When the President of Vietnam visited London in May, met with Queen Elizabeth and Prime Minister Tony Blair and left with hundreds of millions in contracts and aid at the same time the country‘s Prime Minister was touring China also to strengthen the economic and political links between the two neighbours, it was seen by some in Vietnam as a highly-symbolic transition from the status of a relatively isolated peripheral state to an active and dynamic player on the regional and international stage.

Just as it recently marked the 50th anniversary over French colonial forces and approaches the 30th anniversary of a similar combat won over American troops in 1974, the country is developing a regional and international presence that would have appeared unlikely until recently.

Although it is still struggling to overcome a $400 annual per capita income and the heritage of a controlled system, the third largest Southeast Asian country is asserting itself in a process that will culminate with the staging of the Fifth Asia-Europe Summit (ASEM) Meeting this October.

The fifth ASEM, if it goes forward as planned an not cancelled as rumoured because of the division over participation Myanmar/Burma, could be a major stepping stone for the country of 80 million population on the world stage. Another key development scheduled that could accelerate its integration into the world economy and international standards is its planned accession to the World Trade Organisation in 2005. Another planned major showcase for the country, for which the ASEM summit would figure as a dress rehearsal, would be the Asia-Pacific Economic Cooperation (APEC) summit scheduled for 2005 along with all the media attention focused around the participation of an American president.

Recent symbolic gestures included the series of international visits by its leadership to Europe and neighbouring China and progress in implementation of a Bilateral Trade Agreement with the US. Investment deals signed by President Tran Duc Luong and one of the largest Vietnamese business and trade delegations ever to Western and Eastern Europe in May netted the country nearly $400 million, consolidating its place as Asia´s second leading destination for foreign investment after China. In London Luong also met with the leadership of companies such as BP, HSBC, Prudential and Premier Oil, major investors in the country. And he received a pledge from Prime Minister Tony Blair that the UK would raise it official development to the country to about$100 million annually, to become on of the country’s largest aid donors. At the same as the President’s visit, the British Royal Navy ship SS Exeter visited Ho Chi Minh City port.

All of these not only are designed to develop the country’s prestige and profile, they also increase the momentum of the reform and opening process, known as doi moi (renovation), launched in 1986 which began to have its full impact in the 1990s and more recently. Since then the country has been reported to have received some $50 billion in international investment. In May, the Minister of Finance Nguyen Sinh Hung, observed that “Vietnam is running a market economy managed by the state.”

The drive, similar to China’s, has also propelled Vietnam to a possible takeoff stage of development, as was pointed out at a UN Development Programme (UNDP) conference on transition economies in Hanoi in early June. The UNDP report issued then declared that “Poverty has been halved in Vietnam since 1990,” a pace well ahead of the UN Millenium Development Goal schedule, and added that considerable progress had also been registered a range of other indicators “reflecting substantial improvement in human well-being.”

But even after these many achievements, the country still has some way to go to shed some of its inherited structural obstacles and pressures in order to enter into the ranks of some of its ASEAN neighbours, economic certainty and political stability.

One European source experienced with the country‘s sometimes frustrating bureaucracy and corruption, inquires rhetorically “Why would anyone want to invest here rather than China.“ But some EU, Asian and other investors have been doing just that in perhaps surprising numbers given the attraction of the much larger market and production base in China. There are numerous Korea, Japanese and European firm building up or launching new operations there. And the country, of course, is making a newly-developed active role in soliciting and creating a positive environment for such investments.

A recent survey of the 52 Swedish companies operating in Vietnam conducted by the country‘s Consulate General in Saigon noted a sharply improving business environment in Vietnam in the last four years. Some respondents noted its political stability, ample supply of natural resources and cost-effective labour force. One drawback presented was a “image in the international marketplace.“

While the official bureaucracy in Hanoi and elsewhere may be one side of the country‘s image, so is the the global impression made by more dynamic official and business interests in Ho Chi Minh City, formerly officially and still unofficially referred to as Saigon. Especially noteworthy, for example, is the vocabulary and body language displayed by the young Vice Chair of the Ho Chi Minh city council, who also rails against the country‘s rigidity and speaks extensively about the need to improve the city and region‘s digital infrastructure to make its a more efficient environment for the modern headquarters or regional centres for multinational companies. The city is on the verge of announcing the launch of construction of an urban metro system contract avidly sought by international firms such as Siemens and a number of other competitors.

Total two-way trade with the EU has increased an estimate 20-fold since 1990 and reached €6.5 billion in 2003, making the EU the country’s largest trading partner, with a large trade surplus for Vietnam, according to EU figures. And EU firms have invested a recorded $6.2 also making it the largest investor in Vietnam. Over the 2002-2006 period, the EU has also budgeted €162 million in development grants for projects.

In 2003 two-way trade between Vietnam and the US increased in value to $5.8 billion from $1.4 billion in 2001. Trade with China in 2004 was expected to amount to some $5 billion and the two country agreed to push it up to $10 billion by 2010.

While the economy and investments appear to be surging, some of the economy’s traditional key sectors have been under pressure. The country‘s garment, seafood and coffee export-oriented industries, still showing increases in shipments, are nevertheless slowing down because of competition, quotas, anti-dumping allegations or price slumps due to overproduction. Each of these sectors has been the object of restructuring or “equitisation,“ a process the country‘s leadership prefers to outright privatisation.

And while its two main regions of growth and relative prosperity in Ho Chi Minh City and Hanoi, especially the first, are magnets for investments and display relative prosperity, much of the rest of the country remains mired in third-world subsistence activity and is plagued by persistence of poverty and related ills including human trafficking. The UNDP report on the country issued in June also remarked, as it had in 2003, “a range of wide and in some cases vast socio-economic disparities and gaps persist across Vietnam’s 61 provinces and major urban areas.” Persistent problems range from water shortages to corruption, but some attempts are being made to address them. UN, EU and other national aid agencies and NGOs are actively focusing on poverty alleviation or poverty related problems and projects.

Despite these economic advances, the country also remains attached to its traditional communist political system installed in the north of the country following the ouster of French colonial power in the 1950s and cast over the south after the rout of the Americans in 1974. As in China, a new generation of leaders could be seen as ushering some relaxation. Elections take place at the local level, but they are said to generate little interest. The appointed General Assembly is also regarded as an emerging force in national policy-making. Criticism on specific policies is tolerated in the press as long as it does not challenge the continued overall dominance of the Communist Party, according to Europeans on post there.

Perhaps an example of the way tensions are managed was illustrated in an a protest demonstration held in upland region populated by the ethnic “Montagnard” people. Vietnamese official called the incident “an organised riot” fomented by an alleged ringleader, Ksor Kok, who has directed a US movement for a free Degar state.