E-Newsletter Vol. V

CUTS Centre for Competition, Investment &
Economic Regulation (C-CIER)

Advocacy and Capacity Building on Competition Policy and Law in Asia

CUTS Centre for Competition, Investment & Economic Regulation (C-CIER) is implementing a two-year project entitled ‘Advocacy and Capacity Building on Competition Policy and Law in Asia’ (7Up2), supported by the State Secretariat for Economic Affairs, Switzerland (SECO), the Swiss Competition Commission (COMCO) and the Department for International Development (DFID), UK. The project endeavours to accelerate the process towards a functional competition policy and law for selected countries (Cambodia, Lao PDR, and Vietnam in Southeast Asia, and Bangladesh, Nepal and India in South Asia), and advance an enabling environment for the law and policy to be better enforced.

The project is undertaken in partnership with renowned institutions in each of the project countries. Details of the project are available at http://www.cuts-international.org/7up2.htm


First Round of National Consultation in Bangladesh

In order to ensure wider ownership of research findings on the competition scenario in the project countries, a group of diverse stakeholders is identified by the project partners as the National Reference Group (NRG) and regularly update the progress in the project countries. Suggestions for operationalising competition principles and practices are expected from these groups periodically, especially during the national consultation process – NRG meetings.

The 1st NRG meetings in other project countries, i.e. Lao PDR, Vietnam and Cambodia, were organised on February 22, March 4, and May 24, 2005 respectively.

The 1st NRG meeting of Bangladesh was held at Bangladesh Enterprise Institute (BEI) premises on May 30, 2005. The meeting’s primary objective was to seek feedback and comments from the participants on the findings presented in the Draft Country Report highlighting the competition scenario in Bangladesh.

The meeting was attended by 46 participants representing key government agencies, departments and ministries, the business community (both local and multinationals), and civil society representatives including academics, NGOs and development partners. The meeting was chaired by Farooq Sobhan, President of BEI, and the keynote presentation was made by Iftekar Ahmed, Senior Research Fellow, BEI and the Country Project Manager for this initiative in Bangladesh. Dr. Fakhruddin Ahmed, Former Governor, Bangladesh Bank, was the Chief Guest at the meeting. Nitya Nanda, Policy Analyst, CUTS represented the Project Coordination and Management Unit of the overall project at this meeting.


Release of Advocacy Document at 2nd National Meet in Cambodia

A meeting entitled ‘Competition Policy and Legislation in Cambodia’ was organised by the country project partner, Economic Institute of Cambodia (EIC), on July 26, 2005 at Paññasastra University of Cambodia (PUC) as the 2nd meet of the National Reference Group in the country. The meeting was attended by about 165 people, from different backgrounds and organisations – academia, NGOs, press agencies, international organisations, government ministries, parliaments, etc.

The Country Advocacy Document for Cambodia, prepared within the framework of the project, was released and discussed during the course of the meeting, which was covered widely by the Cambodian press in Khmer, French and Chinese. The meeting recognised the significance of adopting and implementing an appropriate competition law effectively in Cambodia in the context of the country’s economic reform and integration process.

Ky Lum Ang, President of the 9th Commission of the National Assembly of Cambodia on Commerce, Investment and Industry, highlighted the roles played by competition law in ensuring all enterprises a fair deal in the market and promoting consumers’ right to quality products and affordable prices.

The detailed proceedings of the seminar are available on the project web page at
http://www.cuts-international.org/7up2.htm
.


Bangladesh

SME Growth Hindered
Delays in settlement of credit sales are heavily affecting the small and medium enterprises (SMEs) in Bangladesh, as these firms have limited financial leverage, according to Bangladesh Bank Governor Dr. Salehuddin Ahmed.

"Credit sales average about 72 percent of the total sales in Bangladesh and are settled within an average period of seven months. Such delays are affecting the SMEs," he explained further in a seminar jointly organised by the Central Bank of Bangladesh and the South Asia Enterprise Development Facility (SEDF).

