ABAC urges changes to protectionism

HCMC – The APEC Business Advisory Council (ABAC) started its investment forum in HCMC on Monday, urging the Government not to adhere to protectionism as it does more harm than good for the economy.
At the ABAC Dialogue on Investment, speakers called for the Government to be more transparent in international trade and to make changes to protectionism.
According to Anthony Nightingale, director of Jardine Matheson Holdings, a member of ABAC Hong Kong, protectionism is not a good policy, and the Government needs to look into the economy’s benefits as a whole.
When entering a country, giant retailers bring with them new thinking about prices, food hygiene and safety as well as many management standards, said Nightingale when talking about benefits that a country can enjoy from foreign companies.
Amid concerns that local small- and medium-sized enterprises (SMEs) can get hurt if not protected while there are more incentives for foreign investors, experts said that the Government should develop policies which bring benefits for all sides.
According to an expert, huge hotel projects in Vietnam were mainly constructed by foreign contractors ten years ago, but local firms have now developed strongly and won many big projects.
Such Vietnamese firms can not be as successful as they are now if they are always protected, and the success of big firms in Vietnam does not result from protectionism, he added.
In addition, protectionism can protect the domestic production but limits investments of foreign-invested firms, and thus they turn to other markets that are more attractive.
Local firms also have to follow international standards and are in need of support from the Government, said Virginia B. Foote, President and CEO of Bay Global Strategies.
Nick Reilly, Chairman Emeritus, U.S. National Center for APEC, said that there should be a win-win strategy to ensure benefits for local and foreign firms. “Protectionism is necessary, but it needs to be balanced and transparent,” he said.
The Government needs to know what foreign investors can benefit the economy and SMEs as well as whether they are willing to transfer the technology or not, Reilly said.
According to experts, the foreign investment leaves a huge impact on the economy of a country as it is a way to attract capital, technology, human resources training as well as production and management experiences.
According to statistics of the Vietnam Chamber of Commerce and Industry, there have been over 13,000 foreign firms making investments in Vietnam with total capital of over US$200 billion. Besides, this sector contributes 25% to the country’s GDP, 35% to the industrial production and 52% to the export value.
Speaking at the opening of the meeting, State President Truong Tan Sang said that as a developing economy, Vietnam is striving to create a good business environment for both local and foreign enterprises, stabilize the macro economy, control inflation and improve the investment environment. Besides, the country will accelerate the economic restructuring, focusing on public investment, commercial banks, financial institutions and State-owned enterprises.
The third ABAC 2012 Meeting will last until Thursday. After that, ABAC experts will have another meeting with the Government on Friday to discuss how to deal with problems relating to public-private partnership (PPP) investments in infrastructure.