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Market potential may be exaggerated

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SCMP Reporter

VIETNAM has 70 million consumers, huge underground savings and a Government openly enthusiastic about foreign investment.

But despite the hype surrounding the removal of the trade embargo by the United States, Vietnam is a long-term proposition and investors must be willing to come armed with large doses of patience and flexibility.

The problems are immense, starting with the dire need for massive infrastructure development from roads and bridges to ports, schools and telecommunications.

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The Vietnamese Government estimates that US$50 billion will be needed by the year 2000 to double the country's gross domestic product - an ambitious goal given the fact most Asian countries are also striving to attract capital for infrastructure projects.

Vietnam's investment environment is also plagued by a legal system full of loopholes and weaknesses that make many investors hesitant about entering the country.

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The country is also wracked by high unemployment, an external debt of about US$15 billion, lack of management skills and frustrating layers of bureaucracy.

The essential question, therefore, is why there is so much fascination with a country where the per capita income is only $200 a year, while other Asian countries offer a more attractive investment environment.

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