Growing industrialisation is indeed making this problem even more serious as credit sales are essential in a buyer-dominated economy such as Bangladesh.

The governor said in spite of their economic importance, SMEs suffer from acute shortage of working capital due to delayed payment of their receivables by large and medium-sized firms as well as public sector enterprises and government departments. Besides, reluctance of banks to extend credit facilities and lack of expertise within SMEs in financial management, in general, are also some of other factors that are hindering the growth of SMEs in Bangladesh.

(The Daily Star Web Edition, Vol. 5, Num 374, 16.06.05)



Essentials Prices on the Up in Bangladesh
Prices of daily necessities have increased in the Dhaka city market after the new budget was proposed in the parliament.

Many essentials including rice, vegetables, oil, pulses, meat, fish eggs, and spices, have marked an increase from Tk to Tk 10 per kilogram. Products like soap and stainless blades have also increased by Tk 1 as the Bangladesh Finance Minister proposed to tax them in the new budget.

Traders of the city’s kitchen market cautioned that many prices might experience a further rise in the coming time as the government did not have any control over the market. Traders said their sales saw a sharp decline as the prices of essentials has increased.

“See, within the last ten years, the price of rice has almost doubled. How can we survive?” said one consumer in the Hatipool market. The government should always monitor the price of the kitchen market, but they never do it, he said.

(The Star Daily Web Edition, Vol. 5, Num 371, 13.06.05)


SingTel Buys 45pc of Bangladesh Mobile Firm
Singapore Telecommunications Ltd has bought a 45 percent stake in Pacific Bangladesh Telecom Ltd, the country’s third-largest cellular operator, for US$118mn, as part of its drive to expand in South Asia.

The acquisition is the first in Bangladesh for SingTel, which owns nearly a third of India’s top listed mobile phone company, Bharti Tele-Ventures Ltd, and is bidding for a stake in a Pakistan telecom firm.

"SingTel believes that there will be rapid telecommunications growth in Bangladesh for years to come, as has been experienced in other regional markets which SingTel has invested in," SingTel CEO Lee Hsien Yang said in a statement.

Facing a mature and tiny home market, SingTel has spent S$17bn (US$10bn) in recent years buying operators in high-growth Asian nations with fewer cell phone users, and in the bigger Australian market.

It now derives about 75 percent of revenues and two-thirds of pre-tax earnings from operations outside Singapore, where more than nine in 10 of the 4.2mn people own a cell phone.

(The News International, Pakistan, 03.06.05)


Cambodia

Cambodia to Set up Own Cement Plant
More than half of Cambodia’s 1.5 million tonnes of cement imported through the Thai border annually would be produced on home soil by early 2008, said Khaou Phallaboth, the local investor for the future Kampot cement plant.

Phallaboth, the president of Khaou Chuly Group (KCG), together with principal investor Siam Cement from Thailand, planned to manufacture at least 850,000 tons per year at the new factory.

He said it was dangerous for Cambodia to rely 100 percent on imports as it does presently with cement. Adding that every other country in the region has their own cement plants.

Cambodia has not produced cement since the late 1960s, when civil unrest forced the closure of a 50,000-tonne capacity Chinese cement plant also in Kampot.

Phallaboth said it would be the largest single investment in Cambodia once the two phases – totalling US$200mn – of the project are completed. Siam Cement will invest 80 percent, and KCG 20 percent.

(Phnom Penh Post, Issue 14/13, 11.07.05)


Cambodia’s Pathways to International Trade
Since Cambodia's accession to the WTO on January 1, 2005, there has been increased donor pressure on the Royal Government of Cambodia (RGC) to formalise the country's largely informal trade activities and create the legal, financial and administrative frameworks necessary to ensure greater trade facilitation. This is to enable the country to take greater advantage of its newfound access to international markets.

