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.