Vietnam reform, less red tape, to draw investors

Vietnam reform, less red tape, to draw investors

HANOI (Reuters):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 US$11 billion, about $2.2 billion a year," he said.

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.

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.

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.