VN news / business news (July 17)

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

Vietnam says preparations for parliamentary elections complete
Vietnam to Develop Bus System in Capital 
Vietnam gives tacit support for Ung Huot 
Life returns to normal at Vietnamese-Cambodia border 
Vietnam elections pave way for leadership change 
Hanoi, July 16 (VNA) - Highlights of Vietnam's daily newspapers today:
Vietnam targets population growth rate of 1.6 pct by 2000 
Vietnam May Consider Moves To Lower Dong Amid Export Worry 
Vietnam Govt: Eyeing Asia Currencies, Exports Unaffected 
Vietnam Will Issue Rules For Currency Transactions 

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Vietnam says preparations for parliamentary elections complete

Hanoi (dpa) - Preparations for Vietnam's parliamentary elections have
been completed and the country's 40 million voters will cast their ballots
on July 20 as scheduled, National Assembly spokesman Nguyen Sy Dung told
a news conference Thursday.

Two months ago the session of Vietnam's National Assembly approved new
legislation to be applied for the coming elections. Under the new law,
the present 663 candidates for Assembly seats - elected once in five
years - have the right to campaign in the state-run media.

The reforms are seen as an attempt to respond to criticism of the Assembly
as a rubber stamp authority for the policies of the ruling Communist
party.

The new National Assembly, which is designed to lead Vietnam into the
21st century, would continue the country's restoration or Doi Moi policy,
the General Secretary of the National Electoral Committee Vu Mao said.

The ratio of lawmakers, who are not party members, is to be raised to
at least 20 per cent from the current 8 per cent, according to Vu Mao.

The country's three top leaders, Communist party chief Do Muoi, 80, president
Le Duc Anh, 76, and prime minister Vo Van Kiet, 74, were not included
on the list for July 20, fuelling speculation of a senior leadership
reshuffle.

Both the president and prime minister, according to the constitution,
must be members of the National Assembly, and their absence from the
list of deputies implies they will vacate their positions after elections.
The posts of president and prime minister will be announced by September
20, the latest possible date for the National Assembly to meet.

The new National Assembly could be convened earlier than September 20,
said Nguyen Sy Dung. But a candidate for presidency will be approved
by the Standing Committee of the outgoing parliament, the new President
will nominate Prime Minister, who is supposed to come up with a list
of candidates for ministerial portfolios, Nguyen Sy Dung said.

At the moment most of the deputies have other duties, mainly within the
state apparatus, and under the current legislation, the National Assembly
meets for only two one-month sessions every year.

In line with the new law, the number of Assembly deputies is being raised
from 395 to 450. Nguyen Sy Dung said the move was prompted by a recent
decision to split some Vietnamese provinces and to create eight new ones.

The electoral campaign was meanwhile marred by a sex scandal. Nguyen
Van Bu, a 43-year-old from Ho Chi Minh City, was forced to withdraw his
candidacy after he admitted an extramarital affair.

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Vietnam to Develop Bus System in Capital 

HANOI, July 17 (Xinhua) -- Vietnam plans to develop public bus system
in Hanoi in order to meet 35-40 percent of the demand of the Hanoian
commuters by the year 2000, local press reported today.

Under the plan, Hanoi will invest 52 million U.S. dollars between now
and 2000 to buy 1,400 buses, upgrade bus stops and related facilities,
and to increase bus lines from 13 in 1997 to 58 by the end of 1998 and
66 by 2000.

The network of bus routes and timetables will be improved so that passengers
will have to wait less than ten minutes and spend less than ten percent
of their monthly income on ticket fares.

Among transport means now used by Hanoians, motor bikes account for 60
percent, bicycles 30 percent, buses three percent, and three-wheeled
taxis 1.8 percent.

Hanoi covers 927 square kilometers and has a population of 2.4 million.
In 20 years' time, its area is expected to expand by 170 percent, and
its population will increase to 4.5 million.

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Vietnam gives tacit support for Ung Huot 

HANOI, July 17 (AFP) - A spokesman for the Vietnamese foreign ministry
Thursday gave tacit support for Cambodian foreign minister Ung Huot to
become first prime minister.

"In his capacity as Cambodian minister of foreign affairs, Huot has greatly
contributed to the consolidation of relations and cooperation and friendship
between the two countries," he said.

"We highly appreciate this contribution."

However, the spokesman stopped short of giving Vietnam's full endorsement
of Ung Huot, who was chosen by the FUNCINPEC party to replace ousted
Prince Norodom Ranariddh Wednesday.

