Vietnam needs to address challenges to attract foreign investment
By Ryan Huang, Channel NewsAsia | Posted: 17 November 2009 2055 hrs

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SINGAPORE: According to businessmen, Vietnam will need to do more to improve its infrastructure and legal framework in order to attract foreign investors.

The issue was discussed by the Vietnam Chamber of Commerce and Industry during a networking session between Vietnamese and Singapore businessmen on Tuesday.

Although the business community is eager to tap into Vietnam's growth potential, many feel that the country needs to address the challenges that may hinder investment.

These include an underdeveloped infrastructure network, inadequate legal framework and red tape, as well as inflation concerns and distribution network channels.

Another concern is the relative instability of the Vietnamese currency - the dong - which has been dipping recently.

Professor Teo Cheng Swee, president, Institute of Management Consultants, said: "If it is an appreciation of currency rate, I think all investors will be happy, because even if business remains stagnant they get out more.

"But if it is depreciating, they put in the same amount but get out less. So, most of the investors including myself would prefer the currency to be more stable."

Addressing the concerns at the event, Vietnamese Finance Minister Vu Van Ninh assured businessmen that the government does not have a policy to depreciate the dong, but is leaving it to market forces. However, the government said it is watching the situation cautiously.

Meanwhile, some investors are still seizing opportunities in Vietnam. Two memoranda of understanding between Vietnamese and Singapore-based companies have been signed in the property and shipping sectors.

These were between PSA International and Vietnam National Shipping Lines, Japan Land and Thai Son Corporation.

Credit Suisse Singapore also signed a deal involving a subscription agreement for convertible bond issue by VINCOM Joint Stock Company.

Some Vietnamese firms believe that foreign partnerships will help boost their overall capabilities, especially in trained workers who are essential for growth.

Bui Van Trung, vice president, Vietnam National Shipping Lines, said: "We would like to expand our cooperation and to get our partnership into higher level by finding some good possibilities to cooperate and invest in other ports in the northern part and central part of Vietnam.

"There are also challenges such as management, the technology, the know-how in port operation. And based on our partnership, I hope it will be quickly overcome."

Going forward, the Vietnamese government said it is in the process of reviewing the next stage of its ten-year development plan for 2020.

- CNA/sc