E-Newsletter-Vol.1
CUTS
Centre for Competition, Investment &
Economic Regulation (C-CIER)
Economic Regulation (C-CIER)
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E-Newsletter-Vol.1 |
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CUTS
Centre for Competition, Investment & Economic Regulation (C-CIER) |
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Advocacy and Capacity Building on Competition Policy and Law in Asia
| The CUTS Centre for Competition, Investment & Economic Regulation (C-CIER) is implementing a two-year project titled “Advocacy and Capacity Building on Competition Policy and Law in the Asia” (7Up2), with support from 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 the 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:
More
about the project can be found at |
| A State-owned enterprise holding monopoly in the fish export sector has been extracting wealth from the whole industry by selling distributorship and export licenses to traders. Interestingly, this State trading monopoly has never taken any physical possession of the fish officially exported under its name, adding no value to the export chain and rendering no service. Only the labourers suffered. |
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| Two convicts seized by Cambodia police for selling fake gold bars argued that they only sold the gold to Thai consumers, whom they can cheat. |
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| Intensified police crackdowns on cheap smuggled gasoline from Thailand and Vietnam drove poor Cambodians out of business. Cambodians have been totally dependent on this source of cheap energy instead of too high-priced Cambodia petrol products, which were due to high taxes imposed by the Government. |
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| Keen to resolve all the issues concerning the Competition Act, 2002, for smooth implementation of the Competition Law, the Government proposes to take up the task of `competition advocacy.' |
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| In a bid to make bandwidth cheaper, the Telecom Regulatory Authority of India (TRAI) has proposed a 63-75 percent reduction in domestic leased line tariffs. The move is expected to improve the level of competition in the sector, in view that some providers with near monopoly were adopting discriminatory tactics. |
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| Banking reforms in Lao PDR were expected to provide more opportunities for competition in the sector. Foreign and Lao commercial banks would be given more leeway to make their own decisions on provision of services. More competition, more choice and better rates for customers. |
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| Although petrol prices have recently increased, transport prices in Vientiane have so far remained unchanged. The key factor keeping the prices of various forms of transport stable was the fact that tuk-tuks (a very popular, low-priced local means of transport), taxis and an increasing number of buses are all competing for customers. |
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| Indian businessmen say more investment opportunities in Laos |
Indian businesses are blossoming in Lao PDR. There is more scope for further development, said local businessmen, especially in processing industries. |
| Operation of private airlines in the Kathmandu- India sector has significantly stepped up the level of competition between airlines plying the sector. |
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| The Consumer Forum, Nepal brought into light that the sugar producers have created artificial sugar scarcity in the market and have also quoted a higher price for sugar through cartelling. |
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| In the pretext of corruption, an unusual dispute surfaced in the transportation management office of Gandaki zone. The workers initiated an agitated strike. The strike, organized collectively by the bus operators’ association of Prithvi Highway and the other seven local associations related to bus service, has not been able to garner much attention and support of the public and consumers alike. |
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| Laser, the first Vietnamese brand of bottled draught beer, was foreclosed by ‘big brothers’ in the international beer industry from its own national market by promotional tactics. |
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| Do Competition and Consumer Welfare Matter to Mobile Incumbents? |
Sfone, a young CDMA mobile network promoted by Saigon Postel Co. faced a lot of problems created not only by the two incumbent GSM mobile service providers (Vinaphone and MobiFone), but also by the Vietnam Ministry of Posts and Telematics, the State regulator of the industry as well. That consumers would benefit from service charge reduction, and provision of new and better quality service due to more competition between service providers did not seem to matter much to those vested interest groups who wanted to maintain the current duopoly in the industry. |
| New Method for Apparel Quota Allocation: The Latest Hot Show |
