Unless the government takes stronger remedy actions "the country's infrastructure status will act as a deterrent to foreign investment and the enhancement of Vietnam's export sector," the survey report said.

Almost 96 percent of foreign trading firms rated the country's infrastructure as "bad" or "very bad" according to a survey presented to the Vietnam Business Forum.

The figure is "staggering", said Tony Foster, who heads a Business Forum sub-committee which includes multinational corporations.

Frequent gridlocks on Vietnam's crumbling roads pose major difficulties, particularly for exporters transporting goods, Foster told the gathering of government officials, foreign diplomats, businesspeople and aid agencies.

Vietnam has already seen a precipitous drop in foreign direct investment this year. At about $19.7 billion from January to November, the total was barely a quarter of the amount registered over the same period of 2008.

After burning through its reserves, Vietnam last week devalued its currency, the dong, as it battles to contain inflation and bolster trade which has suffered during the global economic crisis.

The Business Forum's annual survey questioned 291 firms - 30 percent of which were foreign. More than 80 percent of both domestic and overseas firms rated infrastructure as bad or very bad.

The regular forum is jointly organised by the International Finance Corporation, part of the World Bank Group, and Vietnam's Ministry of Planning and Investment.

A separate survey of more than 600 Japanese firms found weak infrastructure, especially roads, electricity and ports, to be the most pressing issue, Japan Bank for International Cooperation representative Noriyasu Yuge told the forum.

Rising labour costs were also an issue, the survey found.

Agence France Presse - December 3, 2009