"Vietnam of Renewal, Development and Active International Economic Integration"

June 8, 2001

Phan Van Khai
Prime Minister of the Socialist Republic of Vietnam

Mr. Chairman,
Ladies and Gentlemen,

Let me, at the outset, express my sincere thanks to the Nikkei Newspaper for giving me the opportunity to participate in and address the 7th renowned International Conference on "The future of Asia" held in Tokyo, a major political - economic - cultural center of Asia and the world. On this occasion, I would like, on behalf of the Government and people of Vietnam, to convey to the Government and people of Japan our friendly greetings and best wishes.

This conference is a good opportunity for us to exchange views on the development prospect of Asia in this century.

In the last years of the 20th century, the financial - economic crisis caused severe damage to many Asian economies and exposed more clearly defects in their economic mechanism and structure. Though many countries in the region have gone through the most difficult time and witnessed gradual economic recovery, it is still necessary for us to carry on with reforms in economic structure and mechanism to ensure sustainable development. For some countries, overcoming socio-political instability remains an urgent task. This becomes more difficult when world major economies fall into stagnation or recession which adversely affect the growth of the global economy.

Though in the immediate, Asia still has to face numerous difficulties and challenges, we have grounds to be optimistic about the future. Economic fundamentals established in the past decades together with rich, diverse potential, especially human resources imbued with rich oriental culture and tradition, are the endogenous factors conducive to fast and sustainable development. The distinct characters peculiar to Asia, once helped create its dynamic development, will be ever more vigorously promoted as the continent embraces knowledge economy.

A factor, which is indispensable for the Asian economic recovery, is the cooperation among ourselves and between us and non-regional partners. With our joint efforts, cooperation mechanisms at various layers and of various scopes have been formed, such as the Association of South East Asian Nations, now encompassing all ten regional countries, sub-regional cooperation mechanisms including the Mekong Delta sub-region, the 10+3 mechanism between ASEAN and Japan, China and the Republic of Korea, dialogue mechanism between ASEAN and its ten dialogue partners, the Asia-Pacific economic Cooperation Forum (APEC), Asia - Europe Meeting (ASEM) and so on. What matters now is how to make these mechanisms operate more effectively, bringing about tangible benefits to all parties concerned.

With importance attached to intra-Asia cooperation, we do not mean to isolate ourselves. On the contrary, we participate actively in global institutions with profound awareness on objective trends, opportunities and challenges of globalization. We believe that these institutions, including the WTO, are only vibrant if they have the participation of all countries, large and small, rich and poor, and operate on the principle of respect for each other's independence, sovereignty, equality, mutual benefit, contributing to bridging the gap between industrialized and developing countries.

The future of Asia also hinges on a crucial condition for development, which is peace and stability. Asia used to be battlefields of many wars and conflicts. In the final decades of the 20th century, the air of relative tranquility has reigned over the continent. Though there are not a few hidden factors potentially causing instability in the region, we are confident that the meeting of needs and interests coupled by the increasing interdependence among nations in the new era will lessen and help settle disputes, maintain and improve the environment of peace, stability and cooperation in Asia.

In this environment, Asia will be able to vigorously put to best use their rich potential, assuming an increasingly important position in world arena in general and global economy in particular, with the rising might of major economies such as Japan, China and India, together with the dynamic development of other Asian economies. More and more Asian countries are at the forefront of knowledge economy and enhanced world culture.

Immediately since the launch of its renewal, Vietnam has expressed strongly its desire to befriend all countries in the international community, striving for peace, stability and development. We are gratified to note that this motto has been translated into reality in Vietnam's international relations. We are continuing to expand multi-sided relations, bilateral and multilateral, with all countries and territories, international and regional organizations on the basis of respect for each other's independence, sovereignty and territorial integrity, non-interference into each other's internal affairs, non - use or threat to use force, equality and mutual benefit, settlement of differences and disputes by peaceful negotiations, foiling any attempt or act of exerting pressure, imposition of views and power politics. As a member of the Asian community, Vietnam makes every effort to actively contribute to maintaining and improving the peaceful and stable environment in the region, constantly expanding and raising the effectiveness of cooperation in the community. We believe that the cooperation in conformity with the interests of the community and each nation will promote the equitable development among countries, an important factor to bring about prosperity for nations and ensure the dynamic and sustainable development of our continent.

