Lately, US investors purchased up to 56 percent of Vietnam's international bonds. Saigon Economic Times had an interview with Herb Cochran, managing director of American Chamber of Commerce in Vietnam about the US investment here as follows:

Why do US investors pay such a special attention to Vietnam despite the US facing the economic recession?

Recently, many US enterprises have a strategy called "China +1" or "China and India +1". A lot of US businesses built some factories in China and few in India so they want to have more in Asean countries, including Vietnam being considered to be the leading investment destination.

US investors pay more and more attention to southeastern Asia. Since around 10-15 years, Asean has been very attractive for US, even more attractive than China in US eyes. Starting from 2000 when China joined WTO, the investment and trade of US with China surpassed far than that of US with Asean.

But now, Asean becomes the leading commercial partner of US, nearly like China in 2000 and the bigger export market of US than Japan between 2009 and 2010. Usually, investment follows trade. Therefore, this is the main reason encouraging US investors to eye Vietnam. Vietnam, as the interchange president of Asean in 2010, is expected to woo the investment of US. Which fields of Vietnam are attractive for US investors? What do you forecast on US investment in Vietnam this year?

Property, hotel and tourism are the key infrastructure investment fields to support the international business and globalisation strategy so US investors are pouring capital into these sectors, especially long term investment in property. Some investors partnered with Vietnamese or Asian giants. Particularly in hotel business, US investors are emerged with the well known trade names such as Chicago-based Hyatt hotel group with over 400 property projects in 45 countries.

Vietnam is the emerging economy with many big opportunities for growth so other companies (especially in electronic and automobile manufacturing) are considering Vietnam to be a highly potential destination for foreign investors to build factories as the global economy is restored.

Can you tell about the biggest barrier for Vietnam's FDI attraction ?

Vietnam is a small market. Both Vietnam and Asean could not yet promote their all attractive because of lacking a united regional market with general standards, tariff framework and proceedings. Once Vietnam and Asean are speeding up the setting-up of Asean community by 2015, the region will be stronger in luring foreign direct investment.

Secondly, Vietnam's infrastructure cannot yet meet foreigners' requirement. Foreign companies need to bring accessories into production in Vietnam and then export products to the world. Thus, the weakness of deepwater ports, road and bridge, electricity system, and airport has limited the FDI attraction strength of Vietnam.

In addition, there were many illegal strikes in 2006, 2007 and 2008. On August 18, 2008, Vietnamese prime minister released Decision No 1129/QD-TTg to improve the legislative environment in order to protect benefits of the employers and labourers and ensure a sustainable investment environment. Vietnamese officials and authorities implemented the decision, but in my opinion, all aforementioned targets could not be reached yet. Moreover, foreign investors still are hesitant as pumping capital into Vietnam because of low-quality labour, red-tape and prolix administrative proceedings and disadvantages in price control. We US investors are very sensitive as for risks from high inflation and economic challenges that Vietnam has to face. However, Vietnam should liberalise the supply chain to control prices.

The Saigon Economic Times - February 23, 2010