises in which 100% of capital belongs to the State in order to improve the

effectiveness and retain the role of fundamental material forces so that the State could

regulate the macro economy and implement social policies. With policies that granted

people the freedom of doing business in such areas where there is no legal prohibition

the private economic sector has made significant development steps, so far contributing

about 40% of GDP, attracting approximately 90% of labour in the society. Policies on

attracting foreign investment are becoming more and more open, consistent with

multilateral and bilateral integration commitments. Enterprises with foreign investmentcapital have contributed significantly to the economic growth, export, technology

transfer and modern management knowledge.

Thanks to the important role of international economic integration the economy

has overcame the recession period and developed in almost all aspects. GDP growth rate

was relatively high, with the growth rate in the following year higher than that of the

previous one, average rate within 5 years (2001 2005) was 7.51% 4. Social progress

will be presented in details in the next part.

B. WTO accession From the 11th of January 2007 Vietnam was officially implementing the

obligations and enjoying the interests as a WTO member. This event was one of the

important achievements in the implementation of active international economic

integration policies of Vietnam during its 20 years of innovation ( i m i).

4 The Communist Party of Vietnam , The Document of the 10 th National Members Congress,The National Political Publishers, Hanoi 2006, p. 56


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Economic globalization has wider coverage than WTO in terms of space (at the

present WTO has only 150 member countries among more than 200 countries and

territories in the world), in terms of areas of operation (at the present although WTO is

much more open than its forerunner which was GATT its areas of operation are just

trade in goods and services, trade related investment measures, trade related intellectual

property), and in terms of causes. However, international economic integration

commitments in general and WTO commitments in particular are of the same direction,

of the same type, of the same form.

1. Common commitments

As a WTO member, Vietnam committed to observe all agreements and

regulations of this organization with main principles such as: trade liberalization

through tariff reduction and limitation, elimination of trade barriers, opening the

domestic market for goods, services and investment; non-discrimination between

members (MFN principle); non-discrimination between domestic goods, services and

businesses and other members goods, services and businesses (NT principle); publicityand transparency in policies; dispute settlement through WTO dispute settlement body.

Because Vietnam is a low-level developing country in the process of

transformation to market economy, the country has achieved some results in

negotiations in order to have several years of transformation in implementing certain

commitments related to excise taxes, agricultural and non-agricultural subsidies, rights

of doing business However, Vietnam has also to accept the non-market economy

regime within 12 years. Certain important commitments are described in details as

follow:

Regarding import tax: Vietnam will cut taxes from present average level of

17.4% to 13.4% through step by step implementation of the 7-year roadmap from the

date of accession, including: reducing the average level of import tax of agricultural

products from 23.5% presently to 20.9% during the period of 5 years, reducing the

average level of import tax of industrial products from 16.8% presently to 12.6% during

the period of 7 years.

Regarding the opening of market of services: Vietnam has committed to open 11

sectors and about 110 subsectors. With regard to telecommunication, banking and

securities services, after accession Vietnam committed to make certain concessions butin general these concessions are not as high as compared to the present status and

relevant with the approved development orientation of these industries.

Common commitments with regard to services: First of all, foreign companies

are not allowed to present in Vietnam in forms of branches, unless allowed by Vietnam

in each particular area (such areas are not few). Besides, foreign companies are allowed

to bring foreign managers to work in Vietnam but at least 20% of managers of the


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company must be Vietnamese. Foreign organizations and individuals are allowed to buy

shares of Vietnamese enterprises with limitations appropriate with the openness of such

industry. With regard to banking industry, foreign parties are allowed to buy maximum

30% of total shares.

2. Opportunities and challenges

WTO membership brings such big opportunities to Vietnam as:

- Vietnam has more favourable conditions to expand markets for export and

markets for supplying services both domestically and offshore; new perspectives and

driving forces are created to attract investment for development, including domestic and

foreign investment such as FDI or Portfolio. Opportunities for Vietnamese businesses to

invest offshore are created.

- Domestic consumers will have more choice in goods and services with high

quality, competitive prices and having various forms and types to better meet the

demand, help to improve the qualify of life both materially and spiritually. Enterprisescan access to input raw materials, more convenient and higher quality supporting

services, help to increase the effectiveness in production and business.

- To promoting the comprehensive and synchronically modernization, especially

to continue to build and improve market economy mechanism with socialist orientation.

- To acquire from the world not only the benefits of robust, large-scale economic

growth but mainly the benefits of resources, knowledge, experience of high quality and

sustainable development.

- Vietnam has gained a new position, equal with other members, allowing thecountry to participate in global trade policies making process, to be equal in dispute

settlements; to participate in establishing and developing regional and bilateral

cooperation mechanisms.

The cooperation in such fields as human resources development, science and

technology, cultural exchange are being expanded, help to implement sustainable

development.

Challenges the economy will face while implementing WTOs commitments:

- Vietnam will be under pressures of tough competition at 3 levels: product,enterprise and the entire country. Low competitive products and services will lose their

market shares. Low competitive enterprises will have to reduce their production and

business activities or beer the risks of bankruptcy, leading to the unemployment of

workers. Policies, laws and macroeconomic administration if are not to be improved in

correspondent with the roadmap of commitments will cause difficulties and create

barriers to production and business activities.


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- Because of unequal impacts from outside to the country, there will be part of

population who could enjoy less benefit, leading to the widening gap in the society,

creating social instabilities.

- The changes on international market will have stronger and quicker impacts on

domestic market; if there are no appropriate macroeconomic policies, there is shortage

of forecasting and analyzing capacities, capacities to control and solve problems theinstabilities of the market or even financial, economic crisis will occur.

- Dumping lawsuits will increase, especially under the circumstance that

although being WTO member, the country still beer the status of non-market

economy during the period of 12 years from the date of accession.