The Ministry of Trade is plugging a new apparel quota allocation method aimed at boosting the export competitiveness of the garment and textile industry of Vietnam, by which larger exporters have increased opportunities to claim quotas. The proposal, however, was met with strong objections from small and medium enterprises, for fear that it would create unhealthy competition and monopolistic situation in the industry. |
| Leaders of Viet Nam, Laos and Cambodia began talks on Wednesday focused on efforts to accelerate economic development in the three Mekong-region countries. |
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Project Launch MeetingsThe Southeast Asian component of the project was formally launched on 23-24th April 2004 at Hanoi, Vietnam. A big gathering of international competition experts from Asia, Africa, Europe and America was seen debating on the desirability, optimal content and structure of the competition policy & law that developing countries should implement to promote effective markets for economic development. Officials from the Department for International Development (DFID-United Kingdom), Federal Trade Commission (FTC-United States), Foundation for Effective Market and Governance (FEMAG-Australia), State Secretariat for Economic Affairs-Switzerland (SECO), Swiss Competition Commission (COMCO), World Trade Organisation (WTO) joined experts from Australia, India, Indonesia, Kenya, Nepal, Taiwan, Thailand, as well as local consultants of project countries, Cambodia, Lao PDR and Vietnam to present their viewpoints and share firsthand experiences as regards competition policy & law and its implementation performance across the world. The meeting also saw the operational documents of the project, viz. the plan of action, ToRs for project reports and field surveys being discussed and finalised. The
South Asia Regional Launch Meeting of the project is planned to be held
on 22nd-23rd September 2004 at Dhaka, Bangladesh.
More about this meeting please see at Project Advisory CommitteeA Project Advisory Committee (PAC) has been set up to guide the project implementation, with the participation of renowned experts from developing countries, regional institutions or with substantive experiences on the competition field in developing countries. The PAC consists of:
Field surveys startedAs embedded in the designed structure of the project, intensive interviews are going to be carried out in 3 Mekong countries, viz. Cambodia, Lao PDR and Vietnam, targeting three main respondent groups: the consumer, the business and the political class. Specific questionnaires for respective respondent groups for respective countries are being finalised, expectedly to meet the timeline of launching the interviews by end of August. The questionnaires have been co-designed by CUTS C-CIER and partner institutions, taking into account particular perspectives of each respondent group and local contexts of each project country; with valuable guidance and suggestions from PAC members. The questionnaires would soon be made available on the website for wider reference. NEWS ANALYSISCambodia
KAMFIMEX also extracted fees by selling distributorship in every province to successful bidders, who were then entitled to collect a 4 percent fee on the value of all fish transported through their province from domestic traders without rendering any service. The following chart illustrates the trade arrangements described above in the Cambodia fisheries sector, based on a report of the Enterprise Development Cambodia (EDC 2001).
In September 2002, KAMFIMEX was converted into a financially autonomous SOE and no longer had an official monopoly on fish exports. Officially, it now only functions as an agent for small fish traders, allowing them to export under its license. However, it was found out last year, by a study of the Cambodia Development Resources Institute (CDRI), that KAMFIMEX still does nothing other than issuing a “sending goods letter” in exchange for a fee of US$4.9 per tonne (which amounts to 10% percent of fees paid in Cambodia to export fish) paid by these small traders. While KAMFIMEX has no clear legal basis for collecting fees without offering any service as it used to do, small fish traders are still unaware that the “sending goods letter” KAMFIMEX issued is not needed for fish exports any longer. Though State-trading monopolies used to be a common phenomenon in developing countries or least developed countries like Cambodia before they undertook economic reforms, the kind of exclusive control KAMFIMEX enjoyed over the fish export sector in Cambodia had been rarely seen. We have here a monopoly, which offered no physical service, added no value except selling its exclusive export licence and distributorship for fees. Only the labourers suffered. (Various sources) Protection of Neighbour Consumers? - The police in Banteay Meanchey, a province of Cambodia, recently arrested two men for selling bars of fake gold at Poipet, a border crossing to Thailand. The police confiscated 5.5 kg of the bogus bullion, which was made of copper dipped in brass and then gilded. The two convicts ‑ Phon Phan, 35, and Bin Phorn, 53 ‑ had been selling fake gold for five years with 1 kg going for as much as US$2,500. According to the police report, Phon Phan said, "I only sold the fake gold to Thais, whom I can cheat". The arrest followed a slew of complaints from Thai victims. This was a cross-border fraud, reportedly victimising consumers from a neighbour country rather than domestic ones. However, the possibility that Cambodians had been cheated as well should not be excluded, despite the convicts’ denial of any such behaviour. Cambodia has not passed a consumer protection law of its own, hence it still lacksing a clear framework for sanctioning similar violations. The country, nonetheless, might legislate do so one soon in the context of its recent accession into the World Trade Organisation. (Cambodia Daily, 21. 