Vietnam told to improve business climate

Vietnam told to improve business climate

Agence France-Presse, Hanoi

Experts and business leaders urged Vietnam on Monday to improve the investment climate and accept private businesses in major infrastructure projects in the country.

At a meeting in Hanoi ahead of an informal meeting of donors to Vietnam, foreign investors asked the government to simplify the legal framework regulating investment in infrastructure.

"The general concern is whether infrastructure development can keep the pace required to meet the ever increasing demands for improved and expanded infrastructure", said Jean-Michel Caldagues, member of the board of the European Union Chamber of commerce in Hanoi.

"Already in some areas such development is lagging, posing a considerable threat," he added.

His comments were echoed by American Chamber of Commerce governor Tony Foster, who agreed the issue was among those that could explain the limited U.S. investment in the country.

"The American companies would like to see private participation in infrastructure projects," Foster told AFP after the Vietnam Business Forum.

"It is just not sustainable if the government tries to do it all by itself."

Last month, damage to an underwater cable near Hong Kong caused havoc for more than 300,000 Internet subscribers in Vietnam. Traffic was partially restored after few days but the incident was quoted as an example of the shortcomings in the country.

Legal infrastructure and predictability were also on the agenda of the meeting after several recent decisions rang alarm bells among investors.

Several experts especially criticized a recent decree limitating the employment of foreign nationals in foreign invested companies in a bid to stimulate local employment.

The forum, which was organized by the World Bank's private sector arm, the International Finance Corp. precedes the June 16 to June 17 mid-year review of donor countries and organizations to Vietnam.

The donors, who last December pledged US$2.84 billion in assistance to Vietnam for 2004, are expected to urge Hanoi to accelerate the implementation of its reform program and pick up the pace of disbursement.

Donors will meet in the capital of Nghe An province, one of the poorest of the country, which was badly hit by the outbreak of bird flu earlier this year.