Doing Business in Vietnam - The WTO Benefits

Being a member of the World Trade Organization (WTO) has been quite rewarding for Vietnam in its first year. The membership has helped Vietnam accomplished a few notable achievements so far this year.

Below is my short list of what Vietnam has accomplished since its admission to the WTO:

1. A Record Foreign Direct Investment (FDI) - FDI estimated to reach USD$13 billion this year. The WTO membership has brought in a higher number of foreign investors and Vietnam now ranks 6th in the world in terms of the most attractive FDI destination by the United Nations.
2. A Record Foreign Indirect Investment (FII) - FII estimated to reach USD$5.5 billion this year as foreign equity funds are pumping money into Vietnam securities market. Read more about FDI and FII from this post.
3. An Increase in Exports - a 20% increase in export reaching USD$39 billion YTD and estimated to reach USD$48 billion for 2007.
4. Access to Cheaper Loans - Vietnam now has access to loans from the World Bank's International Bank for Reconstruction and Development, which is one of the cheapest loans out there.
5. Equal Treatment for Vietnam Products - Vietnam's products now enjoy equal treatment in member country markets, which leads to the increase in price of export products as well as the increase quality.
6. Increased in Consumer Spending - Consumer spending has increased due to the wider selections of products brought in by foreign companies.
7. A HOT Real Estate Market - The real estate sector has seen rapid development and investment from foreign investors. However this has caused real estate prices to skyrocket and the government will need to act to avoid a crash landing. You can read more about it from my previous post.
8. The MOST Attractive Manufacturing Destination - Vietnam now ranks as the number one manufacturing destination (beating out China ) by the PricewaterhouseCoopers EM20 Index.

Belonging to the WTO has definitely brought Vietnam many benefits. However, it also brought along challenges. Vietnam now has to increase the quality of its exports--it must play by a higher set of standards. The Vietnamese government has to improve the legal and accounting environments as well as streamlining administrative procedures. Vietnam companies now face more foreign competition and most firms in Vietnam have little experience and expertise to compete on a global scale.

Overall, I think the benefits far outweigh all the challenges. The challenges brought along with the WTO membership, to me, are actually good for Vietnam. Facing and solving these challenges will make Vietnam more prepared to compete in the international markets.

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source: Doing Business in Vietnam