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

The legacy of centrally planning economy The concept of competition has been strongly condemned and criticized as inefficient and immoral. 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. 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. Private sector was not allowed but existed due to practical demands.

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

Competition in various industries and services Export has been liberalized and strongly promoted the private participation. Private sector shares ~ 45% of non-oil export. 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. 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. Unfair competition practices still exist. No visible improvement yet.

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). 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. 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) Unequal treatment on accession of land, credit from Development Assistance Fund (Bank on Development)

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

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

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

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

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