The range of products that Cambodia has available for export is limited and, as an overwhelmingly rural country with a largely subsistence rice farming population, widened participation in international trade is likely to come only through the export of rice.

The majority of rural rice producing communities are already engaged in the international rice trade, albeit informally. Cambodia exports an estimated 400,000 tones of rice, primarily in paddy form, through informal cross-border exchanges with Thailand and Vietnam. Typically this rice paddy meets lower quality domestic demand in Thailand and Vietnam, while these highly efficient rice producers themselves export their own higher quality milled rice onto the global market. Thus, prices and demand in Thailand and Vietnam exert strong influence on the rice economies of Cambodia, which are often more attuned and better integrated into dominant neighbours' economies than with other internal Cambodian markets. As Cambodian producers and rice millers cannot effectively compete with the highly efficient and subsidised rice markets of neighbouring countries, export takes place in the form of un-milled rice paddy from Cambodia. In-country value-added benefit is therefore minimal. Cambodian producers therefore inhabit the lowest tier of the international rice supply chain through such trade links. Yet, the prospect of access through formal trade links to the international market does not appear to offer any substantial benefit to Cambodian farmers.

While some labour intensive, organic Cambodian rice is exported formally and directly to the global market, such trade is typically dominated by those with robust business and political connections. This is due not only to the higher quality required by international markets and the risks generally associated with agro-industry processing, but is also due to the complex, costly, time consuming and often corrupt procedures required to export from Cambodia legally. At this time, there is but a handful of companies capable of navigating such complex export procedures at costs that are sustainable on international markets.

Cambodia is, therefore, accessing two segments of the international rice market in two ways: with high quality organic rice to niche markets through formal trade dominated by large well connected exporters, and with low quality unprocessed rice paddy through informal farmer/trader trade linkages to neighbouring countries. While neither of these links is particularly beneficial to Cambodian producers, informal cross-border trade, which has occurred for centuries in the region, is generally less quality demanding and more flexible, thereby enabling rural producers to access the market sporadically and according to surplus production. Thus, informal rice trade offers Cambodian farmers vital, timely and flexible outlets for their surpluses. As such rice smuggling remains rampant throughout the country, and any attempts to curb this informal trade would be ultimately detrimental to farmer survival strategies at the current time.

Cambodia is, and has long been, connected to the global market in uneven, unsystematic and primarily informal ways. Regulation and formalisation of longstanding informal trade links in the name of free trade is not only physically difficult along Cambodia's porous borders, it is in many senses politically unfeasible. While donor pressure is aimed at assisting Cambodia to take advantage of newfound opportunities in the global market place, such access is currently only feasible for large and well-connected companies.

(Maylee Thavat, Asian Analysis Newsletter August, 2005)


India

Competition and the UPA Regime
The United Progressive Alliance (UPA) government has been in office in India for over a year and it is time to assess its performance on the touchstone of competition as laid out in the National Common Minimum Programme (NCMP), which inter alia, states: “The UPA government believes that privatisation should increase competition, not decrease it. It will not support the emergence of any monopoly that only restricts competition. All regulatory institutions will be strengthened to ensure that competition is free and fair. These institutions will be run professionally”.

The most significant achievement over the past one year has been the implementation of the value-added tax (VAT). This is a big step forward in moving towards a single market for the country as a whole, and promises to remove several distortions in the market place.

True to the spirit of the NCMP, certain measures have been taken to end the monopoly of incumbents. For instance, monopoly of GAIL (Gas Authority of India) in gas pipeline infrastructure is set to end. Private operators have been allowed in the movement of container trains, thus bringing an end to the monopoly enjoyed by Concor.

Measures were taken to ensure level-playing field in certain areas. For instance, guidelines have been issued that puts major port trusts and private terminal operators at par on tariff determination. The new petrochem policy seeks to address the inverted import duty structure that disallows competition and cripples units producing finished products.

