Intel declared it will invest US$300 million into building Vietnam’s first chip assembly and testing plant. Especially, FDI inflows in the country have seen positive and sustainable signs. For example, disbursed capital reached 38 percent of the US$6 billion of total registered foreign investment capital last year. Besides, the Common Enterprise Law and Investment Law will take effect on July 1 next year, helping improve the business environment for all economic sectors, especially the private sector.

"The favourable business environment will make the private sector become a driving force for the country’s socio-economic development in the next years", said Asian Development Bank (ADB) expert Omka Checka. "It is expected that investment from the private sector will increase by 50 percent by 2007 and the role of the sector will become greater".

ADB experts also said the Government’s macro regulation through fiscal policies will continue to supporting the country’s economic growth. Although tax collections will reduce due to Vietnam’s commitments to the ASEAN Free Trade Area (AFTA) and WTO agreements on tariff reductions, hike in the global oil price will continue to contribute to increasing the budget. Tax collection from enterprises also increased as the number and scale of enterprises registered to conduct business have also risen sharply.

However, Ayumi Konishi, ADB country director for Vietnam, said the country should speed up economic development and further invest in the energy sector, especially electricity in order to maintain sustainable economic growth.

While evaluating factors affecting the country’s economic development growth, ADB experts forecast that the country’s economy will record a growth rate of 7.8 percent and 8 percent in 2006 and 2007, respectively. Accordingly, the industrial and service sectors will achieve growth rates of 10 percent and 8 percent, respectively. In the industry sector, the proportion of products such as computers and electronics will increase. The garment sector will continue to compete fiercely with Chinese products until Vietnam becomes a WTO member and does not face quotas imposed by the US. The construction sector will also see rapid development thanks to large investment in infrastructure, industry and real estates. The country will host the Asia-Pacific Economic Cooperation (APEC) Summit in November and this is a driving force for the services sector to boost its development.

Source: VOV news