Vietnam Thundering Into World Economy
Vietnamese officials announced Tuesday that chip-making monolith Intel has been granted permission to increase their investment in the communist country from $300 million to $1 billion.
The announcement came on the same day that the World Trade Organization formally extended its invitation to Vietnam for membership in the Geneva-based body. Both developments are clear signs that Vietnam is ready to explode onto the greater global economy, and hit the ground running.
Intel is constructing a $300 million chip assembly and testing plant in Ho Chi Minh City. Its original license, granted in February, allowed the company to invest up to $605 million.
The government has since approved an amended license allowing Intel to invest up to $1 billion and increase its production capacity, said Nguyen Anh Tuan, director of the Information Technology Industry at the Ministry of Telematics.
The deal is considered a significant step forward in Vietnam's campaign to attract foreign investors. It is already the largest single U.S. investment in the country since the Vietnam War ended in 1975.
Intel has scheduled an announcement for Friday in Ho Chi Minh City, but would not disclose its specific plans.
The organization's general council approved the accession terms for Vietnam with the fall of a gavel from WTO chief Pascal Lamy.
Vietnam completed 11 years of entry talks with the Geneva-based group last month.
The communist country can join 30 days after its National Assembly signs the accord, which it is expected to do swiftly.
Vietnam is Asia's best-performing economy after China, and the Asian Development Bank in August projected its economy would expand by 7.8 percent this year.
With a population of 84 million, it also is the second most populous country behind Russia still outside the WTO.
Membership of the global trade body will give Vietnam increased access to foreign markets and the opportunity to take trade grievances to a neutral arbiter, strengthening its hand against nations that accuse Vietnam of illegally dumping goods on their markets.
In return, the country will be required to drop its high tariffs on foreign imports and eliminate subsidies for state-owned companies.
Tuesday's developments come just days before Vietnam hosts the Asia-Pacific Economic Cooperation summit, which will draw heads of state and business executives from around the globe, including President George W. Bush.
Unlike other foreign companies, American businesses may not be able to take advantage of the WTO agreement immediately because the U.S. Congress has yet to grant Vietnam "permanent normal trade relations" status.
Mr. Bush hopes a PNTR bill will be passed before he visits Hanoi for the APEC summit Nov. 18-19, but that looks unlikely.
Among other obstacles, Sen. Mel Martinez, a Florida Republican, has been blocking consideration of the bill due to concerns about a Florida pro-democracy activist who is being held in a Vietnamese jail, suspected of plotting against the Vietnamese government.
The PNTR bill is expected to be approved eventually. But without it, U.S. companies will not be able to enjoy the benefits of the WTO agreement — unless Vietnam decides unilaterally to treat them like other member countries.
Foreign investment in Vietnam has surged ahead of Tuesday's vote, rising 41 percent in the last year.
Foreign firms have been encouraged by Vietnam's market reforms, which began tentatively in the late 1980s, moved in fits and starts during the 1990s and greatly accelerated over the last three years.