05.04) High Tax Harms Domestic Petrol – Residents of Cambodian northwesternnorthwestern provinces were reported to have stopped using their cars, taxis and motorbikes, quoting skyrocketing gasoline prices as the main reasoncause. A non-violent demonstration was planned by students, motorbike and automobile taxi drivers together with local residents in Phnom Penh, Cambodia’s capital city, to demand that the government lower the price of gasoline and reduce the value-added tax on this product. Currently, 01 litre of gasoline costs around US$0.71 in Phnom Penh, which is nearly double the retail price paid in neighbouring countries,. The high price of gasoline in Cambodia, which was reportedly due to the high taxes imposed by the Cambodia Government, had induced local consumers to turn to smuggled petrol from Thailand and Vietnam to reduce costs so as to sustain their business and lives on a slightly larger margin. larger margin. The recently intensified crackdowns on cheap smuggled gasoline (which used to be available at the price of as little as US$0.35 per litre) has driven up the rates of the already high-priced petrol in Cambodia, and forced many small local businesses to stop their operations totally. Tax is a most important source for the State budget. However, too much is a problem, especially when it pushed commodity prices to an unaffordable level. The consumers hereby suffered from the high local petrol price, without much benefits rendered to the local gasoline industry. When access to the cheaper smuggled products was blocked, they stopped their consumption altogether instead of turning to local high-priced products. Nothing for the Treasury. (Cambodia Daily, 26.05.04 & .31.05.04) Govt to create awareness about competition panel - Keen to resolve all the issues concerning the Competition Act, 2002, for smooth implementation of the Competition Law, the Government proposes to take up the task of `competition advocacy.'This is aimed at generating increased awareness of the role of the Competition Commission of India (CCI) in the wake of the changing economic scenario. Certain provisions of the Competition Law recently came under the firing line, with the Government submitting before the Supreme Court that it would amend them. "We are trying to resolve all the issues raised till now," the Minister for Company Affairs (MCA), Prem Chand Gupta, said. The role of the Competition Commission set up under the Act, covers competition advocacy, prohibition of anti-competitive agreements, prohibition of abuse of dominant position, and regulation of combinations (mergers and acquisitions etc, above the prescribed threshold limit). "A lot of things can been done for competition advocacy. The main focus will be to promote made in India brand and see that there is no abuse of dominant position," the Minister told Business Line. Public education is vital to facilitate the acceptance of Competition Policy principles as a central element of the economic and development policy, said Gupta. In fact, this is in line with what India Inc has been asking for. The Federation of Indian Chambers of Commerce and Industry (FICCI) has been holding the view that Competition Law issues should be addressed in three stages. In the first stage, Competition Commission should be endowed with an advisory or advocacy role for a period of three to five years to enable experience to be gained and to have better understanding about the need for and scope of the Competition Law. "Our companies are very small in size as compared with international standards and would need enough time to strengthen and be competitive enough to face global competition," it has said. In the second stage, it is important to resolve the issue of abuse of dominance and in the final stage, the issues concerning mergers and amalgamations should be addressed, a FICCI official said. (Business Line, 29.06.04) TRAI mulls 63-75 percent cut in leased line tariffs - In a bid to make bandwidth cheaper, the Telecom Regulatory Authority of India (TRAI) has proposed a 63-75 per cent reduction in domestic leased line tariffs. As per the TRAI proposal made in its consultation paper for revising the domestic leased line tariffs, a 2 mbps connection over a 50 km distance would cost INR87,407 (US$1890) [1] as compared to the existing tariff of INR348,642 (US$7538). A 64 mbps line over a 500 km distance would cost INR24,000 (US$519) as compared to INR96,000 (US$2075), at present. A similar cut has been proposed by the TRAI for 2 mps and 64 mps connection across all distance slabs. The TRAI move is expected to benefit large bandwidth consumers such as business process outsourcing (BPO) units, corporates and IT-enabled services companies.
