Mr Clinton will be hoping for assurances from Vietnam it will act in good faith by implementing the provisions of the BTA and he is likely to offer considerable technical assistance toward that end.

But the fundamental changes to institutions, procedures and broader attitudes required under the agreement are profound and will not come easily, despite the seven-year timeframe allowed before US companies can operate in Vietnam on a truly equal footing with local competitors.

After 15 years of economic reform, the state sector still produces about half of economic output and, while Vietnam's leadership has embraced economic reform, it remains committed to a pace of change aimed at ensuring continued social and political stability. According to Tony Foster, vice-chairman of the American Chamber of Commerce in Hanoi, that continuing caution will be mirrored by US and other foreign investors.

'The enthusiasm of the early and mid-1990s no longer exists and probably will never come back . . . there remains a substantial scepticism about whether the rewards from investing are worth the risks of coming here,' he said.

'What might return if reform policies and the provisions of the BTA are implemented properly . . . is rational and reasoned investment in particular areas.'

When Mr Clinton lifted the trade embargo, foreign businesses rushed in: foreign direct investment (FDI) reached a peak in 1996 and 1997 with pledges of up to US$8 billion and an incoming cash flow of US$2 billion a year. But red tape, corruption, capricious rules and a lack of transparency soon caused many to give up hope and pull out.

FDI remains at a 10-year low despite a wider regional recovery. Year-end disbursement of FDI is expected to peak at a mere US$780 million - just a quarter of that in 1997.

Mr Foster said that, despite an increase of investor interest in Vietnam since the signing of the BTA, that interest had yet to translate into firm commitments. That, he said, was likely to take two to three years after the agreement's anticipated ratification by both countries early next year.

Executives of more than 50 US corporations are accompanying Mr Clinton, including representatives of giants such as Boeing, Citigroup, Coca-Cola, General Electric, General Motors, Nike and Procter & Gamble.

Coca-Cola was one of the first US firms to return to Vietnam after the lifting of the trade embargo and is regarded as one of the few success stories with its three plants and a workforce of some 2,000 people. But for many other businesses, the initial entry into Vietnam was ill-fated.

Russell Ornburn, country manager for telecommunications consultant Sterling Industries, was in the first wave of US businessmen who arrived in 1994 ready to make the most of new opportunities.

He said a lot of the problems had been caused not just by the government, but by inadequate investor preparation. But Mr Ornburn said things were improving and the Vietnamese Government was moving to cut through the bureaucracy in an effort to entice back investors who had pulled out.

'The business environment has had to clean itself up, create a much more viable business arrangement where the laws, regulations and various things are more easily understood and where you do not have things conflicting with other things,' he said.

Mr Ornburn said the signing of the BTA had boosted confidence.

'I have had meetings recently with American firms wanting to do business here, they are looking forward to the ratification of the trade treaty. Then they say we will start seeing more of their investment showing up.

'That trade treaty will also lead to the WTO, which will cause Vietnam to be more within the international realm of how one does business.'

Thomas Siebert also arrived in Vietnam in 1994, to help set up a manufacturing arm of American Standard, a US-based producer of bathroom ceramics. It now employs about 300 locals and is regarded as one of the company's best plants. Mr Siebert believes that while prospects for doing business are positive, the pace of change could be stepped up.

'Businessmen are not patient people, so I could never say they are moving fast enough,' he said. 'But the pace has improved dramatically.'

At present the US ranks ninth on the list of foreign investors in Vietnam, with projects worth about US$1 billion. That should grow further.

According to the World Bank, the present value of Vietnamese exports to the US - mainly footwear, garments and seafood - could rise by US$800 million in the year following ratification, which will see tariffs on Vietnamese imports drop from 40 to 3 per cent. Vietnam's Ministry of Trade is projecting exports to the US worth US$3 billion by 2005.

Meanwhile, Vietnam's economy is showing signs of recovering from a three-year slump with government figures suggesting a better than expected overall performance this year. Gross domestic product growth is projected to come in at close to 7 per cent this year, up from 4.7 per cent last year, after hitting 6.7 per cent in the third quarter. Many observers consider government figures 'rubbery', but US and other foreign investors producing consumer products for export and the domestic market of nearly 80 million - are reportedly doing well.

'Established companies, by and large . . . are doing okay,' said Mr Foster. 'They will not admit it because Vietnam is not the sort of place where people trumpet good performance. But my guess is they are doing better than they are letting on,' he said, reflecting the assessment of other business analysts.

Among those reporting a turnaround is Ford Vietnam, with general director Deborah Aronson asserting business has improved impressively in the second half of this year.

She said confidence had returned to the economy with the signing of the BTA and a now substantial Vietnamese middle class appeared more willing to spend rather than save.

'Some people say Vietnam is 10 years behind Thailand, but I think that is too long a time frame because of the way things are rapidly changing here,' she said.

'Consumerism is strong, brand is king and demonstrating success through wealth is a very fashionable thing.'

However, Ms Aronson warned that Vietnam remained a difficult environment which required both flexibility and discipline, with the intelligent application of sound international business practice an absolute requirement.

She had this advice for US companies looking to Vietnam: 'People here are eager to learn and be successful, there is a tremendous drive and ambition. As long as you can harness that within Vietnam's [cultural and social] context and avoid being an arrogant American, you can be very successful here.'

Graphic: anal17gbz