- There could be difficulties in ensuring the national security and defense,

building independent, self-control economy, preserving and upholding national cultural

character, protecting and improving ecological environment for sustainable

development.

3. Big challenges to certain industries

3.1. Agricultural production

Pressures from competition for agricultural production are very high because

Vietnamese agricultural production is a small-scale, scattered, low productivity and

quality industry with the lowest in the world average agricultural land per agricultural

worker, with the average agricultural production value per one hectare of cultivation of

30 millions dong. This industry will suffer strong social and employment impacts.

Cotton industry: Cotton cultivation area of Vietnam in recent years is quitesmall, about 25 35 thousands hectares. The average cotton production is just about 1

ton per hectare. Meanwhile, the average cotton production in several countries with

large cotton cultivation area such as US, Mexico is more than 3 tons per hectare; the

cultivation area in Israel is 1,6 ton per hectare. Therefore, cotton industry will

immediately face difficulties in competition with import cotton products as soon as

Vietnam reduce import tax for cotton products to 0% after its accession.

Sugarcane industry: Although this industry was under protection in the long

time, it still has not any chance. Among 44 sugarcane factories across the country only

37 are operating in the period from 2005 to 2006. Total debts are above 5 thousandbillions dong, among them foreign debts are more than 1 thousand billion dong.

Together the implementation of tariff reduction and cut within CEPT/AFTA framework,

the present WTOs commitments are very big challenge for ineffective sugarcane

industry.

Cattle breeding industry: Small-scale, scattered, at-home breeding habits are

still popular. Foods for cattle are of low quality, the percentage of using new stocks and


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certified stocks is still low, butcher and meat processing technology is still undeveloped.

Therefore, the cost price of breeding products is high, their quality is low and it is

difficult to compete with import products. Meanwhile, such breeding products as beef,

pork, butter, milk have high level of tax reduction and cut after WTOs accession (for

beef from 20% to 14%; for pork from 30% to 25% or 15% depending on each type; for

milk from 30% to 25% or 20% depending on each type). Thus, the impacts of WTOs

commitments on cattle breeding industry are relatively deep and wide.

Fruits and vegetables industry: The quality of Vietnamese fruits and vegetables

is not high. Many types of fruits and vegetables are just suitable for domestic market,

not for export. The conservation, packaging and processing after the harvest are still

weak. Above mentioned limitations caused Vietnamese fruits and vegetables fell into

tough competition right on domestic market when tax rates of various types of fruits and

vegetables have to be reduced drastically, with almost all reduction of more than 50% as

compared to tax rates before WTOs accession.

3.2. Indutrial production

Automobile industry: Although being protected by imposing high tax rates on

import cars, automobile production of enterprises is just at the phases of painting,

welding, producing certain simple spare parts and components, other parts such as the

engine, the cover all must be imported. Moreover, almost all automobile production

enterprises have small scale, low productivity. According to WTOs commitments, the

regulations on the percentage of localization, on the obligation of foreign enterprises to

establish joint-venture with domestic enterprises are abandoned. In addition, foreign

investors can invest into such areas as sales, distribution and marketing services,

including automobile insurance and loan for purchase. Therefore, it is possible that a

number of automobile production enterprises will go bankrupt.

Steel production industry: Steel industry has a small scale production, low

quality technology, mostly focusing on the import of steel billets in order to roll steel,

just only a few of them invested into the source input of production to melt and roll steel

products. Steel products are of the same types, focusing primarily on construction steel,

cannot meet the demand on steel plates, coils, strips. Above difficulties plus high input

expenses cause Vietnamese steel to have high price and low quality. When import tax

on steel will be reduced to 0 5% to implement WTOs commitments, domestic steel

industry will face big difficulties.

Paper production industry: Almost all domestic paper production facilities are

of small scale, have no separate raw material area, are dependent on the import of pulp

(the production capacity of pulp in Vietnam can meet only 37% of total pulp domestic

demand), focusing mainly on non-coated paper. With such realities of paper production,

the paper production industry will suffer greatly when Vietnam is implementing WTOs

commitments to open domestic paper market.


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certain province or city, when the company want to open the second supermarket,

Vietnam has the right to decline the request) the participation of foreign enterprises will

create great pressures of competition for domestic retailers, first of all, to more than 1

million household individual businesses and small and medium enterprises. Together

with agricultural production, the social and employment aspects of this industry will be

most severely affected.

Seaport and sea transportation services: At the present Vietnam does not have

any entrept port and modern, large scale deep-water seaport with the capacity to

receive ships with the tonnage of more than 50.000 DWT, in shortage of container

ports, specialized ports with modern infrastructure and loading unloading technology.

Vietnamese fleet is small in scale, has high average life span, in shortage of many

container ships and specialized ships. Seatransporation freights and maritime fees are

high. The management is weak. This reality places enterprises supplying seaport and

seatranportation services under big challenges when Vietnam is implementing

commitments to allow fleet exploitation companies with Vietnamese nationality toestablish join-venture with up to 49% foreign capital and allow international

seatransportation supporting services companies to form join-venture with up to 51%

foreign capital.

3.4 Agricultural and trade services employment faces challenges

According to 2006 Annual Statistics, the number of labours working atthe time of the 1 st July by national economic industries:

Year 2000 2005

Unit Million labour % Million labour %

Total 37,609 100 42,527 100

Agriculture 23,492 62,5 22,860 53,8

Industry 3,889 10,3 5,741 13,5

Trade 3,897 10,4 4,933 11,6

The number of labours in three above areas accounts for approximately

80% of the total labour. Labour number in remaining industries of fishery,construction and other services including health and education ones accounstfor 4,2%. These areas are influenced little by implementation of WTOcommittments. In industry, areas which face strongest impacts by post-WTOtrade liberalization such as car, steel, paper, phamarceutical productionaccounts for less than 10% of total labour of this industry.