Ladies and Gentlemen,

Through 15 years of renewal and development, Vietnam has recorded great achievements, but the economy remains at a low level of development and still in a transitional period with many weaknesses and pressing social issues. In assessing the domestic situation and analyzing international context and trend of the time, we clearly realize the imperative to step up industrialization and modernization, press ahead far-reaching renewal and active international economic integration. Vietnam's 2001-2010 Socio-Economic Development Strategy has identified the goal of "bringing the country out of under-development, markedly improving material, cultural and spiritual life of the people, laying firm foundations for ours to become an industrialized and modern country by 2020". This goal requires accelerated economic growth in a sustainable way. We fully endorse the view on a "development strategy for a stable society" which is one of the themes of this Conference. From ours and international experience, especially lessons drawn from the recent crisis, Vietnam's socio-economic development strategy in the first decade of the new century pays due attention to the close combination of stability, renewal and development:

First, high and sustainable economic growth coupled with social equality and progress and environmental protection.

Vietnam's economic development strategy focuses on products and areas that we have comparative advantage, enhancing their competitiveness in domestic and foreign markets to meet the demand of domestic and foreign markets, accelerating the shift in economic and labour structure in urban and rural areas.

The idea of harmonising economic growth with social equality and progress and environmental protection has been translated into reality in different ways and means, including national target programmes anchored by concerted efforts of the State, people and donor community. Programmes formulated for the 2001-2005 period include employment generation and poverty reduction; education and training; cultural development; clean water and rural environmental sanitation; population and family planning and prevention and control of social diseases, dangerous epidemics and HIV/AIDS. The experience from initial success of Vietnam is that intensive efforts should be concentrated on implementing these programmes concurrently in more than 2000 poorest communes (1/4 of the total communes in the country). As a result, though per capita income is still low, the incidence of poverty has been reduced dramatically, which contributes significantly to socio-political stability. Recently, international financial and monetary institutions have pledged more than US$ 800 million to Vietnam's medium-term programmes on economic development and poverty reduction. This pledge will not only provide an additional resource for but also shows donors' positive assessment on the country's course of renewal and development. It also sends good signals about the investment and business environment in Vietnam.

Second, continue with the in-depth, far-reaching and integrated reforms in the economic and social fields as well as in the State administration, focusing on building and improving a socialist oriented market economy to utilise the brain power, the material and spiritual strength of the entire nation and encourage all entrepreneurs and ordinary people to create wealth for themselves and for the country.

Accelerate the restructuring and reforms of state owned enterprises to raise their operational effectiveness by transferring the ownership of those enterprises that the State does not need to hold 100% shares.

Create and develop all market forces in an integrated manner while building a legal framework for the dynamic, efficient and orderly operation of markets in a healthy and transparent competition environment with restricted and controlled business monopoly.

Attach importance to macro-economic stabilisation, develop a healthy financial and monetary system and control inflation. Application of the market mechanism in such matters as interest rate, exchange rate, trade and investment liberalisation and stock market expansion is to be done on a step by step basis corresponding to actual conditions in order to avoid adverse developments that may cause macro-economic instability.

Third, quickly increase the endogenous strength in science and technology. Expand the scope and raise the quality of education and training to meet the demands of industrialisation and modernization. Rapidly apply advanced technologies in key sectors and industries and, at the same time, select appropriate, pollution-free technologies that can exploit our advantage in terms of labour. Bring about fundamental and comprehensive transformations in education and training. Renew contents of education and training programmes as well as teaching and learning methodologies. Adjust the schooling, professional and regional structures in the education and training system.

Forth, actively integrate into the world economy and seize all opportunities for development. Enhance the competitiveness of the economy while meeting all bilateral and multilateral commitments in trade, service and investment relations. Although now we must take some necessary protection measures, we understand clearly that they are just applied temporarily and selectively and within not a too long period of time. The Vietnamese Government has announced the roadmap for gradual tariffication of non-tariff protection measures and clearly identified steps for reducing tariff rates in accordance with its AFTA and APEC commitments and in conformity with the requirements of the WTO and Bilateral Trade Agreement with the United States.

