HANOI (AFP) – Vietnam has become the 150th member of the World Trade Organisation (WTO) — a milestone expected to launch an era of radical change as the communist nation enters the global economic mainstream.
Southeast Asia’s second most populous country after Indonesia hopes its new status as a signed-up member of the international trading system will accelerate rapid economic growth which is second in East Asia only to China.
“It is a very important turning point,” said Le Dang Doanh, a senior economist at the ministry of planning and investment.
“Joining the WTO will mean for Vietnam the start of a new phase of reform. It should lead to very dynamic and hopeful development. Of course, there are opportunities and there are challenges.”
Labour-intensive industries would benefit first in the country known for its industrious, low-wage workforce, he said, while capital-intensive sectors would face the stiffest challenges from the entry of outside companies.
“Stronger competitors will come and force Vietnam to be more dynamic and there will be some sacrifices. There will be a limited number of bankruptcies.
“Creative destruction is very important for Vietnam but it’s painful. Because the centrally planned economy has so far tried to rescue everybody, now some people must sacrifice.”
Foreign Ministry spokesman Le Dung said Vietnam formally acceeded to the WTO at a ceremony in Geneva in what he called “a momentous event in the international economic integration of Vietnam.”
WTO membership comes more than 30 years after the end of the Vietnam War and 20 years after the regime abandoned strict Soviet-style central planning for gradual “doi moi” (renewal) market reforms.
Today, many investors tout Vietnam as a “China-lite,” which last year booked economic growth of 8.2 percent and drew 9.5 billion dollars in foreign investment.
But experts warn that Vietnam must now follow through on the commitments it has made to the WTO through hundreds of new laws, from protecting the rights of foreign companies to cracking down on copyright piracy.
“There’s been great progress here but that doesn’t mean Vietnam should stand still by any means,” said Adam Sitkoff, executive director of the American Chamber of Commerce in Hanoi.
“Every day is an opportunity for Vietnam to become more competitive and for Vietnamese people to have a better life.”
Under its membership terms, hammered out with the United States, other trade partners and the WTO over more than a decade, Vietnam must scrap a range of tariffs, subsidies and other barriers that protect local industries.
In return, Vietnam — a major exporter of oil, textiles, footwear, rice, seafood and coffee — will face fewer hurdles in selling its goods abroad and have recourse through the WTO in case of trade disputes.
Vietnam has pushed hard to join the WTO while dampening expectations among its 84 million people that the move will bring overnight wealth.
“I am not satisfied when many people think we can become rich immediately after joining the WTO,” Trade Minister and veteran WTO negotiator Truong Dinh Tuyen replied to a recent online question on the news site Vietnamnet.
“Whether these opportunities can be turned into real benefits depends on the efforts of each individual and enterprise.”
Vietnam plans to sell off shares in some of its largest state enterprises in coming years, including Vietnam Airlines and major banks, but it remains unclear what share and how much control it will give to private investors.
Vietnam, one of the world’s five remaining communist-ruled states, describes its economic model as a “market economy with socialist orientation.”
Doanh, the senior economist, said: “The problem is what you mean with socialist orientation.
“You mean it’s freedom for everybody, it’s equality, it’s fraternity, that’s okay,” he said. “If you mean it’s the leading role of the state-owned enterprises, that’s another question.”