Agricultural and trade employment (mostly small trader) which accountsfor 2/3 of total labour will be vulnerable people and in danger of employment


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loss when Viet Nam implements tariff reduction and elimination, removes tradebarriers and opens market under WTO acession commitments because ofsmall-scale prodution and business, backward technology, low competitiveness.

4. WTOs next development steps

From 1998, WTO has started a new round of negotiations, initially planned to be

finished within 3 years, in order to complete the trade, investment and services

liberalization, to protect intellectual property, to solve all major problems, including the

emerging problem regarding agriculture. The round of negotiations in Doha, Qatar

concentrated on the goal of reducing trade barriers all over the world with the focus on

the implementation of fair trade with developing countries and disagreements among

developed countries. So far the negotiations still fall into a deadlock originated mainly

from the disagreements between rich developed countries and poor developing

countries. Agricultural subsidies are the hottest subject in the process of negotiation. In

one hand, industrialized countries in the WTO required to push forward the trade

liberalization subject in the framework of WTOs agreements, on the other hand, they

are strengthening protection policies through the sophisticated technical barriers,

causing a lot of difficulties to export goods from developing countries.

In APEC Summit held in Hanoi at the end of 2006 APEC Leaders expressed

their determination to restart Doha negotiation round to continue to liberalize global

trade.

In the WTO there is only one agreement on trade related investment measures

(TRIM), but there is no common agreement on foreign investment. Several countries aretrying to negotiate and sign a multilateral agreement on foreign investment (MIA), but

there are many disagreements, therefore, it is cannot be concluded, even in the near

future.

WTOs agreement on trade related aspects of intellectual property rights

(TRIPS) play an important role because it covers concerned by all developed countries

issues. Members who are developing countries, WTOs founders enjoyed a transitional

period in implementing TRIPS (developed countries have 1 year of transition,

developing ones have 5 years of transition and the least developing countries have 6

years of transition, counting from 1995). Developing countries which joined WTO after1995, in general, must immediately implement the agreement, there is no transitional

period. However, in principle, the transitional period could still be negotiated during

accession. Some developing countries stated that TRIPS is an unfair agreement, only

protecting the interests of developed countries, of those who possessed property rights,

and has little concerns over developing countries, where there are majority of poor,

vulnerable people, who have no conditions to access to scientific and technological


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- Bringing benefits for rich countries, the rich people, no benefits or even harms to poorcountries, the poor people, expanding the gap between the poor and the rich in each

country and on all over the world; increasing the miseries of more than 4 billions of

people, more than 2/3 of world population.

- Creating gaps in terms of income, opportunities, contributions and life

enjoyment among various classes of people, various countries, various regions, leadingto great, heavy and pressing social inequality; making all forms of peoples activities

and life less secured, from the security of each person, each family to the security of the

country and security of the global economic, financial and monetary system. In such

unstable situation of great instabilities and risks, unexpected crisis could occur, causing

severe chain reactions of harmful effects.

- Reducing partly the power, the coverage and effectiveness of operation of

States nations, shaking violently the utmost important fundament in the life of nations,

posing a very sensitive issue and creating fierce resistance. In the case of wrong national

policies the harmful impacts of disputes and conflicts of power are more severe.

- Negative impacts on culture and environment.

1.3. Some experience for Vietnam

- Developing countries at the beginning period of globalization and international

economic integration will gather positive results in economic development, at the same

time the gap between the poor and the rich between rural and urban areas, between

various classes of population will be widening and it is unavoidable that the part of the

population will get rich first, but it is necessary for the development and can be kept at

the appropriate level.

- The State plays an important role in promoting economic development,

implementing social justice and progress, directly and deeply affecting the social justice

and progress in order to reduce the inequality during the process of development.

- The formation of concrete, clear legal system with regard to the prevention and

control of corruption, the serious organization of implementation, the formation of self-

consciousness and respect for laws and the creation of favourable conditions for the

active participation of the population into corruption prevention and control cause willhelp considerably to implement social justice even in case of low income of the country

and its citizens.

- It is necessary to broaden participation of all citizens in social matters in orderto promote civil social role and solve compicated social isues.

- Improving intellectual standards of the people. High intellectual standardshelps to minimize social negative impacts.


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- A work-out legal system, compatibleness between domestic regulations andWTO and economic integration principles, strictly legal implementation, legalconsciousness will help to form social equality even in context of low-income peopleand country.

- For developing countries with high percentage of agricultural workers if there

is no significant conversion of agricultural workers to industrial and services areas it

will be difficult to achieve high, sustainable growth rate and to reduce gaps in social

justice and progress as compared to developed countries.

2. Impacts on Vietnam

2.1. Positive social impacts

- Helped to improve living standards for the majority of the population

Due to fairly good growth rate of the economy and the adjustments of minimum

salary (from 180 thousands dong at the end of 2000 to 350 thousands dong in 2005 and

450 thousands dong in October 2006 and will be further increased in 2007) as well asthe implementation of programs for agriculture and rural areas development, for job

creation, for hungry elimination and poverty reduction, living standards of the

population both in urban and rural areas were basically improved.

The results of the survey of living standards in recent years by General Statistics

Office of Vietnam indicated that the average monthly income per capita in real prices in

2003 2004 has increased 64% as compared to the income in 1999. Living standards of

households in 2003 2004 in comparison with these standards in 1999: living standards

of 84% of households were improved, living standards of 11,2% retained the same level

and living standards of only 4,8% were declined 5.

