Vietnam Doesn’t Foresee Big Boom In U.S. Investment
HANOI, Vietnam (AP) _ Dramatic growth of American investment is unlikely in the wake of U.S. normalization of relations with Vietnam, a senior government official said Thursday.
U.S. investment will continue to increase steadily but slowly, said Nguyen Mai, vice chairman of Vietnam’s State Committee for Cooperation and Investment.
``For the time being, we will not put too much hope in American investors,″ Mai said. ``The pace will not be so fast.″
Interest in U.S. products was high Thursday in central Hanoi, where Vietnamese peered under the hood and sat timidly at the wheel of a new Chrysler sedan as Vietnam’s first showroom for American cars opened its doors.
``Modern and classy″ is how one guest, Vu Thang Cong, described the maroon New Yorker model parked in the corner of the gleaming storefront in central Hanoi.
The Chrysler Corp. dealership opened just two days after President Clinton announced the establishment of diplomatic relations with Vietnam. American investment and trade with the once-hostile nation is expected to increase as a result.
Chrysler had been planning the opening for months. American rival Ford Motor Co. plans to open a showroom within 30 days in Ho Chi Minh City, said a Ford business manager, Brannon Holt, speaking by phone from the United States. Both companies are seeking approval to assemble cars in Vietnam.
As for price, Vietnam’s 200 percent import tariff on new cars brings the sedan’s cost to $95,000.
``Right now in Vietnam only some companies can buy cars,″ said Tran Tuyet Van, who works for an Austrian energy company. ``Not many people can afford a car. They only buy motorbikes.″
The average annual personal income in Vietnam is a minuscule $129.
U.S. investment has risen to $596 million since the United States ended its economic embargo against Vietnam in February 1994. Americans are now Vietnam’s eighth-largest source of foreign investment.
They are attracted by Vietnam’s rapid economic growth of 8.8 percent last year, and its market of 72 million people. Motorola, IBM, Mobil and Bank of America are among the 41 U.S. companies with investments here.
Vietnam’s three biggest investors are Taiwan, Hong Kong and Japan.
The lack of economic agreements between the U.S. and Vietnamese governments, such as pacts for trade and aviation, impedes faster growth in U.S. investment, Mai said.
Some Americans keen to invest in industries making goods to export to the United States are holding back until Vietnam is approved as a most-favored nation trading partner, eligible for the lowest possible U.S. trade tariffs.
Vietnamese-Americans can act as a catalyst for further U.S. investment, Mai said. More than 1 million ethnic Vietnamese, many of whom fled their Communist-ruled homeland, live now in the United States. They are returning increasingly to do business here.
The government also is doing its best to fight official corruption, Mai added.
While not a big problem, he suggested that some corruption was inevitable in an economy that only began to open up to the non-Communist world in the late 1980s.