HANOI, Vietnam, (AP) -Top business leaders attending a Pacific Rim economic conference on Friday praised communist Vietnam for its stunning progress in reforming its economy a day after U.S. companies struck a flurry of investment deals worth more than $1.6 billion.
“Vietnam has demonstrated to the world its capacity for quantum leaps,” said Craig Mundie, chief research and strategy officer for Microsoft Corp.
“It’s clear that the government has recognized that broad-based reform and economic liberalization are essential to Vietnam’s integration into the global economy,” Mundie told more than 1,000 participants at the Asia-Pacific Economic Cooperation forum’s “CEO Summit.”
Hanoi’s role as host to the annual APEC summit, which brings together President Bush and 20 other leaders for a weekend meeting, gives Vietnam a rare chance to showcase its transformation from a war-ravaged backwater to a fast-growing exporter.
More than 20 years of “doi moi” market-oriented reforms have made Vietnam APEC’s fastest expanding economy after China, with growth racing ahead at a 7.5 percent clip.
The CEO gathering comes fresh on the heels of two of the biggest business developments to hit Vietnam in years — its approval for membership in the World Trade Organization and Intel Corp.’s announcement last week that it will invest $1 billion in a chip plant in Ho Chi Minh City.
More deals were announced Thursday. Energy company AES Corp. signed an agreement with state-owned Vietnam Coal & Minerals Corp., or Vinacomin, to build a coal-fired power plant at a cost of $1.4 billion, Vinacomin said. Arlington, Va.-based AES will contribute 90 percent of the capital, with the Vietnamese partner providing 10 percent.
In another deal, state-owned Vietnam National Shipping Lines, or Vinalines, agreed to form a $100 million container terminal joint venture with Seattle-based SSA Marine.
And Vietnam’s Truong Thinh Co. said it had sealed a US$140-million contract with California-based NRG Resources Inc.
Executives lauded Vietnam’s effort to amend its laws to conform with WTO rules as it prepares to join the Geneva-based trade group next month.
“We see great growth potential in this market,” said Michael Ducker, president of FedEx Express International.
Joining the WTO “represents the emergence of Vietnam towards an economy that is very competitive,” said Scott Price, chief executive of DHL Express Asia-Pacific, which on Thursday said it was investing US$14 million in Vietnam through a joint venture to upgrade its facilities and vehicles in the country.
Salvaging the current Doha round of negotiations toward a global agreement on dismantling trade barriers has been a major focus of the APEC gathering, with the 21 members pledging to consider concessions on farm trade that left the talks in a deadlock in July.
The former head of the World Trade Organization, Supachai Panitchpakdi, on Friday urged trade negotiators to lower their demands and take small steps in a bid to break the deadlock.
“I don’t think the (world) can afford to stand by and let the Doha round go down the drain,” Supachai, now heads of the U.N. Conference on Trade and Development, told the more than 1,000 business executives.
“So let’s do quiet diplomacy. Let’s achieve a little bit and then move on, achieve a little bit and then move on,” he said. “Development is the middle name of the Doha agenda, so don’t shortchange the whole round of negotiations of development.”
Spurred by exhortations from APEC, the WTO’s 149 members met Thursday in Geneva for the first time in four months to discuss the possibility of resuming talks.
“Clearly, business and industry want the removal of obstacles, so with the Doha round, business is saying, ‘Yeah, we’re ready. We’re just waiting for governments to get their act together,'” said DHL’s Price.
While executives say regulations still slow down business in Vietnam, foreign investment is growing as the economy opens up.
Vietnam’s thinnest times came after the Vietnam War ended in 1975 and the communists united the country. Cut off by an economic embargo, the economy stagnated under a rigid, centrally planned system. People lined up to wait for rice and other goods and faced police action if they sold anything on the free market.
The country still faces daunting obstacles, however, in building up infrastructure and training its workers for the newly capitalist-style economy.
“New challenges from terrorism, pandemics, natural disasters and technological inequality threaten the sustainability of regional prosperity,” said Vu Tien Loc, president of the APEC CEO summit and chairman of the Vietnam Chamber of Commerce and Industry. “We believe that worldwide prosperity can only be achieved through shared opportunities and shared development.”