Vietnam Air Service Company And Pacific Airlines example essay topic

History Since reclaiming Gia Lam Airport from the French over 47 years ago, Vietnam's civil aviation industry has grown steadily into one of the country's most vibrant economic sectors, and the national carrier - Vietnam Airlines - is now poised to become a major regional airline. Vietnam Airlines' history dates back to 1956. Starting with a fleet of only five small aircraft, the first international route was to Beijing, followed by Vientiane in 1976 and Bangkok in 1978. In April 1989, the airline was established as a state enterprise, and in 1996 Vietnam Airlines Corporation was formed, bringing together several service companies with the airline at its core. A six-seat management boards whose members the prime minister runs appoint the corporation. Singapore, Manila, Kuala Lumpur and Hong Kong were added to our network in the late 1980's and early 1990's.

With new destinations, including Paris, Taipei, Kaohsiung, Seoul, Osaka, Tokyo, Sydney and Melbourne, Vietnam Airlines now flies form Hanoi, Da Nang and Ho Chi Minh City to 13 domestic locations and 23 major international cities. In April 2001, Vietnam Airlines increased the frequency of flights between Vietnam's most popular domestic destinations. Our newest domestic route, launched in early 2002, runs between Ho Chi Minh City and central city of Vinh. For international flights, our Indochina route links Ho Chi Minh City with Vientiane and Phnom Penh. We also offer five flights per week from Ho Chi Minh City to Guangzhou; seven flights to Osaka; and five flights to Kaoshiung.

In May 2001, Vietnam Airlines launched a route in cooperation with China Airlines to the United States. Now you can fly with us between Ho Chi Minh City, Los Angeles and San Francisco. Direct flights between Hanoi / Ho Chi Minh City and Kunming and Beijing were added to Vietnam Airlines' network in 2001. We launched direct flights between Ho Chi Minh City and Tokyo on April 22, 2002; direct flights from Hanoi to Tokyo started on June 29, 2002. The reopened routes to Moscow are also started for the July 2002. In June of this year, Vietnam Airlines Corporation held a ceremony at Noi Bai International Airport to mark the purchase of three ATR 72-500 aircraft from the French firm AIR.

We also bought four new Boeing 777-200 ERs and five new Airbus A 321-200's, bringing our total fleet up to 31 aircraft: 11 Boeing, 10 Airbus, 2 Fokker 70's, and 8 ATR 72's. After receiving its first Boeing 777-200 in April 2003, Vietnam Airlines put this plane into operation in May. Three more Boeing 777's will arrive in June, August and September. In 2002, Vietnam Airlines carried some four million passengers and 60,000 tons of cargo. At the end of the year we unveiled our new logo, the Golden Lotus. I: In our organization, First, we will look at the type of the organization.

There are two kinds of business organizations: - Unincorporated: - sole trader - Partnership - Incorporated: - private limited company - Public limited company What is private company? Private company is business owned by private entities or people. Mostly it operated for profit or some non-profit organization. And Public limited company is business owned by public (government).

It operated for provide goods or services. Some are profit or non-profit Vietnam Airlines is a Public Limited Company that owned by government. Structure and management mechanism of Vietnam Airlines Corporations: The Vietnam Airlines Corporations (hereafter Corporation) was established on May 27, 1995 according to the Decision No. 32/TTG of the Vietnamese Prime Minister. The Corporation consists of: o Seven dependently financed units, including Vietnam Airlines (VNA) the core unit of the Corporation - Eleven independently financed units - Six joint ventures - One joint-stock company (Pacific Airlines) - Two professional units Its aims Vietnam airline's aim is to give you the best and widest choices in Vietnam airline flight reservations at competitive prices. c.

Its stakeholders One reason for the difficulty in understanding social responsibility is that managers must confront the question, responsibility to whom? The organization's environment consists of several sectors both inside and outside the organization. From a social responsibility perspective, enlightened organizations view the internal and external environment as a variety of stakeholders. A stakeholder is any group within or outside the organization that has a stake in the organization's performance.

Each stakeholder has a different interest in the organization. There " re 8 important stakeholders. Owner, creditors, suppliers interest are served by managerial efficiency, that's, the use of resources to achieve profits. Managers and employee expect work satisfaction pay, and good supervision. Customers are concerned with decision about the quality and availability of goods and services.

Other important stakeholders are the government and community. Most corporations exist under the proper charter and licenses and operate within the limits of the law and regulations imposed by the government, including safety laws and environmental protection requirements. The community includes local government, the natural and physical environments and the quality of life provided for residents. But Vietnam airline has not stakeholder because these company undertaken 100% capital from government for this form company. They called public enterprise company D: responsibilities as a company There are 4 types: 1. Economic responsibility: the business institution is the basic economic unit of society.

Its responsibility is to produce the goods and services that society wants and to maximize profit for its owner and shareholder. Quite often, corporation are said to operate solely to maximize profit. Certainly, profit is important to a firm, just as a grade point average is important to a student. Profit provides the capital to stay in business, to expand and to compensate for the risks of conducting business.

There is a responsibility to make a profit to serve society. Imagine what would happen to out society if large company or Monopoly Company did not make profit and went out of business. Thousands of people and the economy would be affected. 2. Legal responsibility: all modern societies lay down ground rules, laws and regulations that organizations are expected to follow.

Legal responsibility defines what society deem as important with respect to appropriate corporate behavior. Organizations are expected to fulfill their economic goals within the legal framework. Local town councils, stake legislatatiors, and federal regulatory agencies impose legal requirements. 3. Ethical responsibility: ethical responsibility includes behaviors that are not necessarily codified into law and may not serve the corporation's direct economic interests, to be ethical, organizational decision makers should act with equity, fairness and impartiality respect the rights of individuals, and provide different organization's goals and tasks.

