By MALCOLM FOSTER
The Associated Press
Sunday, November 19, 2006; 3:11 PM

HANOI, Vietnam -- Eager to tap Vietnam's burgeoning economy, international business leaders who gathered in Hanoi this weekend heaped praises on the communist nation for its economic reforms and for opening itself up to global trade.

"We see great growth potential in this market," said Michael Ducker, president of FedEx Express International. "We're very optimistic about the future here."

Rival delivery company DHL, a unit of Deutsche Post AG, also is eager to expand its presence in the country, whose economy is growing at a 7.5 percent clip amid surging exports and consumer spending.

"Consumers appear to have more money in their pockets ... so you see not only exports growing, but imports into the country, too," said Peter Landsiedel, chief executive of DHL Global Forwarding Asia Pacific.

Hanoi's role as host of the Asia-Pacific Economic Cooperation summit, bringing together government leaders from 21 countries and territories and 1,200 business executives, is giving Vietnam a rare chance to showcase its transformation from a war-ravaged backwater to a fast-growing exporter.

Vietnam's membership in the World Trade Organization, expected to become official next month, will require the country to slash tariffs and other trade barriers, making it easier for foreign companies to enter the Vietnamese market. It will also give Vietnamese companies new export opportunities and a chance to supply goods and services to foreign corporations coming to Vietnam.

Still, the country faces obstacles that hinder its development and make doing business here difficult, from poor port facilities to myriad regulations, business executives and other experts say.

DHL's Landsiedel says there is too much red tape in customs regulations.

"From our perspective, this has to be made easier, more direct and straightforward," he said in an interview. "The government is aware of that and is working on it."

Toward this end, the United States is working with Vietnam to implement an "eManifest" system at the Hanoi and Ho Chi Minh City airports in which customs officials can receive electronic manifests before airplanes arrive so that they can quickly determine which items need inspection.

Vietnam's still-developing infrastructure is also an obstacle to investors, said Christoph Wiesner, a member of the European Commission's delegation.

"Ports are one major headache. Despite some improvements, it takes too long to ship a container to main overseas destinations and it's quite a bit more expensive than elsewhere in the region," Wiesner said during a panel discussion.

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.