Hanoi takes steps towards free trade

Hanoi takes steps towards free trade

By Philip McClellan

BANGKOK (AFP): Vietnam has taken cautious steps towards
realizing an ASEAN dream of creating a Southeast Asian free trade
zone despite doubts over opening its carefully controlled economy
for outside inspection.

Five months after becoming ASEAN's seventh member, Vietnam
last Friday joined a mechanism designed to liberalize trade and
lay the groundwork for an ASEAN Free Trade Area (AFTA) by early
next century.

Accession to the Association of Southeast Asian Nations'
Common Effective Preferential Tariff (CEPT) scheme came as
Vietnam took its place for the first time at a summit of the
seven-member group here last Thursday and Friday.

Under the scheme, Vietnam will be required to make its
carefully controlled economy more transparent and clarify trade
and tariff policies, a reality which the country's economic
masters will find difficult to swallow.

The CEPT covers some 40,000 product lines, with members
allowed to submit items in domestically sensitive areas, notably
farm products, for exclusion.

Vietnam's "sensitive" items include vehicles, various
electrical goods and agricultural products.

Prime Minister Vo Van Kiet has vowed to keep Vietnam on its
course of economic renovation, which was launched in the late
1980s, by boosting gross domestic product growth to 8.2 percent a
year and expanding trading relations with the world.

"Vietnam is now pushing ahead its renovation cause in order to
actively participate in the development of ever closer economic
relations among the

ASEAN member countries," Kiet said at the opening of the
summit last Thursday.

"At present, Vietnam has sufficient conditions to enter into a
new stage of development," he said, citing rapid
industrialization and modernization.

Vietnam's economy, which is mainly agricultural, suffered from
years of a US-imposed trade embargo which was lifted in 1994,
eight years after Hanoi took its first tentative steps away from
central planning.

However, despite a surge in interest in Vietnam in the early
1990s, many foreign business have complained that problems such
as poor infrastructure, ever present red tape and unclear laws
have held up the expected profit flow.

Vietnam's exports for 1995 are expected to be up 30 percent at
US$4.7 billion, with imports forecast to reach $6.5 billion, up
33 percent.

Within ASEAN, some officials have privately grumbled that
Vietnam -- the weakest link in the grouping's economic chain --
has been dragging its feet in preparing the way for its accession
to AFTA in 2006.

The AFTA target date for the other ASEAN economies was 2003,
when tariffs would fall to between zero and five percent, but
leaders agreed at the summit Friday to speed up the creation of
the free trade zone.

A target of complaint was the mountain of paperwork required
for the various lists of products to be considered under AFTA
which Vietnamese bureaucrats delivered up for ASEAN inspection at
the last minute.

Other officials say that communist Vietnam has made great
strides in freeing up its once impenetrable economy, adding that
they hope Myanmar, Cambodia and Laos will follow before the end
of the century.

"An enlarged ASEAN will create both opportunities and
challenges," Singapore Prime Minister Goh Chok Tong said in a
closing address to the summit.

But he added, new members faced "difficulties in discharging
their multi-fold obligations within ASEAN, including phasing in
their commitments in AFTA."

ASEAN groups Brunei, Indonesia, Malaysia, the Philippines,
Singapore, Thailand and Vietnam.