Unethical behavior occurs when decisions enable an individual or company to gain at the expense of society. 4. Discretionary responsibility: Discretionary responsibility is purely voluntary and guided by a company's desire to make social contributions not mandated by economics, laws or ethics. Discretionary activities include generous philanthropic contribution that offer no monetary return to the company and are not expected. Example, IBM needed to reduce the size of its sales force due to the recession. Instead of firing people, they stop hiring and let normal turnover decrease sales force size.

Discretionary responsibility is the highest criterion of social responsibility because it goes beyond societal expectations to contribute to the community's welfare. II: A: the type of economic system it operates in. Vietnam economic system is currently based on a mixed market economy. Fourteen years ago in 1986, it's economic system was also based on a command market economy. In 2000, Vietnam had GDP of $28 billion and the estimate for 2002 is 31 billion.

The unemployment for 2000 is estimated to be 15% and the inflation rate for 2000 is estimated to be 8%. Although no major economic reforms have been undertaken in Vietnam within the last 14 years, faced with a lack of physical resources and a small domestic market in 1975 after independence, the government of Vietnam adopted a pro-business, export-oriented economic policy framework. Combined with state-directed investments in strategic government-owned corporations the country's economic strategy was a success as seen through the average growth rate of 6.2% between the economic reforms in 1975 to 2002. B: the role and influence of the state and its policies on the company The 1995 amended Civil Aviation Law: Though the 1995 Civil Aviation Law has already been amended it is necessary to add language on the promotion of competition and privatization. The additions will specify methods for doing business and how to transfer the right of independent decisions on prices, charges and fees to private businesses. The language could be as follows: "Gradually promote competition and privatization in the aviation sector, giving private businesses more opportunities to decide on prices, charges, and fees of their air services and goods" Decree No. 68 of the Vietnamese government (October 25, 1995) on the functions, tasks, powers, and organizational structure of the Civil Aviation Association of Vietnam (CAAV).

Article 1 of this Decree states the following condition: "The Civil Aviation Association of Vietnam is an agency under the authority of the Government, which performs the functions of State management over the civil aviation throughout the country". Article 1 explains how the Vietnamese Government would maintain its monopoly policy in the aviation sector. These restrictions could complicate decision-making procedures and may not coincide with the principles of GATS / WTO, ICAO, and ASEAN. The principles of these organizations require a pro-competitive, non-discriminatory environment. Thus, maintaining this Article may block Vietnam's accession to the WTO. Decree No. 04/CP of the Vietnamese government (January 27, 1996) approving "regulations on the organization and operation of Vietnamese Airlines Corporations".

Chapter I, Article 1 of this Decision states: " Vietnam Airlines Corporations (hereafter Corporations) established by the Government's decision is a large-scale States Corporation, with Vietnam Airlines as the core and consisting of member units, which are independently and dependently financed businesses, and professional units. These units are interactively linked to each other for economic, financial, technological, information, training, research, and marketing benefits. Their aim is to promote stimulation, spread professionalism, and cooperate in production to fulfill the tasks assigned by the Government: that is, improving the business ability and efficiency of the member units and the Corporation as a whole, by responding to the demands of the economy". Decision No. 818/TTG of the Prime Minister of Vietnam (December 13, 1995) on the prices, charges, and fees of aviation Article 1 of the Decision stipulates: "The Government shall uniformly manage civil aviation prices, charges, and fees, including the transportation of passengers, cargo, postal matter, and parcel post on international and domestic routes, and the rent of charter flights". Decision No. 202/CT of the Prime Minister (June 1992) on names of state-owned enterprises (SOEs) that can be privatized "The Government shall fully manage all strategic sectors such as electricity, water distribution, and aviation".

Domestic Political Strategy The first step towards reaching consensus among the CAAV, the Vietnam Airlines Corporations, and other functional units is to lobby key individuals of these entities: The Director General of the CAAV and the Director General of Vietnam Airlines Corporations. The Agreement will not be achieved without the support of either of these individuals. Fortunately, they have the same "progressive" standpoint on the Aviation Development Strategy (1999) and the Strategy to develop Vietnam Airlines Cooperation (2000). In addition, it is critical to gain the support from the Director of Air Transport and Navigation Department of the CAAV, and Vice Director General of the CAAV, in charge of international affairs.

These two individuals will be chief Vietnamese negotiators for the Agreement. Next, the Department of International Relations and the Department of Planning and Investment of the Vietnam Airlines should coordinate to send a White Paper to the Director General of CAAV and the Director of Vietnam Airlines Corporations. The draft should highlight both short run and long run goals of the agreement and the benefits that the agreement will bring the aviation sector and other commercial sectors closely The Department of Legal Affairs of the CAAV should draft proposed language for the amendments of following legal documents, explaining the importance of the amendments to the agreement (See Legal Analysis). This proposal should be approved by the internal Civil Aviation, and sent to the Ministry of Legal Affairs.

The CAAV should take advantage of the support of those who advocated for the following documents: - The amended Civil Aviation Law 1995 ratified by the National Assembly of the Socialist Republic of Vietnam on April 20, 1995. - Decree No. 68/CP of the Vietnamese government (October 25, 1995) on the function, tasks, powers, and organizational structure of the Civil Aviation Association of Vietnam (CAAV). - Decree No. 04/CP of the Vietnamese government (January 27, 1996) approving "regulations on the organization and operation of Vietnam Airlines Corporations". - Decision No. 818/TTG of the Prime Minister of Vietnam (December 13, 1995) on the prices, charges, and fees of the civil aviation.

- Decision No. 202/CT of the Prime Minister (June 1992) on the names of state-owned enterprises (SOEs) that can be privatized. International Negotiation Strategy The International Negotiation Strategy will aim to: - Gain the recognition of the WTO Working group and WTO members on Vietnam's efforts for accession. Adjust domestic regulations to adhere to the international obligations. - Obtain support of foreign governments and regional and international organizations for the US-Vietnam BCAA.