- Achieved good results in job creation, hungry elimination and poverty

reduction, education and health development

From 2000 untill 2005, 7,5 millions of workers were employed. Hungry

elimination and poverty reduction task were accelerated and achieved satisfactory

results. According to old national standards, the poverty rate decreased from 30% in

1992 to below 7% in 2005. And according to the international standards (the applied

standard is 1 USD/day/person) the overall poverty rate decreased from 58% in 1993 to

28,9% in 2002. From 2002 onwards, Vietnam was assessed by the United Nations aswill completed the task earlier than the global scheme; will decrease the poverty rate

by half in 2015 6

5 General Statistics Office of Vietnam, Socio economic Dynamics and Realtities 2001 - 2005, StatisticalPublishing House, Hanoi 2006, p. 18,21.6 The UN representative office in Vietnam: Bringing the Millennium Development Goals closer to thePeople, Hanoi, 2002, p. 1.


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Education development reached new scale, various forms of schools and classes

were diversified: from pre-school, primary education levels to higher, undergraduate

levels. In 2005 the country completed the generalization of primary education, there

were 24 provinces that reached the standard of generalization of primary education at

the right age and there were 26 provinces that reached the standard of generalization of

secondary school. In 2004 2005 there were 230 universities and colleges, 285

professional schools, 236 vocational training schools and 1500 vocational training

facilities across the country. The number of vocational training schools increased up to

70% with the increased training scale as compared to that scale in 2000. In Global

Monitoring Report 2005, in which United Nations Educational, Scientific and Cultural

Organization (UNESCO) is assessing the progress of implementing education for

everyone until 2015 goal proposed by United Nations, Vietnams world education

indicator was ranked 64-th place among 127 listed countries, above several countries in

the region like Indonesia, the Phillipines, India. However, there are still big and serious

problems in the quality of education at all levels and forms that need to be solved right

now.

Public healthcare achieved significant progress. Health and public healthcare

service network were expanding. In 2004 97% of communes across the country had

medical station. The number of physicians in public medical examination and treatment

facilities increased 27,8% as compared to that number in 2000. The malnutrition rate of

children under 5 years old decreased from 33,1% in 2000 to 26,6% in 2004 and 25,2%

in 2005. In 2003 Vietnam was recognized by World Health Organization (WHO) the

first country successfully controlled the severe acute respiratory syndrome (SARS). In

recent years Vietnam has also successfully controlled avian influenza H5N1. The publichealthcare was improved which lead to the increase in life expectancy of the population

from 67,8 years in 2000 to 71,5 years in 2005. Similar to education, the quality of

public healthcare really needs to be improved through great and right-direction efforts.

- Helped to improve social progress and justice and quality of life

With such results as: the average GDP per capita was about 640 USD in 2005;

life expectancy increased from 67,8 years in 2000 to 71,5 years in 2005; the level of

knowledge, counting based on the number of classes a person had completed increased

from 3 4 classes (before 1990) to 7 8 classes in 2005, United Nations Development

Programme (UNDP) ranked Vietnams Human Development Index (HDI an index

comprised of 3 elements: GDP per capita in equivalent to Purchasing Power Parity

(PPP), life expectancy and education level) 108-th place among 177 listed countries in

2005. Vietnam was the country with HDI 16 ranks higher than GDP per capita. In 2005,

there were 100 countries (among 177 listed countries) with HDI higher than GDP per

capita in equivalent to PPP. Vietnam was among these countries. The average level was


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HDI 16 ranks higher than GDP per capita in equivalent to PPP. The high level was HDI

35 or 40 ranks higher than GDP per capita in equivalent to PPP.

- Created many opportunities for promotions, for career establishment and for

success of all social classes, especially the youth

The deeper and wider integration into the regional and international economy

helped Vietnam to establish more and more relevant with international standardsinvestment and business environment. The result was that from the beginning of the

1990s to 2006 more than 200.000 private enterprises and more than 5000 enterprises

with foreign investment were established and went into operation. The biggest and most

important contribution of the private economic sector and the economic sector with

foreign investment was to create jobs and help to shift social labour structure, to

establish high-quality management and technical staff. Ten thousands of young skillful

workers had income levels equivalent to those in a number of other countries in the

region (a monthly income of an engineer was between 201 and 385 USD in Hanoi and

between 249 and 373 USD in Ho Chi Minh City; the similar numbers of an average-level manager was between 451 and 661 USD and between 572 and 1.054 USD

correspondently 7. Several ten thousands of businessmen have been succeeded in their

business, have became rich, have brought wealth to the community and the society.

- New thinkings of social mattersi

Modern social relationships were established step by step, first of all, the

relationship between economic growth and social progress and justice and good

business cultures were absorbed8.

There was a transfer from passive mentality, relying on the State and the

collectives to dynamic, self-motivated and socially-active mentality of all the

population. There was also a transfer from over estimation of the collective benefits in

very abstract way, from implementing average leveled nature distribution policies

disguised in the form of distribution policies based on working results to gradual

implementation of distribution policies mainly based on working results and economic

effectiveness, at the same time based on the level of contributed capital as well as other

sources put into production business activities and through social welfare. Therefore,

social justice was more and more evident.

There was a transfer from misestimating the importance of social policies in

interactive relationship with economic policies to the unification of economic policies

7 Overseas Research Department, Japan External Trade Organization, the 16th Survey of Investment-Related Cost Comparison in Major Cities and Regions in Asia.8 The Communist Party of Vietnam , The summarizing report of some theoretical practicalmatters throughout 20 years of Innovation ( i m i) (1986 - 2006). The National Political Publishers,Hanoi 2005, p. 75.


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and service sectors. At the timebeing, urban population ratio increases from 24,18% to26,88%.

