Vietnam's five-year economic plan calls for the country to scrap restrictions on investment by foreign companies, a government official said Wednesday.

The poor Southeast Asian country, which has been pushing market reforms for 20 years, wants to further integrate with the global economy by attracting more foreign investment and joining the World Trade Organization.

"We want to strongly develop the foreign-invested economic sector ... gradually reduce and ultimately abolish all special regulations on foreign-invested enterprises," Deputy Investment and Planning Minister Tran Dinh Khien said at a news briefing.

Foreign investment in Vietnamese companies is capped at 49 percent but it was 30 percent until last September. The cap applies to companies listed on Vietnam's 35-member stock exchange.

Vietnam has also changed many failing state-owned enterprises into semi-private firms. Khien was presenting the "Socio-economic development plan 2006-2010" to be discussed at this week's Communist Party National Congress, the most important event on the political calendar every five years.

The Congress, which opened on Tuesday and closes on April 25, has heard concerns that Vietnam lags behind its Asian neighbours in key sectors of the economy, such as technology and science.

"We have to augment the competitiveness of the economy, otherwise we will lose out," the deputy minister told reporters in the Congress press centre, which is decorated with a hammer and sickle and a bronze bust of revered former President Ho Chi Minh.

Foreign investment boom

Even with restrictions, foreign investment is booming. First-quarter pledges for foreign direct investment rose 24.4 percent from a year ago to $1.63 billion, according to the government.

In March, Finance Minister Nguyen Sinh Hung gave the green light to the energy, banking, telecoms and aviation sectors to raise funds from foreign investors to help fuel economic growth, which was 8.4 percent in 2005.

Vietnam's entry into the world's biggest trading club hinges on a trade deal with the United States, former enemies in the US war in Vietnam in the 1960s and 1970s.

The United States is Vietnam's biggest trading partner and officials from both sides said they were close to a deal.

Hanoi and Washington, which restored diplomatic ties in 1995, are keen for Vietnam to enter the world's biggest trading club by November when President George W. Bush attends the Asia-Pacific Economic Cooperation summit in the Vietnamese capital.

An earlier trade agreement between Washington and Hanoi has boosted Vietnamese exports to the United States to $6.5 billion in 2005 from $800 million in 2001 when it took effect.

Under that deal, known as the Bilateral Trade Agreement, US banks will be allowed to have full operation in Vietnam by 2010.  

Source: Reuters