Vietnam's economy yet to benefit from integration: economists

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Vietnam has failed to grasp the development opportunities that came its way in the last few years, including its accession to the World Trade Organization, economists said at a conference in Hanoi Wednesday.

Economists from the Central Institute for Economic Management said six years after joining the WTO Vietnam's foreign trade environment has improved as has foreign investment.

But businesses' low competitiveness has made them vulnerable to foreign competition, they said.

Le Dang Doanh said Vietnam is yet to create a true market economy since both the authorities and businesses have failed to adjust quickly enough to global market rules.

They are "not quite active" in reforms, he said.

While Vietnam has been exporting more of its competitive products like coffee, rice, and seafood, many businesses remain embroiled in anti-dumping lawsuits, which are a "major barrier to Vietnamese exports," he said.

The country attracted a wave of foreign direct investment when it first joined the WTO, but its economic instability soon put paid to that, he said.

"Vietnam is struggling to compete with Myanmar and Indonesia for FDI, which is flowing faster into those countries than us."

Analysts also expressed concern over Vietnam's reliance on China for many of its major exports, saying, in other words, it is exporting on behalf of China.

"Garment is one of our leading exports, but we import 75 percent of the materials from China. We have been depending too much and too long on China," Doanh said.

Some American officials have said that Vietnam is giving China a lift to the US for free, "really something we need to think about."

Vietnam's trade deficit with China has been increasing steadily since at least 2000, rising to US$16.7 billion last year from $13.8 billion in 2011.

Pricey rescue

The attendees also criticized the government's stimulus package in 2008 at the height of the global downturn, saying US$8 billion has been a "very expensive" price, since all it has brought is a further 1 percent GPD growth and debts. Vietnam's economy grew 6.5 percent last year, the slowest in more than a decade.

Vo Tri Thanh, deputy head of the institute, said the stimulus was not a smart move, and the inflow of cash merely caused an illusion about the true capacity of the economy.

Doanh said the stimulus was not beneficial, indeed, on the contrary, causing macro instability.

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