Vietnam: New Ordinance to Create Momentum for Post & Telecom Sector

A long-awaited ordinance on post and telecommunication ("Ordinance") was promulgated by President Tran Duc Luong on June 11, 2002 after being ratified by the National Assembly’s Standing Committee on May 25, 2002. The Ordinance will take effects as of September 1, 2002, and replaced Government Decree No. 109/1997/ND-CP which is no longer appropriate for a rapidly growing and dynamic P&T sector. With 79 articles in 8 chapters, the Ordinance in general aims at creating a comprehensive legal framework for the sector, opening up the market by transforming from enterprise monopoly to a cooperative and competitive environment. While the Ordinance allows all economic sectors to take part in P&T services, it sets a principle that the most fundamental and significant ones, defined as public utility services, will be still retained by the State. The following are the most noted points of the Ordinance.

For postal service, the Ordinance provides that a postal State enterprise, called Vietnam Post, to be established by the Government, shall be the only one that can operate public postal services. Vietnam Post will establish and operate the public postal network nationwide to provide mail and parcel services locally and abroad. However, enterprises in all economic sectors, called forwarding companies, are allowed to transfer and deliver all types of items and goods in accordance with the laws. The transfer and delivery of mails of under 2kg are mainly handled by Vietnam Post, while other businesses may provide domestic services only according to certain conditions on weights, quality and charges as stipulated by the Government.

For telecom service, the enterprise monopoly is abolished for provision of network infrastructure (such as national backbone, international outbound, mobile and local fixed telephone), however the providers are still restricted. Accordingly, only SOEs or enterprises that the State holds a majority or special share can operate as providers of network infrastructure. Provision of telecommunication services is opened up to all enterprises in all economic sectors. Telecommunication services include the transfer of signals, data, script, sound, image or other kinds of information through telecommunication network; provision of value added service; Internet connection, access and application services. It is noted that, to encourage new comers in the market, the Ordinance sets out some measures to restrict the influence by the existing players dominating the market on the market penetration of the new comers. Those businesses holding more than 30% market share of a given telecom service shall be subject to certain restrictions. For example, such businesses may not utilize its advantage to restrict or cause difficulties for provision of services by other businesses; they are also under control by the competent State authority in terms of market share, quality and service charges for the telecom service that they hold a majority share. The Ordinance also specifies that all telecom businesses are entitled to connect to the network or services of other players as well as be obliged to allow others to connect to their network and services for effective use of information resources and infrastructure sharing.

In terms of pricing, except for public utility services and services dominating the market of which the charges will be controlled by the Government, enterprises involved in postal and telecom services are free to set their own service charges. Consumers would benefit much from this provision.

Another important part under the Ordinance is those provisions for protecting consumers’ rights and interests. The Ordinance specifies the rights and obligations of service providers and service users. Service providers must take responsibility for the services they render regarding charges and quality, and shall compensate for losses or damages caused to consumers. Specifically, the Ordinance prohibit service providers and users from conducting certain acts such as: (i) to destroy post and telecommunication works or to obstruct legal operation on post and telecommunication; (i) to illegally record, overhear information on the network; to steal, illegally usage of password, personal information of other individuals, entities; to produce, purchase counterfeit stamps; to appropriate, open, change, reveal message content, package of other individuals, entities; (iii) to provide and use post, telecommunication or wireless frequency services and equipments for the purpose of opposing Vietnamese Government; perturbing public security; violating country’s good customs; smuggling or any other activities violating legislative regulations on post and telecommunication. These acts will be considered as violations and may be subject to administrative penalties or criminal liability, as the case may be.

In conclusion, the new Ordinance is a major step forward in creating a legal framework for P&T sector and a level playing field for the players in the field. It would foster the development of the P&T sector, particularly help establish a competitive environment, whereby enhancing service quality and reducing service prices and benefiting consumers. Nevertheless, as usual, the Ordinance is just a general framework and there are a lot of issues which need to be clarified and detailed, so that the positive policies as outlined in the Ordinance will work in practice. It is expected that the implementing regulations of the Ordinance will be issued soon.