"The internal affairs of Cambodia are decided by Cambodians. Being a
neighbour with friendly relations with Cambodia, Vietnam wishes to see
stability for the Cambodian people for the development of the country,"
he said.

When asked at a press briefing whether Vietnam had played any part in
Second Prime Minister Hun Sen's ouster of Prince Ranariddh in early July,
the spokesman said: "We have no reason to care about Cambodia's internal
affairs."

He also refused to make any comment on Khmer Rouge radio reports of Vietnamese
troop movements near the border.

"We have absolutely no comment on that," he said.

In December 1978 Vietnamese troops invaded Cambodia and ousted the Khmer
Rouge regime headed by Pol Pot, under whose reign more than one million
Cambodians died.

Hun Sen was then installed as the head of a Hanoi-backed government in
Phnom Penh.

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Life returns to normal at Vietnamese-Cambodia border 

MOC BAI, Vietnam, July 17 (AFP) - A steady stream of traders on motorbikes,
bicycles and on foot crossed the Vietnam-Cambodia border on Thursday
indicating a return to normal after recent turmoil.

Hundreds of people fled into Vietnam at Moc Bai, a town in Vietnam's
Tay Ninh province which borders Svay Rieng province in Cambodia, after
clashes between forces of Cambodia's rival prime ministers this month.

The road linking Phnom Penh to Moc Bai had five check points manned by
soldiers loyal to Second Prime Minister Hun Sen, but security was excellent,
a reporter said.

Hun Sen controls most of Cambodia after the factional battles that ousted
the prince.

Only one truck full of soldiers armed with B-40 rockets was spotted along
the route. They had stopped for lunch in a roadside restaurant in Svay
Rieng province.

The calm at the border was in stark contrast to the chaos which reigned
about a week ago, said Nguyen Van Cang, a Vietnamese taxi driver.

He reported seeing about 500 foreigners from Canada, Japan, Australia,
France and New Zealand who made a chaotic departure over the border.

On the Vietnamese side there was no sign of any military activity.

In Hanoi a foreign ministry spokesman refused to give any information
on whether Vietnamese troops had mobilized near the border.

People at Moc Bai said that during the height of tension 10 days ago
there was no unusual exodus of Vietnamese.

But witnesses said many Vietnamese fled across the border at other points,
apparently mostly from nearby Preay Veng province.

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Vietnam elections pave way for leadership change 

HANOI, July 17 (AFP) - Vietnam will move one step closer to replacing
its three most powerful men on Sunday, when the country goes to the ballots
to elect its next parliament.

None of the triumvirate of the ruling Communist Party of Vietnam -- General
Secretary Do Muoi, 80, President Le Duc Anh, 77, and Prime Minister Vo
Van Kiet, 75 -- are seeking re-election to the National Assembly.

But the question of succession has raged in Hanoi's corridors of power
for more than a year, with members of the powerful party Central Committee
still divided on who will lead Vietnam into the next millenium.

The challenge facing the party is to choose a slate of leaders who can
provide both an ideological and a regional balance within which Vietnam's
consensus-style decision making can survive.

The current trio steered Vietnam through the period of most rapid economic
growth since the country was united in 1975, balancing competing interests
while providing a united front.

Anh, Muoi and Kiet represent north, central and south regions and defence,
party and reformist interests. Finding a new troika to replicate this
delicate balance has proven particularly tricky, observers say.

The party is concerned overall with stability and a smooth transition,
but is now at a crossroads, says one European diplomat.

"The future is going to be complicated. They want to open the economy
up, and the party wants to run the show, and that creates a schizophrenia,"
he said.

That dilemma is very much affecting debate behind the scenes, he said,
noting that the Central Committee's 170 members were still divided on
the succession question.

But time is running out. The National Assembly must meet within 60 days
of the July 20 national elections when the 450 deputies for the next
five year term are chosen.

And while the assembly technically elects a new president and prime minister,
the party still chooses leaders ahead of time and submits them to the
legislature for approval.

With the party predicted to win 80 percent of the seats in July, its
choice is guaranteed.

Carl Thayer, a Vietnam specialist at the Politics School at the Australian
Defense Force Academy, says not to expect any surprises.

"Vietnam is not going to change its political stripes and change its
policies," he said.

The new president and prime minister will also occupy the number two
and three spots in the communist party political bureau.

Technically, unlike the president and prime minister, the party secretary
need not hold a seat in the assembly, and Muoi is likely to retain his
post for several more months to ensure a smooth transition of power,
observers say. By September, Vietnam can turn to the pressing problem
of economic management and state enterprise reforms which have stagnated
for the past 18 months amid party wrangling over succession.