2.2. Negative social impacts

- Increased inequality in income

According to General Statistics Office of Vietnam, the average monthly income

per capita of the group with highest income in 2003 2004 increased 304,4 thousands

dong. With the increase of 34,1 thousands dong per person per month, equal to 11%

increase of the group with highest income, whereas consumption index has increased

significantly in recent years the real income of the group with low income was

improved negligibly. By observing the income disproportion between the group with

highest income and the group with lowest income it can be seen that the gap was

becoming broader and broader, from 7,6 times in 1999 to 8,1 times in 2001 2002 and

8,3 times in 2003 20049

.The average monthly income per capita and the gap between the rich and the poor

Year The average monthly income per capita in real

price (thousand dong)

The difference between

the group with highest

income and the group

with lowest income

(times)

Group with highest

income

Group with lowest

income

1995 519,6 74,3 7,0

1996 574,7 78,6 7,3

1999 741,6 97,0 7,6

2001-2002 872,9 107,7 8,1

2003-2004 1182,3 141,8 8,3

To which extent was the inequality in Vietnam as compared to developed

countries as well as countries in the region? Recent studies showed that the developed

countries achieved more equality than developing ones. Tomy Koh 10, Institute of South

East Asian Studies of Singapore has used Gini index to evaluate the inequality of

countries in the world. In reality there was no such country which could achieve Gini

index of 0 or 100.

9 General Statistics Office of Vietnam, Dynamics ... Quoted material, p. 3110 Tomy Koh, Ambassador - at - Large, Institut of Political Study,Singapore, Paper for The 4 th Asia - Pacific Roundtable MeetingLuncheon Talk on "Asia three biggest Challenges" 7 February 2006,Grand Cothorone Waterfront Hotel, Singapore.


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Gini index of Japan was 24,9, the similar numbers of developed countries were:

Denmark - 24,7, Finland - 26,9, Norway - 25,8, Switherland - 25, US - 40,8 and the

similar numbers of developing countries in the region were: China - 44,7, Malaysia -

49,2, Philipines - 46,1 and Thailand - 43,2.

Based on the results announced by General Statistics Office of Vietnam and the

calculation of conversion method from Gini coefficient to Tomy Kohs Gini indexmentioned before the Gini index of Vietnam in 2003 2004 was 42,3, higher than 39 in

1999 and 42 in 2001 2002. Therefore, the inequality in income of Vietnam had

tendency to increase, was higher than developed countries and was approximately equal

to that of certain countries in the region.

Not only income inequality between the group with highest income and thegroup with lowest income increased but also inequality among different areas andindustries increased, especially between urban and rural, delta and mountainous, remote,minority areas.

Monthly average income per head in urban area is double than in rural area;monthly average income per head of highest income area (Eastern of the South) is 3times higher than this of the lowest income area (Western of the North) in 2003-2004.

- The number of jobless people could increase leading to more serious

unemployment situation and employment shortage

Enterprises, household businesses, especially in such fields as cotton production,

sugar production from sugar-cane, fruits and vegetables, cattle-breeding, distribution,

due to difficulties in doing business, probably cannot withstand the competition, couldsuffer losses or go bankrupt. Therefore, the number of jobless people could increase

leading to more serious though strained at the present unemployment situation and

employment shortage.

The Announcement of the Central Labour and Employment Investigation

Steering Committee in 2005 indicated that there were 44,385 millions of currently

employed workers across the country at the time of the 1st of July, 2005, the

unemployment rate of labour forces in working age in urban areas was 5,3% (0,3%

lower than that of 2004), however, the unemployment rate of youth workers in working

age was still 13,4%. The rate of using working time of employed workers in rural areas

was 80,7%.

The rate of not using working time in rural areas was still at high level, about

20% and it will be difficult to decrease significantly in the coming time because the

application of scientific and technical progress will lead to the gradual decrease in the

average cultivation area per capita (the population will continue to increase, higher than

the replacement growth rate, the agricultural land will continue to be converted into land


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for industrialization and infrastructure development). In general, the number of new

jobs in rural areas will increase negligibly due to the slow implementation of labour

allocations in rural areas. Basically, new-come workers will have to share just only the

number of old though extremely deficient jobs in rural areas.

- The import of harmful, exotic culture

The transnational development bears the risk of negatively affecting thepreservation of the national warm cultural character. The culture of communities of

various nationalities of a country will not stand firm when there will be extremely

vigorous import of culture and will occupy the national culture of this country. With the

boom of IT, the usage of internet, if a country is not conscious: doesnt know how to

select, the Western culture, especially American culture will have potentials to replace

the local culture. The material and cultural products of the United States are now

present everywhere in the world. Not only developing but also developed countries feel

the risk of being assimilated into culture and the consequenses will be the loss of their

own cultural characters which means the falling behind in social progress.

Recently the fight in Vietnam to prevent harmful cultural products, exotic

cultures has not been paid appropriate attention, has many weak points and

insufficiencies. The recession, degradation in morals and lifestyle, the increase of social

evils and crimes are worth to concern, especially among the youth.

- Life of the part of the population becomes more risky, unpredictable, first of

all, life of the poor in deep, remote and mountainous areas.

According to the investigation of poverty by General Statistics Office of

Vietnam 11 , in general, the poverty rate, including foodstuff poverty and non-foodstuffpoverty in 2003 2004 of the entire Vietnam was 19,5%, or out of 5 citizens there was

1 poor. In the North Eastern Coast, North Central Coast and Western Highland areas,

the poverty rate was about 30%, or out of 3 citizens there was 1 poor; in the North

Western Coast areas the poverty rate amounted to 58,6%, or out of 2 citizens there was

1 poor. If counting based on foodstuff indicators of the old poverty standard of monthly

income per capita in urban areas of 163 thousands dong and in rural areas of 124

thousands dong, the poverty rate in 2003 2004 was only 23,2%, or out of 4 households

there was 1 poor in foodstuff.

Therefore, when expanding the standard of poverty the poverty rate of

households had increased drastically, from 6,9% to 23,2%, which was 3,4 times.

