Sheltered
Vietnam's sluggush integration into the
international marketplace should cushion any major
blow from the global economic downturn. While
starting from a low base, Vietnam is expected to
maintain steady GDP growth of 5.9% for 2001 and 6.1
% for 2002. Foreign investors are not expected to pull
out. "Vietnam is still a strategic investment location
rather than a short-term commercial investment location
for them," says a banker in Ho Chi Minh City.
In the first eight months of 2001, Vietnam licensed 281
new foreign investment projects worth $1.13 billion, a
35% increase in the number of projects over the same
period last year. Energy-related projects will continue
to make up a large chunk of the investment pie. Bright
spots include infrastructure, property, and food
processing. Some expect new opportunities with the
U.S.-Vietnam bilateral trade agreement, slated for
ratification by Congress before October 1. Vietnam can
still count on an expanding market in the U.S. for
seafood and textiles. But serious challenges remain in
the agricultural-export sector. Plunging prices for rice,
coffee, and cashew nuts spell continued hardship in the
countryside, where 80% of Vietnam's 80-million
population resides. Growth in textile and garment
exports will be hit by lower prices, competition and a
shrinking market. If crude-oil prices decline
significantly, that would put Vietnam in a major bind.
By Margot Cohen - The Far Eastern Economic Review - August 30, 2001.
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