Given its resolve to strengthen regulatory institutions and run them professionally, the Planning Commission of India is busy preparing a policy paper for the establishment of an effective regulatory regime based on international best practices. The discourse that ensued suggests that there is now an appreciation of the need for setting up independent regulatory authorities in infrastructure sector. However, certain turf issues still remain unresolved. For instance, while the Planning Commission is in favour of an independent rail regulator, the ministry of railways is strongly opposing the move.

Civil aviation has been one of the active sectors on the policy radar. The restructuring of Delhi and Mumbai airports is under way. Private airlines have been allowed to fly to foreign destinations, providing a platter of choices, and competitive prices, to consumers. However, the lucrative Gulf sector continues to be reserved for the public sector. Furthermore, domestic airlines with less than five years of experience have been kept out. The proposal to establish a civil aviation regulator has not seen the light of the day.

Besides, the government seems to be continuing with discriminatory policy to meet its commitment of a strong and effective public sector. The recent announcement to extend the purchase preference policy for central public sector enterprises (PSEs) for another three years is one example. The continuation of Access Deficit Charge (ADC) payments to BSNL is yet another instance. There are several such examples, which distort the competitive neutrality principle!

As promised in the NCMP, the National Manufacturing Competitiveness Council (NMCC) is preparing a draft strategy paper to suggest measures for enhancing competitiveness in certain sectors. However, there are several competition concerns, which affect the competitiveness of manufacturing sector. For instance, Reliance is a dominant player in polyester staple fibre (PSF) with a market share of 85 percent while IndoRama produces the rest. Together, they are following an ‘exploitative pricing policy’, which affects the competitiveness of textiles, a huge growth area.

It would therefore be good if the NMCC also examines how government’s policy and lack of an effective competition law affects the competitiveness of Indian manufacturing industry. This also requires active involvement of the Competition Commission of India. However, despite being mentioned in the thrust areas for policy implementation in six months identified by the PMO for 2005, the fate of the Competition Commission is still vague.

In the absence of a functional competition law, the economy continues to suffer from myriad abuses. Thus, deals such as the recent one between Videocon and Electrolux that is likely to reduce competition in the lower end of the consumer durables market, go unchecked.

The government needs to make a competition assessment of all its policies and practices. This calls for the adoption of a national competition policy to provide guidelines in maintaining the appropriate competition dimension.

(Pradeep Mehta, The Economic Times, 19.08.05)


Lao PDR

Lao’s Opportunities and Risks of Closer Sub-regional Integration
The success of the 10th ASEAN Summit held in Vientiane in November 2004 showed Laos' commitment to regional affairs. It was the first ASEAN summit and the largest regional event ever hosted by the country. Over 3,000 delegates, including 800 foreign journalists, were invited. It was no small achievement for a country that joined the organisation less than 10 years ago, after decades of war, followed by several years of diplomatic and economic ostracism from the international community.

The integration of Laos into a sub-regional transport network is a collaborative regional project, supported by multiple national and international actors: the Asian Development Bank (ADB), the World Bank, Laos' Southeast Asian neighbours (Thailand, Vietnam, Cambodia, Myanmar) and China.

The Greater Mekong Sub-region (GMS) Programme, in particular, plays an essential role in the process of regional integration. Launched in 1992, this initiative involves the participation of six countries - Cambodia, China (Yunnan Province), Laos, Myanmar, Thailand and Vietnam - as well as the strategic support of the ADB.

A key issue is the need for more studies to improve understanding of the complex relationship between mobility and HIV risk. Some specialists have argued that more than movement of people, it is new forms of social practices and behaviours between mobile and non-mobile groups that contribute to increases in HIV transmission. In other words, movement itself does not mean vulnerability to HIV: a correlation between better transport networks and higher HIV risk does not necessarily imply causality

The issue, therefore, is not so much whether Laos will become 'land-linked' but, rather, how the country will negotiate the new socio-economic opportunities and risks that a greater opening of her borders will inevitably create.

