Business, donors look at booming Vietnam’s growing pains

http://www.tehrantimes.com/index_View.asp?code=158886

HANOI (AFP) — Nearly a year after Vietnam joined the WTO, business groups have lauded its booming economy but also pointed at obstacles such as red tape, infrastructure bottlenecks and a shortage of skilled labor.

In a yearly stocktake of Vietnam’s economy last week, observers said the developing country, where economic growth will top eight percent this year, has come a long way since it joined the World Trade Organization in January.

But they also urged the communist-ruled country to speed up ongoing institutional reforms and boost civil society to ready itself for the next stage of growth as it seeks to become a middle-income economy by 2010.

World Bank country chief Ajay Chhibber said 2007 had been a “”banner year for Vietnam”” which was now “”a highly attractive investment destination,”” drawing a record 16 billion dollars in foreign direct investment this year.

A recent UN survey of multinational companies ranked Vietnam, a country of 84 million people, as the world’s sixth most attractive business location, and Japanese firms see it as the third most promising medium-term destination.

A sense of optimism

A new sense of optimism is fuelling the stock market, driving up property prices and bringing fashion boutiques and luxury cars to the congested centers of Hanoi and Ho Chi Minh City, the port city formerly called Saigon.

But Chhibber also warned that Vietnam must now “”maintain the momentum”” by meeting all its WTO commitments, building up infrastructure, cutting bureaucracy and red tape, and improving its skilled labor pool.

These and other concerns were echoed by many experts at two annual meetings in Hanoi last week, the Vietnam Business Forum and the Consultative Group conference of donor countries, development agencies and state officials.

Vietnam may be on the fast track to becoming a new “”Asian tiger”” or a “”mini-China,”” but it still suffers growing pains, many of them the legacy of decades of war, isolation and centralized economic planning.

Vietnam has implemented many of its WTO commitments but falls short in areas such copyright protection. WTO-compliant laws passed in Hanoi are not always understood at the provincial level.

Foreign companies are pushing Vietnam to more quickly open markets such as banking and telecoms.

Bureaucracy and opaque laws make paperwork a headache and feed corruption, a major concern.

Business tenders are often untransparent and corporate reporting standards weak, business groups say. The World Bank ranks Vietnam 91st out of 178 economies in ease of doing business.

Power blackouts, congested ports, poor roads and railways, and slow internet lines still top the list of gripes.

Donors pledged a record 5.4 billion dollars in aid for next year, over half of it for infrastructure, but many projects will take years to come online.

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