Foreign investors have meanwhile been left in the lurch. Key decisions
on big ticket telecoms and power projects have been on hold, and overseas
businessmen have grown increasingly restive watching the government flip
flop on laws and regulations.

"It has been a lame duck period," said one international economist. "The
inability to address political resistance on reform is likely to result
in lower economic growth."

"The party cannot accomplish all the economic tasks it has set for itself
without giving something on the political side," he added.

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Hanoi, July 16 (VNA) - Highlights of Vietnam's daily newspapers today:

NHAN DAN:

- The national daily paper prominently carries a frontpage report on
Party General Secretary Do Muoi's activities in Beijing where he had
separate talks with Chinese top leaders.

- Prime Minister Vo Van Kiet has signed a decision on construction of
the Dung Quat refinery No.1 in the central coastal province of Quang
Ngai with a design capacity of 6.5 million tonnes per year. Under the
decision, the US$1,500 million project, which will be invested fully
by Vietnam, will begin this year and be completed in 2001.

HANOI MOI:

- In the first six months of this year Vietnam's industrial sector attracted
137 more foreign investment projects with a combined capital of US$1,459
million. Since early 1988 some 843 foreign invested projects have been
licensed in the industrial sector worth combined invested capital of
nearly US$9.5 billion, or 33.6 percent of the total foreign invested
capital pledged for Vietnam.

QUAN DOI NHAN DAN:

- Prime Minister Vo Van Kiet has approved a masterplan on Ho Chi Minh
City's socio-economic development in 1998-2000. Under the masterplan,
the city's GDP rate will be 13 percent, and income per capita, US$1,600
by 2000.

VIETNAM NEWS:

- The Japanese government spent US$65,753 to build water-purifying facilities
and a kindergarten in the newly-established district 9 in a rural area
of Ho Chi Minh City.

- Finance Minister Nguyen Sinh Hung says the Government needs to speed
up the formation of joint-stock companies with most shares to be sold
to the general public.

(VNA)

16-07 1519

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Vietnam targets population growth rate of 1.6 pct by 2000 

HANOI , July 16 (VNA) - Vietnam 's population growth rate dropped to
1.88 percent in 1996 as compared to 2.4 percent in 1992, Cabinet Minister
and Chairman of the National Committee for Population and Family Planning
Mai Ky, reported at a meeting here last week marking World Population
Day.

However, Vietnam 's rate is still higher than the world's average of
1.48 percent, Mr Ky said, Vietnam will strive to reduce the rate to 1.5-1.6
percent by the year 2000, in order to stabilise the population at 120-125
million by the mid-21st century.

Vietnam is now faced with an increasing rate of elderly and unplanned
migration among the provinces.

My Ky said that in addition to providing people with employment skills,
it was necessary to raise their knowledge of nutrition and health care,
including the reproductive health of women. Measures to reduce the rate
of people suffering from hereditary diseases affecting their physical
and intellectual capacity and steps to address local migration and to
improve the health of the elderly should be studied in the near future,
Mr Ky said.

Deputy Prime Minister Nguyen Khanh, who attended the meeting, attributed
Vietnam 's achievements in population activities to assistance from the
international community through the UNFPA, ADB, German and Australian-funded
projects in recent years.

The UNFPA provided Vietnam 's population programme with US$87 million
in aid from 1978 - 1996.

In the first phase (1978-1983), UNFPA funded the construction of a condom
factory, the establishment of a Population Data Centre, research into
population, and the training of population project workers. UNFPA also
helped distribute contraceptive devices nationwide and provided medical
equipment for reproductive health care for the two southern provinces
of Song Be and Kien Giang.

>From 1984-1987, then provinces and cities of Hanoi , Hai Phong, Hai Hung,
Thai Binh, Ha Nam Ninh (in the north), Nghe Tinh, Quang Nam-Da Nang,
Nghia Binh (in the centre), Tien Giang and Ho Chi Minh City (in the south)
were provided with birth control devices and medical equipment by the
UNFPA.

A national population census was conducted in 1987 with UNFPA's assistance.
The organisation also helped train 220 doctors and 5,400 activists in
the field and set up a number of population centres.

In the third phase from 1988-1991, eight provinces benefited from UNFPA
aid. They included Hoa Binh, Ha Tay (in the north), Dong Nai, Ba Ria-Vung
Tau, Tien Giang, Hau Giang and Ben Tre (in the south).

