VN business news (Apr 28)

[Dam Son <son@fermi.phys.washington.edu>]

April 28: Chrysler to Withdraw from Vietnam
April 28: Vietnam Reports Inflation Data 
April 28: Vietnam to Employ 3 VAT Taxes 
April 28: Vietnam-trade : Vietnam's four month trade deficit falls 24.7 percent 
April 28: Vietnam: Labor Tensions Ease At Nike Contract Plant


Chrysler to Withdraw from Vietnam 

AsiaInfo Daily News Service
Copyright AsiaInfo Services, Inc.

CHINA -- Due to the heated competition among a variety of automobile
joint ventures and the unsatisfactory sales in Vietnam, Chrysler Corp,
the third largest automobile company of the US, is planning to remove
its US$ 192 million worth of auto assembly plant out of Vietnam and
put its focus on its development in China. The main reason for
Chrysler's decision is that Vietnam has loosen its control over the
building of automobile joint ventures and this has led to increasingly
heated competition.

The Vietnam government has approved the applications of automobile
enterprises from Japan, France, Germany and Philippines to build auto
joint ventures in this country.
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Vietnam Reports Inflation Data 

HANOI (DJ) -- The government's retail price index, Vietnam's principal
barometer of inflation, fell 0.6% in April from March. It rose 1.6%
from the year-earlier month, according to preliminary data from the
the Government Statistics Office.

The April month-on-month decline compares with an 0.5% decrease in
March. The year-on-year rise in March was 2.3%.
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Vietnam to Employ 3 VAT Taxes 

HANOI (WSJ) -- Vietnam's National Assembly has passed a bill to
replace the complex sales tax with three rates of value-added tax from
1999, the official Vietnam News Agency said Sunday.

VNA said that more than 80% of the legislature's deputies voted for
the bill, which is part of a continuing overhaul of the country's
taxation system.

Under the VAT legislation, tariffs of 5%, 10% and 20% will be levied
on goods and services, but there will be no tax on export goods, goods
made under contract for export and export services.

Western tax accountants in Vietnam have welcomed the move, saying it
signals a major shift in fiscal policy from direct taxes on income to
indirect taxes on consumption.

The National Assembly is also due to consider a bill on business
income tax.
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Vietnam-trade : Vietnam's four month trade deficit falls 24.7
percent 

HANOI (AFP) - Vietnam's trade deficit fell 24.7 percent from a year
earlier to 962 million dollars in first four months of 1997, according
to official statistics released Monday.

The drop was due to concerted government efforts to curb non-essential
imports, resulting in a modest 7.7 percent increase in the import bill
to 3.64 billion dollars, according to the General Statistics Office.

In contrast, exports grew 33.8 percent to 2.68 billion dollars during
the first four months, on the back of stronger commodity sales,
especially of coffee, which increased 106.4 percent in volume terms.

Exports of crude oil, the country's top foreign exchange earner,
climbed 21.4 percent to 3.23 million tonnes during the first four
months.

Footware, one sector where Vietnam's inexpensive labour and
sophisticated imported machinery has made it competitive regionwide,
saw a 62.9 percent increase in exports to 285 million dollars over the
period.

Exports of garments, another labour intensive industry in which
Vietnam is strong, grew 37.9 percent to 303.4 million dollars.

Exports of foreign invested enterprises accounted for 243.3 million
dollars, or about nine percent of the total.

The trimming of the trade deficit was due mainly to severe drops in
imports of several key items including automobiles, steel, cement and
clinker.

Cement imports fell more than 40 percent during the first four months
to 462.2 million tonnes, while steel imports plummeted 58.4 percent to
283.5 million tonnes.

Auto imports fell 12.9 percent to 6,322 units in the first four
months.

Last year, Vietnam registered a trade deficit of nearly 4.0 billion
dollars, representing about 17 percent of gross domestic product, a
level economists said was unsustainable in the medium term.
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Vietnam: Labor Tensions Ease At Nike Contract Plant 

Hanoi (DJ) -- Workers and managers at a Vietnamese factory producing
shoes under contract for Nike Inc. (NKE) appear to have made strides
toward resolving their differences in contract negotiations that
concluded over the weekend.

Under a contract agreed to by a workers' bargaining committee but
still requiring formal staff approval, employee salaries at a plant
owned by South Korea's Samyang Co. will increase 5.0% and will be
calculated at a more favorable exchange rate, company officials said
Monday.

'We've settled all the matters,' In Tuk-joo, the plant's director,
said in a telephone interview.

Samyang employs about 8,000 people at a factory producing exclusively
for Nike outside of Ho Chi Minh City. The company is one of five that
make shoes for the U.S. footwear giant in Vietnam.

Friday about 1,300 workers at the Samyang plant staged a one-day
strike to protest their salaries and other aspects of their contract.

The walkout came as Samyang and worker representatives were in the
process of negotiating a new one-year contract due to come into effect
May 1.

According to Samyang's In, the exchange rate used to convert worker
salaries into dong from dollars was the most contentious issue under
discussion.

As a foreign company operating in Vietnam, Samyang must formally fix
it salaries in dollars but pay them out in dong.

The starting salary for a laborer at Samyang is $45 a month.

Samyang agreed to a proposal from workers and the local labor
confederation that the conversion occur at 11,400 dong to $1, a more
attractive rate than the previous 11,100 dong to the dollar, In said.

Monday, in the Vietnamese interbank foreign exchange market, there are
11,655 dong to $1. After nearly three years of stability at 11,000
dong to the dollar, the Vietnamese currency has depreciated steadily
in the last six months.

Under the new contract, all employees also will receive a 5.0% raise,
an official at Samyang's personnel department said.

Additionally, the new contract will contain specific, clear language
about worker entitlement to: a one-month bonus at the lunar new year;
bonus pay for work in hazardous parts of the plant; vacation time and
other leave, said Martha Benson, a Nike spokeswoman.

'It's absolutely a worker's right to understand their contract,'
Benson said in a telephone interview.

Samyang staff have criticized their previous contract for its
vagueness about bonuses and leave.

Benson said many of the tensions between Samyang and its workers 'come
back to issues of communication.'

She added: 'We've been looking at all our plants on this, on how to
better communicate things.'

At Nike's insistence, all of Samyang's expatriate managers soon will
receive 'bicultural training' to make them aware of differences
between Korean and Vietnamese workplaces. And workers will be trained
in the Vietnamese labor code so they are aware of their rights under
it.

Separately Monday, both labor and management representatives denied
weekend press reports that Samyang staff had been locked into the
factory cafeteria during the Friday strike.

The latest tensions at Samyang have occurred when Nike is under
scrutiny for labor practices at its contract factories in Vietnam and
elsewhere.