Banks given free reign to compete - The Government of Lao PDR has recently granted new freedoms to allow commercial banks more say in running their businesses. The policy came into effect six months ago, but was only released to the media in June by the Bank of Lao PDR. The reform followed poor performances since the 1980s by Lao banks. It was expected to provide more opportunities for competition among the commercial banks. Since the foreign and Lao commercial banks could make their own decisions on provision of services, more competition could mean more choice of services for customers. "People can choose the best service for them," said Governor of the Bank, Mr Phoumy Thipphavone.
Competition keeps transport price increase at bay - Although petrol prices have recently increased, transport prices in Vientiane have so far remained unchanged. The key factor keeping the prices of various forms of transport stable was the fact that tuk-tuks (a very popular, low-priced local means of transport), taxis and an increasing number of buses are all competing for customers. Mr. Soudala Yathotu, President of Laos-Vietnam Transportation Company, said that the price of bus tickets on the company’s route from Vientiane to Hanoi and Danang (Vietnam) had actually fallendropped this year. The increase inin the number of bus operators had prevented him from increasing prices on his bus routes. He said that greater overheads and operational costs would have induced him to do so, had it not been for competition from the numerous newly established bus services.
It was not only buses like Soudala’s who had encountered higher fuel costs and greater competition. Drivers of other forms of transport also found that they could not afford increasing their prices to compensate for the rising cost of fuel without losing out customers to other service providers. Taxi drivers at the Morning Market in Vientiane have been facingwith similar headaches, as they had to compete not only with each other but also with other forms of transport to snatch as many customers as they could.can. In the rush to lure passengers away from tuk-tuks and buses, they could not afford to dwell too much on rising fuel prices. Mr. Kao, 55, who works as a taxi driver at the Morning Market, said that despite the five percent increase in petrol prices earlier this month, he had not been able to raise the prices he charged his customers. “Sometimes drivers accept only LAK15,000 (US$1.4) or LAK20,000 (US$1.9) from the Morning Market to the Friendship Bridge, even though the official price is set at LAK50,000 (US$4.7)”, he said. Competition has been benefiting customers in Lao PDR in terms of price in this case. However, the quality of the service provided, especially passengers’ safety, would be better moreensured, if Laos had had a legislative framework to clearly provide for this. (Vientiane Times, 06. 2004) Indian businessmen say more investment opportunities in Laos - Indian businessmen living in Laos said that the country was a gem of opportunity for doing businesses and investment.Most Indian people living in Laos are running their own businesses. "We see Laos as a land of opportunity for investment because it is still developing and there are many market niches to be filled," said Habib Mobammed, Managing Director of Lao Agar Int'l Development Company, which grows and processes Agarwood for use in perfumes. Habib is from Dubai, but has run his company for four years in Laos. Habib explained that there is a vacuum of processing industries in Laos. "The opportunity for investors is huge if you know where to look," he said. "There is plenty of room for Laos to produce what it is currently having to import." "Production in some areas may already be full, such as the garment and textile industry, but there are still many fields and many opportunities just waiting to be discovered," said Habib's wife, who is the owner of a local garment factory. She added that Laos is more open to foreign investment than ever and that now was is the time to display Laos as a place of business strength. Tamilselvan, Assistant Manager of Kirloskar Brothers Limited, a company supplying infrastructure materials, said his business had been growing in Laos for the past six years. "Following the ASEAN Summit, I believe the economy is really going to grow here and that my business is set to