Vietnam hopes U.S. investment will grow faster
Wed Jul 6, 2005
By Ho Binh Minh
HANOI, July 6 (Reuters) - The opening of a $50 million hotel in most countries attracts little attention. But an American hotel in Vietnam generates more interest than most given the two countries' troubled past.
After years of caution, diplomatic relations between the United States and Vietnam have warmed -- most lately with the first visit to Washington by a Vietnamese leader since the war ended 30 years ago -- which Vietnam hopes will lead to increased U.S. investment.
"We expect money from U.S. investors to rise, among others, in the near future, to move the U.S. up the rankings of the biggest investors in Vietnam," Phan Huu Thang, head of the planning and investment ministry's foreign investment department said.
The $48 million Park Hyatt Saigon opens for business next week and is the first investment in Vietnam by U.S.-based Global Hyatt Corp., which is partly eyeing an expanding tourist sector in the country. Vietnam says foreign visitors are expected to increase 10 percent this year.
The trip last month by Vietnam's Prime Minister Phan Van Khai to the United States has raised the profile of the communist country in the U.S. business community, said Carl Thayer, a politics professor at the Australian Defence Force Academy.
"There is renewed American investor confidence in this country," he told the Vietnam Investment Review weekly.
Like other investors, the U.S. is looking at Vietnam's large potential consumer market and relatively young population, plus a cheap labour force, as its communist leaders press to open the country's borders to world trade by joining the WTO, possibly as soon as this year.
However, U.S. firms would have to deal with the downside of doing business in Vietnam, which foreign investors have said include corruption, slow bureaucracy and high telecoms fees.
NEW DEALS
The United States is already Vietnam's top trading partner. They did $6.4 billion in business last year, compared with just $450 million in 1995, the year diplomatic ties were restored following the war.
But the United States ranks only as Vietnam's 11th biggest investor, although the leaders of both Vietnam and the U.S. promised last month to boost U.S. investment, behind Singapore, Taiwan and Japan.
In Washington, Khai witnessed the signing of a deal enabling U.S. insurers ACE INA International Holdings and New York Life International to set up wholly owned life insurance firms in Vietnam.
In another deal signed during Khai's visit, Motorola Inc. (MOT.N: Quote, Profile, Research) will sell telecoms equipment to eight Vietnamese provinces.
Deals signed during the visit totalled $1.4 billion, a significant boost considering that as of June total pledged investment in 2005 totalled $1.35 billion.
Among U.S.-funded projects pending approval are a $300 million hotel in the southern province of Ba Ria-Vung Tau and an $800 million construction project to build a tourist and commercial complex in the central region of the country, the Vietnam News Agency said.
U.S. companies are most competitive in the service sector such as banking and financial services, environment and telecoms, officials said.
Deputy Finance Minister Le Thi Bang Tam told state-run Voice of Vietnam radio station on Tuesday the parliament will pass new laws late this year designed to speed up the time it takes to set up companies and get investment licences.
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