Targets of the International Negotiation Strategy are: - The WTO Working Group on Vietnam's accession to the WTO and WTO members. - Foreign airlines operating direct flights to Vietnam and those planning to invest in the market. Strategy to deal with the WTO working group on Vietnam's accession to the WTO This strategy aims to: gain the recognition of the WTO working group on Vietnam's efforts for accession to the WTO by loosening one of its most strategic markets, and adjusting domestic regulations to adhere to ICAO and WTO / GATS obligations; and expedite Vietnam's accession to the WTO. To succeed with this strategy, the CAAV should consult with the Politburo, the National Assembly, the Government, the Ministry of Foreign Affairs, the Ministry of Trade, the Ministry of Planning and Investment, and the National Committee for International Economic Cooperation to prepare for negotiations with the WTO Working group and members. During these negotiations, the Vietnamese negotiators should stick to the following talking points: - Pushing for Vietnam's accession to the WTO by showing how restrictions have loosened on such strategic sectors as telecommunications and aviation. - Providing information on adjustments to the Civil Aviation Laws to show how Vietnam is trying to comply with international aviation organizations.

- Show plans to make other service sectors of Vietnam abide by the WTO / GATS Agreement. : A: the market type it operates in The Vietnam Airlines Corporations includes three air transport businesses: Vietnam Airlines (VNA) - the core unit, Vietnam Air Service Company (VASCO), and Pacific Airlines. - Vietnam Airlines (VNA): VNA handles most of Vietnam's air transportation, both for passenger and cargo services in domestic and international markets. VNA belongs to the dependently financed business of the Vietnam Airlines Corporations. - VASCO: Established in 1988, VASCO is a dependently financed business of the Corporation.

Its operations are mainly aviation photography and geographical exploration. VASCO provides services for electricity, forestry, ambulance, and charter flights. - Pacific Airlines: Established in 1990 by the Decision 12/90-BG TVT of the Ministry of Transportation, the joint-stock Pacific Airlines consists of seven state-owned shareholders. In 1994, the government assigned CAAV to manage and restructure Pacific Airlines. Even though Pacific Airlines operates in a narrow realm with three wet-leased aircraft, it seems to have the potential for growth. At the present time, Pacific Airlines has two domestic flights per day (Hanoi - Ho Chi Minh City), and nine international flights per week (Ho Chi Minh City - Kaohsiung, and Saigon - Taipei).

Since 1975, the sector has been subsidized 100% by the government. Its financial and accounting mechanisms have been centralized and are totally controlled by the government. In addition, since the establishment of the Vietnam Airlines Corporations, the government has had to cover its losses, even though it is a monopoly. The Vietnamese civil aviation sector has been unable to profit or experience financial growth. From 1993-1997, the Vietnam civil aviation sector invested VND 947.6 billion, equivalent to 24.4% of the total state budget.

Of the 947.6 billion, VND 585 billion is invested in the Flying Information Region (FIR) construction project and 596.6 billion in other aviation infrastructure projects. As part of a more comprehensive plan, Vietnam Airlines will receive financial support from the US Export and Import Bank (US EXIM), Overseas Private Investment Cooperation (OPIC), Airport Group International (US), the DAR group (UK), DIWIDAG (Thai-German), and Maeda (Japan). This support of USD$3 billion will be used to upgrade the infrastructures of the existing airports and to build new airports over the next ten years. B: the effect of the market force on the company and the company is responses (SARS) Vietnamese airline hit by SARS affect SARS Reservations in April / May reportedly down 15-20%. Passenger numbers have reportedly fallen sharply from Europe and Japan. Planning new domestic and increasing capacity on unaffected routes e.g. Ho Chi Minh City-Tuy Hoa, Hanoi-Siem Reap and Ho Chi Minh City-Fukuoka.

Vietnam airline, says it has suspended its Hanoi to Danang service until May 15th. This follows a 30-percent fall in the numbers of bookings due to the outbreak of Severe Acute Respiratory Syndrome, or SARS. Vietnam Airlines had started the service in January with five flights a week. The airline also suspended its Ho Chi Minh City-Singapore route earlier and has yet to say when it plans to resume the service.

"Bookings on the route have declined 30%", Nguyen Tu Hung said. Meanwhile, the airline has yet to announce when to resume the Ho Chi Minh City-Singapore service with five weekly flights, which have been suspended since Apr. 1. The outbreak of a flu-like respiratory illness has dealt a blow to a number of air carriers in the country, with passenger bookings taking a nosedive. Vietnam airline cancelled 14 flights from Hanoi to Hong Kong and 8 from HCM City to Hong Kong from Apr. 1 to 15.

Earlier, the airline operated 28 flights between Vietnam and Hong Kong a week. The airline has canceled a number of international flights as SARS has resulted in a drop in bookings in the past three weeks. The exact number of canceled flights is not available at the moment. The airline has no plans to suspend any international services, Luong Hoa i Nam, head of market planning at the airline said. However, in case the number of bookings is too low, it will cancel flights and transfer passengers to other flights, he said. IV: A: European commission European Union (EU), name given since the ratification (Nov. 1993) of the Treaty of European Union, or Maastricht Treaty, to the European Community.

(EC), an economic and political confederation of European nations, and other organizations (with the same member nations) that are responsible for a common foreign and security policy and for cooperation on justice and home affairs. Fifteen countries-Austria, Belgium, Denmark, Finland, France, Germany (originally West Germany), Great Britain, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, and Sweden-are full members of the organizations of the EU. European Monetary System, arrangement by which most nations of the European Union (EU) linked their currencies to prevent large fluctuations relative to one another. It was organized in 1979 to stabilize foreign exchange and counter inflation among members. Periodic adjustments raised the values of strong currencies and lowered those of weaker ones, but after 1986 changes in national interest rates were used to keep the currencies within a narrow range. In the early 1990's the European Monetary System was strained by the differing economic policies and conditions of its members, especially the newly reunified Germany, and Britain permanently withdrew from the system.

