Vietnam seeks to scrap curbs on foreign investment

[Ulhas Joglekar <joglekarulhas@xxxxxxxx>]

Reuters.com

Vietnam seeks to scrap curbs on investment
http://today.reuters.com/investing/financeArticle.aspx?type=economicNews&storyID=2006-04-19T113515Z_01_HAN76279_RTRIDST_0

Wed Apr 19, 2006 7:34

By Grant McCool

HANOI, April 19 (Reuters) - Vietnam's five-year economic plan calls for the
communist-run country to scrap restrictions on investment by foreign
companies, a government official said on Wednesday.

The poor Southeast Asian country, which has been pushing market reforms for
20 years, wants to further integrate with the global economy by attracting
more foreign investment and joining the World Trade Organisation.

"We want to strongly develop the foreign-invested economic sector ...
gradually reduce and ultimately abolish all special regulations on
foreign-invested enterprises," Deputy Investment and Planning Minister Tran
Dinh Khien said at a news briefing.

Foreign investment in Vietnamese companies is capped at 49 percent but it
was 30 percent until last September. The cap applies to companies listed on
Vietnam's 35-member stock exchange.

Vietnam has also changed many failing state-owned enterprises into
semi-private firms. Khien was presenting the "Socio-economic development
plan 2006-2010" to be discussed at this week's Communist Party National
Congress, the most important event on the political calendar every five
years.

The Congress, which opened on Tuesday and closes on April 25, has heard
concerns that Vietnam lags behind its Asian neighbours in key sectors of the
economy, such as technology and science.

"We have to augment the competitiveness of the economy, otherwise we will
lose out," the deputy minister told reporters in the Congress press centre,
which is decorated with a hammer and sickle and a bronze bust of revered
former President Ho Chi Minh.

FOREIGN INVESTMENT BOOM

Even with restrictions, foreign investment is booming. First-quarter pledges
for foreign direct investment rose 24.4 percent from a year ago to $1.63
billion, according to the government.

In March, Finance Minister Nguyen Sinh Hung gave the green light to the
energy, banking, telecoms and aviation sectors to raise funds from foreign
investors to help fuel economic growth, which was 8.4 percent in 2005.
Vietnam's entry into the world's biggest trading club hinges on a trade deal
with the United States, former enemies in the U.S. war in Vietnam in the
1960s and 1970s.

The United States is Vietnam's biggest trading partner and officials from
both sides said they were close to a deal.

Hanoi and Washington, which restored diplomatic ties in 1995, are keen for
Vietnam to enter the world's biggest trading club by November when President
George W. Bush attends the Asia-Pacific Economic Cooperation summit in the
Vietnamese capital.

An earlier trade agreement between Washington and Hanoi has boosted
Vietnamese exports to the United States to $6.5 billion in 2005 from $800
million in 2001 when it took effect.

Under that deal, known as the Bilateral Trade Agreement, U.S. banks will be
allowed to have full operation in Vietnam by 2010.

© Reuters 2006. All Rights Reserved.