Vietnam-U.S. trade agreement on track

Vietnam's 2002 GDP growth forecast is 6.9 percent

By CNN's Kirsty Alfredson

HANOI, Vietnam (CNN) -- U.S. Congressional approval for a bilateral trade agreement with Vietnam could come as early as this week.

However, its passage through Congress is more likely in September, after legislators return from the northern summer break.

The American Chamber of Commerce in Vietnam told CNN the agreement is on track and is expected to quickly boost trade between the two former foes.

VIDEO CNN's Kirsty Alfredson reports on the anticipated growth in trade between the U.S. and Vietnam. Play video (QuickTime, Real or Windows Media)

Adam Sitkoff, executive director of AmCham Hanoi, says there's already been phenomenal growth since a U.S. trade ban was lifted in 1994.

"If you go back to 1994, bilateral trade between Vietnam and the United States was at about $225 million," he said.

"Last year, it increased to $1.2 billion and while that can't be a big amount compared to major trading partners with the U.S., it's about a 500 percent increase in a six-year period."

Trade on the rise

Sitkoff said that the World Bank had predicted bilateral trade would double very rapidly, once the agreement is in place.

He said that like other South East Asian nations, Vietnam suffered transparency problems and required further legislative changes.

"Vietnam has to tackle graft and corruption problems," he said.

Rice is one of Vietnam's leading export commodities.

Vietnam remains one of only five countries not yet granted normalized trading relations with the U.S. and consequently its exports are subject to tariffs.

Managing director of Indochina Capital Corporation, Peter Ryder, who has lived in Vietnam for ten years, said when he first arrived in Hanoi there were few cars. Now, there are tens of thousands.

Economy under transformation

"We've been investing in the country since the U.S trade embargo was lifted in 1994," he told CNN.

"The private sector has developed at a phenomenal rate during the decade of the nineties. Most of that is over the last couple of years, due to government reform and legislation."

"In 1990 there were something like 100 privately registered companies. Today there is approaching 50,000. We've seen a remarkable transformation in the general make up of the economy."

Vietnam's policy of doi moi, or open door, has allowed capitalism into the communist country.

Stock exchange a year old

The majority of stock market investors are Vietnamese

There are now six listed companies on the stock market, which opened just over a year ago in a climate of strong demand.

The majority of the investors are Vietnamese and Ryder says if they invested early enough they would have quadrupled their money.

He says the Ho Chi Minh City-based stock exchange is behaving like a normal market after a faltering start, due to attempts by the government to provide stability.

The government imposed a two percent trading band, and because of unmet demand, stocks went up two percent on each trading day.

It wasn't until the government increased the band to seven percent that the market began to fluctuate.

The Asian Development Bank, in its latest outlook, says Vietnam has a GDP growth forecast of 6.9 percent in 2002. It is one of only a few countries with a growth rate anywhere near China's 7.5 percent.

Like China, it wants to join the World Trade Organization.