On APEC event

From FT:

Vietnam’s economy last year grew at 8.4 per cent to $53bn, ranking it as the second-fastest growing only to China among the Asia Pacific Economic Cooperation forum’s 21 members.

“Vietnam is an exciting place. It’s a place with an enormous future,” said Mr Bush, even as the House of Representatives slowed that progress this month by failing to pass a bill to approve permanent normal trade relations with Vietnam.

Mike Green, senior adviser at the Center for Strategic and International Studies, said: “Other than Singapore, Vietnam is probably the Southeast Asian nation with the clearest vision of their own strategic position and national interests – particularly vis-a-vis China. It makes them an increasingly important partner for Washington.”

He added: “While Vietnam is far from being a democracy, they are taking important steps on religious freedom and economic reform.”

From AP (Yahoo Finance):

HANOI, Vietnam (AP) -- Top business leaders attending a Pacific Rim economic conference on Friday praised communist Vietnam for its stunning progress in reforming its economy a day after U.S. companies struck a flurry of investment deals worth more than $1.6 billion.
"Vietnam has demonstrated to the world its capacity for quantum leaps," said Craig Mundie, chief research and strategy officer for Microsoft Corp.

"It's clear that the government has recognized that broad-based reform and economic liberalization are essential to Vietnam's integration into the global economy," Mundie told more than 1,000 participants at the Asia-Pacific Economic Cooperation forum's "CEO Summit."

Hanoi's role as host to the annual APEC summit, which brings together President Bush and 20 other leaders for a weekend meeting, gives Vietnam a rare chance to showcase its transformation from a war-ravaged backwater to a fast-growing exporter.

More than 20 years of "doi moi" market-oriented reforms have made Vietnam APEC's fastest expanding economy after China, with growth racing ahead at a 7.5 percent clip.

The CEO gathering comes fresh on the heels of two of the biggest business developments to hit Vietnam in years -- its approval for membership in the World Trade Organization and Intel Corp.'s announcement last week that it will invest $1 billion in a chip plant in Ho Chi Minh City.

More deals were announced Thursday. Energy company AES Corp. signed an agreement with state-owned Vietnam Coal & Minerals Corp., or Vinacomin, to build a coal-fired power plant at a cost of $1.4 billion, Vinacomin said. Arlington, Va.-based AES will contribute 90 percent of the capital, with the Vietnamese partner providing 10 percent.

In another deal, state-owned Vietnam National Shipping Lines, or Vinalines, agreed to form a $100 million container terminal joint venture with Seattle-based SSA Marine.

And Vietnam's Truong Thinh Co. said it had sealed a US$140-million contract with California-based NRG Resources Inc.

Executives lauded Vietnam's effort to amend its laws to conform with WTO rules as it prepares to join the Geneva-based trade group next month.

"We see great growth potential in this market," said Michael Ducker, president of FedEx Express International.

Joining the WTO "represents the emergence of Vietnam towards an economy that is very competitive," said Scott Price, chief executive of DHL Express Asia-Pacific, which on Thursday said it was investing US$14 million in Vietnam through a joint venture to upgrade its facilities and vehicles in the country.

Salvaging the current Doha round of negotiations toward a global agreement on dismantling trade barriers has been a major focus of the APEC gathering, with the 21 members pledging to consider concessions on farm trade that left the talks in a deadlock in July.

The former head of the World Trade Organization, Supachai Panitchpakdi, on Friday urged trade negotiators to lower their demands and take small steps in a bid to break the deadlock.

"I don't think the (world) can afford to stand by and let the Doha round go down the drain," Supachai, now heads of the U.N. Conference on Trade and Development, told the more than 1,000 business executives.

"So let's do quiet diplomacy. Let's achieve a little bit and then move on, achieve a little bit and then move on," he said. "Development is the middle name of the Doha agenda, so don't shortchange the whole round of negotiations of development."

Spurred by exhortations from APEC, the WTO's 149 members met Thursday in Geneva for the first time in four months to discuss the possibility of resuming talks.

"Clearly, business and industry want the removal of obstacles, so with the Doha round, business is saying, 'Yeah, we're ready. We're just waiting for governments to get their act together,'" said DHL's Price.

While executives say regulations still slow down business in Vietnam, foreign investment is growing as the economy opens up.

Vietnam's thinnest times came after the Vietnam War ended in 1975 and the communists united the country. Cut off by an economic embargo, the economy stagnated under a rigid, centrally planned system. People lined up to wait for rice and other goods and faced police action if they sold anything on the free market.