(Vatthana Pholsena, Asian Analysis Newsletter June 2005)

Export Growth Means New Challenges

Lao export is recently showing progress, however the progress is accompanied by new challenges.

The Director of the Lao Trade Promotion Centre, Khenethong Sisouvong, said during an interview to the media to mark the 30th year of the establishment of Lao PDR at the Lao Journalists' Association office yesterday that, in recent times, Lao export has been growing steadily, and are expected to increase at 10 percent per year from 2006 to 2010.

“Recently, we have seen many value-added products exported, while before we mostly depended on wood and non value-added products,” said Khenethong. He illustrated his point with an example that, instead of exporting logs as in the past, the country now mostly exports processed wood and wooden furniture. Handicraft is another area of significant progress, according to Khenethong. “However, there are also many challenges as we are becoming part of the ASEAN Free Trade Area in 2008,” he said.

The Government of Lao (GOL) considers exports as a key to poverty reduction. According to the draft Socio-Economic Development Plan for 2006-2010, Lao GDP will grow at 7.2 percent annually from 2006 to 2010. To achieve this, exports are expected to increase 10 percent per year.

It is expected that the total five-year exports will hit US$2.82bn, and exports in the year 2010 will reach US$676mn. In 2010, electricity exports will touch US$140mn, garments US$138mn, mining US$110mn, wood and wood product US$164mn, coffee US$36mn, handicrafts US$25mn and agricultural products, US$29mn.

Khenethong stressed that people were the most important component to help develop exports. “We need quality businessmen to do exports and skilled labour to produce quality goods. We also need patriotic people to buy and support Lao products to increase the confidence for exports,” he said. “People are the key to success in achieving export as well as national targets,” he added.

Currently, Lao PDR exports far less than other ASEAN member states. According to the Ministry of Commerce, exports rise from US$330mn to US$380mn respectively between 1998 and 2003. Thailand and Vietnam are the major export partners of Laos, receiving 70 percent of its export. Lao exports to the EU have increased annually since receiving trading privileges in 1996. Besides, there is no longer any barrier to exports to the US since normal trade relations has been established between the two countries.

According to a UNCTAD report early this year, world trade has been expanding at a rate of nearly 5 percent a year, but gains in trade tend to be concentrated in a few nations. Over 80 percent of all world exports are produced by only 10 countries in the world.

(Vientiane Times, 07.07.05)


Nepal

Agro-machinery Dealers Unite
The dealers and importers of agricultural machinery in Nepal have formed an ad hoc committee to organise themselves into an association. At a meeting held in Kathmandu recently, the dealers discussed various problems of their business and came up with a number of demands related with bank finance, taxation, sales and imports.

About the bank finance, the dealers demanded the banks to follow uniform policy while providing finance for agricultural machines and other vehicles. This was due to the fact that, while financing other vehicles such as truck, bus, car and motorcycles, the banks do not ask for any collateral other than the vehicle itself, but in case of financing on tractors and power tillers, they ask for additional property, such as real estate, as collateral.

Another problem being faced in promoting use of agricultural machines like tractors and power tillers is caused by the restriction on the transfer of ownership of these machines till five years of the sale from the dealers. Because of this, banks and finance companies other than the Agricultural Development Bank (ADB) of Nepal are not willing to invest in these machines. Thus, the finance needed for this business is not enough, it was pointed out.

Similarly, the agricultural machine dealers complained also about the unfair tax system on agricultural machines. For example, for the four-wheeled tractors with average price of Rs 700,000, the annual tax is Rs 2,300 whereas a power tiller with an average price of Rs 100,000 carries a tax burden of Rs 1,600 per year.

Another anomaly pointed out was about the customs duty that favours import of fully fitted agricultural machines and discriminates against local assembling of these machines. The dealers argued that if parts and components of such machines were provided with similar concession on the import duty as available for importing fully fitted machines, it would encourage local assembling of such machines and thus help create additional employment opportunities in Nepal.

