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Hanoi (Vietnam): India woke up and took notice of Vietnam in 2006 when it lost a billion investment from tech-giant Intel to the once war-ravaged economy.

In fact, in 2005 itself, Vietnam had beaten India to the position of Asia's second fastest growing economy.

One of the ways they did this was disinvestment. This communist regime believes that less government control means lesser corruption.

Says Minister for Investment and Planning, Vo Hong Phuc, "The government does not need to subsidise. Companies can mobilise all funds that they need from both the domestic and the private sector."

And foreign investors are lining up with projects, including India. The booming health care sector is a big draw with Ranbaxy already setting up operations.

With Vietnam spending over 5.5 per cent of its GDP on health care, Indian pharma companies are excited about the prospects.

From 5 million in 2006, domestic pharma is expected to jump to .5 billion by 2007.

Investors say that Vietnam is a hybrid of China and India. It's proved its mettle in manufacturing and if India doesn't watch its back, it could do the same in services in the next five years.

More on: India, Vietnam, investment, communist party