boom," he said. Small Indian businesses are also blossoming in Vientiane. Munafi, the owner of a shop selling gems and precious stones in the Morning Market, has lived in Laos for more than 30 years. "My business is already good here and it's only going to grow as the Lao economy picks up," said Munafi. He set up his gems shop in the past few years after assisting his father in a similar business. "Gems and precious stones are a strong investment here." He added that he was planning to open an additional shop in the Don Chanh Palace Hotel and was looking to start exporting to Singapore and Malaysia in the near future. He said about 60 percent of his customers are currently tourists from Europe, America as well as ASEAN countries. Restaurants are also a popular business for Indians in Laos. Munnu Miranda, owner of the ‘Taste of India’ Restaurant, said business was thriving. Munnu set up his restaurant four years ago. "We don't have a problem and have become even more competitive, even in the low tourist season because I have regular customers," he said. "The business is better compared to previous years." (Vientiane Times 13.08.04) NepalPrivate Airlines crank up the competition - Operation of private airlines in the Kathmandu- India sector has significantly stepped up the level of competition between airlines plying the sector. With the entry of Jet Airways, an Indian private airline with connections to over 250 cities in India into the sector, both the national carriers of these countries - the Royal Nepal Airlines Corporation (RNAC) and Indian Airlines (IA) - have been dealt a serious blow. The two state-owned airlines have witnessed a continuous decline in passenger numbers since May, when Jet Airways launched its operation. The RNAC posted a decline of around nine percent in passenger numbers between April and May. April’s figure of 9,927 fell to 9,052 the following month. The number of IA passengers came down by around 400 passengers to 18,397 between April and May Likewise the IA passenger numbers fell by 1,400 between May and June and RNAC numbers dropped from 9,052 in May to 8,467 in June. On the other hand, the Jet Airways passenger numbers have increased considerably since the airline’s launch in the sector. The numbers climbed from 3,882 in May to 6,383 in June. However, both the RNAC and IA steadfastly deny the arrival of Jet Airways has been eating up their business. “We are operating our planes with around 90 percent occupancy rate,” says Nivric Roy Narang, Nepal Manager of IA. Mohan Khana, General Manager of the RNAC has not faced any problems due to the arrival of new airlines. “However, a lack of planes has eroded our competitiveness,” he says. The RNAC has been running daily flights in the Kathmandu-Delhi sector and two flights a week in the Kathmandu-Mumbai and Bangalore sectors. IA operates daily flight in the Kathmandu-Delhi sector, and three flights a week on the Kolkata and Varanasi sectors. Jet Airways operates a daily Delhi-Kathmandu-Delhi flight. With increased competition in the sector, consumers can reap the benefits as airlines have begun to introduce promotional schemes, giving concessions on some tickets. IA followed suit, offering a special discount for passengers flying to 19 Indian cities through Delhi, Kolkata and Varanasi. “This scheme is only for Nepali and Bhutani citizens,” says Narang. The RNAC is preparing to enter the promotional scheme war. An RNAC delegation has just returned from India, having studied campaign options there. “We will introduce discounts or other packages soon,” says Khanal. However, the competition has failed to increase the number of Indian tourists. The number of Indian tourists entering the country by air increased by two percent in May, while the tourism industry posted declines of eight percent and 16 percent in arrivals of Indian tourists in June and July respectively. The operation of Sahara Airlines from September 1 is set to make the sector still more competitive. Tourism officials are hopeful that increasing competition among airlines will help to promote the tourism industry. “The competition will prompt the airlines to introduce attractive packages to consumers. This will in turn increase the number of Indian tourists visiting the country.” said Tek Bahadur Dangi, Chief Executive Officer of the Nepal Tourism Board. (The Kathmandu Post, 