In 1994 the European Monetary Institute was created as transitional step in establishing the European Central Bank. (ECB) and a common currency. The ECB, which was established in 1998, is responsible for setting a single monetary policy and interest rate for the adopting nations, in conjunction with their national central banks. Late in 1998, Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain cut their interest rates to a nearly uniformly low level in an effort to promote growth and to prepare the way for a unified currency.

At the beginning of 1999, the same EU members adopted a single currency, the euro. For foreign exchange and electronic payments. The introduction of the euro (worth about $1.17 at its inception and dropping to about $1.00 by year's end) four decades after the beginnings of the European Union was widely regarded as a major step toward European political unity. By creating a common economic policy, the nations acted to put a damper on excessive public spending, reduce debt, and make a strong attempt at taming inflation.

The European Currency Unit (ECU), which was established in 1979, was the forerunner of the euro. Derived from a basket of varying amounts of the currencies of the EU nations, the ECU was a unit of accounting used to determine exchange rates among the national currencies. Of the European Union members not adopting the euro (Denmark, Great Britain, and Sweden), perhaps the most notable is Britain, which continues to regard itself as more or less separate from Europe. Nonetheless, British Prime Minister Tony Blair announced plans to consider adopting the euro sometime in 2002-5.

In all three nations there was strong public anxiety that dropping their respective national currencies would give up too much independence. Greece, which failed to meet the economic conditions required to join, hoped to adopt the euro by 2001. Euro coins and notes will be introduced into circulation in Jan., 2002, and local currencies are to be removed from circulation by July of that year. B: European monetary system European Commission, branch of the governing body of the European Union (EU) invested with executive and some legislative powers.

Located in Brussels, Belgium, it was founded in 1967 when the three treaty organizations comprising what was then the European Community (EC) were officially merged; previously, a separate commission governed each organization. The commission is composed of 20 members-two from each of the five largest EU nations and one from each of the others. Members are appointed by agreement among the member nations and serve four-year terms. One member serves as president and six serve as vice presidents. A large administrative staff, numbering more than 10,000, is divided among many committees and administrative agencies. The commission implements the provisions of the EU's founding treaties and carries out rules issued by the Council of the European Union.

In keeping with the objective of the founding treaties, the commission initiates EU policy on the economy in particular but, increasingly, also on environmental and foreign and security affairs. The legislation it drafts is subject to amendment by the European Parliament and to ratification by the Council of the European Union. It was under the presidency of Jacques De lors (1985-95) that the commission put forward the Single European Act (1987) and the Treaty of European Union (1992; also known as the Maastricht Treaty), both of which provided for a significant expansion of the EU's powers. In 1995, Jacques Sante r of Luxembourg became president of the commission. The entire commission resigned in 1999 amid accusations of financial mismanagement, corruption, fraud, and nepotism, and a new set of commissioners, with Romano Prodi of Italy as president, was appointed later the same year. V: Explain how becoming a member of ASEAN or the WTO (whichever is applicable) affects the company your choice.

History and Evolution of ASEAN When the Founding Fathers of ASEAN from Indonesia, Malaysia, the Philippines, Singapore and Thailand established the Association in 1967, they held out a bold vision of all countries in Southeast Asia cooperating actively towards peace, stability, progress and prosperity in the region. It was a bold vision because at that time the region was still badly divided by ideological conflict and war. Internal insurgencies and economic hardship forced countries in the region to waste a great deal of their scarce resources in defense and to depend on external powers for security and aid. Territorial disputes and racial tensions caused recurring irritation and aggravated distrust between neighbors and prolonged fragmentation of Southeast Asia. The Sabah dispute between Malaysia and the Philippines led to the early demise in 1962 of the Association of Southeast Asia, which these two countries formed with Thailand just one year earlier. Diplomatic ties between Kuala Lumpur and Manila were severed between 1962-66.

Consequently, President Macapagal's idea of a Malphilindo grouping was stillborn. Then there was the Confrontation between Indonesia and Malaysia; the separation of Singapore from Malaysia in August 1965; the escalating war in Vietnam and the Cultural Revolution in China where Chinese leaders openly espoused a policy to export revolutions to Southeast Asia. Against all odds, ASEAN was founded to provide a framework and mechanism for regional cooperation. In the ASEAN Declaration unveiled in Bangkok on 8 August 1967, the Founding Fathers spelled out the first three aims and purposes of ASEAN as follows: "1. To accelerate the economic growth, social progress and cultural development in the region through joint endeavors in the spirit of equality and partnership in order to strengthen the foundation for a prosperous and peaceful community of South-East Asian Nations; 2. To promote regional peace and stability through abiding respect for justice and the rule of law in the relationship among countries of the region and adherence to the principles of the United Nations Charter; [and] 3.

To promote active collaboration and mutual assistance on matters of common interest in the economic, social, cultural, technical, scientific and administrative fields... ". The ASEAN Declaration made clear that "the Association is open for participation to all States in the South-East Asian Region subscribing to the aforementioned aims, principles and purposes". It further stated "the Association represents the collective will of the nations of South-East Asia to bind themselves together in friendship and cooperation and, through joint efforts and sacrifices, secure for their peoples and for posterity the blessings of peace, freedom and prosperity". From ASEAN-5 to ASEAN-6 From the very beginning, the door to membership has always been open for all the other countries in Southeast Asia to join ASEAN.

