HANOI, May 4: Vietnam insisted today it was trying to meet the demands of foreign investors frustrated with the country's bureaucracy and high-cost business environment. says Reuters.

Tran Xuan Gia, minister of planning and investment, said the communist leadership was creating a stable environment for foreign companies to do business and endeavouring to cut costs.

Speaking on the sidelines of the opening of the country's National Assembly. Gia referred to measures announced in March that were intended to gradually lower a variety of business costs for foreign firms.

He told reporters that falling foreign investment inflows was part of a trend in Asia, something Vietnam could do little to control.

"Investment is declining not pnly in Vietnam." Gia said.

Underscoring Vietnam's fading business lustre. Deputy Prime Minister Nguyen Tan Dung told National Assembly delegates that inflows of foreign investment reached $250 million from January-April, well down on the previous period.

He gave no clear comparison. but said the figures showed a marked decline. Dung also said foreign investment pledges in the first four months were $358 million, from $1.07 billion in the same period last year.

Foreign investors complain that Vietnam is an expensive place to make money and in danger of lagging further behind its leaner, more competitive Asian neighbours.

One of the March measures will enable foreign firms to denominate wages for local staff in the dong currency from July 1. Local wages currently must be denominated in US dollars.

Asked about confusion over the move. Gia said it would apply to entities under the Law on Foreign Investment.

Such a policy would apply to wholly-owned foreign firms and joint ventures, but leaves a question mark over representative offices and branches of foreign banks and law firms.

Gia said the wage policy for these institutions fell under relevant labour codes, but he declined to say if banks and law firms could set dong-denominated salaries from July 1.

Plan to boost local enterprises

Another report adds: Vietnam wants to boost local enterprises by giving companies in certain sectors preferential treatment and helping establish a credit guarantee fund, a senior official said today.

Deputy Prime Minister Nguyen Tan Dung, addressing the opening of the country's National Assembly, also said banks should not discriminate against firms that need credit.

Dung gave no clear details but he appeared to be urging banks to respond to the needs of private companies, which struggle to compete for credit witnfavoured state-run firms.

"Companies should not be discriminated against when they try to get bank loans." he said.

Dung gave no details on which sectors would receive preferential treatment but said this would take the form of low interest rates on loans, export incentives and reduced taxes for designated companies.

In addition, the government would set aside unspecified funds to 'assist in setting up a credit guarantee fund, which would be used especially to help small and medium-sized enterprises, he added.

■ It was unclear if this would be solely a government initiative.

Dung also did not differentiate in his speech between state enterprises and private companies. which have barely emerged beyond household businesses and family-run entities.

Many private firms complain about tough taxes and policies that generally discriminate in favour of lumbering state companies.

Indeed. Hanoi regularly insists the state sector would play the leading role in the economy.