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. 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. 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. Perhaps the most obvious explanation is that Vietnam is loaded with potential to be the next Asian Tiger and many investors are afraid to miss out on the boat as the Government's market-orientated reforms take root. Vietnam's economic numbers are already speaking loudly, highlighted by real gross domestic product (GDP) growth of seven to 7.5 per cent in 1993 and an estimated eight per cent this year. Exports grew by 14 per cent to $2 billion for the first nine months of last year while imports jumped 31 per cent to $2.2 billion. The Government's aggressive reform measures have seen many state enterprises abolished, while many others have been forced to face market forces. The country is also intent on developing capital markets to help the flow of foreign investment. A stock exchange is expected to open in Ho Chi Minh City later this year with full participation by foreign investors and brokerage houses. Vietnam has already received about $3.5 billion of foreign investment, including $1.22 billion from Hong Kong investors such as New World, South Seas Development, Luks International, Peregrine and Swire. There are abundant signs of foreign investment in Ho Chi Minh City, the country's commercial centre, where posters for Pepsi-Cola, Tiger beer and Mastercard are plastered on walls around the city. The local reaction to President Bill Clinton's decision finally to lift the 19-year-old US economic embargo was surprisingly muted because the Vietnamese had been disappointed after expecting it so many times before. While the economic embargo's removal may lead to a wave of US investment, it has greater symbolic significance by encouraging other foreign investors to move into the market without concerns. Local businessmen said the Japanese, in particular, would be buoyed by the decision, despite the fact they had been allowed to invest in Vietnam. ''I think it's more a psychological development than anything else,'' said John Brinsden, Standard Chartered's chief executive for Vietnam and Cambodia. ''Had the embargo been lifted four years ago, the effect would have been like Champagne coming out of the bottle. But there have been so many false alarms that now it's finally happened, there isn't the sense of euphoria.'' Mr Brinsden contended that the embargo had really ended last year, when Mr Clinton removed restrictions on loans to Vietnam by the World Bank and International Monetary Fund. Hongkong Bank chief representative Bill Cameron said one of the major benefits of the embargo's removal for Vietnam was that it would give the country a better understanding of a market economy in the 1990s. ''There will be considerable American impact here but it won't be as considerable as the Vietnamese think it would, mainly because American companies coming here will, like everyone else, be commercial firms looking for investments to generate good returns,'' he said. Peregrine Capital Vietnam managing director Nguyen Trung Truc, who returned to Vietnam in 1990 and is a prominent member of the country's emerging entrepreneurial class, was more cautious about the future. ''I don't think the embargo's removal will have much effect,'' he said. ''I think there are a lot of unrealistic expectations and euphoria. In six months, people will become more realistic and pragmatic. ''It has a tremendous psychological impact and nothing else. Those who want to be here are already here and have positioned themselves.'' Vietnam's economic future essentially lies with its ability to develop into an export-oriented manufacturer with a vibrant domestic market, modelling itself on the path chosen by China over the past decade. This, however, is about five to 10 years away, because Vietnam must deal with a myriad of problems to encourage foreign investors to set up joint ventures. In terms of infrastructure, the country still suffers through power shortages that force businesses to shut down. Hongkong Bank's Mr Cameron checked the office's electric and electronic machinery during this interview, following a power shortage earlier in the day. Manufacturing now accounts for about one-third of Vietnam's GDP, primarily food processing, textiles and garments, timber, wood products, building materials, metals and minerals. Unfortunately, the growth of Vietnam's manufacturing sector has been hindered by bureaucracy, making the formation of joint ventures an exercise in frustration and exasperation. A US businessman, who arranged joint ventures in China and Vietnam, said much of the foreign manufacturing in Vietnam had been set up to circumvent high local tariffs or avoid quota restrictions. The country has a huge domestic market for motorcycles, but high import duties make it impractical to ship them in from Japan. Many garment makers have come to Vietnam after exhausting quotas in China. But the most important issue for the Vietnamese is the granting of most-favoured nation trade status by the US to provide it with open access to the world's largest market. For the most part, Vietnam remains an agrarian society that employs 75 per cent of the available labour force. The upside is that the country is self-sufficient in food with major commercial crops of rice, maize, coffee, silk, sugar and potato. While US investment is soon expected to have an impact on Vietnam, Mr Brinsden said the hype had been overblown and he doubted there would be a repeat of what happened when China opened up to the world. ''There's a different mood now in America,'' he said. ''America is in a mood to focus on core markets. A lot of American banks have disinvested overseas and focused on the home market. ''America has made a choice of locations in which to invest and a lot more companies are more comfortable looking at places like Hungary and Poland because, for many of them, Vietnam still draws an emotional reaction.'' This had not stopped US firms such as Pepsi-Cola, Coca-Cola and American Express from preparing plans to enter the country once the embargo was lifted. Coca-Cola signed executory contracts with local partners last year to form joint ventures after the embargo's removal and it plans to re-enter a market where it had achieved annual sales of 500 million bottles before 1975.