Business Execs See Red Tape in Vietnam

U.S. Secretary of State Condoleezza Rice, right, holds talks with Russian Foreign Minister Sergey Lavrov on the sideline of the Asia Pacific Economic Cooperation (APEC) summit at a hotel in Hanoi, Vietnam, Sunday, Nov. 19, 2006. (AP Photo) (AP)

Authorities have accelerated market reforms that started 20 years ago, but business leaders say rules remain complicated, burdensome and sometimes murky.

Joining the WTO should help by bringing "increased transparency, standardization and a set of rules that everyone can play by," said FedEx's Ducker.

HSBC Chief Executive Michael Smith called Vietnam "one of the world's great untapped emerging markets" _ and that is precisely why foreign investment is pouring into the country.

Intel Corp. is building a $1 billion chip plant in Ho Chi Minh City. And in the last few days, Vietnam signed a string of deals with U.S. companies worth more than $1.64 billion, including agreements to build a coal-fired power plant and a container terminal.

But Vietnam needs more university graduates with degrees in engineering and other technical skills, and more emphasis on practical experience rather than theory, said Than Trong Phuc, Intel's country manager for Vietnam, Laos and Cambodia.

Opening itself up to global trade will bring in a flood of foreign competition in everything from banking to electronics, forcing local companies _ many still run by the government _ to adapt or perish.

To cope, Vietnam needs to promote an openness to innovative and entrepreneurial ideas, both in business and education, experts and business executives participating in the APEC conference say.

"You can't legislate or regulate innovation," said Scott Price, chief executive of DHL Express Asia Pacific. "All a government can do is remove all the obstacles that prevent innovative ideas and an innovative business culture from developing."

Supachai Panitchpakdi, the former head of the WTO, also warned Vietnam to be on guard against systemic risks such as currency speculation that led to the financial crisis that derailed Asian economies in 1997 and 1998.

Supachai said Vietnam is bound to attract growing foreign investment in coming years _ especially portfolio funds. But the country must be able to distinguish between short-term speculative inflows and long-term investment that could boost productivity, he said.

"Don't think it will not happen ... beware of the inflows," he said, urging Vietnam to strengthen its financial supervision.

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Associated Press writer Eileen Ng contributed to this report.