The likelihood that the U.S. government will soon lift its trade embargo against Vietnam has many eager American investors lining up for the door to open.
But a group of Vietnam specialists, who issued a report last week analyzing the state of Vietnam's economy, its political structure and recent attempts at economic reform, said Vietnam is a long way from being a stable place to invest.
Although Vietnam's communist government has introduced reforms intended to loosen restrictions on the centrally planned economy, the report prepared for the Rockville, Md.-based Pacific Basin Research Institute, said Vietnam does not have a political and legal system that guarantees protections for foreign investors.
The institute, described as a nonprofit research organization founded in 1990 by a group of Vietnamese and American academics concerned about Vietnam's problems, also said in its report that Vietnam's economy is in poor shape. Despite predictions that Vietnam will be the next Asian growth "tiger," the report said, the economy has been in constant turmoil since the end of the war in 1975 and the country remains one of the world's poorest, with annual per-capita income of less than $200.
Even with economic reforms implemented by the government, "the private sector cannot develop without the state's full recognition and protection of private property rights," the institute's report states.
Foreign-owned private companies that currently operate in Vietnam under temporary visas can be shut down at any time depending on the mood of the authorities there, Bui Diem, executive director of the institute, said at a Los Angeles conference.
"Right now, Vietnam has great potential, but much remains to be done before it can make a successful transition to a free economy and a stable civil society," said Diem, who was a member of the defunct government of South Vietnam, including serving a stint as ambassador to the United States.
"There is no independent legal system there that can guarantee rights," said Mai Cong, president of the Vietnamese Community of Orange County. Because of the sluggish economy in the United States, many Vietnamese Americans are pursuing investments in Vietnam, she said, but many have been cheated by authorities and had their goods confiscated.
