WTO Plan Reshapes Vietnam's Economy

Nation Prepares For Export Boom, New Competition

The Hanoi Textile and Garment Co. is predicting sharp increases in exports. (Photos By Alan Sipress -- The Washington Post)

HANOI -- A pair of eager workers gaze skyward from a billboard at the main gate of the Hanoi Textile and Garment Co., arms raised in proletarian zeal, a tableau of industry unfolding behind them. Bold slogans across the bottom urge worker solidarity and diligent labor.

But if the billboard is a socialist throwback, the front lobby faces the future. Festooned above the reception desk are the flags of 40 countries with American red, white and blue strategically positioned in the middle.

As Vietnam, one of Asia's fastest-growing economies, prepares to join the World Trade Organization, it is redoubling its efforts to look abroad. The country is making fundamental changes, from the halls of the national assembly to factory floors where row after row of sewing machines churn out tracksuits, pants and polo shirts for American shelves.

WTO membership will open new markets abroad, but it also will commit Vietnam to reduce protections for its own companies. "The impact on us will be very heavy," said Doan Duy Khuong, vice president of the Vietnam Chamber of Commerce and Industry. "To be stronger, we have to learn how to compete."

Hanoi Textile and Garment, known as Hanosimex, has recently installed new machinery in its spinning and knitting factories and begun retraining its sales staff. It is predicting sharp increases in exports. Already, slightly more than half of what the company produces is shipped abroad, with nearly two-thirds of the exports bound for the United States.

Vietnam and the United States reached a pact on market access in late May, opening the way for Vietnam to join the WTO as early as the end of this year. The bilateral agreement set the terms for Vietnam's membership, laying out specific steps for deregulating its economy and further opening the way for foreign goods and services.

If entry is to happen, the U.S. Congress must also endorse the deal and grant Vietnam a legal status known as permanent normal trade relations. Supporters have been urging a vote before the August recess.

In preparation for joining the Geneva-based organization, Vietnam has adopted a pair of laws restructuring how enterprises and investment are regulated. For the first time, all firms must be treated equally, whether domestic or foreign, state-owned or private. Further laws are being drafted to overhaul the pharmaceutical industry, social security and taxation.

"WTO seems to be motivating quite a considerable amount of change in Vietnam," said Jonathan Pincus, senior country economist for the U.N. Development Program. "The vast majority of that change has been positive. The vast majority of that change is still to come."

Entry to the WTO would follow nearly two decades of economic liberalization that helped transform Vietnam into one of Asia's fastest-growing economies. Despite widespread corruption and bureaucratic lassitude, Vietnam's economy has expanded by 50 percent in the last five years.

Vietnam reshuffled its top leadership last month in a move likely to reaffirm that trend while keeping politics under the tight control of the ruling Communist Party. Vietnamese legislators named Nguyen Minh Triet, a corruption fighter and Communist Party chief in Ho Chi Minh City, as president, and economic reformer Nguyen Tan Dung as prime minister.

These promotions mark a shift to a younger, more cosmopolitan generation and place greater power in the hands of politicians from southern Vietnam, which has long been the country's commercial engine.