Moreover, besides the poor part of the population, there was another part of the

population with income not much higher than the income of the poor households. These

households are vulnerable, easy to fall into the group of poor households if facing

difficulties in production and life. In this sense, the results of hungry elimination and

11 General Statistics Office of Vietnam, Dynamics ... Quoted material, p. 29


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poverty reduction are not really solid, the risks of getting back to the poor level are

relatively high.

Not only in mountainous areas of North Western Coast and Western Highland

where there was high rate of poor households and more difficult life than in other

regions of the country, but also in North Coast lowland, where there was no land and

big population, people are facing continuous and prolonged poverty and will be facing itif there are no more concrete steps in conversion of labour from agricultural field to

industrial and services fields.

National education system in the country still has many weaknesses,

shortcomings and negative urgent phenomena, especially the education system in deep,

remote, mountainous areas, areas of ethnic citizens was not paid appropriate attention,

resulting in the education development in North Western, Western Highland,

particularly South Western Coastal areas not only falling behind further than that of the

other areas but also falling behind the economic development within the areas

themselves.

The innovation in health system is implemented slowly, the quality of health

services cannot meet the increasingly diversified needs of the population; healthcare

conditions for the poor, people in remote, deep areas, areas of ethnic minorities are very

limited. There are more and more dangerous and complicated transnational diseases like

Acquired Immune Deficiency Syndrome HIV/AIDS, Severe Acute Respiratory

Syndrome (SARS), influenza H5N1. The management of private and foreign-invested

medical examination and treatment activities and the practice of medicine and drugs are

lack of effectiveness. The drugs production and supply capacities are still weak; the

management of medicine market has many problems. The environmental sanitary, food

safety are not closely controlled. Violations of professional morals and ethics are

compensated slowly.

Narcotics, prostitution evils are taking place complicatedly. Although the

material life of the population is becoming wealthier, organized crimes and drugs-

related crimes have the tendency to increase, downgrading the society, unsecuring

social safety and order.

Competitiveness in high-skilled labor

Because of low-skilled labour (till 2007, 32% of the total labour are trained andpercentage of labour acquired short-term tranning certificate is 14,4%), many industries,particularly high technology industries and high value added services recruit foreign laboursmeanwhile most of exported labours have low qualifications. If this fact is not quicklyimproved Vietnam will continue to export low-skilled and low income labours and import


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high-skilled and high income labours. This means Vietnam loses in her internal playing-fieldin term of high-skilled labour competitiveness resulting social negativeness 12.

Necessity to comply with international standards

Beside implementation WTO commitments, Vietnam has to comply with technicalbarriers set by developed countries such as sanitary standards, food safety, labour standards...

In context of being a developing country with low income and treated as a non-market economy in 12 years from the date of WTO acession, it is not always easy to

implement those standards. For examples, anti-dumping investigations relating to textile and

garment, shoes, gas lighter products by the US, EU, Cannada; seafood containers being send

back due to not meet requirements of sanitary standards; textiles and garments products do

not accepted by import countries because of violating labour standards. Labours working in

those sectors will lose their jobs, creating social chaos.

- More and more serious environmental pollution

The industrial growth of Vietnam in recent years was about 15%, meanwhile theadded value was only 10%, indicating that the natural resources as well as other

resources are being wasted more than the results themselves.

Forest are continuously being distroyed by severe illegal wood exploitation

because it is impossible to stop the shifting cultivation of wandering hilltribes and

because there are still violations in the field of planning by taking away forest land

illegally for the purpose of agricultural cultivation land. In 2005, although Vietnam had

grew 1 million hectares of concentrated forest, the countrys forest coverage rate was

only 38%, 1% lower than the proposed target.

The official data from United Nations Food and Agriculture Organization

(FAO) showed that the deforestation occurs in tropical regions at the pace of 0,7% per

year, and this pace is increasing every day. Such serious deforestation resulted in

several negative consequenses like the loss of sustainable supply of forest products, the

increase of hydrologic impacts such as flood, the reduction of biodiversity and the

increase net greenhouse waste gases 13.

- Extremely serious land, water and air pollution in industrial zones, urban

areas, craft villages.

At present, dangerous solid waste in industrial zones is estimated at 1,2 milliontons, accounting for more than 1/3 of the total solid waste in 2005. The solid waste that

was transported by specialized units through signing contracts between enterprises is

insignificant, about more than 10%. Dangerous waste is still not processed after

12 Anh Minh, Bi ton ch t lng cho lao ng, Th i bo Kinh t Si Gn, ngy 26 thng 7 n m2007, trang 2213 World Bank , Globalization, growth and poverty, Culture and Information Publisher, Hanoi 2002, p.195.


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transporting out of industrial zones. Until June 2006, there were 33 out of 135 industrial

zones in Vietnam which have built and brought into operation water waste processing

systems, water waste in the other IZs were either not being processed or being

processed with low quality. Air and dust filtering systems and noise reduction systems

of factories in IZs are of very basic and formal nature. Harmful air waste is being

discharged directly into the environment, severely affecting the health of the

surrounding population 14.

At the present, there are 2017 craft villages across the country, including 300

traditional craft villages with centuries of history 15. The production and business

activities of craft villages have contributed to the socio economic development, rapid

export expansion, especially such products as handicrafts, fine arts and woodwork, have

created jobs for ten millions of people. At the same time, these craft villages are severly

polluting the environment, badly affecting the heath of the population, somewhere,

sometimes bringing economic benefits at the same time harming the health of the

population.The percentage of contraction of many dangerous diseases such as lung cancer,

skin diseases in craft villages is higher than in villages without craft industry (steel craft

village in Da Hoi, Bac Ninh province; paper craft village in Phong Khe, Bac Ninh

province; textile craft village in La Phu, Ha Tay province; tanning craft village in Lieu

Xa, Hung Yen province ...).

