Growing Opportunities to Do Business in Vietnam

Vietnam Business Forum had an interview with Mr Adam Sitkoff, Executive Director of American Chamber of Commerce (AmCham) in Hanoi on Vietnam’s business environment the growing interests of US companies in doing business in Vietnam.

How do you comment on the business climate in Vietnam?
Since the 2001 Bilateral Trade Agreement took effect, the trade between Vietnam and the U.S. has grown quite remarkably. So far this year, the United States is the largest foreign investor in Vietnam and I hope this positive trend continues. The combination of rapid economic growth, social stability, and an excellent demographic profile, is likely to keep fueling industrial production and consumer demand here. Everyone who comes to Vietnam and those of us who live here feel the vibrancy that is fueling this momentum. Vietnamese people are beginning to benefit from the better choice, higher quality, and lower prices that come from increased openness and competition under WTO rules. In addition, Vietnam's 40 million workers will also benefit from an expanding economy, greater participation by the private sector, and better training as Vietnam becomes more competitive.

Which business sectors are most attractive to US companies and why are Americans interested in doing business in Vietnam?
American companies are eager to take advantage of new opportunities in both the goods and services sectors. Opportunities exist in hotel and resort development, power generation, telecom equipment and services, computer and software services, education and training, medical equipment, franchising, environment technology, and much more. In recent years, it has become much easier for U.S. entrepreneurs and small business people to access the Vietnamese market. This trend will continue as Vietnam continues to open its economy.

If US companies are interested in Vietnam, why has the level of US investment in Vietnam been rather modest over the past few years?
As I mentioned earlier, the United States is the top foreign investor in Vietnam this year. In past years, US investment ranked lower, but this statistic has never been accurate because many multinational companies register their investments through third-country subsidiaries in countries such as Singapore and the Virgin Islands. Some examples of this include investments in Vietnam from American companies like Coca-Cola, Procter & Gamble, and ExxonMobil. So, in fact, the United States has been one of the largest investors in Vietnam for many years.

What should Vietnam do to attract more US investment?
Twenty-three years of Doi Moi reforms have been successful, but we live in a competitive world and there is no time for Vietnam to be content with past successes. AmCham seeks continuous improvement in the business climate because our members have long-term commitments to Vietnam, its economy, and its greatest resource - its people.

AmCham members continue to urge the government to increase the speed of infrastructure development. We all know that investment in infrastructure is vitally important to Vietnam's future. Rapid growth is putting strains on the country's physical infrastructure, and these constraints threaten foreign direct investment for manufacturing and export. Private sector participation in infrastructure development, finance, and management is needed urgently, especially in key sectors like electric power and deep-water seaports.

Vietnam also needs to improve intellectual property rights protection and enforcement. IP theft hampers investment and innovation, threatens public health and safety, and reduces government revenue. Laws are important but they don't mean much without strong, consistent and relentless enforcement.

We applaud government leaders, media, and the public who have exposed and strongly condemned corruption. However, our members continue to feel that Vietnam must also do better in weeding out corruption. Existing control systems are inadequate to prevent corrupt officials from misappropriating funds intended for public infrastructure, as has happened many times in this country.

 

U.S. investors also wish to see greater legal certainty in Vietnam. Investors need to know that the contracts they sign will hold up under the law and that disputes will get settled in a fair way. This issue is especially important when dealing with State-owned enterprises and companies that are owned or managed by government ministries.

Vietnam needs to improve its education system. The challenge of modernizing the higher education system is one of the most important components of a country's globalization process, and one that directly affects the options and prospects of future generations. It is encouraging to see that real discussion about "education reform" in Vietnam is ongoing and ideas for change are under consideration.

In closing, I remind Vietnam Business Forum Magazine readers that the American business community is excited about the future of Vietnam, and AmCham will continue to work hard to increase the understanding among U.S. companies about the growing opportunities to do business here.