Vietnam has been trying to diversify its economy

Ahead of a conference of foreign donors, investors said the government must improve the transport system, cut red tape and clarify decision making.

Foreign investment in Vietnam is set to hit $2.85bn (�1.5bn) in 2004, the government has said, up 7.5% from 2003.

Vietnam is trying to diversify its economy by attracting high-tech firms.

Incentives

Deputy Prime Minister Vu Khoan said on Monday that Vietnam had succeeded in attracting more foreign firms by offering greater tax incentives and lowering the cost of telecommunications.

"We know that not all can be done smoothly," Mr Khoan said ahead of an annual conference of foreign donors, on whose support Vietnam is heavily reliant.

"When one issue is addressed, another will rise and requires new action. We all need the strong support from businesses."

Despite being one of Asia's fastest growing economies, Vietnam has been criticised for unpredictable decision-making on economic issues and weak enforcement of intellectual property rights.

A survey of Vietnamese and foreign firms by the Vietnam Business Forum found that four out of five companies wanted to expand their interests in the country.

However, foreign investors have said the government's policies need to be more transparent, calling for a level playing field for all companies doing business in Vietnam.