III. CERTAIN POLICIES AND SOLUTIONS

The accession into WTO brings big opportunities as well as presents severe

challenges. Overcoming challenges will reduce losses, create more driving forces fordevelopment. The matter of whether Vietnam can benefit from the opportunities and

overcome challenges after WTOs accession all depends on the country as a whole, on

its business communities and people.

Below are several solutions, essentially concentrating on social matters. In

necessary cases common and economic solutions could be mentioned.

1. The determination of the entire nation, the State, business circles and each

citizen

International economic integration has impacts on the country, business circles

and each citizen. Therefore, good preparation in order to actively integrate into the

international economy in accordance with the guidelines of the Party and State is the

mission of the entire nation, taking into account the important role of the State, although

14 Quang Chung, Red alert on the environmental pollution, Sai Gon Economic Times, 20 th of July, 2006,p. 44.15 Vu Quoc Tuan, The current development of private economic sector in Vietnam, The NationalPolitical Publishers, Hanoi 2005, p. 60.


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the striving efforts of the entire nation in economic, cultural and social innovation for

rapid, comprehensive and stable development of the country are the essential and most

decisive elements.

The entire nation should reach consensus in main directions as well as should

uphold the national spirit, be self-confident, firmly integrate into the world. Vietnamese

nation should know itself, know others, know the tendencies and the playing rules ofthe world, should benefit from opportunities, successfully handle with challenges. In the

20 th century, although materially weak, Vietnamese people have won all aggressive

wars. Despite thousands of difficulties, the country has successfully completed the

Innovation ( i m i) mission. Despite being in the early stage of internationaleconomic integration, Vietnam is seriously implementing the commitments in the

AFTA free trade area in the process of development of the country. Nowadays,

Vietnams position and forces are stronger than before. With the strength of great

national unity, Vietnam will definitely implement WTO commitments successfully.

The State should actively limit the negative social impacts by promulgating andorganizing the implementation of policies and laws in order to protect those who lose

their jobs, the poor people, the vulnerable people, people in the scope of social policies;

at the same time to create favourable and consistent with WTOs commitments

conditions so that production and business industries facing difficulties at the moment

could reorganize to overcome and prosper, to limit the minimum number of

unemployed workers and the shortage of jobs (this will be presented in more details in

the next section).

The business community in general and each enterprise in particular should

eliminate as soon as possible presently prevailed separatist character in production and

business, should be aware of the necessity to enhance cooperation and association for

their own sake, for the sake of the entire business community and the country. Business

associations should uphold their role in supporting economic organizations of Vietnam,

including enterprises, cooperatives, individual business households and small holders

and in strengthening the cooperation and networking. This is one of the practical tasks

for business circles in order to improve the competitiveness of Vietnamese businesses,

to help to rapidly overcome tough challenges during the implementation of international

economic integration commitments, especially WTOs commitments.

In the globalized economic and social life everyone should think globally, not

just limiting themselves in the scope of one country. However, how good the global

thinking is really depends on the work of each person, there is no common solution. For

example, if you are studying you should not only know how to answer questions and

read textbooks but you also should find what knowledge the world has already had in


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The construction of post-WTOs macroeconomic policies has the purpose to

eliminate all kinds of subsidies, to create environment for synchronical and effective

operation of all kinds of markets and to ensure macroeconomic stability to meet the

requirements while implementating WTO and international economic integration

commitments.

It is necessary to eliminate all kinds of subsidies, including price subsidies, toimplement market pricing for all goods and services. With regard to products applying

pricing-by-State mechanism, it is mandatory to define the roadmap of implementing

market pricing so that businesses could recalculate their production and business plans.

It is also necessary to modify, supplement and build policies supporting domestic

production industries consistent with WTOs regulations in such fields as infastruture

development, education, training, research application, market development,

technology innovation, supporting areas with difficult socio economic conditions,

information supply.

To compensate for reduced budget because of tariff reduction and elimination,trade barrier removal. Taxation policies should be reformed in the directions of

increasing the source of revenue from economic development, converting main sources

of revenue from indirect taxes to direct taxes.The Government is submitting the Law on

Personal Income Tax for the National Assemblys approval. In case of approval, this

Law would be effective on the 1st January 2009. At the same time, the State will create

favourable conditions for business community broadening and improving business and

production effectiveness, increasingly contribution in state budget. The sources of

revenue need to be nurtured, the process needs to be fair, consistent, simple and

convenient for all types of businesses. The mechanism of self declaration, selfsubmission and seft responsibilty needs to be applied broadly by all types of

businesses.

Monetary policies and the operation of the State Bank need to be renovated

continuously. Interest rates, exchange rates need to be used flexibly to ensure the value

of the currency, to control inflation, to ensure financial security of the financial system,

bank system and credit organizations against exchange rates and interest rates shocks

from outside.

One large-scale policy to protect small and medium enterprises (SMEs),household businesses against tough competition in implementing WTOs commitmentsis credit guarantee policy for SMEs pursuant to Decree No. 90 of the Government in2000 and Decision No. 193 of the Prime Minister in 2001. So far, the results from theimplementation of this policy are very limited. Right now, only 5 provinces and citieshave established their funds; among them only 2 funds in Dong Thap province and Yen


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Bai province operate with total guaranteed credit capital below 50 billions dong 18. Thecredit guarantee policy for SMEs needs to be modified and supplemented in thedirection of diversifying the ownership of the fund, allowing enterprises and businessassociations to establish and run their own funds in accordance with market mechanism(Decree No. 90 stipulated the operation of non-profit funds); establish banksspecializing in serving SMEs, according to the experience of Japan and other countriesin the region these banks will supply loan and insurance services, reducing the risks of

credit guarantee funds. SMEs which are able to create a lot of new jobs will getpreferential loans as defined in the Decision No. 101/2007/QD-TTg on the approval ofProgramme on national target of employment to 2010.

