15 STAR WTO 1 year Review Presentation QG

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Vietnam One Year After Entry into WTO Steve Parker, Chief Economic Advisor, STAR-Vietnam January 11, 2008: 

Vietnam One Year After Entry into WTO Steve Parker, Chief Economic Advisor, STAR-Vietnam January 11, 2008

What is STAR-Vietnam: 

What is STAR-Vietnam TA for Implementation of U.S.-Vietnam Bilateral Trade Agreement and WTO + + since 2001 First major USAID-funded program in Vietnam Designed to respond to needs of counterparts in implementing BTA/WTO (Demand Driven) Supervised by a Government Steering Committee and USAID Assigned to work with 47 counterparts Support not only liberalization of trade and investment, but also systematic advances in the rule-of-law, transparency, governance and protection of property rights

WTO Implications: 

WTO Implications Faster liberalization and more level playing field Faster transition to a market, rule-based economy Predictability and transparency Better socio-economic development through more trade, investment, jobs and less poverty

Highlights of Economic Performance in 2007: 

Highlights of Economic Performance in 2007 GDP Growth: 8.44% (US$833/person) Exports: US$48.4 Bil. (22% YoY Growth) Imports: US$60.6 Bil. (35% YoY growth) FDI registered: US$20.3 Bil. (70% growth) Poor household: 14.87% Inflation (12.6%) Infrastructure Gap Implementation Gap Competitiveness Sustainability and Quality of Growth


SHARES OF KEY EXPORTS Emergence of manufactures and decline of primary products


Equipment and materials dominates. Some comsumer goods are on the rise (cars, clothing etc.)


Overall exports to U.S. grew at about 20% in 2007. Exports of primary products declined by 4% largely due to a 33% decline in petroleum exports. Clothing exports posted a 28% growth – 10% increase from 2006’s.

Exports of Non-clothing manufacturing exports (US$ Million): 

Exports of Non-clothing manufacturing exports (US$ Million) Emergence of electronics which posted a 40% increase over 2006. Footwear export growth decelerated to 9% from 33% growth in 2006. Furniture had a strong growth of 37%.

Growth of U.S. Exports to Vietnam (%): 

Growth of U.S. Exports to Vietnam (%)


Strong Interest of foreign investors after WTO

Increase of private investment after WTO: 

Investment composition by ownership (%) Increase of private investment after WTO

Challenges and Risk: 

Challenges and Risk Infrastructure gap: Quantity and quality Quality and equality in growth (who gets what – winners and losers, growth & environment etc.) Implementation gap: WTO maters both in law and practice Massive legal reforms (100+ new laws and regs) Strong commitment with concrete action plans New and different institutions needed to bring WTO related reforms to benefit investors and people Role of the Government: Regulator? Owner? Player? Low cost and low risk regulatory regime for businesses and people More exposure to external risks (e.g., oil shock, subprime mortgage etc.)

Managing Challenges and Risk: 

Managing Challenges and Risk WTO as floor not ceiling to handicap growth and liberalization New culture and incentive for more effective government/regulators (from control to service) Administrative and regulatory reform (Korea) Judicial reforms (Singapore) Free access to information to reduce risk – information remain a scarcity here (Law on Laws, Law on Access to information) Independence/separation of regulatorship, ownership and playership of the Government New tools and more information needed to manage more open economy with much more international interaction Development of human capital

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