US investments in Vietnam are expected to rapidly increase due to Vietnam's potential for consumption and new business opportunities, according to the Ministry of Planning and Investment's Foreign Investment Agency (FIA).

Workers at the Intel Products Vietnam Co in the Sai Gon Hi-tech Park.

The FIA wrote in a note on its website that many US corporations saw Vietnam as a strategic market with long-term benefits, pointing out that low labour costs was a key factor in attracting investments.

As labour costs in China soared, many multinational corporations were shifting their investments to countries with lower costs, such as Vietnam. Those businesses which have moved, or are in the process of moving production to Vietnam, include Microsoft, Intel, Jabil and Microchip.

The participation of Vietnam in the Trans-Pacific Partnership also helped promote US companies to establish a presence in Vietnam to seek investment opportunities, according to the FIA, adding that the trade agreement would create advantageous conditions for the US to increase investments, including expanding capacity.

Vietnam's young population and improved incomes would also promote consumption, in addition to the country's stable political situation, controlled inflation and the Government's incentives, which helped attract investment inflows.

The FIA also pointed out that US companies were showing increasing interests in major sectors of Vietnam's economy, such as oil, with giants like Exxon Mobil, Chevron; in aviation with Boeing and ADC-HAS Airport; information and technology with Microsoft, Intel, Apple and HP; along with the power sector with General Electric and AES.

Still, US investments in Vietnam remain below their potential.

According to the agency, transparency and corruption were of major concerns of US companies when investing in Vietnam.

The FIA cited statistics showing that 69 per cent of surveyed US firms said that corruption was one of the biggest problems in Vietnam.

Also, the lack of transparency in legal frameworks created conditions for corruption and inconsistent implementation of laws in different localities.

There was also a lack of co-ordination between the Government and businesses in the economic restructuring to enhance competitiveness and adaptability to international integration for both State-owned enterprises and small- and medium-sized enterprises (SMEs).

Other problems included shortages of power and transport infrastructure and skilled labourers, together with rising costs during the past five years.

In order to attract more investments from the US, according to the FIA, Vietnam should look at different channels, including through banks and investment funds.

Co-operation with SMEs from the US should also be enhanced in manufacturing and heavy industries, besides strong US sectors such as petroleum, aviation, energy, IT and finance.

Additionally, promotional activities should be boosted, together with on-time handling of problems encountered by US investors, to increase their confidence.

The Ministry of Planning and Investment's statistics showed that, as of mid-2015, the US was the seventh largest investor in Vietnam, with 748 existing projects worth US$11.08 billion.