MPI grabs the moment for investment

January 23, 2006 | 17:40
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In the recent past the planning and investment sector made large contributions to the country’s renovation process. A series of mechanisms and policies were formulated by the Ministry of Planning and Investment (MPI) to help renovate the private sector, state-owned enterprises, goals as well as the implementation of plans. Planning and Investment Minister Vo Hong Phuc speaks to Vietnam Investment Review’s Duc Minh about the role of the planning and investment sector during the past 20 years of renovation.
Can you elaborate on the sector’s contributions in the recent past?
In the process of renewing the private economic sector, the MPI constructed the Enterprise Law in 2000. It is this law that helped open a new era of the private sector’s development and contributed largely to the country’s economy. This sector is responsible for the country’s high economic expansion with a growth rate of 24-25 per cent per year. Meanwhile, the state-owned sector only grew less than 10 per cent, per year.
The MPI is a government agency with active activities in the task of attracting foreign investment capital. It is thanks to foreign investment that our country’s industry has actually been renewed. The foreign-invested sector has produced new products which we earlier had to import. Besides this, foreign investment has also accelerated the growth of the economy, especially the industrial sector.
The foreign investment sector achieved an average growth rate of 18 per cent per year and even 19-20 per cent at times. A string of new policies in the finance, banking sectors and many reforms in the social sector were also done under the latest five-year plan.

For the coming five years, we have made a socio-economic development plan completely in an ‘open’ direction. What is the foundation of this plan?
The socio-economic development plan for the next five years has been made on the basis of the sustainable development of the whole society, so the main criteria, which constitutes the foundation of the plan, is the economy, society and the environment. In this plan, attention is focused not only on economic growth, but also on other fields like education, employment, health care for the people, elimination of hunger and reduction of poverty, gender development, youth development, harmonisation of development between regions, and the religion issue. All these are included in the contents of the five-year development plan for the country.
Another thing is that the method of making plans also changes. We make ‘open’ plans in order to attract the participation of the entire society. The draft plan has been made with suggestions contributed by all circles concerned including, scientists, economic experts, regions in the country, and even by various communities of the population, and especially by international communities.

This is the first time we have invited a broad range of suggestions regarding the country’s socio-economic development plan. What was public opinion about the plan?
It is necessary to say that they think highly of it. Many of the suggestions were very sincere with concrete content concerning a wide range of matters. For example, representatives of women offered many suggestions about gender equality; many other suggestions were about youth development; the business circle suggested creating a good investment environment and equality between various economic components; international donors offered comprehensive employment and profound ideas.
Donors raised many issues of social development, hunger elimination and poverty reduction, legal reform and anti-corruption. They said that a comprehensive and pretty complete plan would need to be considered for a national action programme for the time to come.

Is it true that because the international community were invited to offer their suggestions to the plan, at the recent donors consultative group meeting a record $3.7 billion official development assistance (ODA) package for Vietnam was pledged?
It’s true. They agreed to our idea of consulting donors about making the plan at the end of 2004 and said that this was an occasion for donors to combine their ODA strategy for the years to come with Vietnam’s development strategy.
When the two strategies are combined they will be able to realise the extent of our needs and will concur with us in development targets, our need for loan capital, and from that they will be able to establish the amount of money they need to provide, so it is very easy for them to pledge ODA to us since they believe it will be used effectively towards specific purposes.

You have said there would be a new wave of investment pouring into Vietnam in the time to come. Up to now do you think the assessment will be confirmed?
It is true that there is now a wave of foreign investment into Vietnam. For example, last year investors’ newly pledged capital at the end of the year was more than $5.8 billion. It is a record amount we have never reached in recent years. Also, through sounding out strategic investors like the EU, US and Japan, we can all the more affirm that.

So, according to you, what leads to the said result?
In my opinion, the main cause is that we have been able to determine that the attracting of foreign investment is one of the leading strategies to advance the country’s socio-economic development. That was demonstrated by the leaders’ visits to our major partners in recent times.
Through the visits, we have made foreign investors understand more about Vietnam’s investment environment, enabling them to see a clearer direction to take. Another cause is that the investment environment in many other countries is not stable, such as in Africa, the Middle East and some other countries. There are no such favourable conditions as found in Vietnam.
Some other causes which are also important. Vietnam’s investment environment has been made more transparent with the coming into existence of the new Investment Law and the Enterprise Law. We have never ceased to improve the investment environment. Besides, in some areas, which investors are usually worried about, such as finance, customs and taxation, we have made considerable improvements. We also have specific policies to readjust the human resource structure in order to meet development requirements.

One of the key tasks for us to do in the time to come is that we have to strive to be able to join the WTO. What will we have to do to be successful as a WTO member?
We have to do many things even when we have signed agreements with other WTO members and become an official member. We call the things we have to do a ‘post-WTO programme’. The question here is, what is to be done to guarantee successful integration, the competitiveness of Vietnam’s economy in general and that of each enterprise, each goods manufacturing cluster and each field in particular.
Donors with good-will want us to devise a programme in support of Vietnam joining WTO so as to achieve sustainable development to guarantee the competitiveness of Vietnam’s economy. For that there will be many things to do, including a complete legal system and doing all that has been pledged when joining WTO.
We need to have a roadmap for honouring our commitments, then we will have to readjust economic policies, and carry out reforms in various fields such as finance, banking, post and telecommunications.

Once in the playing field, we need to understand the rules of the game, don’t we?
Right. We must be aware of the international legal system. We need to understand the common rules so as to be able to take part in the common playing field. We need to understand international regulations and the laws of each country to participate in that market. We must make Vietnamese enterprises understand more about international laws. Another thing that must be done, which is to improve the ability of state management agencies so as to suit the new management mechanism, the open management mechanism.

What is your assessment of the challenges in 2006 and the ability to do the tasks we have proposed?
I believe there will be many challenges facing us in 2006. When we have joined the WTO we will have to cope with fierce competition. There will be other difficulties such as natural disasters and epidemics. But I think those challenges cannot block our country’s progress. So we must be determined to fulfill our duties for 2006 which were passed at the eighth session of the 11th National Assembly, among which the GDP growth rate must be 8 per cent. I believe we can make it.
To do so we must satisfactorily implement the laws passed by the National Assembly, we must bring them into good effect to create a transparent investment and business environment which is equal to all economic components so as to give Vietnam’s economy a new boost. We need to strive to successfully implement the new five-year plan right in the first year so as to give momentum to the following years to carry out successfully the 2006-2010 plan which the 10th National Party Congress will adopt, in which the essential goal dictates that, to the year 2010, Vietnam escapes from the group of underdeveloped countries and takes a new development step.
By then the Vietnamese people will see their per capita income reach the level of over $1,000. I would like to recommend MPI officials and staff at all levels to mount a determined assault on all difficulties in a pioneer spirit in the time to come.

No. 745-746/January 23-February 5, 2006

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