Loopholes of the laws lend a hand to Chinese to rule the roost in Vietnam

Posted on August 23, 2012

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Vietnamese farmers, who suffered from the trickeries by Chinese businessmen, have sworn that they would abstain from dealing with Chinese businessmen forever.

Chinese businessmen have been, through different ways, doing trade illegally in Vietnam, thus causing chaos to the market and ravaging the agricultural production. This has been attributed to the loopholes existing in the Vietnamese laws.

Vo Van Quyen, Director of the Domestic Market Department of the Ministry of Industry and Trade, said Chinese businessmen come to Vietnam as travelers, but they collect farm produce to carry to China, affirming that this is an illegal activity in the Vietnamese territory.

Easy regulations clear the way for Chinese to Vietnam

Dinh Tien Phong, Deputy Director of Hathaco, a farm and seafood produce processing company, said most of the Chinese businessmen come to Vietnam to collect farm produce with an aim to collapse the Vietnamese market.

In fact, with similar geographical conditions, all the plants grown in Vietnam can also be grown in China.

China’s Hainan Island, for example, is well-known as a big chili growing land, while Chinese businesses regularly export chili to South Korea. However, Chinese businessmen still came to Vietnam to collect chili. Why did they accept to pay the high price of 30,000 dong per kilo to buy Vietnam’s chili, while Vietnamese enterprises only paid 20,000 dong?

In fact, Chinese businessmen offered high prices just to encourage Vietnamese farmers to grow more chili. After that, they disappeared from the market, leaving Vietnamese farmers with the unsold chili.

Ngo Van Chanh, Deputy Director of Chanh Thu Fruit Import-Export Company in Ben Tre province, said Chinese businessmen well understand the problems of Vietnamese farmers, who just make transactions with verbal agreements instead of signing contracts. Therefore, they can easily swindle Vietnamese farmers and welsh on their debts.

The government’s Decree No. 90 clearly shows how to treat the foreign businessmen with no presence in Vietnam. However, to date, such businessmen have not appeared in reality.

Since the decree took effect in 2007, no foreign businessman has registered their business at the Ministry of Industry and Trade’s Import-Export Department or provincial industry and trade departments.

Most of the Chinese businessmen came to Vietnam with tourism visas. In Vietnam, they collected farm produce and then assume the names of Vietnamese businessmen to carry the produce back to China across the border gates.

The out-of-date decree

Under the Decree No. 90, the foreign businessmen with no presence in Vietnam are referred to the ones who do not make direct investment in Vietnam in accordance with the modes stipulated in the Investment Law and Commercial Law. The businessmen do not have representative offices or branches in Vietnam as stipulated by the Commercial Law.

The businessmen, if wanting to collect goods in Vietnam, must register for the import-export right at the Vietnamese competent agencies.

However, as Professor Vo Tong Xuan, a well-known agriculture expert in Vietnam, no one would be foolish enough to register to the competent agencies if he really plans to make deceitful trade.

It would be better for Chinese businessmen to act as travelers to come to Vietnam, which allows them to ease the administrative procedures, and then collect farm produce with the assistance of Vietnamese merchants.

In case the businessmen are discovered by the competent agencies, they would be easily escape punishment, because Vietnamese farmers cannot show any documents, invoices or contracts, to prove their behaviors.

“Therefore, the requirement on making registration at provincial industry and trade departments proves to be nonsensical,” Xuan said.

Thu Uyen

Vietnam’s trade with China: Fellow travellers, fellow traders

AS MUCH as their official media tend to extol grand friendship between a pair of great nations, Vietnam and China have a long and tumultuous history as neighbours. More recent friendly manoeuvres between Vietnam and America are understood to comprise a kind of diplomatic bulwark against a certain unmentioned giant to the north. Vietnam’s relationship with China is complicated on a number of fronts, not least of which is trade.

At the beginning of the month America’s defence secretary, Leon Panetta, dropped in at Cam Ranh Bay, a deepwater port that was controlled by America’s navy during its war with Vietnam. He was there to exchange artefacts from the war with its victors, in Hanoi. Which set minds to wondering at the strengthening of ties between these “former-foes-turned-unlikely-allies”, as the American press tends to style them.

Was it all part of a containment policy for China? Vietnam’s and America’s defence ministers have been exchanging visits annually since 2003. The previous secretary of defence, Robert Gates, supplemented that routine in coming to Vietnam for an ASEAN-sponsored summit of defence ministers in 2010.

Certainly Vietnam is suspicious of China, and has been for centuries, if not millennia. For hundreds of years at a stretch China’s emperors ruled over parts of Vietnam; today the names of the country’s biggest boulevards commemorate heroes who fought against foreign invaders, including the Chinese. Though hardliners within the Communist Party leadership might prefer to look to China for inspiration before turning to the America, especially when it comes to issues of internal security, post-revolutionary Vietnam is not always happy with its neighbour. Last year 12 weeks of essentially government-sanctioned protests against China’s actions in the South China Sea were a vivid demonstration of that.

Carlyle Thayer, a Vietnam specialist at the Australian Defence Force Academy, wrote that “Secretary Panetta must be at pains to ensure that any form of stepped-up defence co-operation is not construed by Vietnamese Party conservatives as an attempt to enlist Vietnam into an anti-China containment policy.”

All is not mutual suspicion however. Throughout recent years Vietnam and China have excelled at trade. China is Vietnam’s largest trading partner. Last year their two-way trade stood at $36 billion, while trade between America and Vietnam was $22 billion. Their two-way trade however is a bit more one-way than the Vietnamese would like. Their trade deficit already stands at $1.85 billion for the first two months of 2012, according to Vietnam’s General Statistics Office.

This doesn’t even take into account for the huge black-market border trade at places like Mong Cai, in the north of the country, or Lang Son, which is known, among other things, for its large sex-toy market (dildos being technically illegal in Vietnam).

Jonathan Pincus, an economist at Harvard, reckons part of the problem comes down to the export industry itself. Vietnam must import the raw materials for many of things it makes for export from China. Leather for shoes, fabric for the huge garment industry, and so on. Possibly the state-owned companies should focus on this and not, say, utterly unrelated industries. (To be fair, in the face of their huge financial losses, the government has tried to wean the SOEs from their penchant for excessive diversifying).

Le Dang Doanh, a Vietnamese economist, sounded frustrated when speaking at a conference more than a year ago. Vietnam, he said, “exports coal and then imports power. It exports rubber and then imports car tyres. As for the garment industry, if China were to stop supplying materials, the industry would face big difficulties.”

It is the spectre of dependency that has many of Vietnam’s leaders feeling cagey; no one wants to be reliant on China. In fact, it was the fear of becoming a captive market that fuelled protests against the development of bauxite mines in 2009 and 2010. The mines, which were to be run by Chinese companies, attracted huge criticism from a number of areas. Environmental concerns were paramount. But so was the fear Vietnam would be stuck exporting its relatively cheap alumina yield to China. “Containing” China is a crowd-pleasing goal in some quarters, but containing the trade imbalance might prove to be the more popular achievement.

The Economist

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Posted in: Corruption, Politics