During the late 1960's and early 1970's, Cambodia, Laos and South Vietnam attended some of the ASEAN Ministerial Meetings as Observers. Burma, on the other hand, showed no interest because she was more concerned about preserving her neutrality. North Vietnam, meanwhile, was at war with South Vietnam and the US. Unfortunately, the end of the wars in Indochina in 1975 did not remove distrust and ideological animosity, let alone improving regional stability. Worse still, in late 1978 the Kampuchean conflict raised regional tensions to dangerous level and consequently robbed all parties concerned nearly 15 years of their precious time as well as enormous human and economic resources that could otherwise have been used in national reconstruction and regional cooperation in Southeast Asia. Only in 1984 did the ASEAN membership begin to expand with the admission of Brunei Darussalam on 7 January of that year, one week after the country gained independence from the British.

With a population of less than 300,000 and sandwiched between Indonesia and Malaysia, ASEAN membership brought to Brunei Darussalam instant recognition and acceptance from her ASEAN colleagues as one of the equals. Brunei Darussalam also found a stronger voice through ASEAN. "ASEAN is very important to us", said H.R.H. Prince Mohamed Bolkiah, Minister of Foreign Affairs of Brunei Darussalam in a recent interview published in ASEAN at 30. "Like any small country, we have special concerns. Economic ones, we need to find markets, and political ones, small countries sometimes get overlooked. So being in ASEAN definitely helps us...

We can be more effective than we could be on our own", he added. From ASEAN-6 to ASEAN-7 ASEAN took a giant step towards realizing the vision of ASEAN-10 (having all 10 countries in Southeast Asia in ASEAN) with the admission of Vietnam in July 1995 as its seventh member. This was indeed a paradigm shift in Southeast Asia. H.E. Mr Nguyen Minh Cam, Minister of Foreign Affairs of Vietnam, described it as a "qualitative change in the condition of our region 50 years after the end of World War II... an eloquent testimony to the ever growing trends of regionalization and globalization in the increasingly interdependent world". The admission of Vietnam meant "a great deal more than an increase in membership from six to seven", said H.E. Mr. Ali Al atas, Minister for Foreign Affairs of Indonesia, at the Admission Ceremony of Vietnam into ASEAN held in Bandar Seri Begawan on 28 July 1995 prior to the start of the 28th ASEAN Ministerial Meeting (AMM).

"Vietnam undoubtedly will enhance the vitality and the collective strength of our Association. Its strategic geographical location, its skilled manpower and the general dynamism of its people as well as its abundant natural resources will add to and deepen the meaning of ASEAN cooperation, unity and cohesiveness", he added. From ASEAN-7 to ASEAN-10 The admission of Vietnam inspired Laos to speed up her preparations to join ASEAN. Laos and Vietnam became Observers in ASEAN after their accession in 1992 to ASEAN's Treaty of Amity and Cooperation in Southeast Asia. Until 1995, Laos had taken the position that she would join ASEAN together with Cambodia and Myanmar. But at the opening of the 28th AMM, H.E. Mr. Somsavat Lengsavad, Minister of Foreign Affairs of Laos, departed from his prepared opening statement to announce that Laos wished to join ASEAN in two years' time so that Laos could take part in the 30th anniversary celebrations of ASEAN in 1997.

Also at the 28th AMM, Cambodia was accorded Observer status after Cambodia acceded to the Treaty of Amity and Cooperation in Southeast Asia in January 1995. Myanmar acceded to the Treaty in July 1995 and was accorded Observer status at the 29th AMM in July 1996 in Jakarta. At the Fifth ASEAN Summit in Bangkok in mid-December 1995, the ASEAN Heads of Government met their counterparts from Cambodia, Laos and Myanmar for the first time. On 15 December, after the historic meeting, the Heads of the 10 Southeast Asian countries signed the Treaty on the Southeast Asia Nuclear Weapon-Free Zone. In their Bangkok Summit Declaration of 1995, the ASEAN Heads stated that "ASEAN shall work towards the speedy realisation of an ASEAN comprising all Southeast Asian countries as it enters the 21st century: ... ".

Cambodia, Laos and Myanmar (the CLM countries) submitted their respective applications for ASEAN membership in 1996. Like Laos, Cambodia and Myanmar also wished to join ASEAN in 1997. To assist these prospective members in their preparations to join ASEAN, the ASEAN Standing Committee (ASC) has set up a Working Group chaired by a Deputy Secretary-General of ASEAN. The ASEAN Secretary-General, the Directors-General of ASEAN National Secretariats of the seven member countries, and several teams of ASEAN Secretariat officers have visited the CLM countries to conduct policy consultations and provide briefings to facilitate the preparations. The Senior Economic Officials Meeting (SEEM) has also set up a similar Working Group, also chaired by the Deputy Secretary-General of ASEAN, to facilitate the accession of the CLM countries to major economic cooperation agreements in ASEAN. At the First Informal ASEAN Summit in Jakarta on 30 November 1996, the ASEAN Heads met for the second time with their counterparts from the CLM countries.

The ASEAN Heads announced in their joint press statement that they "reaffirmed their strong commitment to the speedy realization of an ASEAN comprising all ten Southeast Asian countries. They agreed that Cambodia, Laos and Myanmar be admitted as ASEAN members simultaneously. To this end, they agreed to request the relevant ASEAN bodies to continue with the necessary technical and procedural steps. As to the actual timing of the admission of the three countries, this will be announced in due time. In the meantime, as in the case of Cambodia and Laos, Myanmar will be participating in ASEAN activities... ".

The ASEAN Foreign Ministers discussed the timing of admission of the CLM countries at an informal luncheon meeting in New Delhi on 7 April 1997. They were in the Indian capital to attend a Non-Aligned Movement ministerial conference. The ASEAN Foreign Ministers requested the Secretary-General of ASEAN to prepare a report on the technical preparations of the CLM countries to join ASEAN and to present it at a Special Meeting of ASEAN Foreign Ministers in Kuala Lumpur on 31 May 1997. At the Special Meeting in the Malaysian capital, the Secretary-General concluded his presentation of the report that the CLM countries were all technically prepared to join ASEAN and had given satisfactory written undertakings to fulfil all obligations of membership and commitments under various ASEAN agreements.