05.08.04) Cartel in Sugar Prices - The Consumer Forum, Nepal brought into light that the sugar producers have created artificial sugar scarcity in the market and have also quoted a higher price for sugar through cartelling. According to the Forum, four sugar mills namely Everest, Indushankar, Shreeram and Ston sugar mills conspired to regulate sugar prices in accordance with Indian market and thus have been cheating the consumers. As the rates for sugar in Indian market is bit higher compared to that in Nepal, the mills were selling sugar, the price of which is only NPR24 (US$0.32) per kg [3] at NPR34 (US$0.45) per kg. This was found to be true from the investigation done by Central Committee of Finance Department on Saturday in the shops of Pokhara. (Kantipur, 08.06.04) Strike for Syndicate - In the pretext of corruption, an unusual dispute surfaced in the transportation management office of Gandaki zone. The workers initiated an agitated strike. The strike, organized collectively by the bus operators’ association of Prithvi Highway and the other seven local associations related to bus service, has not been able to garner much attention and support of the public and consumers alike. It is because the masses think that the main motive behind holding strikes by the transportation professionals is coercive pressure for the application of syndicate with corruption being just a cover-up. According to Consumer Protection Act 2054 and Consumer Protection Rules 2055, syndicate and cartelling by the professionals are strictly prohibited and punishable. The similar rule has been inscribed in Vehicles and Transportation Management Act, 2049. Nevertheless, this practice of syndicate is deep-rooted in the western region of the country. The professionals do not allow entry to the outsiders and thus are stifling competition and discouraging those willing to provide cheap and efficient service. The number of buses that are affiliated with Prithvi Highway transport association accounts to nearly 1,200. Around 300 buses leave from here Pokhara to various destinations of the country including Kathmandu. Most of these buses are in dilapidated condition and in dire need of repair. Broken seats and the inability to reach the destination punctually have become common features of these buses. Even if a professional buys a new bus and gets legal permission to use new route, it is futile if not accepted by the association. The fee to register a bus with the association is said to be NPR100,000 (US$1334.31) to get a desirable route it is even more costly. The strike in the name of corruption is actually a tactic to safeguard the practice of syndicate. The association, demanding that Panas, Himal, Makalu, and Agni bus services also succumb to syndicate system of Prithvi Highway, did not allow these buses to leave Pokhara for a month. Later the association tried to influence the office to give similar direction. On the contrary the office chief, Mr. Jeevanraj Sedhai on 8 Jestha, decided that the bus services could be conducted independently. After that he claims to have been alleged with corruption. (Nepal National Weekly, 14.07.04) Promotional Strategy Foreclosed New Entrant - Laser, the first Vietnamese brand of bottled draught beer, was foreclosed by ‘big brothers’ in the international beer industry from its own national market. Tran Qui Thanh, President of the Executive Board of the Tan Hiep Phat Corp., appealed to relevant State agencies and government officials in a meeting held on April 7th 2004 that Laser beer, their new product, could not access retail shops, distribution agencies and bars, etc due to pressure from foreign beer brand-holders who were dominating the Vietnam beer market. Thanh quoted beer brands like Tiger, Heineken and Bivina (produced by the Vietnam Beer Joint-Venture) as direct rivals of Laser. Owners of retail shops, distribution agencies and bars said they “dare not” sell or distribute Laser beer, or even have Laser advertisement boards hang at their places. The aforementioned beer producing joint-ventures reportedly forced distribution agencies, retail shops and bars to sign a contract with them, which included an exclusive term preventing these sellers and distributors from selling, exhibiting, introducing, marketing… or even allowing marketing staff of any other beer brands to work on their business sites.
