For a moment, foreign investors fed up with the corruption and red tape of doing business in Vietnam thought their request for reform might be getting through to the Vietnamese leadership. Prime Minister Vo Van Kiet stood up in front of the National Assembly in mid-October and told lawmakers that corruption and inefficiency were hurting the economy and undermining the investment climate. Jubilant foreign companies believed their voices were going to be heard at last. But when they saw the final version of Vietnam's amended investment law, businesspeople were disappointed. Nothing much had changed.
The problem is, the rest of the Vietnamese leadership is not as amenable to the pleas of the investment community. In a country where policy is decided by roundtable consensus, it only takes one communist stalwart to keep reform from pushing ahead. And there are a lot more than one in the government in Hanoi.
Vietnam, where per capita income is still less than $250 a year, desperately needs to modernize. But approved foreign investment projects are down 34% so far this year. The projects that could help develop the country are being scared away by government policies that seek to extend stifling control over investments. Despite the growth of a market economy in Vietnam, government officials and bureaucrats remain suspicious of capitalism. To many, it is simply an opportunity for graft.
Kiet knows where Vietnam must go in the future. There are many markets in the global economy that beckon investors and their capital. If the country's leaders do not loosen control over investment, curb corruption, and make a real commitment to market-oriented reforms, Vietnam will never realize its potential for becoming another Asian economic tiger.