Vietnam Pullout: This Time, Investors Pack Up Gear, Stymied by Bureaucracy, Lack of Reforms
HANOI, Vietnam -- In a further sign of the grim business climate here, some of Vietnam's early-bird investors are flocking home.</br></br>These investors represent that first wave of daring foreigners who jumped in when Vietnam first began opening its market in the early 1990s. They were once willing to spend the most money and take the biggest risks in the fledgling market, but after three or more years of losses, many are running out of patience.</br></br>"People are tired of waiting for economic reforms that come too little, too late," said Fred Burke, an investment lawyer at U.S. law firm Baker & McKenzie in Ho Chi Minh City.</br></br>The first investors' departure spells yet another setback for Vietnam's economic development. Vietnam depends heavily on foreign venture capital to support a current account strained by hefty trade deficits. With very few resources of its own, the country depends heavily on foreign capital to fuel growth.</br></br>According to ING Baring Securities Ltd.'s May report, foreign direct investment accounts for 8% to 9% of gross domestic product, and 17% to 18% of total export earnings. For the first six months of this year, however, total foreign investment dropped 20% in pledged capital, compared with the year-earlier period, according to government figures. Last year, foreign-direct-investment pledges dropped more than 50% from 1996. Economists fear the decline may be even more dramatic than the official numbers suggest.