Vietnam reform, less red tape, to pull investors

~ Le Vięt Nam, aujourd'hui. ~
The Vietnam News

Vietnam reform, less red tape, to pull investors

HANOI - Communist Vietnam said on Thursday that economic reform, less bureaucracy, and a U.S. trade agreement that has still to be ratified, would bring back foreign investors in the next five years. Minister for Planning and Investment Tran Xian Gia predicted in an interview that foreign investment would soon return to levels not seen since a mid-1990s boom.

"In the next five years we expect capital disbursement of foreign direct investment to be around 10-11 billion dollars, about $2.2 billion a year," he said. "These targets are realistic and suitable to Vietnam's situation and reform policies as well as (our) progress in the international integration process." Increasing foreign investment flows is a key aim of a 10-year economic strategy to be adopted by Vietnam's ruling Communist Party at a five-yearly congress that began on Thursday.

Analysts say the expected replacement at the congress of conservative party leader Le Kha Phieu with reform-leaning National Assembly Chairman Nong Duc Manh could help. Foreign investment has been sluggish in recent years compared with the mid-1990s, when more than $2 billion a year came pouring into the country. Potential investors complain that red tape and corruption are weighing against Vietnam's potential and better deals are available elsewhere. The International Monetary Fund (IMF) estimates foreign direct investment (FDI) disbursements should peak in 2002 at about $1.7 billion with completion of a $1.4 billion gas sector project led by BP-Amoco.

In a report last month, the IMF said, assuming an improved investment environment and an east Asian recovery, disbursements were projected to average $1.2 billion in the medium term. It said they could be bigger if the pace of structural reform increased and Vietnam liberalised its trade and exchange rate system and eliminated foreign exchange surrender rules. The fund said several sectors, including agriculture, garments, textiles and fisheries could benefit. Hanoi says foreign investors supply 24 percent of total investment in Vietnam, just below domestic private investment which accounts for 27 percent.

Corruption and bureaucracy

Gia brushed aside concerns about corruption and bureaucracy, also raised recently by the IMF and World Bank, which are together offering Vietnam more than $750 million to aid economic reform and poverty reduction efforts. "I admit that there are such comments from the IMF and the World Bank, but I can confirm that bureaucracy and corruption are not increasing, they have been reduced," he said. "That has been the progress in the last few years. We believe that in the next few years the gap between good policies and implentation will be narrowed." A recent survey by the Hong Kong-based Political & Economic Risk Consultancy found Vietnam had outstripped Indonesia to be come the most corrupt country in Asia. Gia said the slowing investment had been due to the Asian economic crisis, but added the government's slow up-take of market reform was also a factor. "About 70 percent of foreign investment was from Southeast Asian countries which have been suffering from economic crisis, and global competition for capital is tougher." he said. "On the internal side, reform of government policies and management regarding foreign investment has lagged a little."

Access to US market

Gia said a trade agreement which would increase access to the U.S. market would help increase trade and investment. The pact, signed last year but yet to be ratified, faces an uncertain future. The Bush administration is considering packaging the legislation with other agreements with other countries, which could take up to two years to be passed through Congress. Gia said Vietnam was not pinning its hopes on the agreement and would develop exports to other markets. "Under the U.S. trade embargo we managed to develop, and therefore we are continuing to strengthen our relations with other countries and other regions," he said. "We will not just wait for a trade agreement America signed and has not ratified. I think the American people and America's progressive forces will not have such unthoughtful actions." The U.S. lifted a long-standing trade embargo in 1994, but Vietnamese goods still face high U.S. tariffs.

By Dominic Whiting - Reuters - April 19, 2001.