(New Business Age, May 2005)


Private Sector Comment on Proposed Power Sector Reforms

Two draft Ordinances, namely the Electricity Ordinance (EO) and the National Electricity Regulatory Commission Ordinance, aimed at reforming the power sector were presented for discussion among widespread national stakeholders in Nepal in mid-April 2005.

The two draft ordinances have provided for, among others, unbundling of the Nepal Electricity Authority (NEA) and further opening power generation and distribution for private investment while setting up a regulatory authority (National Electricity Regulatory Commission or NERC) for tariff fixation and a National Electricity Transmission Company (NETCo) for operating and managing the national electricity transmission grid. The private sector power developers and distributors are promised open, unrestricted and non-discriminatory access to the national power grid on payment of a wheeling charge prescribed by the NERC.

Commenting on the draft ordinances, the Nepal private sector representatives pointed out that power trading – both internal and external – should be recognised as a legitimate activity in the objectives of both the EO and the NERC Ordinance. Power trading will introduce competition in the market leading to overall improvement of the quality of electricity and service delivery.

Section 20 of the EO – Restructuring of the Corporate Body – is totally impractical for the private sector, they said. If the intent of the draft ordinance was to restrict monopoly in the sector, the private sector’s suggestion was to grant the NERC the authority to define the scale of a Corporate Body that needs to be “unbundled”.

Regarding the draft NERC Ordinance, the private sector welcomed the idea of forming a National Electricity Regulatory Commission (NERC) as it is expected to provide a more transparent and level playing field for Independent Power Producers (IPPs) and public sector utilities. But objection was raised due to the absence of a clear definition of “reasonable return” promised to IPPs while fixing the royalty and electricity tariff by the NERC. The Electricity Act 1992 of Nepal had provided for a 25 percent return on equity, while the NERC Ordinance is silent on this issue.

In another objection, the private sector said that the draft provisions have imposed a lot of limitations on the NERC’s autonomy. For example, the sources of funding for the NERC are the government and donor agencies and international organisations, the tenure of the NERC members are limited for an interim period and the procedure for removing the NERC members from their positions do not let them function autonomously. These issues would adversely affect the working of the NERC as the government and the donors may impose conditions and covenants which would render the NERC’s activities far from being that of an “independent” regulator. Opportunities for such interferences must be removed from the Ordinance, the private sector representatives said.

(New Business Age, May 2005)


Vietnam

Viettel Mobile Faces Bankruptcy Due to VNPT’s Monopoly
The fledging Viettel mobile phone service provider in Vietnam has been forced to call for Government interference in a desperate measure to break a deadlock over network connection with the Vietnam Posts and Telecommunications General Corporation (VNPT).

The Ministry of Defence, Viettel Mobile's owner, filed an official letter recently to the Prime Minister, accusing the General Corporation of limiting phone calls by Viettel customers to VNPT’s mobile and landline subscribers.

The letter said: "The fact that VNPT has not met Viettel connection demand has persisted for five years, and the situation is getting worse. If the problem goes on, Viettel is likely to reach the brink of a collapse".

Under the current regulations, VNPT, as Vietnam's largest mobile phone and landline service provider and the dominant market holder, must ensure there is communications connection between the corporation and other start-up companies.

According to the military-run Viettel, the two companies came to a deal in December 2004 on the connection issue, under which, if these is a congestion in connection between the two networks, Viettel should make a request to VNPT two weeks in advance to increase the connection capacity.

However, while Viettel’s mobile phone subscription rocketed in the past six months, VNPT has only provided less than 50 percent of the connection demand, triggering a wave of complaints by Viettel customers about service quality.

A company official said that calls from Viettel to the VNPT-controlled networks were refused once their limit of connections was reached. He added that in the past six months, Viettel made eight requests to VNPT, asking for an increase in connection capacity. However, the State-owned giant turned down the requests, citing a lack of available ports to the central switchboards, and lack of investment for new circuit switchboards.

