The report assessed the impact of the BTA on foreign direct investment (FDI) in Vietnam, saying US investment in Vietnam increased by 27 percent annually from 2001-04.

Notably, the report, announced Monday by the USAID-funded Star Vietnam Project, clarified that US investment capital in Vietnam in the 1988-2004 period is double the figure provided by the Vietnamese Ministry of Planning and Investment (MPI).

The MPI only ranked the US 11^th in 75 countries and territories investing in Vietnam, with 215 projects valued at $1.3 billion.

However, the ministry’s statistics did not include investments from US companies’ subsidiaries in a third country, Steve Parker, Star Vietnam Project director, pointed out.

Investment through their overseas subsidiaries helped US companies avoid strict provisions in the US tax law and manage their business activities easier, Parker elaborated.

These subsidiaries, including that of Coca Cola’s, Procter & Gamble’s and Exxonmobil’s, were mostly based in Hong Kong, Singapore and Thailand and thus “closer to Vietnam and they understand more about Vietnam’s legal system and market,” he added.

Besides, they were also subject to the preferential treatment offered by the Vietnam-US bilateral trade agreement (BTA), Parker said.

More to come

The US ranked second among top investors in Vietnam in 2003, and in the following year managed to dethrone Japan as the biggest investor with total realized capital of $531 million, the report said.

Despite the high annual growth, US investment in Vietnam accounted for only nearly 1 percent of US’ total investment in the region, and was equal to 28 percent of US investment in Thailand and 20 percent in Indonesia in 2003, said Parker.

However, more US investments could be expected in the next few years as Vietnam fulfills BTA commitments to open its market, a MPI official said.

“As [Vietnam] opens its market following the [BTA] roadmap, US investment will increase significantly in infrastructure and information technology,” said Nguyen Anh Tuan, Deputy Director of the MPI’s foreign investment department

High GDP growth, rapid industrialization and modernization, huge labor force, stable political situation and the prospect of joining the WTO in the near future were the key factors encouraging US investors to come to Vietnam, Parker said.

Source: Thanhnien Online, 26/2/2006