FDI is much likely to climb as indicated by recent fact-finding tours of large companies and FDI increases in the first half of the year.

The Government licensed nearly 350 FDI projects with total registered capital of US$2.4 billion in the first half of 2006, a year-on-year increase of 20 percent, according to MPI.

"Vietnamese authorities are considering many FDI projects, and improvements in the country's investment environment have been highly appreciated by local and international businesses," said Mr Tuan.

Japan continues to be Vietnam’s largest investor so far, with more factories being built in Hanoi, Bac Ninh and Quang Ninh by such groups as Cannon, Sumitomo, and Tenumo.

Vietnam is also seeking investments from Spain, the Republic of Korea, and especially the US. In fact, many American investors have followed US-based Intel Corp after the company invested US$600 million in a chip-manufacturing project in Ho Chi Minh City.

According to Mr Tuan, the annual disbursement of FDI rose from about US$2.5 billion before 2004 to US$3.5 billion in 2005, and is expected to reach US$3.7 billion this year.

"However, more need to be done to attract foreign investment and accelerate the implementation of FDI projects," he said. Obstacles include labour disputes and strikes, underdeveloped infrastructure, and a lack of a transparent legal framework in this sector. The Government should soon enact policies to encourage the private sector’s investment in infrastructure, Nguyen Anh Tuan added.