- Green Growth
- Your Consultant
VIR’s Bach Quang talks with Eurocham chairman Preben Hjortlund about the new advisory report.
What are the most outstanding issues and recommendations that this year’s White Book, the fifth edition to date, presents?
As the previous editions, the White Book 2013 has an executive summary which provides an overview of the main issues per sector as well as the cross-sectoral issues affecting all of EuroCham’s members. This year, there are three main reoccurring themes in the White Book: pricing, the role of the state sector, and intellectual property right (IPR) issues In terms of pricing, the government continues to display an ambivalent attitude towards free market pricing, and in various sectors price changes require approval. This type of price control creates uncertainty for investors who expect to be able to set prices themselves within the normal boundaries created by cost and competition.
Regarding the role of the state sector, a significant part of the economy is in the hands of the State sector, which in itself is not a problem. However, State companies generally receive favourable treatment – through loans, access to land, limited profit targets etc – and are inefficient, which hampers the growth of the economy.
With regards to IPR issues, Vietnam is currently competing internationally based on low labour costs. The government has expressed the desire and need to move into technology and value added areas. But investors are unlikely to bring their technology to Vietnam unless there is real, implemented protection of intellectual property rights.
Does the White Book 2013 make any efforts to facilitate the on-going negotiations to conclude a Vietnam-EU free trade agreement (FTA)?
The White Book 2013 will play an important role in the Vietnam-EU FTA negotiations, as the EU negotiators use the input from different relevant actors to ensure that the FTA is adapted to the Vietnamese market. In this respect, EuroCham’s members have in-depth knowledge of the market specificities that will ensure that the FTA has the desired outcome.
Is there any notable innovation of the White Book 2013 as compared with the White Book 2012?
The White Book 2013 has an updated layout to ensure that the key issues are communicated more clearly. Additionally, the Vietnamese and English versions of the text will be printed in two separate copies.
Vietnam’s economy has continued to experience hostile conditions including a worrisome decline in domestic consumption, narrow credit access and huge bad debts for banks. The quarterly EuroCham Business Climate Index shows that its members’ business confidence is in decline. Do those facts and figures impact on the sentiment of this year’s White Book?
The Business Climate Index expresses the sentiment of the businesses whereas the White Book looks at the underlying issues and enables the businesses to share their knowledge and practical suggestions with the Government.
The publication of the White Book allows EuroCham’s members to express their views on issues that impact their businesses. However, the White Book is not only a list of issues that need to be addressed. The White Book also provides suggestions for how to facilitate the process towards an improved business environment based on experience from other markets.
Do you see many improvements on the lead issues that were addressed in last year’s White Book?
Of course the government has had successes since last year’s White Book, one of the most encouraging being the stabilisation of the currency since the devaluation last year. Furthermore, headline inflation on a year-on-year basis is trending lower, and has reached single digits. Local banks’ liquidity has improved materially. Vietnam’s foreign currency reserves have grown. The government has maintained public confidence in the banking system through a difficult time. Overall, the macroeconomic picture is much improved.
However, whilst the tight monetary policy of the last year has been effective in terms of macroeconomic indicators, there is a need to ensure that adequate growth momentum is sustained.
Consumer sentiment has become relatively negative and other signs of stress across the economy include: compressed margins, workforce reductions, higher unemployment amongst new graduates, reduced real estate valuations, and an increase in reported bankruptcies.
As also demonstrated by the Business Climate Index, businesses want to see this addressed; this year EuroCham’s Business Climate Index has further declined – from 56 to 45, a drop of 11 points! And even more worrying, it has for the first time gone below the mid-point of 50.
What do you expect most from the White Book 2013?
EuroCham’s expectations for the White Book 2013 are first and foremost to clearly communicate our members’ views on different issues and thereby continue the constructive dialogue with the government. Additionally, we hope that the Government is successful in tackling the general issues of pricing, the role of the state sector and protection of IPRs.
Finally, we are confident that the White Book will play an important role in the Vietnam-EU FTA negotiations. EuroCham and its members remain available to discuss any of the issues and recommendations with interested parties.