Saigon Times: What has been achieved over the past 15 years? How have the achievements affected Vietnam's socio-economic, and cultural and social development?

Deputy PM Vu Khoan: Vietnam and the European Community sealed their official diplomatic ties in November 1990. And July 17th, 1995, was a landmark for bilateral co-operation with the signing of the framework agreement on co-operation, which sets out the principles for stepping up economic and trade relations.

The EU has become a partner of prime importance to Vietnam in politics, development co-operation, trade and investment. Politically speaking, the two sides have increased the frequency of high-level meetings, culminating in the Vietnam-EU summit talks in October 2004 within the Asia-Europe Meeting 5. The two sides have also maintained co-operation in multilateral forums such as the ASEM and ASEAN-EU.

The EU is a leading trade partner of Vietnam. The two sides have granted each other most-favoured nation status, and the EU extends tariff preferences to Vietnam under the its Generalised System of Preferences mechanism. The number of EU foreign direct investment projects in Vietnam is fairly large with almost 450 projects capitalised at more than US$7 billion in different fields, many of which are large-scale investments with capital of up to several hundreds of millions of dollars. Regarding development co-operation, the European Community has provides large amounts of official development aid to Vietnam, and now the EC and EU members are Vietnam's biggest providers of non-refundable aid.

The two sides have concluded negotiations for Vietnam's accession to the World Trade Organisation, and the garment quota regime has been abolished for Vietnam. This shows the EU's strong support to Vietnam, which lays the foundation for Vietnam to engage more in the European market and integrate successfully into the world economy.

These achievements have played a crucial role in spurring Vietnam's economic development. Some of Vietnam's leading economic sectors, which have posted high growth rates and which use advanced technologies, have had remarkable support from European investors. EU projects in Vietnam are employing millions of workers, unleashing creating many new productive forces and creating new products for the economy. Moreover, EU aid has helped Vietnam solve social problems regarding health care, education, training, environmental protection, poverty reduction and hunger eradication, and capacity and institution building.

Saigon Times: A prominent point in Vietnam-EU co-operation is that the EU has become Vietnam's largest donor of non-refundable aid, and the EU is a huge market for Vietnamese exporters. However, the EU is now a Union of 25 nations instead of 15. Will bilateral co-operation be maintained at the same level, or even see further enhancement?

Deputy PM Vu Khoan: We have a big advantage. All the EC-initiated development co-operation programmes and projects have focused on Vietnam's priorities, such as like rural development to reduce the rich-poor gap, projects for remote and mountainous areas, human resources development, educational and health care development, technical assistance, business management capabilities (especially accounting and auditing), quality control, intellectual protection, and reforms in the administrative and judicial fields, banking, finance and international economic integration. The EC is completing feasibility studies and fine-tuning financial agreements for projects for the 2005-2006 period, including education and training, health care, support for the private sector, rural development in the Central Highlands.

The EC's development co-operation programmes for Vietnam have been increasingly effective, helping Vietnam boost its comprehensive reform and sustainable development.

With the 25-member EU, I believe that co-operation opportunities and potential will be even bigger, because many new EU members are Vietnam's traditional partners.

Large Vietnamese communities are living in several new EU members. They will serve as a gateway for Vietnam to develop co-operation with the EU.

Saigon Times: The number of EU-invested FDI projects in Vietnam is not large, especially in areas which are strengths of the EU such as finance, banking and the hi-tech field. What are the main reasons for that, and what should be done to attract investment to these important areas?

Deputy PM Vu Khoan: Many EU member countries have their priority in areas with which they have traditional links, such as for instance, Eastern Europe and Africa. However, the US$7 billion investment in Vietnam does not reflect the real amount committed by EU companies. Many EU companies have invested in Vietnam through Asian subsidiaries and so their investments Vietnam do not appear in official statistics are not classified as EU projects.

Yet we have to say that some European entrepreneurs are still sceptical about Vietnam's investment environment, its institutional stability, administrative procedures, and high investment costs compared with regional neighbours. Although Vietnam has substantially improved its investment environment, its neighbours have also bolstered their competitiveness in attracting foreign investment, posing great challenges to Vietnam. Therefore, the improvement of in Vietnam's business and investment environment is an urgent task both in the short and the long run. I believe that with Vietnam's commitment to all-out reform and its WTO entry, more European investors will eye Vietnam as a land of opportunities.

Saigon Times: Some observers say that, despite great efforts, Vietnam has not yet attracted as much FDI as expected. They say that if Vietnam were to give more support to foreign investors already doing business here so that they can gain more profit and expand their business scale, this would lead to the attraction of more foreign investors. What do you think of this argument?

Deputy PM Vu Khoan: It is correct. It is easier to encourage thousands of foreign investors in Vietnam with investment worth billions of U.S. dollars to expand business than to attract new investors. But Vietnam must fulfil the two tasks at the same time. New investments will diversify capital sources and investment fields, particularly in areas where Vietnam is desperately in need of, for instance, hi-tech manufacturing industries, public services and infrastructure.

True, we must help investors which are already present here improve business performance. EU investors are experienced and financially capable, so once they make an investment decision, it is often implemented rapidly and efficiently. I believe EU investors in Vietnam will make remarkable contributions to Vietnam's economic growth.