To make matter worse, as a warning signal, just recently, a beer shop has been brought to court by one of those big beer producers due to so-called ‘impeachment of economic contract’. The decision of the Ho Chi Minh City People’s Court was that the beer shop “Cay Dua” was not permitted to advertise, sell or allow Laser marketing staff at their site until November 2004; in accordance with the contract signed between the shop and the Vietnam Beer Joint-Venture since November 2003. Lawyers representing “Cay Dua” and Tan Hiep Phat Corp. argued that the contract was not an economic contract, but simply a sponsor or site leasing contract; and that the contract did not entitle fair rights and obligations to both signatory parties but was in favour of Vietnam Beer JV. The court, rejecting all these arguments, said the signatory conditions as well as substantive provisions of the contract were in compliance with relevant laws and regulations; hence the contract was legitimate, effective and must be respected. Though analysts opined that the terms of the contract were an abuse of dominance by Vietnam Beer JV to compete unfairly and maintain its dominant position by unjust practice, the contract was able to escape the scrutiny of the law as Vietnam is yet to have a Competition Law. In the meanwhile, the current Commercial Law and the State Ordnance on Economic Contracts do not cover these areas. (VietnamNet 04.07.2004 & 18.05.04) Do Competition and Consumer Welfare Matter to Mobile Incumbents? – With the official launch of a third mobile network - Sfone by Saigon Postel Co., (SPT) - it was expected that consumers would benefit from more competition between service providers, instead of a situation where Vinaphone and MobiFone (the two incumbent mobile service providers at the moment) shared the Vietnam market. However, the new mobile network was indeed facing a lot of difficulties, not excluding the possibility that the old duopoly would continue. It was only very shortly before the launch of Sfone (1st July 2003) that an Official Decision on CDMA [5] service charge was released by the Ministry of Posts and Telematics (MPT). However, the Decision was nowhere similar to what SPT proposed - charging by 10-second block since the beginning of the first minute. The MPT only permitted SPT to charge by 10-second block after the first minute. Truong Dinh Anh, CEO of FPT Corp., a leading telecom corporation in Vietnam commented, “The duration of 70-80 percent of phone calls made from my mobile is less than 01 minute. This applies to other people’s phone calls as well. Therefore, if the service is charged by 10-second block only after the first minute, the cost saved is rather insignificant”. Accordingly, the proposal on lower service charge – one of the ‘big weapons’ that SPT hoped to use to gain more market shares – was restricted by the MPT even before Sfone was launched.
Not permitted to grow too fast
How was Sfone ‘warmly received’ by competitors? It was only a short time before Sfone came into operation that Vinaphone and MobiFone launched their low-priced services, Vina Text and MobiPlay. Vinaphone also launched a big promotional programme for both its pre-paid and post-paid new subscribers on its 7th foundation day anniversary. At the same time, the two big players hinted that they would launch an intra-region service with a fixed subscription charge of VND55,000 (US$3.5) per month and a call charge of VND800 (US$0.05) per minute, which would soon be approved by the MPT. With these competing tactics, Sfone’s small advantage rendered by lower service charge would definitely be “depreciated” in consumers’ eyes.
New Method for Apparel Quota Allocation: The Latest Hot Show – The Ministry of Trade is plugging a new method for apparel quota allocation, by which larger exporters have increased opportunitiesy to claim quotas. Mr. Truong Dinh Tuyen, Minister of Trade, has recently sent a letter to the Vietnam Garment and Textile Association proposing two methods for quota allocation for apparel exports to the US in the year 2005. The first method was the one adopted since two years ago, by which a majority of quotas would be allocated to business with high export percentage (bonus quota), while the remaining would be granted as additional quota to encourage production capability development, with appropriate adjustments. However, according to Mr. Tuyen, “this method of bonus based quota allocation, though providing every enterprise with export opportunities, will lead to a scattering on the supply side, which might result in US importers switching to non-quota markets like China, India, Pakistan, etc, rendering no benefit for each enterprise as well as for the textile-garment industry of Vietnam as a whole”., he said. Mr Tuyen gave preference to the second proposed method, which prioritises quota allocation for a number of ‘large’ enterprises, which have intensive trading relations with large US importers and distributors, and which as well as possess a strong capability of exporting into the US via these contacts. As per this alternative method, these ‘large’ enterprises, being granted prioritised quotas and being able to secure large export contracts into the US, would act as ‘cores’ for various voluntary production chains comprising of of many other ‘satellite’ enterprises. Members of the chains would co-operate at all stages of production, from purchasing and processing materials, manufacturing, to delivery, etc through specific cooperation understandings and specialisation arrangements. A detailed implementation guideline for this method is currently being drafted by the Ministry of Trade in collaboration with the Ministry of Industry. A senior official from the Ministry of Industry said that the Ministry of Trade envisioned a reshuffle of the whole industry to increase its competitiveness as against other markets in the context of Vietnam’s approaching World Trade Organization (WTO) membership. It was expected that as many as 70 percent of the US$1.7bn quota granted by the US to Vietnam this year would fall into the hands of around 30 percent of textile enterprises nationwide. “Furthermore, the quota allocation, based on some leading enterprises, could remove the confusing situation when some small enterprises sell their share of the quota to stronger enterprises which are more capable of signing export contracts with US partners,” he said. Hundreds of Vietnamese garment and textile enterprises, however, did not appear to share the same opinion.
