REFORMS OPENED DOOR TO NEW ERA OF OPPORTUNITIES
VIETNAM'S doi moi or open door policy began in 1987, after rampant inflation of up to 800 per cent the previous year forced the Communist Party to launch an economic reform package.
Testament to the success of the policy is a foreign investment commitment of US$6.8 billion (HK$52.5 billion) and inflation last year of 10 per cent. This is expected to fall to single digits this year.
In its early stages, the package adjusted prices, allowed farmers to transfer land, and introduced two-tier banking and laws covering foreign investment.
The new laws allowed four forms of foreign investment: joint ventures, 100 per cent foreign-owned initiatives, ventures operating under a basic co-operation contract, and Build Operate and Transfer (BOT) ventures.
In addition the policy has allowed the development of a modern taxation system, an international banking system, international arbitration, international trademark registration, and currency exchange centres.
Owing to the inchoate form of these laws, however, most foreign investment proposals require negotiation on a case-by-case basis. Despite this, the majority of joint ventures work on a 70/30 foreign/Vietnamese investment split with local capital providedin the form of land, buildings or rent.
Alex McKinnon is a senior journalist with the Vietnam Investment Review in Ho Chi Minh City.