Foreign companies can now hold as much as 50 per cent in joint ventures with Vietnamese companies to provide telecoms service in the strictly controlled telecoms sector.Deputy minister of Post and Telematics, Mai Liem Truc, last week confirmed that under the bilateral trade agreement (BTA) between Vietnam and the US, foreign companies would be permitted to form joint ventures with local partners to provide value-added services from December 12, Internet services from late next year, and basic telecoms and mobile phone services from December 2005.
A Ministry of Post and Telematics (MPT) official, however, said: “Foreign companies allowed to do so are only those from the US, Europe and other countries who have signed agreements with Vietnam.”
Truc said his ministry was fully committed to agreements on licensing, frequencies and the legal environment as stated in the BTA.
“Foreign companies put a lot of emphasis on the importance of creating a fair and transparent business environment,” he said.
Nevertheless, there is no legal framework for the establishment of a joint venture in the telecoms sector, but Truc said “the ministry will finalise it soon”.
Under Vietnamese regulations, basic telecoms services are defined as calling and receiving services. Service extras have not yet been clearly defined in law. The ministry official said they might include e-commerce and messaging (SMS and MMS) among other things.
Simon Perkins, chief representative and CEO of Comvik International Vietnam AB, told Vietnam Investment Review that the move would be good for Vietnam and that his company was considering a joint venture with Vietnam Mobile Service company, the MobiFone network provider, instead of operating together under a Business Cooperation Contract (BCC) as at present.
“It is good for Vietnam, especially young people, who would enjoy such value-added services as SMS, SMS chatting and downloading ringtones.
“We will investigate what exactly we can do and will establish a joint venture as soon as possible,” Perkins said.
Although preferring a joint venture to a BCC, Comvik will not form a joint venture with a local partner until 2005, as basic telecoms and mobile phone services will only be opened up in late 2005; the company is focused on providing basic mobile phone services as being more profitable than service extras.
Meanwhile, Vu Hoang Lien from the Vietnam Datacommunication Company said it was clear that local companies would face great pressure from foreign rivals for market share. But, he said, “it would create a chance for them both to compete and cooperate to ensure their interests in the local market and even to invest in the foreign market”.
EIS deputy general director, Le Thang Long, said Vietnam had to learn lessons from joint ventures with foreign partners that had already been established in other sectors in order to create fair policies, and prevent Vietnamese partners from losing their share in joint ventures at later dates.
“The government should create a fair environment for private companies to participate in joint ventures to prevent that option from going only to foreign companies. Competition is now not only in terms of capital but also technology,” Long said.
By Hai Van