VINACHEM

But their representatives expect a concerted effort to tackle major macro-economic obstacles.

"Viet Nam's success in attracting foreign investment has largely been built on the expectation of economic and political stability," American Chamber of Commerce, Amcham, chairman Hank Tomlinson told the forum - a prelude to the yearly donor Consultative Group meeting.

Unfortunately, the Government's approach to economic and monetary policy had also raised concern, he said.

Amcham, together with other investor representatives, is worried about the falling value of the dong and a perceived lack of an effective policy to control inflation.

Street vendors traded the US dollar at between VND21,400-21,450 yesterday, up VND100 against late last week.

The nominal depreciation of the currency through five deprecations since December 2008 is 11 per cent.

Fall

But the dong has fallen 36.8 per cent in value during the past three years when measured against the consumer price index.

"Monetary policy has helped boost economic growth and control inflation," Deputy Minister of Planning and Investment Dang Huy Dong assured the forum.

And while he recognised potential risk, he reminded the forum that GDP growth in Quarter 1 had been 5.8 per cent; 6.4 per cent in Quarter 2; 7.16 per cent in Quarter 3 and 6.7 per cent in Quarter 4. GDP for the year was estimated at 6.7 per cent against an initial target of 6.5 per cent.

Planning and Investment Minister Vo Hong Phuc said fighting inflation and maintaining stability would be next year's economic priorities.

Inflation of 7 per cent was expected while the target for economic growth was 7.5 per cent.

International Monetary Fund Viet Nam representative Benedict Bingham told Viet Nam News the Government should make macro-economic stability - rather than frequently shift between growth and stability - its first priority.

The change would ensure economic growth, he said.

International Finance Corporation Regional Manager Simon Andrews said Viet Nam could not forever rely on its natural resources, favourable location, relatively low-cost labour for economic growth work.

Quality

Improving the quality of growth was a major challenge, he said.

Eurocham chairman Alain Cany warned that Viet Nam's ability to maintain high economic growth was dependent on the Government's action in infrastructure and its encouragement of innovation.

"Without this, Viet Nam risks falling into the middle-income trap," he said. The trap was an economy based on cheap labour and low-technology manufacturing against value-added knowledge-intensive and innovation-based manufacturing for domestic consumption and export.

The forum listed a variety of worries for international enterprises including:

An inefficient State-owned system;

Corruption and a conflict of interest in the State-owned sector;

Inadequate infrastructures;

A lack of transparency and inadequate governance; and

Bureaucratic investment licensing procedures and the protection of intellectual and property rights.

Vietnamese Government representatives said the contribution of the international enterprises was highly appreciated and their proposals to improve the efficiency of doing business in Viet Nam would be considered. — VNS