The Special Meeting decided to admit the CLM countries in July 1997 and requested the Chairman of the 30th ASC, H.E. Dato Seri Abdullah Haji Ahmad Badawi, Minister of Foreign Affairs of Malaysia, to convey the decision to the CLM countries. Accompanied by the Secretary-General, the Malaysian Minister of Foreign Affairs visited Vientiane, Phnom Penh and Yangon from 6-10 June 1997 to explain the decision and its purport. At first, the ceremony for the admission of the CLM countries was scheduled on 23 July 1997 prior to the start of the 30th AMM in Subang Jaya, Malaysia. Unfortunately, due to what ASEAN described in its press statement issued on 10 July 1997 as "unfortunate circumstances which have resulted from the use of force" in Cambodia in the incident on 5-6 July, ASEAN Foreign Ministers, at their Special Meeting in Kuala Lumpur on 10 July, decided "to delay the admission of Cambodia into ASEAN until a later date. [And] they agreed that the admission of Laos and Myanmar will proceed as scheduled...

". At the Admission Ceremony on 23 July 1997, H.E. Dato Seri Abdullah Haji Ahmad Badawi best reflected the sentiments in ASEAN when he said "Indeed, as we all are aware, this ceremony would have been, but for an unfortunate turn of events, a ceremony to admit three countries instead of two. It is with disappointment and regret that we view the course of events in Cambodia in the last couple of weeks. However, certain things cannot be undone. Therefore all concerned would need to resolve to work even harder so that ASEAN-Ten is realized sooner rather than later... ".

To Laos, her admission, according to H.E. Mr. Somsavat Lengsavad, Minister of Foreign Affairs of Lao PDR, "is an historic event of great significance for the enhancement of the fruitful cooperative relationship between the Lao PDR and ASEAN Member States... The admission of the Lao PDR as a new member of ASEAN will open to her greater opportunities to further contribute to the cause for common benefits of the region and the world". H.E. U Ohn G yaw, Minister for Foreign Affairs of Myanmar, saw the admission of Myanmar into ASEAN as "a significant moment in the contemporary history of my country as Myanmar now stands proudly as part of the ASEAN family, an integral part of Southeast Asia in spirit and in letter". of the Association's founding fathers The Sixth ASEAN Summit, held in Hanoi on 16 December 1998 decided to admit the Kingdom of Cambodia as the tenth member of ASEAN and instructed the Foreign Ministers to organise special ceremonies of admission in Hanoi. On April 30, 1999, The Association of Southeast Asian Nations (ASEAN) today admitted Cambodia as its tenth member fulfilling its vision to establish an organization for all Southeast Asian countries. ASEAN now comprises Brunei Darussalam, Cambodia, Indonesia, Laos, Myanmar, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

With Cambodia's entry, the ASEAN region now has a total population of about 500 million, a total area of 4.5 million square kilometers, a combined gross national product of US$685 billion, and a total trade of US$720 billion. Vietnam and ASEAN economic relations Viet Nam's exports to ASEAN member countries accounted for more than 18 percent of its total export value last year while the country's imports from regional countries made up 28 percent of its total import value. Also last year, the country's exports to ASEM members made up 67 percent and imports from those countries represented 70.9 percent in terms of value. In the 1995-2000 period, ASEAN investors pledged to a combined registered capital of USD 7.3 billion to Viet Nam or 28.7 percent of the total while ASEM investors as a whole committed to invest USD 15.2 billion, making up 59.3 percent of total foreign investment capital in Viet Nam Minister Khoan was speaking in an interview with national daily Nhan Dan (People) in anticipation of the third ASEM Economic Ministers' Meeting (EMM 3) and the 33rd ASEAN Economic Ministers' Meeting (AEM 33) to be held in Hanoi next week. He said that the European Union (EU) is an important partner of Vietnam. Trade value between the two sides increased to US $4.6 billion in 2000 from US $1.4 billion in 1995.

Investors from EU member countries invested US $554.4 million in Vietnam last year or 26.8% of the country's total foreign investment. Mr Khoan expressed the hope that bilateral relations between Vietnam and the EU will be further boosted through the ASEM co-operation framework. The coming EMM 3 is expected to explore further measures to realize co-operation orientations approved at the third ASEM Summit in the Republic of Korea last year. Economic co-operation among ASEM member countries has increased markedly in recent years. Trade value between European members and their Asian partners rose to US $310 billion in 1999 from US $275 billion in 1995. Investment coming from the European members to the Asian members jumped to US $7.8 billion in 1998 from US $6.5 billion in 1995.

At the EMM 3, Vietnam will propose ideas aiming at enhancing economic co-operation of ASEM with priority given to agricultural technology, farm produce processing, environmental technology, energy, transport and communications. Vietnam hopes that the meeting will define more concrete measures to boost ASEM co-operation in the above-said domains based on Vietnam's recommendations. Asked about Vietnam's contributions to regional co-operation, the minister noted that Vietnam attached great importance to accelerating economic co-operation within ASEAN. The country has strictly carried out its commitments to the regional grouping.

Vietnam's commitments, covering investment, services, e-ASEAN and other fields, aim to expand markets, bolster relations with its neighbors and accelerate regional and international integration. To this end, Vietnam has included 4,946 commodity items in the Quick Tax Reduction list of the Common Effective Preferential Tariffs (CEPT) under the ASEAN Free Trade Area (AFTA) the trade minister further said. Of the figure, 3,241 items of 66% of the projected total enjoy tariff rates from zero to 5% and 1,705 items are subjected to above 5% tariff rates. Two-way trade between Vietnam and ASEAN was registered at US $7.1 billion last year, or 24% of the country's total trade value. Also in 2000, regional investors poured US $50 million into Vietnam, Mr Khoan noted. On his assessment of the ASEAN economic co-operation process, Minister Khoan said that the implementation of CEPT / AFTA will gradually establish a unified market of the 10 ASEAN members and step by step remove trade barriers between member countries to boost intra-regional trade development.