VNPT’s Deputy General Director Tran Manh Hung explained that it was not VNPT’s intention to cause trouble to Viettel. The problem, he said, was indeed caused by VNPT’s circuit switchboards using old technology and at present it would not be economically efficient to upgrade the system. He added that Viettel could connect directly to the local switchboards to solve the problem.

Viettel said the explanation was irrational as VNPT only needed to invest US$2mn or 0.3 percent of its total annual investment capital to satisfy demand for Viettel, far less than the US$30mn Viettel reportedly paid VNPT for connection in 2004.
Subsequently, a tripartite meeting was convened between the two telecoms companies and the Ministry of Posts and Telematics of Vietnam to try to work out a solution to the problem. After the meeting, VNPT committed to help Viettel settle the deadlocks by allowing connections through some local switchboards, while in the long run; Viettel would have to build up its backbone transmission line.

However, despite VNPT’s temporary measures to increase Viettel’s connection capacity, the military-owned operator is still not happy.

“The meeting did not bring about measures to radically deal with the issue. VNPT has only agreed to increase the connection capacity by a little, and only agreed to do so when we complained,” said Hoang Anh Xuan, Viettel General Director.

Mr. Xuan proposed that an independent regulatory agency be in charge of overseeing the implementation of rules governing connections among telecom networks.

Deputy Minister of Posts and Telematics Le Nam Thang, in a media interview, expressed the same idea, saying that; “there must be a market-driven mechanism responsible for connections.”

The Competition Administration Department under the Ministry of Trade of Vietnam, the State agency designated to oversee competition issues in the country, did not take any action or make any comment.
(VNS)


Airline Industry Open to All Players
All individuals and organisations would be entitled to take part in the civil airline business, Nguyen Tien Sam, Head of Vietnam Civil Aviation Administration (CAA) has said.

The Ministry of Transport of Vietnam has made a proposition to the Government to set up more airlines besides the existing Vietnam Airlines and Pacific Airlines, which currently have a monopoly on the 80 million potential customers in Vietnam.

The country's demand for air transport has been increasing and the private sector is now able to join the air industry's development, said Mr. Sam. He emphasised that the managing board's knowledge and experience related to air activities play a vital role in ensuring safe flights and profitable business because of the air industry's specific features.

Le Van Trung, a former member of the lobbying board, said the air business is very challenging but it is very possible to make a profit. It has been suggested that a level playing field in the monopolised air industry should be created to encourage competition among the carriers, thus improving the quality of service.
(www.vietnam-trade-investment-law.sino.net/news/2005/6/228.php)

Regulation to Stabilise Drug Market
Relevant State agencies have made a move to stabilise the domestic medicine market, issuing a joint circular to instruct the implementation of the open bidding to supply medicine for public health clinics in Vietnam.

Insiders expect that the bidding regulations, which have been ratified by the Ministry of Finance and Ministry of Health of Vietnam, will benefit patients as they contribute to making drug prices offered by public health clinics more reasonable.

Drug prices currently provided by public health centres in Vietnam are higher than that offered by private pharmacies.

Under the new circular, all public health clinics at central, provincial and district levels, which get annual funding of at least VND200mn , VND100mn, and VND50mn respectively from the State budget to buy drugs, will be required to organise open bidding for their medicine purchases.

Other public health clinics, which get funding of less than the above figures, are allowed to apply the measure of competitive order or to purchase by themselves using bidding results set by other public health clinics in the same locality.

Drug prices used in bidding will be based on retail prices in domestic market and reference prices set by the Ministry of Health’s Pharmacy Management Department.

The Department, every six months, will publicise its reference retail prices of import drugs as well as manufacturing and retail prices of Vietnamese-made medicines, which is expected to help increase the use of locally drugs as the health clinics will have the opportunity to make a comparison of quality and prices of domestic and imported drugs.

(Vietnam News, 17.08.05)