Ten years on, Vietnam again excites foreign investors
HANOI - For the second time in a decade, investors are flocking to Vietnam attracted by rave reports about its hard-working, literate and low cost workforce and the country's dynamic economic growth.
Ten years ago the hype soon fizzled as many foreign companies found out the hard way that Asia's latest "tiger" had yet to change its command economy stripes, even before the buzz was dealt a fatal blow by the 1997 Asian crisis.
This time around there is talk of a "mini-China," an emerging investment alternative to the northern giant, with a government that is speeding up reforms in a bid to join the World Trade Organisation (WTO) this year.
"Ten years ago there were companies circling Vietnam," Virginia Foote, president of the US-Vietnam Trade Council, told the Vietnam Investment Forum conference in Hanoi last week.
"Some of them stayed, many of them went on.
"I think there is a little bit of that sense now with investment capital, there is a lot of it," she told the packed auditorium. "There's obviously a fair amount of it in this room."
A lot has happened since the 1990s, when Vietnam opened up to the world. The United States lifted its embargo in 1994 and the former enemies signed a trade pact in 2000, triggering a surge of Vietnamese exports.
The southern Mekong Delta, a bloody battleground a generation ago, is now a vast industrial zone where leading chipmaker Intel is setting up shop amid hundreds of garment, shoe and electronics factories.
The economy has grown at around 7 percent annually in recent years and foreign direct investment per capita in the nation of 82 million was larger than China's last year.
In November Vietnam, which joined the Association of Southeast Asian Nations (ASEAN) in 1995, will host the annual Asia Pacific Economic Cooperation (
APEC) summit which will bring leaders including US President George W Bush.
"I think there is a different assessment this time of where Vietnam is," said Foote. "The companies are coming to look and looking to stay."
The conference brought over 1,000 delegates from 22 countries. One of the speakers, John Shrimpton of Ho Chi Minh City-based Dragon Capital investment fund, hailed the "unprecedented level of investor interest in Vietnam".
"We have gone from one enquiry a month to almost three an hour at times," he said, praising the dynamism of Vietnam, where the number of new private companies had risen from 100 a year in 1980 to 38,000 in 2005.
HSBC Vietnam president and CEO Alan Cany listed Vietnam's key attractions: "cheap but high quality labour, political and social stability, good location."
Vu Tien Loc, who heads the Vietnam Chamber of Commerce and Industry, said the country would link China and ASEAN, which has a market of 2 billion people.
Vietnam's communist party is due to meet soon for its five-yearly party congress when it may choose a successor to Prime Minister Phan Van Khai.
But Shrimpton said any change at the top was unlikely to trigger a rolling back of reforms in what was "probably the world's largest youthful country," where 1.5 million new job seekers enter the market every year.
"The key task for anybody running this country is to create further reforms that are going to encourage more ... investments to make those jobs," he said.
Nike Vietnam chief Amanda Tucker said the sportswear maker chose Vietnam in part because "we don't want to put all our supply eggs in the China basket".
She added a note of caution to the giddy talk, saying "the growth rates currently in the country are definitely taxing the system".
"A number of our contract factories here have issues with constant supply of power, roads, port capacity," she said, adding that a recent wave of strikes had pointed to poor worker-management communication.
Foote, too, cautioned that Vietnam needed to enforce many reforms that existed on paper by fighting copyright piracy, improving corporate auditing and levelling the playing field for foreign companies.
"Over 30 laws were passed last year covering a wide range of absolutely crucial areas of the economy," she said. "But those laws now need to penetrate the system."
Much is at stake, she warned, as Vietnam negotiated the final hurdles to WTO accession, including crucial talks with the United States, ahead of the summit in November.
"There'll be an enormous amount of attention to Vietnam from the APEC countries and worldwide, and to not be a member of the WTO at that time, I think, would be a great embarrassment for all of us."
Agence France Presse - March 19, 2006.
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