Vietnam opts for new leader, official says

HANOI - Reform-minded National Assembly chairman Nong Duc Manh is poised to take over as Vietnam's new leader, replacing the unpopular Le Kha Phieu as head of the ruling Communist Party, a senior official said on Thursday. Phieu himself, while not confirming the news, told Reuters he was ready to make way for a younger generation if the conditions were right. Phieu is 70, Manh is 61. More than 1,000 party faithful began a five-yearly congress on Thursday to the strains of the national anthem and the communist Internationale. They will endorse the new leadership and set Vietnam's long-term political and economic course.

"I can confirm the Reuters report," the senior official, who did not want to be identified, said after party sources revealed the imminent leadership change. The sources had said a new 150-member central committee elected at an internal congress this week, picked Manh -- a member of an ethnic minority and widely rumoured to be a son of revolutionary hero Ho Chi Minh -- as party leader. The 1,168 delegates stood to attention to sing the anthems before getting down to business on Thursday. The current leaders sat on a red-draped stage in front of gilded bust of Ho Chi Minh and images of Marx and Lenin. They sat with representatives of 34 foreign delegations.

Conservative Phieu, considered close to neighbouring communist China, sat next to the Chinese Vice-President Hu Jintao. At a break in the congress, Phieu told Reuters he was willing to step down for a younger man. "I think I have reached the age and if the conditions are right, then the conditions should be created for a younger person," he said. Asked if he was happy with the prospect of Manh taking over, he said: "In general, everyone wants to work and work more. But in fact, when a young generation have sufficient capability then we should create conditions for them to work." President Tran Duc Luong said in opening remarks that the congress was "a milestone marking a new period of the Vietnamese revolution." He said its aim was to create "a prosperous people and a strong country on the course of socialism." Party sources said that in picking Manh on Tuesday, the new central committee also voted in a new 15-member elite politburo, retaining 11 of the previous 18 and adding four new members. Party officials gave no clue as to the changes at a Wednesday news conference, saying the decisions rested with the congress.

Main policies will be the same

"My first impression is that this (leadership change) is a good way for Vietnam, economically and politically," the official who declined to be identified told Reuters. "The main policies will be the same, an open economy to the outside and the same international policies." Referring to the congress, the official said: "People are taking this chance to review what has happened in past years and if implementation has been bad, it must be corrected."

Asked if the changes would be welcomed abroad, the official said: "The outside world would welcome what is happening. This is shown by continued foreign aid to Vietnam. The criticism on human rights is small and comes from those who don't understand Vietnam." Earlier, the delegates, led by Phieu, laid wreaths at Ho's Leninesque mausoleum opposite Hanoi's Ba Dinh hall where the congress is being held. The formal public session is due to last until Sunday. Pham The Duyet, a member of the existing politburo expected to retire, said on Wednesday a new secretariat would replace the existing five-member politburo standing board, while ideology chief Huu Tho said the central committee would be cut to 150-160 from a previous 170. The congress is due to approve a political report and a 10-year socio-economic development plan backed by the World Bank and International Monetary Fund laying out ambitious growth targets dependent on faster economic reform.

The party, which broke with old-style central planning at a party congress in 1986, decribes its economic aims as achieving a socialist-orientated market economy. Many Western economists consider these objectives incompatible. A Western diplomat quoted a party source as saying on Tuesday the internal congress had voted for retention of Luong as state president, while Prime Minister Phan Van Khai would continue in his post until May 2002. The diplomat's source also said Trade Minister Vu Khoan, who negotiated a historic trade pact with Washington last year, would take the deputy premier's post held by Nguyen Manh Cam. In the past, about a third of the outgoing central committee and politburo have retired at each congress. Manh, who has served as National Assembly chairman since 1992, will be the first ethnic minority member to become party chief. His roots should stand him in good stead in resolving discontent among tribal people who staged big anti-government protests in February, the worst in Vietnam for years.

Diplomats see him as someone who would push more than Phieu for reform of the cumbersome bureaucracy and legal system and say his appointment would send a positive message to the outside world that could help spur sluggish foreign investment.

By David Brunnstrom - Reuters - April 19, 2001.