“It is noteworthy that 20 large American companies import about 60 percent of US garment demands from Vietnam while the remaining 40 percent traded in the market are by smaller firms”, said Mr Le Quoc An, Chairman of Vietnam Garment and Textile Association. Besides, the Ministry had not been able to clarify in their plan a way to determine the scales of Vietnamese enterprises, whether it would be based on their capital or export turnover, said Mr. Pham Xuan Hong, Director of a Ho Chi Minh City-based garment corporation. The fact that a company was small does not mean that it had no big customers, argued Mr. Diep Thanh Kiet, HATGEK’s General Secretary. Reiterating on the above, Mr. Le Duc Toa, Deputy CEO of Viet Tien Garment Company, a state-owned garment giant, said that small-scale businesses that are well-professionalised could also compete inon the export market. About 40 percent of the garment sector’s production capacity comes from small and medium garment enterprises, which provide hundreds and of thousands of jobs. (Various sources) RegionalVN, Laos and Cambodia mull economic triangle - Leaders of Viet Nam, Laos and Cambodia began talks on Wednesday focused on efforts to accelerate economic development in the three Mekong-region countries.Meeting in Seam Reap, Cambodia, for their third round of talks, Prime Minister Phan Van Khai and his Lao and Cambodian counterparts, Bounnhang Vorachith and Hun Sen, reviewed a programme to create a development triangle encompassing the three nations. They discussed measures to speed up the programme and agreed to focus on developing a transport network, electricity, trade, tourism, human resource training and health care. Besides approving certain proposals mooted at a meeting of high-ranking officials in Seam Reap earlier the same week, the leaders called for working out a master plan for socio-economic development in seven contiguous provinces in the three countries. The plan would be submitted to them for approval at the ASEAN 10 Summit in the Lao capital, Vientiane, in November. The leaders agreed it was critical to intensify co-operation in the Mekong sub-region to ensure the three countries benefited and their environment and resources safeguarded. They also exchanged views on cooperation for fighting international crimes and terrorism. Cooperation envisaged The plan to form a development triangle comprising the three neighbours was initiated by the prime ministers at their first meeting in Laos five years ago. It was fleshed out at the second meeting in 2002 with focus on the seven provinces, Ratanakiri and Strung Treng in Cambodia, Attopeu and Sekong in Laos, and Kon Tum, Dac Lac and Gia Lai in Viet Nam. All these provinces were socio-economically backward and shared similarities in terrain, land and climate, and had the potential to develop agriculture, forestry, farm processing, light industries, tourism and trade. While the programme has so far concentrated on these provinces, it is proposed to be expanded to cover the whole of Viet Nam’s Central Highlands, north-eastern Cambodia and southern Laos, thereby serving the three countries’ border security needs. One of its priorities is establishing a transport network linking the triangle with the three capitals and Viet Nam’s seaports. The countries have also agreed to build a power transmission network and develop a small-scale hydroelectric model by 2010 to supply power to the Lao and Cambodian provinces from Viet Nam. Many measures have been devised to accelerate trade in the triangle – like setting up border economic and trade areas, simplifying customs procedures and offering incentives to investors. The three have agreed upon a joint tourism campaign with the slogan "Three countries – one destination" and are building common tourist routes by linking world heritage sites recognised by UNESCO in each country. Bolstering programme To strengthen the programme, the prime ministers decided to dovetail it with their national plans and with bilateral and multilateral programmes in the Greater Mekong sub-region and ASEAN. They called for international financial assistance for implementing it. (Vietnam News Agency, 23.07.04) |
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