The fourth phase which concluded last year involved seven provinces of
Yen Bai, Thai Binh, Ha Bac (in the north), Quang Nam-Da Nang, Khanh Hoa,
Phu Yen (in the centre), and Song Be (in the south). In addition, UNFPA
also financed a mid-term population census and the compilation and publishing
of population activity materials.

However, the UNFPA-supported programme has shown some weak points, including
inadequate attention to remote, isolated areas, minority ethnic groups,
minors, as well as the male gender.

Socio-economic changes in localities have also not been taken into full
account.

The fifth phase of UNFPA's aid project for the Vietnam national population
programme will be carried out from 1997-2000, worth US$24 million.

(VNA) 16-07 1553

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Vietnam May Consider Moves To Lower Dong Amid Export Worry 

Hanoi, July 17 (Dow Jones) -- Vietnam's central bank may attempt to weaken
the notoriously overvalued dong, as devaluations across the region threaten
to make Vietnamese exports even more expensive, some foreign bankers
say.

'Given the depreciation of the currencies in the region's economies,
Vietnam's export competitiveness has been eroded and this should cause
the policy makers to re-evaluate the policy of setting exchange rates
of the dong against the dollar,' said Peter McLean, head of treasury
at Standard Chartered Bank in Vietnam.

The dong could be weakened by either widening the band in which it trades,
giving it more room to fall, or by raising the official central rate
for the dollar against the dong, which is set by the bank each morning.

The policy-setting arm of the State Bank of Vietnam, the central bank,
wouldn't respond to requests for comment, but the head of the central
bank's dealing room has said she has received 'no signals' that the bank
will widen the band in which the dong trades.

'The State Bank will do everything to keep the Vietnamese currency stable.
They don't want to devalue it or to destroy confidence in the currency,'
Nguyen Thi Thu Thuy said.

This is the dilemma for the State Bank, observers say. A cheaper dong
would encourage exports which the country badly needs to foster job creation
and narrow its trade deficit, which was $4.0 billion in 1996. But it
wants to discourage the Vietnamese people from selling off the dong and
rushing into dollars and gold and this may argue for caution, some bankers
say.

'If there is any expectation by the population that the dong will devalue
they will go back into dollars and gold. It would destroy confidence,'
a Western banker said, adding 'previous gains would be reversed.'

Indeed, When the State Bank widened the trading band for the dong in
November, in a bid to bid to retore liquidity to the interbank market,
many Vietnamese rushed to withdraw dong and convert into gold and dollars
on the black market.

In recent weeks the dong has been unaffected by the turmoil in the Asian
currency markets, with the official rate practically unchanged.

On Thursday the central level was set by the State Bank at 11,125 to
the dollar, barely down from 11,119 on July 1, the day before the decision
to float the Thai baht.

In the market Thursday, the dong is trading at around 11,660-11,680,
near the weak end of the current trading band, which is plus or minus
5% from the central rate.

Some observers to predict the central bank will steer clear of a further
widening of the band in favor of its policy of the last three years of
gradually easing the official dong target rate.

The latest dong central rate is less than 1% below the central rate of
11,055 dong to the dollar at the start of the year, though the interbank
rate has fallen 4.4% from 11,162 dong per dollar as a result of the decision
to widen the trading band in March.

The Western banker noted that by lowering the central rate by 2-3 dong
per week, the central bank could guide the currency 1-1.5% lower per
year.

Noting that the dong is not convertible and there is no speculative pressure
on the Vietnamese unit, one North American banker noted 'We're protected.
Foreign speculators can't buy T-bills, open dong bank accounts and there
is no stock market.'

However one banker with a foreign bank said he expects the State Bank
to widen the trading band by one percentage point in both directions
possibly in early September.

In March, the State Bank widened the dong trading band to plus-or-minus
5% from the central rate, from the previous plus-or-minus 1%. The move
effectively devalued the dong by 4%, as the currency fell to the weak
end of the new band immediately afterwards and has remained near there
since.

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Vietnam Govt: Eyeing Asia Currencies, Exports Unaffected 

Hanoi, July 17 (WSJ) -- The Vietnamese government said Thursday it is
monitoring the unrest in other Asian currencies but indicated that it
is not concerned that a relatively more expensive dong will affect Vietnam's
own exports.

Some foreign bankers have said the State Bank of Vietnam may attempt
to weaken the notoriously overvalued dong, as devaluations across the
region threaten to make Vietnamese exports even more expensive.

