Competition environment and THE URGENCY of competition law in Vietnam Trinh Anh Tuan Specialist Competition Administration Agency Ministry of Trade of S.R.Vietnam I. COMPETITION ENVIRONMENT IN VIETNAM Since 1986, Vietnam has launched renovation policy - “Doi moi”- carrying out multi-sectors economy, changing from central planned economy into market economy under State management, implementing open - door policy, actively integrating in international economy. Going hand in hand with all these moves is fundamental changing the role of State and market in the economy: State builds favorable environment for doing business; Enterprises of all economic sectors have the rights to autonomy in their business activities and enjoy the equality in competition opportunity in the market. Going parallel with renovation process and the trend of globalization, freedom of trade and investment, competition was accepted as momentum for development, increasing economic efficiency, promoting social advance and for consumer’s interests. At present, Vietnam economy has significant changes, scale of private enterprises has step by step expanded, financial potential remarkable raised, especially the great contribution of many foreign investment enterprises so that promulgation and enforcement Competition Law are very important. That demonstrates the important step in the direction of modernization of legal corridor and economy of Vietnam. Addition to the supplement roles for economic reforms such as freedom of trade and price ….the approval and effective implementation of Competition Policy will bring about ability to make great contribution to modernization and economic reform in general. However, in the process of doing business, phenomenon of unfair competition has become popular in Vietnam market. Many enterprises has trend to reduce competition pressure by agreement and economic concentration. At the same time, they prevent effective competition by practice such as abuse dominant and monopoly position or unfair competition practices. Noting the importance of the issue, the resolution of Building law Program, the Ordinance 1999 assigned the Ministry of Trade to be the host of drafting the Competition Law. In the process of studying competition law we also take into account the characteristics of Vietnam socio-economic development and study competition law of more than 30 countries over the world representing different economies, especially the competition law of 1 transitional economies. We also collect contribution opinions from foreign experts such as Canada, US, Japan, and Taiwan.. At present, the Drafting Board has fulfilled the 9.3 draft of Competition Law, expecting to submit to the Government in the beginning of 2004 and to the National Assembly in the end of 2004 and hoping to put into operation in 2005. II. THE URGENCY OF THE COMPETITION LAW IN VIETNAM 1. The competition law is among the fundamental one to regulate the market economy Competition is the inherent growth dynamics of the market economy. However, restrictive business practices, abuse of dominant position and unfair competition are the harmful results of competition. Because of the negative impact of restrictive business practices, abuse of dominant position and unfair competition, competition in business should be and has been regulated by laws. According to UNCTAD statistics, in 2000, 77 countries and territories have laws to regulate competition. Vietnam has shifted the economy towards market mechanism since 1986. Due to the need to regulate the market economy, the promulgation of competition law in Vietnam is essential, making contribution to the promotion and enhancing the possessiveness while limiting the negative impact of market economy. 2. The need of controlling monopoly One of the outstanding features of the Vietnamese economy is that it was shifted from a central planning economy. Therefore, during the transition process, the impact of the state sectors on the market is still very big. Due to a low starting point and some inherent social and economic features of Vietnam, in the coming time, some sectors still maintain state monopoly. However, the Government should have a mechanism to control those monopolies, based on the provision of competition law, to avoid the authoritarian, abuse of monopolistic position to create bad impact for society. 3. The need for promoting and maintaining a fair and equal business environment. Based on the experience of 15 years of economic reforms, the socio- economic development strategy of Vietnam to the year of 2010 affirmed “synchronously creating market elements; reforming and improving the efficiency of economic management of the Government” in the light of creating an equal and clear investment environment, for both domestic and foreign 2 investment, suitable with the changing business and production environment. At the moment, Vietnamese economy has the following features: Firstly, the Vietnamese economy has a low starting point, shifting toward market mechanism while the state sectors still accounted for a big proportion. In the coming time, state sector still plays a significant role in some industries and areas. Secondly, Vietnam is also attracting foreign investment by incentive measures on tax, the land lease and land use right, etc. These incentives, unexpectedly, created a big discrimination among different economic sectors, creating competition advantages for certain economic sectors. Therefore, to balance the benefits of different economic sectors for a good coordination in behaviors and policy planning, Vietnam should have a consistent instruction principles in this regard. Competition Law is one of the necessary instrument of the Government to realize that purpose. 4. The need of the international economic integration International economic integration has become a certain trend of all nations on their development path. The participation of Vietnam into ASEAN, AFTA, ASEM, APEC and the conclusion of the Vietnam – US BTA has marked the active process of international economic integration of Vietnam. As the result of the integration process, Vietnam has to open its market for goods and services for foreign companies. Companies from economic powers like the US, EU, Japan... are competing with Vietnamese enterprises right on the Vietnamese market. With experience and powerful economic potential, they do not hesitate to adopt all competition measures including unfair ones, restrictive business measures to get customers and expand market. Like any other transition economies, Vietnam is facing the challenge that foreign enterprises will abuse the advantage of trade liberalization to impose their own restrictions like price fixing, dumping, other abuses to distort fair competition on the market. Therefore, to arrange all necessary legal tools in the process of international economic integration, Vietnam need to have competition law. 5. The reality of legal corridor to regulate the current competition practices The 1992 Constitution (partly revised in 2001) has recognized the right of free business and the development of multi-sector economy in Vietnam. This has created the foundation for competition among enterprises of all types of 3 ownership. Since then, other legal documents like Civil Code, Enterprise Law, Commercial Law, Law on foreign investment in Vietnam, Law on credit institutions and Law on Insurance Businesses etc has help create the necessary legal corridor for competition. However, legal regulations relating to competition practices are still general with low legal validity, resulting in the inability to deal with dedicated and complex competition violation of enterprises in the market. Because of all the above mentioned need for regulating competition behaviors in the current context, Vietnam is required to have Competition Law. Competition Administration Agency in Vietnam 4 Competition Administration Agency established to control competitive issues and to deal with lawsuits related to antidumping, countervailing duties, and safeguard. Mr. Nguyen Huu Chi General Director Competition Administration Agency Phone: 84 4 8257078 Fax: 84 4 8262551/8264696 Mr. Tran Anh Son Deputy General Director Competition Administration Agency Phone: 84 4 8256066 Fax: 84 4 8262551/8264696 Contact Information Competition Administration Agency Ministry of Trade 21 Ngo Quyen street, Hanoi Vietnam Email: [email protected] Tel: 84 4 8252651 Fax: 84 4 8264696 Web: www.mot.gov.vn 5.