"That may be too harsh a word to use to describe what we consider a healthy competition among friends," he said.

Khiem was quick to add a note of humility. "Thailand's annual per capita income is still much higher than Vietnam's. Yours is about US$2,000 [Bt76,310] while ours is only slightly over $600. So, we still have some way to go yet before we can catch up with Thailand."

But Khiem didn't mention the fact that Vietnam's per capita income is expected to hit $1,000 by 2010, when it would be dropped from the list of countries qualified for concessionary loans from the World Bank. Its dramatic rise from a per capita income of only $180 in 1993 to $640 last year has been duly noted by regional observers.

Thailand's per capita gross domestic product (GDP) stands at $8,300, while that of Vietnam is estimated at $3,000. However, Thai analysts have recently been issuing warnings to authorities here about Hanoi stealing the show from Thailand in several critical areas in the international arena. For one thing, Vietnam registered an average GDP growth of 8 per cent from 1990 to 1997 - and continued at around 7 per cent from 2000 to 2002, making it the world's second-fastest-growing economy, trailing only China. Investment grew threefold and domestic savings quintupled during the same period.

The official word from one of the country's top policymakers was even more revealing. During an exclusive interview with editors from the Asia News Network (ANN) taking part in the celebrations of the 15th anniversary of founding member the Vietnam News, Khiem said the national GDP grew 8.4 per cent last year. Moreover, Vietnam attracted $5.7 billion in foreign direct investment (FDI) last year, the highest level since 2001.

"Our goal in the next five years is to boost economic growth, step up the process of industrialisation and modernisation and develop a knowledge-based economy. These will create a foundation for Vietnam to become an industrial nation by 2020," he said.

Alarm bells began to ring in Thai trading circles a few weeks ago when Vietnam beat Thailand, China and the United States to win a bid to export 440,000 tonnes of rice to the Philippines. The value of the deal has yet to be revealed but Vietnam's prices ranged from $27 to $29 per tonne cheaper than that of Thailand.

"I love Thai rice. I eat Thai rice very often," said Khiem, a soft-spoken deputy premier rumoured to be the next foreign minister in a new top-tier line-up that will see all the top three political posts - president, prime minister and national assembly speaker - replaced following the ongoing crucial national assembly session.

Vietnam also received a major boost when Intel announced in February of this year that it will make Ho Chi Minh City, formerly known as Saigon, the site of a $300-million microchip plant, with production scheduled to begin in 2008. Thailand had been one of the candidates when Intel's executives were considering the latest investment scheme in Southeast Asia. Inevitably, analysts in Bangkok anxious about Thailand's shaky state of competitiveness in the regional arena have started to voice concern that Thailand is losing the FDI war to this "rising star" to the east.

Vietnam is bracing itself for three major events of international significance later this year which Hanoi hopes will enhance its role as a player in the region as well as in world politics. After several years of gruelling negotiations, Vietnam expects to be officially admitted into the World Trade Organisation (WTO) in the next few months. In November, Hanoi will play host to the Asia-Pacific Economic Cooperation (Apec) summit. The presence of US President George W Bush at this high-profile conference will be a major event of special political significance in itself.

Thirty-one years after the end of the Vietnam War, Washington and Hanoi have decided to open up a new chapter of cooperation. Khiem told me: "We would like to close a chapter in history to begin a new one."

How will the Vietnam government receive Bush in Hanoi? "As warmly and cordially as we receive all leaders attending Apec. We will come to understand and respect each other more," the deputy premier deadpanned. No doubt, he is considered one of the most accomplished diplomats in modern Vietnam's inner circles.

As we stepped out from the interview, I asked a senior Vietnamese journalist whether the Vietnamese leadership had actually left all the agonies of war with the Americans behind. He said: "Our thinking is that we forgive but we shouldn't forget."

 To me, more remarkable than the economic reforms brought about by the "doi moi" (renewal) policy in the past 20 years is perhaps the apparent absence of a hostile attitude against foreigners - the so-called "war hangover" - among the new generation of Vietnamese today.

Vietnam's dynamism, determination, strongly aided by its humility, is posing the greatest challenge to Thailand's plan to keep ahead of the pack in Southeast Asia.

When I asked why a country associated throughout history with one war or another against foreign aggressors could so conveniently leave those memories behind, a young entrepreneur involved in a thriving medium-sized business shouted above the din of the motorbike-clogged streets:

"Bill Gates is our role model now."

He could have snubbed me with a much more direct response: "What bitter memories?"

Suthichai Yoon