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Competition Law and Policy in Vietnam. The focuses of this presentation : The current competition situation in Vietnam Perspectives on competition policy. 1. The current competition situation in Vietnam. a) Some major features of Vietnamese Economy b) The competition policy in Vietnam
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Competition Law and Policy in Vietnam The focuses of this presentation : • The current competition situation in Vietnam • Perspectives on competition policy
1. The current competition situation in Vietnam a) Some major features of Vietnamese Economy b) The competition policy in Vietnam c) Market structure and competition
1.a. Some major features of Vietnamese Economy • In the transition to the market economy since 1986; • In 1990s, because the economy was at a very low starting point and with the participation of private and foreign invested sectors, the high growth rate of GDP has been reached; • The competitiveness is still low;
1.a. Some major features of Vietnamese Economy (Con’t) • The economy is actively integrating into the world and regional economy, however it is still defined as a non-market economy. Among many comments, some are: 1) The VND is not freely convertible; 2) The SBV remains under state control; 3) The competition Law was not be enacted until October of 2003; 4) The government owns all the land and does not recognize private property rights; 5) The State sector accounts for about 40% of GDP;
1.a. Some major features of Vietnamese Economy (Con’t) 6) 70% of bank lending went to SOEs in 2001, thus severely restricting the credit available to private enterprises; 7) The Government Pricing Committee directly sets prices in many industries; 8) The SBV controls the 4 state-owned commercial banks, which comprise 80% of the banking sector; 8) The rule of law is underdeveloped, and so on.
1.b. The competition policy in Vietnam • Before Nov. 2004, there was no the competition law in Vietnam; • However, the competition regulations have been embodied in various policies and laws (e.g., the 1992 Constitution, the commercial law, criminal code). • The level playing field is still not created for market players: SOEs are given more preferential treatments (see Example 1); • The establishment of GCs has restricted the competition.
1.c. Market structure and competition • State sector dominates in the production of goods viewed as natural monopoly and of strategic goods; • Non-state sector dominates in the production of necessity goods; • Foreign invested sector dominates in the production of goods with the higher technology level; • The dominant position in production of some goods has changed from one sector to another; • The import of consumer goods is restricted, so consumption goods produced domestically have not to compete much with imported goods.
2. Perspectives on Competition Policy • Background and Methodology • Field survey results • The main findings
2.a. Background and Methodology • 3 types of questionnaires were designed for 3 types of respondents: officials, enterprises, and customers. • The list of 50 respondents for each types was randomly selected before the questionnaires were sent to them • The sample size was too small, so Hanoi was chosen as a place for the survey and the direct interviews were carried out in the second round.
2.b. Field survey results • Many concepts related to the competition policy and law seem to be new in the transition country like Vietnam. • The majority of respondents feel that unfair practices are prevalent in many business activities; the level playing field is only in paper. • Many respondents (enterprises and customers) said about the existence of the anti-competitive practices, but they could not describe them in detail. • Many respondents (officials and enterprises) said that the competition policy and law alone cannot solve the unfair aspects in doing business.
2.c. The main findings • The perception about the prevalence of anti-competitive practices is different among three types of respondents. • Many respondents think that resale price maintenance is prevalent, but it should not be considered as the anti-competitive practice. • The prevalence of anti-competitice practices depends on the market conditions. • The long-run effect of anti-competitive practices should be compared with their short-run effect.
2.c. The main findings (Con’t) • Many respondents said that the dominance position may have both the positive and negative effects. However, they didn’t know how to determine and when the dominance position is defined as abused. • Some respondents suspected about the efficient implementation of the competition law. • The capacity building on the competition law and policy is very necessary.
