 |
| Finance Vice Minister Dr.
Le Thi Bang Tam: “Concessions are a matter
of reciprocity.” |
| Photo by Thomas Jandl |
Vice Minister of Finance - Dr. Le Thi Bang Tam
assisted at the signing ceremony for the Bilateral
Trade Agreement (BTA) in Washington in December
2001. She discusses progress made and progress still
needed for full implementation.
Before the United States lifted the embargo in
February of 1994, there were already signs of some
U.S. investors in Vietnam, but they had to invest
through their international subsidiaries. After
the embargo was lifted, progress was fast. The level
of $500 million – 100 times the embargo level
– was reached in very short time. The BTA in
December of 2001 represents another milestone in
the normalization of bilateral relations.
These investments are of great importance to the Vietnamese
economy. Not only do U.S. businesses invest, but their
presence also boosts subcontractors. For example,
with Nike came a number of Asian suppliers. Moreover,
foreign companies bring technology with them that
improve the efficiency of the economy overall. And
most foreign businesses produce for export.
This is at the basis of the positive development of
Vietnam’s trade patterns. Vietnam can now make
full use of the competitive advantage of its products,
as we have already seen in sectors such as seafood,
textiles or footwear.
But with these benefits come challenges. As Vietnam
becomes a stronger competitor, trade disputes arise.
The catfish case is a vivid example. Unfortunately,
Vietnamese companies are unfamiliar with American
law and trade rules. On the other hand, Vietnamese
law is in transition. That is why the BTA has not
yet been able to reach its full potential. The United
States is an important investor, but far from reaching
its potential in Vietnam.
As Vietnam’s exports to the United States
increase, we expect more trade disputes. I believe
in the benefits of the BTA, but to maximize them,
we need efforts from both sides for full implementation
and the reduction of constraints.
Financial services
On the Vietnamese side, the financial services sector
has drawn a lot of attention. Especially the insurance
market has experienced an impressive opening since
1993. At that time, there was only one insurance company,
now there are 20, half of which are foreign- invested.
The United States has one fully licenses, 100% foreign-owned
life insurance company, AIA. Two more, New York Life
and ACE are waiting for their licenses.
The opening of the sector led to an improvement of
the industry overall, with 80,000 jobs created and
significant improvements in management skills throughout
the industry. And there is still room for growth.
The annual growth is 20%, but only 1.3% of gross domestic
product is spent on life insurance. That is low in
the international comparison, even in the context
of ASEAN (Association of South East Asian Nations).
We are now finalizing our strategy for the sector.
We will implement all of our commitments we agreed
to under the BTA. We see no threat from the foreign
sector and are considering the applications from the
two U.S. companies. Our message to the U.S. and other
foreign companies is this: Help us develop the sector,
its regulatory capacity. Then the sector will be ready
for more competitors. At the moment, increased capacity
may exceed our regulatory capacity. The large ones
only fit in the market as it grows.
Moreover, we have to balance the concessions we extend
to foreign partners. Japan, for example, invests much
more money in Vietnam and provides more development
assistance than the United States. We also see problems
with the terms of trade imposed by the United States,
as evidenced in the catfish case. These disputes are
part of the overall relationship.
This overall relationship also serves to explain why
we extend certain concessions. How could we explain
to Japanese or European insurance companies why the
U.S. applicants get preferential treatment.
With overall improvements, we could argue reciprocity. |