The country still faces daunting obstacles, however, in building up infrastructure and training its workers for the newly capitalist-style economy.

"New challenges from terrorism, pandemics, natural disasters and technological inequality threaten the sustainability of regional prosperity," said Vu Tien Loc, president of the APEC CEO summit and chairman of the Vietnam Chamber of Commerce and Industry. "We believe that worldwide prosperity can only be achieved through shared opportunities and shared development."

Vietnam's booming stock exchange attracts attention at APEC summit - article from IHT 14/11

The market is emblematic of Vietnam's overall economy: energetic, fast-growing and still in the early stages of its development. It poses greater risks to investors than a more advanced economy, but also the promise of great returns.

"You'd have to go quite a long way to find a stock market that's grown 10 times in 10 months, even though it started from a very small base," said Dominic Scriven of Dragon Capital, which manages an US$860 million investment fund in Vietnam. "And it probably will have grown 15 times by the end of the year."

When it opened six years ago, the market was the laughingstock of Southeast Asia. Few companies were listed, and foreign investors kept their distance. But it has taken off in the last couple of years, attracting the attention of investment firms such as Credit Suisse and Citigroup.

"Vietnam is beginning to deliver on a decade of promise," a recent Merrill Lynch report said.

Vietnam has approved a new securities law that Scriven called "a huge leap forward." Effective Jan. 1, it will clarify investment rules and bring more transparency to the market, though still not as much as in developed countries.

Vietnam's agreement on banking in the accession to WTO

Vietnam currently limits foreign banks to a minorirty shareholding position of 49%, but allows bank branches. Vietnam only allows foreign securities companies to open representative offices. Our (US) WTO bilateral market access agreement with Vietnam includes the following improvements:

As of April 1, 2007, U.S. and other foreign banks will be able to establish 100% foreign-invented subsidiaries. As Vietnamese legal entities, these subsidiaries will receive non-discriminatory ("national") treatment upon accession. U.S> banks will be able to establish a 100% foreign-invested bank subsidiary, take unlimited local currency deposits from legal entities, and issue credit cards.

As of date of Vietnam's accession, foreign securities firms will be able to open joint ventures with up to 49% foreign ownership. After five years, foreigners will be able to own 100% of securities firms and will be able to branch into Vietnam for some securities avtivities (asset management, advisory, and settlement and cleairng services).

Foreign-invested firms established in Vietnam will be afforded national treatments, across all other financial services sub-sectors.

Cross-border market access commitments will be comparable, or superior, to those of OECD countries (Organisation for Economic Co-operation and Development).

The WTO is about to welcome an "non-market economy" into its ranks

The article on The Economist (4th November) begins with the joining of Ukraine at the beginning of this year into the WTO. "That might surprise many Ukranians, who were under the impression they had been living with free enterprise since prices were deregulated in 1991."

The WTO is built on the principle that members will treat each other alike. But as one price of entry Vietnam agreed to remain on a list of so-called "non-market economies", alongside China and several other WTO members (Soviet members). This stigma has one practical consequence. It makes it harder for Vietnam to defend itself against the charge of dumping. Into a non-market economy, America's Department of Commerce argues, prices are not set by supply and demand so they cannot be trusted, Instead, it comes up with is own calculation of "normal value" based on costs in other "surrogate" countries.

America is Vietnam's biggest market and one of the more prolific users of anti-dumping duties. But it is not the only place to brand its trading partners as unmarket-like. Last month, the EU confirmed that Vietnam was dumping leather shoes, based on what it costs Brazil to make them. Last year it was imposed duties on Vietnamese bicycles, after comparing them with the costs in Mexico.
The most notorious case remains, however, Vietnam catfish or "basa" as they are now labelled. It reached the tax impose of 37-64% after calculating what Vietnam's fillets would cost if they were reared on a fish farm in the region of Bangladesh, using water bought in India, transported by Bangladesh truckers, with the labour purchased in Vietnam.
What Vietnam must do to shake off the "non-market" label? The EU, the Americans and others each have their own requirements. America wants to see the removal of price-fixing and currency controls, even more foreign investment, free wage bargaining, and limited government ownership.
But "the economic logic is invariably something of a facade". The only criterion that really matters is that America's retailers, who like Vietnam's cheap merchandise, lobby harder than its garment-makers and catfish farmers who hate it. It is mostly those with something to fear from open markets who accuse other countries of falling short of them.