However in answer to a written question posed ahead of a bi-weekly press
briefing for foreign journalists, the foreign affairs ministry said,
'Export competitiveness depends on a number of factors. So far the currency
fluctuation in regional countries has not had an impact on Vietnam's
exports. However, we are closely following the election.'

The written response added Vietnam's policy is to have a 'stable but
fixed rate of exchange' that follows the laws of supply and demand.

An official said that questions about whether the State bank will take
any action to weaken the dong will be passed on to the Bank. So far officials
there have declined comment.

The dong could be weakened by either widening the band in which it trades,
giving it more room to fall, or by raising the official central rate
for the dollar against the dong, which is set by the bank each morning.

On Thursday the central level was set by the State Bank at 11,125 to
the dollar, barely down from 11,119 on July 1, the day before the decision
to float the Thai baht.

In the market Thursday, the dong is trading at around 11,660-11,680,
near the weak end of the current trading band, which is plus or minus
5% from the central rate.

The Vietnamese foreign ministry said Thursday the government's policy
is to have a 'stable but not fixed rate of exchange' that follows the
laws of supply and demand.

(In an item timed around 1006 GMT (6:06 a.m. EDT), the policy was incorrectly
stated.)

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Vietnam Will Issue Rules For Currency Transactions 

Hanoi, July 17 (WSJ) -- Vietnam is about to adopt its first set of regulations
for foreign-exchange dealings.

The new rules, expected be issued by State Bank of Vietnam in six weeks,
are aimed at creating a legal foundation for the use of basic foreign-exchange
products, such as forward contracts, swaps and spot trades. Options,
which were included in an earlier draft of the proposed rules, are gone
from the new version.

The new rules will allow more flexibility for foreign investors to manage
their foreign-exchange risks, foreign bankers and lawyers say. A new
investor bringing dollars into Vietnam, for example, will need to buy
dong. That investor might hedge by buying dong through a swap transaction,
in which the dong can be exchanged again for dollars in six months.

In a spot contract, currencies are bought and sold at a specified rate
for immediate settlement. A forward contract is an agreement to buy or
sell a currency at a specified rate at a specified date in the future.
A swap involves, for example, the purchase of one currency against another
at an initial date and an agreement to reverse that transaction on a
future date at a specified rate.

The owner of an option contract has the right, but not the obligation,
to buy or sell a currency at a future date.

Too Simple for Some Dealings

"Up until now there has been no way to hedge dong exposure, something
which the market and our customer base desperately require," says Peter
G. McLean, treasury manager of Standard Chartered Bank in Vietnam.

But the new rules may be too simple for many foreign-exchange deals,
warns Marie-Anne Birken, branch director of international law firm Clifford
Chance in Hanoi. The rules assume one-time transactions, but many foreign-exchange
deals are a more complicated series of transactions, she says.

If in the middle of a series of transactions one company goes bankrupt,
for example, there are no legal provisions for "winding down" the deal
under the new regulations, Ms. Birken says. She also argues that foreign
banks should be allowed to use options.

Not everyone agrees. Options would have been "potential dynamite" in
Vietnam's underdeveloped banking system, says David Hutcheson, Hong Kong
& Shanghai Banking Corp.'s chief executive for Vietnam.

David Pollit, head of treasury at Hongkong Bank and foreign-exchange
adviser to State Bank of Vietnam, adds that some Vietnamese banks "just
wouldn't know how to do the accounting" for such sophisticated instruments.
"They're sensible to move into forex trading at this more orderly pace,"
Mr. Pollit says.

Starting Off Small

In a back room at the State Bank of Vietman building in Hanoi, workers
are putting the finishing touches on Vietnam's first official foreign-exchange
dealing room. A row of clocks tell the time in major financial markets
around the world, and wires for six new trading terminals hang from the
newly installed trading positions.

The bank will "start small" with six dealers, and add another six when
"we see how it goes," says Nguyen Thi Thu Thuy, manager of the bank's
treasury division. "We still have some training to do," she says. The
new dealing room is expected to be ready for operation by Aug. 1.

An association of foreign-exchange dealers, known as Vinaforex, has drawn
up a six-page code of conduct covering such items as confirmation of
trades, ethics, settlements, phone-call recording, substance abuse and
general dealing procedures.

Expected to be put into practice within a few weeks, the code is intended
to bring local practice in line with international norms. Most important,
foreign bankers say, the new code provides guidance on "dealing at noncurrent
rates," which aims to prevent traders from hiding trading losses by rolling
deals forward at old rates.

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