The Foreign Service Journal, April 2015

64 APRIL 2015 | THE FOREIGN SERVICE JOURNAL U.S. investment in Vietnam reached $1.1 billion in 2012 (the last year for which statistics are available), with an Intel Corp. wafer testing facility being the largest single investment by an American firm. Vietnam’s electronics exports have soared, and its economy has been more deeply integrated into the global electronics supply chain in recent years since South Korea’s Samsung Electronics Co. set up a $2 billion mobile phone assembly plant in Vietnam and has announced plans for a sec- ond one. Despite the country’s relative economic success, its domestic economy is still being held back by slow progress in reforming inefficient, socialist-style, state-owned enterprises that siphon off critical credit and resources from the more dynamic private sector. Cleaning up the high percentage of nonperforming loans in the banking system is also a painfully slow process. The World Bank’s “Ease of Doing Business 2014” report ranked Vietnam 99th out of 189 nations—behind neighbors like Thailand, but ahead of others like Indonesia. U.S. companies cite a number of problems holding them back in Vietnam, ranging from an overextended infrastructure to corruption. Transpar- ency International last year ranked Vietnam 119th out of 175 countries. A related challenge is an inefficient bureaucracy that frequently changes government regulations. Vietnam’s economic reformers hope that ratification of the high-standard TPP agreement, perhaps later this year, will help jumpstart reform in a number of areas by leveling the playing field between the private and state-owned sectors. U.S. com- panies anticipate that it will open a number of relatively closed sectors in Vietnam, including services. To facilitate Vietnam’s accession to the TPP, the U.S. Agency for International Develop- ment has invested in a program to promote competitiveness, boost accountability and support biodiversity through customs reforms. Forging Closer Ties Political and security ties between Vietnam and the United States have come a long way since the two countries normalized relations two decades ago. In 2000, Bill Clinton became the first U.S. president to visit Vietnam since the end of the war. Since then, Hanoi and Washington have stepped up high-level visits and established regular political, security and defense dialogues to tackle a raft of outstanding issues. Over the past few years, Vietnam has emerged as an increasingly important U.S. security partner in the region, as the two countries cooperate bilaterally and in multilateral forums. Hanoi has made great strides in accounting for the nearly 2,000 U.S. military personnel missing at the end of the war. Washington has also started assistance programs aimed at envi- ronmental remediation and health support for areas and people affected by dioxin contamination from its use of Agent Orange. Hanoi would also like American help as it searches for its own roughly 200,000 servicemen missing from the war, and assis- tance in the removal of unexploded ordnance still in the ground in areas of heavy fighting. Human rights issues continue to pose an obstacle to closer relations. In general, freedom of expression and religion has improved significantly since the early days of the country’s reunification. The government does not, however, tolerate activities that it sees as a threat to the Communist Party’s grip on power and a regularly rounds up bloggers, activists and dissi- dents. U.S. officials estimate that Vietnam is holding about 125 political detainees. The two governments hold regular and frank discussions on these issues, but have not allowed them to derail economic and strategic ties. More detentions may come in the run-up to the ruling party’s next congress, slated for January 2016, at which many top leaders will be required to retire. Managing relations with China is another topic that will elicit wide-ranging com- ment among the country’s active (and nationalist) blogger com- munity. During his July 2013 visit to Washington, D.C., President Truong Tan Sang and President Barack Obama launched plans for a comprehensive partnership between the two countries. The agreement spelled out nine areas of cooperation ranging from political and economic ties to security relations, human rights and cooperation on tackling environmental issues. Over the past decade, the two countries have taken the first steps to boost military-to-military relations. They have regular bilateral defense talks that explore issues such as military medi- cine, environmental security, demining, search and rescue, and peacekeeping. In recent years, the two sides have also discussed more active defense cooperation. Last October, Washington agreed to partially lift its ban on arms sales to Vietnam, which has been in force since the end of the war and has been maintained due to human rights concerns. In2000, Bill Clintonbecame thefirst U.S. president tovisit Vietnamsince the endof thewar.