The whole region will have a common voice in trade deals with the rest of the world, thus making ASEAN an attractive region for investment. Five of the six founding members of the association, namely Brunei, Indonesia, Malaysia, the Philippines and Thailand, have applied tariff rates of between zero and five percent to more than 90% of the total projected items of the Quick Tax Reduction list. Singapore has reduced tariffs levied on all its projected items for the Quick Tax Reduction list to zero percent. Within the framework of AEM, Vietnam will propose measures to narrow the development gap between the association's founding members and its newly admitted members, Cambodia, Laos, Myanmar and Vietnam, and facilitate the latters' regional integration At the Fifth ASEAN Summit in December 1995, in Bangkok, Thailand, member countries signed the ASEAN Framework Agreement Services (AFAS). AFAS' objective is commitment for investment liberalization, market access, national treatment, private sector involvement, and all service sectors and sub-sectors. Aiming at liberalizing trade in services, seven key sectors were chosen for negotiation: financial services, telecommunications, maritime services, air transportation services, tourism, commercial services, and construction services.

At the Sixth ASEAN Summit held in Hanoi on December 1998, Vietnam committed to liberalize air services and other service sectors not included in the first round of negotiations. The commitment in air services covers aircraft fixing and maintenance, booking, and air marketing. At the 31st ASEAN Economic Ministerial Meeting (AEM) in 1999, ASEAN countries agreed to push forward negotiations aimed at liberalizing trade in services within ASEAN, and to finalize the "Framework Agreement on Negotiations in Services from 1999 to 2020". At the 32nd ASEAN, the draft "Framework guiding the ASEAN liberalization of trade in services" was approved.

Ministers continued to work on long term liberalization goals, determining sectors, sub-sectors, and modes of supply to be liberalized. At the moment, the Ministry of Planing and Investment of Vietnam is working with other related Ministries to develop a strategy for further negotiation of services with other ASEAN countries. From February 13-15, 2001, civil aviation leaders of ten ASEAN countries held the Third Conference of a working group in Air Transportation in Brunei. Countries were urged to submit drafts for open-air commitments in such service sectors as aircraft maintenance services, sale and marketing of air products, and computer reservation systems (CRS). In addition, at the conference, country members were required to examine new sectors for the next round of negotiations on opening the service market, including: - Wet-lease - Dry-lease - Package delivery services - Air tourism services - Air craft maintenance - Cargo services - Stairway services - Baggage services - Passenger services - Radar air control - Air control at airports - VIP services for commercial purposes - Air catering services - Security services Vietnam committed to open its market in aircraft repair and maintenance, sale and marketing products, CRS, and dry-lease At the conference, Brunei submitted a draft about the ASEAN "cross border" aviation agreement, which is an Open Skies agreement. During the process of drafting the document, there appeared two primary opinions: First, a few ASEAN members thought it was time to liberalize air transport services to stimulate economic development in the region and in each member country.

Such an agreement could be considered initial progress in adopting the "Open Skies Policy" in ASEAN countries. Second, most ASEAN members, especially Cambodia, Laos, Myanmar, and Vietnam (CLMV) affirmed that a cross-border agreement under the modernization model is currently unsuitable. There is a large gap in the air transport development between the countries. The four countries emphasized that agreements should be a step-by-step and continuous process, starting at the point of cooperation between countries in the ASEAN sub-region, then expanding to the entire ASEAN region. According to them, ASEAN aviation cross-border agreements can only be reached after agreements are established and operated effectively in sub-regions like the Indonesia, Malaysia, and Thailand growth triangle (IMT-GT) and the Brunei, Indonesia, Malaysia, Philippines-East Asia Grow Area (B IMP-EAG A). A draft of Memorandum of Discussion on air cargo transport, considered a supplement to the current bilateral air agreements between ASEAN members, was signed.

The memorandum is the first step towards an air transport policy of Open Skies in ASEAN countries. However, much editing, particularly regarding the CLMV provisions on loading, frequency, freedoms, and code-sharing authority, is needed to satisfy all countries. Cambodia, Laos, Myanmar, and Vietnam have agreed to cooperate and initiate the next stage of development in the Open Skies policy in ASEAN countries. Cooperation between countries in the sub-region ensures that their airlines will fully and effectively engage in the international air transport market.

The "Agreement between General Director of Civil Aviation of Cambodia, Laos, Myanmar, and Vietnam on cooperation on air transportation in the sub-region" is comprised of the following contents: - No limit on 3rd, 4th, and 5th freedoms, loading supply, frequency, designated airlines, destination, original, intermediate, and beyond points within the sub-region. - The Computer Reservation System (CRS) of each country may be established in the territory of other countries in the sub-region. o Application of double disapproval on fare for air transport within the sub-region. - No limit on the non-scheduled activities, depending on approval requirements of each country. - Code-sharing and other methods of cooperation between designated airlines of the sub-region is encouraged.

Vietnam and the "open skies" trend: In the global economy, air transport is a strategic economic sector for every country. Not only does it fuel the development of national economies, but it also fosters economic, political, and cultural cooperation between nations. Vietnam considers international cooperation and liberalization indispensable for the development of its civil aviation sector and economy. Therefore, Vietnam is progressing from protectionism towards liberalization.

