Interview: PM Phan van Khai
Far Eastern Economic Review
March 20, 2003
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TO DRIVE HOME his views on Vietnam's prospects for enhancing trade, investment and the rule of law, 69-year-old Prime Minister Phan Van Khai sat down for a rare interview on March 5 with The Wall Street Journal Deputy Managing Editor John Bussey, Far Eastern Economic Review Editor Michael Vatikiotis, The Asian Wall Street Journal Editor Reginald Chua and Hanoi correspondent Margot Cohen. The discussion took place on the eve of a heavily attended Asia Society/Dow Jones conference in Hanoi on Vietnam's business climate. Excerpts:
WHAT ARE THE KEY AREAS THAT YOU WISH TO TARGET FOR INVESTMENT IN VIETNAM?
We hope to attract a lot of investment in hi-tech areas, so that high technologies will be incorporated in different industries to be more competitive with foreign companies. We will [also] focus on infrastructure development. Say, for example, electricity. In this sector, during the last few years, demand has grown by about 10%-15% per year. This year, we'll have to build a number of hydropower plants and thermal power plants and gas-powered plants as well. Another important area is the cement industry. In 2002, we had to import 3 million tonnes of clinker . . . Also important is the oil-and-gas sector . . . exploration, exploitation as well as processing activities . . . And we hope to have better cooperation with foreign partners in the production and processing of agricultural products and sea products for export.
IS THE DISPUTE OVER CATFISH IN KEEPING WITH THE SPIRIT OF THE 2001 BILATERAL TRADE ACCORD, OR BTA, WITH WASHINGTON?
During the two years of implementation of the BTA, the two-way trade value has increased substantially . . . During the process of strengthening relations in trade and investment, we need to overcome any issues that may arise. We have the good will to settle those issues with the United States side . . . Representatives of the Department of Commerce, of the USTR [U.S. Trade Representative] and other U.S. organizations have been invited to Vietnam to visit fish-farming areas. Some of them expressed a position that does not reflect goodwill and fairness . . . We are ready to cooperate with U.S. partners for the production and processing of catfish for export to the States. I think that would be in the best interest of American consumers, because our catfish are of good quality and inexpensive.
IS VIETNAM DUMPING CATFISH ON THE AMERICAN MARKET?
No, Vietnam is not dumping.
WHAT COMES AFTER THE BTA?
I think Vietnam's next major step will be to prepare for membership in WTO [World Trade Organization]. Our target is 2005. We submitted our application in January 1995. We also have undergone four rounds of negotiations with the WTO working party. Negotiations on the trade regime of Vietnam have been completed.
WHAT ARE THE BIGGEST PROBLEMS FACING FOREIGN INVESTORS IN VIETNAM?
No. 1, our administrative procedures are still very cumbersome. There are still many doors we have to go through. You could get approval at the central level, but you still have problems at the local level . . . with issues like land. The government would like to pursue the policy of a one-stop system, with all foreign-investment projects only having to work with the Ministry of Planning and Investment . . . The second major complaint we receive from investors is about unequal services [dual pricing systems]. Telephone tariffs are still very high, with discrimination between foreign and domestic [firms]. Air fares are also different for foreigners and it's the same with electricity rates. Reductions have been made several times toward a single-price system. But our country has recently emerged from war and a centrally planned economy. Therefore we have to take it step by step. Otherwise, it would lead to collapse if we go too fast.
HAVE YOU BEEN INFLUENCED BY CHINA'S EXPERIENCES IN JOINING THE WTO AND ATTRACTING FOREIGN INVESTMENT?
In the past, the two countries had a similar economic policy. So, the experience and lessons from China are very useful for Vietnam, including policies to attract foreign investment, better tap internal resources, develop the private sector and improve the competitiveness and efficiency of state-owned enterprises . . . But, each country has its own historical circumstances. Our lesson is that if we just copy one foreign model, there's a chance of failure. Therefore, our policy is to study and learn from selected cases.
DO YOU WORRY THAT CHINA'S RAPID GROWTH MIGHT DRAW POTENTIAL INVESTMENT AWAY?
China is a very big market for Vietnamese products. Vietnam's exports to China have recently increased significantly. Two-way trade by value is estimated to reach $5 billion in the year 2005 . . . Vietnam needs to identify the products where we have the best advantage. Something I always tell Vietnamese enterprises is [to aim for] high quality and low prices, in order to be competitive.
UNLIKE IN CHINA, PRIVATE VIETNAMESE ENTREPRENEURS ARE NOT WELCOME TO JOIN THE COMMUNIST PARTY. BUT PARTY MEMBERS CAN DO BUSINESS. HOW DO YOU EXPLAIN THIS SPLIT POLICY?
We have different conditions from China. We do something on the basis of our conditions . . . Party members in Vietnam are still allowed to run their own business, but I don't think up to the same extent as capitalists. For example, in rural areas our party members still have their own farms, they run their own businesses. The successful party member/businessman will be in a better position to help the poor.
DO YOU THINK THE CURRENT CORRUPTION TRIAL IN HO CHI MINH CITY OF ALLEGED MAFIA BOSS NAM CAM WILL CONVINCE FOREIGN INVESTORS THAT THE RULE OF LAW WILL BE UPHELD?
Nam Cam is a very special case because it is related to state officials . . . There are some people behind him, protecting him. The trial reflects that we have very strong measures to fight against corruption and various crimes that may occur in our country, and to ensure compliance with the law.
