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Advocacy for Competition Policy in Vietnam's Transitional Economy |

This project examines the impact of competition policy and law in Vietnam's transitioning economy, highlighting the need for regulatory reform and capacity building. |

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Advocacy for Competition Policy in Vietnam's Transitional Economy |

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  1. PROJECT FINAL MEETING Advocacy and Capacity Building on Competition Policy and Law in Asia (7up2 Project) 27-28 June 2006 Hotel Landmark Bangkok, Bangkok, Thailand Competition Policy and Law in Transitional Economies- The Case of Vietnam Le Dang Doanh Senior Economist

  2. The legacy of centrally planning economy • The concept of competition has been strongly condemned and criticized as inefficient and immoral. • The economy operated according to administrative order and decision in all spheres: production, distribution, consumption. Consumer did not have any choice. De-facto there was monopoly everywhere. • Private sector was not allowed but existed due to practical demands.

  3. The Reform Process • Law on Foreign Direct Investment (1987, 1990, 2000)and Law on Investment (2005) • Law on Company (1990), Law on Enterprise (1999 and 2005) • Law on Bankruptcy (1995 and 2003) • Law on Competition 2004. No sufficient control on monopolies.

  4. Competition in various industries and services • Export has been liberalized and strongly promoted the private participation. Private sector shares ~ 45% of non-oil export. • In non-essential industries and services competition helped to improve supply, choice, quality of products and services: in gastronomy, garment and footwear, passenger transport and taxi etc. Private sector was clearly more efficient. • Unfair competition practices still exist. No visible improvement yet.

  5. Monopolies and unequal playing field • Monopolies in strategic services are regulated by special laws: Law on Telecommunication, on Civil Aviation. Decree-Law on Pricing regulated pricing for various products (gasoline) and services (electricity, passenger air-transport etc). • De-facto monopoly at provincial level on procurement of certain agrarian products. • Unequal treatment on accession of land, credit from Development Assistance Fund (Bank on Development)

  6. Monopolies • Airline: Vietnam Airline operates airport facilities, keeps predominant market-share. • Telecommunication: VNPT share 92% of market in fixed telephone, controls the access to the national grid. • Electricity, Vinacoal • Import and export of cultural products: movies, books, magazines. • Cement, gasoline etc. • Mixed signals: establishment of big state-owned Holding Groups on public utilities and products. • High cost, low quality of services.

  7. Regulations • Monopolies operate without independent regulator. Electricity Regulator reported to the same Minister of Industries. • Laws with unclear conditions for market entry. • Master plan for development of essential products and services. • Licenses

  8. Law on Competition • As a fundamental law for market economy the promulgation of the Law on Competition considered as an important progress. • Efforts for implementation: Decrees, Competition Commission, Competition Agency. • Increasing awareness among business community and consumers • So far limited impacts on the practice.

  9. Problems • Unleveled playing field between state-owned enterprises and domestic private companies. • Intervention from various agencies into business affairs. • Large share of micro-businesses, unable to understand and observe laws. • Under–staffed Competition Agency. • Coordination between Competition Law and specific laws regulating utilities.

  10. Prospect • Vietnam’s WTO-accession helps to intensify competition, demonopolyze various industries and services according to a roadmap. • Over-hauling of the legal framework. Establishment of independent regulators for public utilities. • Strengthening the Agency on Competition, Commission on Competition.

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