In light of the gap between developing and developed countries regarding air transport, Vietnam has progressed during the past few years. Due to restraints in its competitive ability, however, Vietnam must continue to expand its aviation network. Hence, Vietnam plans to liberalize in the sub-region scope (Cambodia, Laos, Myanmar, and Vietnam), then to ASEAN, APEC and the world. To iron out relevant legal issues, Vietnam has adjusted numerous provisions in bilateral agreements: - It has incorporated the code-share provision with airlines of third country parties into the traditional agreements. Designated airlines of each party are allowed to have a code-sharing contract with airlines of third country parties provided that the bilateral agreement between the two contracting parties is not affected. - It has applied the new safety provision of ICAO.

The authorities of the contracting party are eligible to inspect air safety (inspect aircraft at the airport and the air safety control system in the territory of the other party). Operation may be suspended if the other contracting party does not meet air safety conditions. - An exchange of Fifth Freedoms is possible for competitive routes. In short, Vietnam's attitude towards the Open Skies policy is cautious, due to the relative weakness of the country's civil aviation sector. As described above, Vietnam is not only concerned about Open Skies in ASEAN, but also about elements of the US Open Skies policy. It is believed that Vietnam needs more time to catch up with its competitors.

Opportunities and challenges facing Vietnam Vietnam's regional and global economic integration constitutes the centerpiece of its trade and investment policies in the second half of the 1990's, and it will remain so as the 21 St Century approaches. During the process of economic integration, Vietnam will reap Benefits and at the same time be faced with numerous challenges. How can Vietnam benefit from its regional and global economic integration? It will do so in the following ways: Meeting the needs of the industrialization and modernization of Vietnam's economy The industrialization and modernization of Vietnam's economy is one of the priority tasks being pursued by the government at present. Promoting economic cooperation and integration within the region and beyond will enable Vietnam to speed up the industrialization and modernization of its economy. Vietnam is at present in the midst of the process of economic liberalization from which it is receiving substantial dividends.

At the initial stage, the globalization of Vietnam's economy has been dominated by its economic interchange with its ASEAN partners, who have played an important role in this aspect. In ASEAN and through AFTA, Vietnam has integrated with some of the newly industrialized economies and will reap the gains of increased trade and foreign investment. Vietnam will also gain access to new international markets through the ASEAN window and have greater opportunities to expand its economic relations, including technology transfers, with the more industrialized economies of the world, thus positively contributing to its economic growth. Vietnam will also have the opportunity to exchange views with other countries and learn from their experiences in improving its economic management and businesses. All of this will assist Vietnam in building an efficient, dynamic, and competitive economy.

Vietnam and the World Trade Organization (WTO) Vietnam's accession to the WTO Vietnam was recognized as an observer of the WTO in June 1994. On January 31, 1995, the Working Group on Vietnam's accession to the WTO was established, and on April 01, 1995, the WTO received Vietnam's application for membership. The Working Group conducted four meetings, and Vietnam fulfilled its obligations to move to the next step. During the second step of the WTO's accession procedure, Vietnam must report to the Working Group a memorandum on its trading and legal regime.

The Working Group will inspect Vietnam's answers to all questions raised by other WTO members. Topics discussed within the Working Group are generally agriculture, customs, import licensing, national treatment, SPS and TBT, State trading, trading rights and TRIPS. Vietnam hopes for official membership to the WTO by 2005. General Agreement on Trade in Service (GATS) GATS is an annex to the agreement establishing the WTO. The GATS framework consists of fourteen obligations and disciplines aimed at promoting trade and investment. Though GATS has not yet incorporated any Article on Air Service in its main body, the CAAV should base its main principles on the following GATS principles: - Most Favored Nation (MFN) Treatment (Article II): requires WTO members to grant other members treatment equal to that offered any other members.

- Transparency (Article ): requires that measures related to trade and investment in services be publicized. - Domestic Regulation (Article VI): requires that measures affecting trade and investment in services be conducted in a rational, determined, and unbiased way. - Monopolies and Exclusive service providers: requires members to ensure that monopolies and state companies not act against scheduled commitments. GATS Annex on Air Transport Services The Annex incorporates measures affecting trade in air transport services, aircraft repair and maintenance services, the selling and marketing of air transport services, and computer reservation system (CRS) services. It indicates that traffic rights, or services directly related to traffic rights, are exempt from the dispute settlement procedures.

Dispute settlement procedures can only be requested by involved members. The Annex requires the Council for Trade in Services' periodical review on "developments in the air transport sector". Vietnam airline will have more benefit like: In the 10 years since the Open Door policy was initiated, Vietnam grew from the least popular ASEAN tourist destination to a popular destination for the new millennium. An indispensable factor in Vietnamese tourism is the strong tie to the civil aviation sector.

The civil aviation sector and the General Department of Tourism have successfully cooperated in the following ways: - They coordinated governmental proposals on international passenger traffic to Vietnam. - They have helped one another in marketing, advertising, and introducing images of Vietnam to the world tourism market. - They have coordinated bringing Vietnamese people to foreign countries through holiday programs. Other indirect benefits are revealed by sub-dividing the tourism. According to the General Administration of Tourism, 45 percent of the value of each tour (USD 1,200), is spent on hotels, 45 percent on restaurants, shopping, and sightseeing, and 10 percent on surface transportation. We can calculate revenue for each sub-division.

The General Department of Post and Telecommunication and other related agencies would have to invest more in telecommunications and computer technology infrastructure to ensure flight control, finance and general management, and to connect Vietnam civil aviation with aviation counterparts in the sub-region, region, and the world. Another boost to the telecommunications sector would be the new foreign passengers to Vietnam and their expected 3 to 4 million USD. These passengers would use many telecommunication services. In addition, US Airlines, booking offices, representative offices, and air service companies licensed to open business in Vietnam would use telecommunication services for their operations.

The US-Vietnam Civil Aviation Agreement would thus indirectly benefit the telecommunication sector Vietnam airline will have more challenges: Have a lot of another competitor airline and need to improve about services.