By Robert L. Wallack, AJOT Vietnam is attracting more investments from the Unites States and foreign companies and improving the business environment for partnering with local firms. Their level of economic development is lower than cross-border neighbor China, yet infrastructure investments in ports and roads are contributing to strong and steady growth rates. Vietnam is well positioned to benefit from the new and largest free trade area in the world when the China-Association of Southeast Asia Nations (ASEAN) Free Trade Area (CAFTA) begins in 2010. The United States is important to Vietnam’s trade and investment as a result of several policies since the lifting of the trade embargo in 1992. Namely, the 2001 Bilateral Trade Agreement that normalized U.S.-Vietnam relations as well as the 2007 U.S.-Vietnam Trade and Investment Framework Agreement (TIFA). “Since 2001, Vietnam had most favored nation (MFN) policy with the U.S.A. and cargo increased 40 percent and keeps increasing,” said Mark Vu, Director, Marina Logistics, Hanoi in a recent interview with the American Journal of Transportation. In fact, the U.S. is Vietnam’s second largest trading partner after China. In 2008, total bilateral trade was $15.7 billion for a $10.1 billion surplus for Vietnam. United States imports were up 21 percent from 2007 of knitted and woven apparel, furniture, footwear and coffee of $12.9 billion whereas U.S. exports increased 46.6 percent from 2007 of machinery, vehicles, meat and cotton of $2.8 billion, according to the U.S. Census Bureau. Vietnam is enjoying one of the fastest growth rates in the world of 8 to 6.2 percent since 1990 in a country equivalent in size to Ohio, Kentucky and Tennessee combined and populated by a relatively young and educated 85.7 million people. Direct investments bv U.S. companies are pouring into Vietnam amounting to $4 billion through August of 2009. These U.S. investments are 37 percent of Vietnam’s total foreign direct investments (FDI) which are up from 3 percent last year, according to Vietnam Briefing, Dezan Shira Associates. The U.S. investments are in the context of a slower investment year projected by the Vietnam Ministry of Planning and Investment to be less than one third of 2008 registered FDI of $71.7 billion. General Electric (GE) Energy is one United States multinational making a $60 million investment in the northern city of Haiphong near the seaports. The new manufacturing plant will produce generators for 1.5 MW wind turbines and expects the facility’s first output in the first quarter of 2010 for North American and European markets. This is GE’s first investment in Vietnam. “To be a long term player there is a need to put something in the ground, hire local people and have a presence to be a win-win with Vietnam. It is not a viable long term strategy to just sell stuff to a country,”said Stuart Dean, President, ASEAN, General Electric in a Hanoi interview with the American Journal of Transportation. Vietnam has a 2,144 mile coastline and several container ports in the North and South are under continuous improvements to upgrade from shallow depths so that vessels of at least 7,000 twenty equivalent units (TEU) containers can call at the ports rather than the current feeder services to river ports of 1,000 TEU vessels. In addition to Haiphong port improvements, there are also plans for terminals with 12 meter draft berths to the North at Cai Lan port and a new deep water terminal on Lach Huyen Islands near Haiphong. “One of the main reasons we have chosen Haiphong is because of its close proximity to several ports. The closest seaport to our site is just 7 miles away,” said the plant manager, GE Energy. Well over 50 percent of Vietnam’s container traffic is handled in the South near Ho Chi Minh City. The Cai Mep port development is to the South of Ho Chi Minh City and will increase container throughputs for all the nearby economic activities. However, the population density and road congestion are logistics o