The investment policy should mobilize in maximum internal forces, increase the

effectiveness of utilizing external forces and take full of dynamic advantages. The

allocation and usage of capital need to be carried out pursuant to market mechanism,

first of all, with regard to state investment.

The State needs to continue to increase and concentrate on investment in

building economic and social infrastructure, to ensure the combination between

economic growth, social progress and justice, and to implement sustainabledevelopment. Private economic sector needs to have more favourable conditions to be

equal in accessing resources, especially land and credit resources, ensuring the freedom

of doing business in not prohibited by the State fields so that private economic sector

could continue to show off all of its potentials. The operational quality of the stock

market needs to be improved and enhanced so that the stock market really becomes a

public, transparent market an important long-term capital mobilization channel for

socio economic development.

Foreign investment attraction (both direct and indirect) needs to be strengthened

in accordance with investment forms stipulated in Law on Investment in 2005;

transnational corporations having source and high technologies need to be paid high

attention for attraction; attracting investment into research and development phases, into

designing and modeling phases which create high added values need to be accelerated;

foreign investors need to be allowed to join real estate market step by step. The official

development assistance (ODA) in such fields as building socio economic

infrastructure, human resources education, hungry elimination, poverty reduction,

institutional enhancement and environment protection should be used more effectively.

Offshore investments of economic organizations need to be open, focusing on fields

which Vietnam has advantages and on natural resources exploitation industries in order

to ensure national energy security and the supply of resources for domestic production.

4.2. Restructuring industries, fields

18 Trinh Phong Lan, Head of division, Finance and banking Department, Ministry of Finance, Creditguarantee funds in Vietnam realities and solutions, this paper was presented in Supporting the accessof capital for SMEs workshop held by SMEs Bureau of MPI in Hanoi on the 3 rd of April, 2007.


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Such industries as cotton production, sugar from sugarcanes production although

having good solutions in the organization of production and technical matters still found

it difficult to compete with import products, therefore it is necessary to reduce

production or convert to the production of other more competitive products of high

demands.

Agricultural products such as fruits and vegetables, cattle-breeding products dueto small and scattered production habits cannot produce uniform products and reach

appropriate scale for industrial production, therefore, the speed up on large scale of the

implementation of land accumulation policies in favourable places is fully supported by

the farmers. From that point it is possible to allocate best agricultural producers enough

land area for industrial cultivation, gradually establishing large-scale agricultural

production industries, at the same time having policies to create jobs for land-withdrawn

farmers, to reduce negative impacts on employment and rural societies (this will be

presented later).

With regard to enterprises in such industries as automobiles, steel, paper, drugs itis necessary to build policies on the organization, establishment of raw material areas,

technology innovation and product diversification, to promote the management of

products quality and to improve the knowledge level of market and international laws.

The conversion of some domestic automobile production enterprises to domestic spare

parts production ones is encouraged .

4.3. Social welfare policies

For newly joined WTO and international economic integrating countries with

low income in the beginning period the deeper and wider integration the greaterinequality tendencies. Therefore, there should be social welfare policies and public

solutions to help individuals, households and communities to cope with and reduce the

risks of bad impacts on income, reduce the vulnerability and income uncertainties.

In Vietnam social welfare policies are policies and solutions being widely

applied to help members in the society to deal with difficulties and avoid unwanted risks

of losing or seriously reducing income, and also to supply healthcare services. Social

welfare system is constructed to be systematic, closely tight together, especially the

standards of each component, at the same time it must ensure the sustainability,

especially financial sustainability and must be directed to all members of the societybecause they have the rights to get help when facing difficulties or risks.

Social welfare policies need to be continued to improve and enhance with

following 6 pillars 19:

19 Ngo Van Du - Hong Ha - Tran Xuan Gia, Understanding some termines in documents of the 10 th PartyCongress, p.152-154


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- Policies and programs on labour market, the focus of which is to help to create

jobs for disadvantageous persons on labour market and subsidize redundant workers

caused by international economic integration and WTO process, particularly those in

industries and fields which cannot compete in the process of integration, competition,

reorganization of enterprises and privatization of state enterprises.

- Social insurance policies, including pension, insurance policies, subsidizationpolicies in case of losing health, sickness and ailing, pregnancy and giving birth,

accidents at work, occupational diseases, death. However, regimes on sickness and

ailing are solved mainly through mandatory health insurance policies with small number

of participants. Therefore, there should be new health insurance with more expanding

scope as compared to mandatory health insurance.

- Health insurance policies including mandatory health insurance, voluntary

health insurance, health insurance for the poor, socially patronized persons and children

under 6 years old. In this sense, health insurance policies have covered up to 60% of the

population meanwhile mandatory health insurance has covered only about 14% of thepopulation (more than 4 times larger in scale).

- Special preferential policies (preferential policies with regard to deserving

persons, invalids and revolutionary martyrs families). Vietnam also applies these

policies with regard to soldiers on active service (Health insurance and social subsidies

in circumstances of having low income family).

- Social aid for disadvantageous persons (socially patronized persons) including

monthly social aid for socially patronized persons (orphans; lonely senior citizens; more

than 90 years old citizens without frequent source of income; severely disabled persons;families with more than 2 severely disabled persons who cannot serve themselves;

HIV/AIDS contracted poor persons; families or persons adopting orphans, dropped

children, children with difficult life conditions); aid in health, education, vocational

training, job creation, accession to public projects, cultural and sports activities; and

urgent aid which so far called social assistance for unlucky persons caused by

unexpected acts of God.

- Policies and programs to help the poor. The implementation of policies to

support the production development investment, especially investments in such fields as

production land; living land, houses, fresh water, vocational training and work

Documents

Etude Impacts Sociaux - FSP I - En