A trade ministry official has allayed fears of threats posed to Viet Nam’s service sector, predicted by experts, once the country joins the World Trade Organisation.

Ngo Chung Khanh, an official from the Ministry of Trade and a member of the WTO negotiating delegation, has said the country’s commitment to open its market in 11 to 12 fields and 110 sub-branches of the service sector was ‘reasonable’ compared to commitments made by other newly-admitted members.

As for ‘sensitive’ fields like telecommunication and finance, countries like Saudi Arabia had agreed for absolute liberalisation, while Viet Nam, to some extent, has still maintained the right to protect the domestic sector.

This should be seen as a "good negotiation result in the context of existing members putting pressure on nations applying for WTO membership."

The negotiations have helped to make the Vietnamese Government more flexible while protecting businesses from shocks.

Though experts had warned of domestic distributors losing their "home-turf" when foreign retail groups start operations, Khanh said the view was erroneous as Viet Nam had only made commitments for limited expansion of foreign companies.

The retail sector, according to the Viet Nam-US Bilateral Trade Agreement (BTA) and the country’s commitments to WTO membership, a 100 per cent foreign enterprise can only be established from 2009.

While many fear Viet Nam’s retail sector to suffer from foreign companies taking over the domestic retail market, the country has considered all possibilities and taken effective measures to deal with foreign investors.

Viet Nam would only allow the setting up of one 100 per cent foreign-owned supermarket in one designated province or city, and reserves the right to reject requests to set up more supermarkets if it is proved that there is no actual demand for more, Khanh said.

The country has been successful in protecting the domestic retail industry by limiting the opening of foreign-owned supermarkets.

Similarly, in the banking sector, overseas banks will have to pay US$15 million to the State Bank of Viet Nam (SBV) to open a second branch in the country.

This regulation would limit the opportunities of foreign banking corporations to open new branches as many may refrain from spending $15 million to establish a branch.

Many foreign banks will therefore choose to acquire more shares in local banks and set up joint ventures to get involved more deeply in the domestic banking system. Currently, foreign banks are allowed to hold only 30 per cent of the total chartered capital in Vietnamese banks.

Source: Vietnam news