Full trade ties with the US and WTO membership will bring profound changes to Vietnam, a communist country that is now embracing the free market, analysts and business groups said.
Greater exposure to the harsh winds of the global economy will create new winners and losers in the small but fast-growing economy whose leaders have vowed to speed up two-decade-old doi moi, or "renewal," market reforms, they say.
Opening the Vietnamese economy further to large US and other foreign companies under WTO rules will have "profound consequences in the long term," said Carl Thayer, a Vietnam specialist with the Australian Defense Force Academy.
"In strategic terms, the Vietnam Communist Party will have to give way to market forces in the running of the economy," he said.
The US Congress has granted Vietnam the status of a full trade partner, removing the last obstacle between the former enemies as companies on both sides gear up for a new era when Vietnam joins the WTO later this month, cutting many tariffs and subsidies.
Passage of permanent normal trade relations (PNTR) in an 11th hour vote by the outgoing US Senate on Saturday ensured that US companies would now enjoy the same market access as those of other WTO partners when Vietnam becomes a member.
Eager to produce and sell in an economy expected to grow by over eight percent this year and which is now often touted as a hot new investment destination, US businesses have strongly lobbied for Vietnam's WTO admission and PNTR.
Chairman of the American Chamber of Commerce in Vietnam David Knapp applauded the "historic" vote, which had been delayed and challenged for months due to procedural problems and concerns over human rights and US jobs.
"American investors are attracted to Vietnam's strong GDP growth, rapid industrialization, huge labour force, stable political situation and the prospect of a better business climate under WTO rules," Knapp said.
Vietnam's 84 million people, he said, "will benefit from the better choice, higher quality and lower prices that will result from increased openness and competition under WTO rules."
"Vietnam's 40 million workers will also benefit from an expanding economy, greater participation by the private sector and better training as Vietnam becomes more competitive," he said.
Hoang Van Dung, deputy chairman of the Vietnam Chamber of Commerce and Industry, also hailed the PNTR passage and said it would benefit both sides, but warned of tough times ahead for many businesses at home.
More than 90 percent of Vietnamese companies are small and medium sized, he said.
"When we open the market they will be under pressure from overseas companies. The companies are very newly established, in the last 20 years or less. They still lack experience in international business. They are very fragile, and many companies have not yet operated outside Vietnam," Hoang said.
Thayer said that "whatever the pain of short-term adjustments ... the people of Vietnam will have a better choice of high quality goods. The private sector will strengthen especially as it meets world standards."
Vietnam's economic growth has already sharply reduced poverty and created a new affluent class, especially in the cities -- but the UN yesterday urged Vietnam not to forget those who are being left behind.
Ethnic minority groups had benefited least from the new boom, a growing number of internal migrants were falling through social safety nets, and fees for education and health were placing a high burden on poor households, the UN said in a statement marking International Human Rights Day.
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