VNS-Changes to business regulations and laws are needed if Vietnamese businesses are to take advantage of the global market offered by the Internet, according to market observers.

     Lack of a legal framework facilitating business-to-business transactions over the Internet is the biggest stumbling, block to e-commerce expansion in Viet Nam, the observers say.

     Furthermore, a reluctance amongst the country's bankers to embrace new technology such as electronic invoices and digital signatures is hampering efforts to develop the necessary infrastructure for e-payments, a key component of e- commerce.

     Offering an example of the situation, manager of computing company Opticom, Stefan Probst said: "Existing laws and regulations require a scaled contract if a transaction value is above a certain limit.

     But of course e-commerce means paperless transactions. There is no printed contract, which could be signed and scaled. "

     According to Probst, this regulation could be dropped quite easily and digital signatures used to replace the socalled "red seals" if the initiative was pursued.

     However, he said that the single biggest hindrance to business-to-business e-commerce - and the one that may be the most cumbersome to remove - was the present le- gal requirement for "official financial invoices" in transactions controlled by the tax offlee.

     "In e-commerce the invoices are printed out from the Web (if needed). The invoice number is solely controlled by the seller. No seal, no signature of the seller. So, I don't think it will be possible to drop that requirement only for e-commerce, and keep it for other transactions at the same time," said Probst.

     He suggested that the tax office should consider how to drop the concept of the "financial invoice" as soon as possible and to allow businesses to overview their own invoices so as to enable e-commerce.

     For domestic bankers, apart from obstacles presented by the absence of laws, there is a reluctance to trans- form their traditional payment systems.

     "The fact is that bankers are afraid of losing highly profitable and low-risk but old payment services even though they acknowledge that the e- payment will benefit their customers more," one banking insider who wished to remain anonymous said.

     But, he predicted, conservative bankers would be wiped out of the marketplace in the next couple of years if they remain unchanged.

     "Traditional banks will face tough competition from non-credit organisations born by the Internet-driven economy such as supermarkets and consumer goods producers, " he added.

     Such companies are be- ginning to offer credits such as goods Purchasing cards to credit prices and flexible procedures than traditional- banks.

    Another big hindrance for e-commerce

    In relation to international Internet transactions, a major problem is that Viet Nam allows no commercial import or export of goods without a corresponding "foreign trade contract. "

     Probst said the situation is even worse, when it comes to transactions of "digital content," such as software, services which can be delivered through the Internet as only the export of goods is exempted from VAT, export of services is not considered.

     He added that: "The tax office doesn't accept zero per cent-VAT invoices for exports which are not confirmed by the customs office but customs cannot confirm the export of deliveries via the Internet."

     Probst noted that Viet Nam is connected to the same Internet over which some companics in other countries sell equipment worth several tens of millions US dollars every day, using the same technology available in Viet Nam.

     "Changes to the law in relation to contracts, accounting and customs regulations have to be made as soon as possible, " Probst said.

     The low usage of credit cards and PCs in Viet Nam, as well as relatively high Internet fees, explain only a rather small part of the slow e-commerce progress, he said.

     "In e-commerce, usually a distinction is made between Business-to-business and business-to-consumer trans- actions, where the former one represents world-wide a significantly bigger volume than the latter one."

     "Since the purchasing power of consumers in Viet Nam is rather low, business-to-consumer transactions are not hurt too much by the present dearth of laws in this area."

    VASC