LGERI has released a report about the investment prospects of foreign owned enterprises in Vietnam in the future. The institute’s researchers concluded that Vietnam’s economy would see stronger growth until 2010 or 2015.

LGERI’s report has been released as leading Republic of Korea (ROK) groups are rushing to build workshops and make investment in many fields in Vietnam.

At the end of January 2007, the ROK Investment and Trade Promotion Agency announced that the country had surpassed Hong Kong and the US to become the biggest investor in Vietnam in 2006 with the total capital of nearly $2.7bil.

However, LGERI has also recommended that ROK investors keep cautious when making decisions on investing in Vietnam as the country still lacks necessary infrastructure items for business activities.

The report by LGERI stated that investments in Vietnam might be risky until 2010-2015, when the country’s industrialisation could meet the requirements in attracting foreign investors.

Vietnam is surely a land promising many opportunities with rich natural resources and high development potentials. However, the short term prospects are not bright, the report concluded.

The fact that foreign owned enterprises’ rights are limited and there is a lack of skilled labourers have also been cited as difficulties foreign investors will have to face when making investments in Vietnam.

Moreover, Vietnam still lacks companies that specialise in making accessories and spare parts to provide to manufacturers. It also lacks a modern transport system, which puts difficulties on enterprises which want to expand production in different localities in the country.

Though Vietnam’s economy has been witnessing high growth rates of around 8% per annum in recent years, analysts said that the market remained too small to attract more and more investment capital.

The prices of houses in Hanoi and HCM City have increased by 2-5 times in the last three years, the sign of overly hot development.

Like other foreign research institutes, LGERI has confirmed that the long term prospects of Vietnam’s economy are very bright. The efforts being made by Vietnam in economic reform, including the construction of petrochemical and steel plants, will help improve the infrastructure situation of the country by 2009.

Many leading international groups are eyeing Vietnam, considering it a lucrative destination since it became an official member of the WTO.

The fact that Vietnam successfully attracted $9bil worth of foreign direct investment in 2006 is an impressive result which allows one to be optimistic about the future.