Considering foreign-invested enterprises as an integral part of the national economy, we have gradually fostered an enabling climate of equal cooperation and competitiveness among all economic sectors in terms of single prices, fees and taxation. In the immediate future, we will reduce telecommunication subscription fees, uniformly apply some prices and fees, adjust personal income tax and solve land-use related problems. At the same time, we will continue to improve the legal environment and streamline investment procedures to reduce investment costs and create more favourable conditions for foreign investors to enhance their competitiveness and become more export oriented. After a period of decline, foreign direct investment in Viet Nam is showing signs of rebounding and increasing. Great efforts have also been made to remove delays in disbursement of ODA provided by some governments and international financial institutions with a view to increasing the effectiveness of this important source of capital. This is also a practical way for us to demonstrate our gratitude to international donors for their valuable assistance.

Fifth, continued efforts are to be made to reform the State apparatus, especially the administrative system with focus on the following major tasks; continue to build and overhaul institutions and pay particular attention to enhancing their enforceability; implement the democratisation regulation and ensure transparency so that the people can know, discuss, implement and examine affairs of the State, especially those directly relating to the livelihood of the people and the operation of businesses; combat red-tape and corruption and build a clean State apparatus manned with true servants of the people.

We understand that more difficulties and challenges are ahead of us as we continue to deepen the renewal process and further accelerate our integration into the world economy. However, it is our firm conviction that with the sound policy to promote such driving forces as the national unity and the dynamism and creativity of the people in combination with the support and cooperation from international friends, our country's course of renewal, development and international integration will see new success, thus contributing actively to the future of Asia.

Ladies and Gentlemen,

Japan plays a vital role in maintaining stability and development in Asia and the world at large. Although Japan's economy is experiencing difficulties, we strongly believe that as the world's second largest economy with huge potential, a creative and hard-working people and a strongly-committed government under the leadership of Prime Minister Koizumi, Japan will quickly surmount challenges, regain its dynamic growth and enhance its role in promoting cooperation and development in the region. Despite economic difficulties, Japan continues to maintain its active assistance to developing countries in Southeast Asia through bilateral and multi-lateral cooperation, investment projects, support programmes on poverty reduction, infrastructure development and enhanced production and managerial capacities. This valuable assistance plays a important role in the development of many countries and Japan's own economic recovery.

Vietnam and Japan have time-honoured relations of cooperation. Japanese commercial ships started doing business with Vietnam since the 16th century, thus establishing the economic ties between the two countries and left behind valuable Japanese cultural legacy in the ancient city of Hoi An in central Vietnam, which was recognized by UNESCO as world cultural heritage and treasured by the Vietnamese government and people. In recent past, our bilateral relationship has seen important developments. Japan has now become a major trading partner, a leading investor and top donor of Vietnam. We highly value the active role played by Japanese investors in Vietnam of whom some are recognized as the most successful FDI enterprises. The Vietnamese government wishes to elevate the bilateral trade-economic relations to a new height and further cultural exchanges between our two countries, especially among the youth.

Vietnam hopes that with the efforts jointly made by our two countries and in the context of a brighter Asian future, the friendship and mutually beneficial development cooperation between Vietnam and Japan will be further strengthened and yield more dividends. On this occasion, I would like, on behalf of the Government and people of Vietnam, to express my sincere thanks to the Government and people of Japan for their practical and effective assistance accorded to Vietnam in our cause of renewal and development for the goal of "rich people, strong country, just, democratic and civilized society".

Ladies and Gentlemen,

Peace and development are always the earnest aspiration and constant objectives of all nations. The future of Asia is in the hand of nations and peoples of Asia. As an active member of the international community, Vietnam always strives for an Asia and world of peace, stability and prosperity. Vietnam will carry on with the policy of active regional and global economic integration, creating every favourable condition for foreign investors and businesses coming to Vietnam and welcomes all international partners which are expanding their cooperation with Vietnam.

I wish the conference a great success.

Thank you.

Titles of speakers, names of companies, etc., were correct as of the time when the forum was held.