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VN news / business news (July 24)



Israeli deputy premier to visit Vietnam in August 
Vietnam opposes ASEAN intervention in Cambodia 
Vietnam's Communist Party strengthens influence over army 
Vietnam Says Taking Action over Province Unrest 
Internet -- Vietnam tip-toes to the internet 
Vietnam's national military cemetery reopens 
Vietnamese former banker died by electrocution: report 
Vietnam's Emergency Services on Flood Alert 
Vietnam-Politics: Old Guard May Be out, but New Policies Uncertain
Vietnam assembles just 3,000 vehicles in first six months 
Vietnam Police Assess Minh Phung Debt At 6,200B Dong-Report 
Vietnam HCMC Banks' Guaranteed Letters Of Credit At $737Mln 
Vietnam Still Counting Costs of Business Scandals 
Vietnam Overseas workforce doubles 
Vietnam Tightens Control of Cash Flow of Foreign Currencies 
Hanoi Says Banks to Honour Lc's on Debt-Torn Firms 
Feature Vietnam Needles Europe over Textile Quot 

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Israeli deputy premier to visit Vietnam in August 

Hanoi, July 24 (AFP) - Israeli Deputy Prime Minister Rafael Eytan will
travel to Vietnam for an official visit on August 4 to 7, the Israeli
embassy said on Thursday.

Eytan, who is also agriculture minister, will meet with Vietnamese Minister
of Agriculture and Rural Development Nguyen Cong Tan and Minister of
Science, Technology and the Environment Pham Gia Khiem.

Eytan, who was former Israeli chief of general staff will meet General
Vo Nguyen Giap, the master military strategist responsible for defeating
the French army and forcing the US American forces to withdraw.

Eytan is also expected to meet with Communist Party General Secretary
Do Muoi.

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Vietnam opposes ASEAN intervention in Cambodia 

KUALA LUMPUR, July 24 (AFP) - Vietnam's Foreign Minister Nguyen Manh
Cam said Thursday he opposed interfering in Cambodia's internal affairs
after recent fighting between troops loyal to the country's two prime
ministers.

Speaking at the annual meeting of foreign ministers from the Association
of Southeast Asian Nations (ASEAN), he said Vietnan was following with
"profound interest" recent developments in Cambodia.

" Vietnam regards these as Cambodian internal affairs which can be solved
only by the Cambodia people. Vietnam's consistent policy is to strictly
respect Cambodia's independence and sovereignty and not to interfere
into its internal affairs," Cam said.

"We always respect the decisions made by the Cambodian people. At the
same time, having friendly relations with Cambodia, Vietnam sincerely
wishes the Cambodian people peace and stability for their national 
reconstruction."

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Vietnam's Communist Party strengthens influence over army 

Hanoi, July 24 (AFP) - Vietnam's monopoly Communist Party strengthened
its influence within the military, recruiting more than 6,000 new members
in the first six months of this year, it was reported Thursday.

The official army daily Quan Doi Nhan Dan said the 6,488 new party cell
members who signed up in the first half of 1997, represented a 9.65 percent
increase over the same period of 1996.

Vietnam does not disclose total figures for party membership within the
military, which are an official secret, and the newspaper did not supply
figures on total party recruitment for the period.

The Communist Party claims about 2.2 million members among a population
of nearly 77 million and while the army numbers about 570,000.

However a foreign military attache said the figures belie the enormous
power wielded by the military.

"The fact remains that the military runs the country," he said.

Foreign observers say the military's role could become less opaque in
the future if, as widely expected, Lieutenant-General Le Kha Phieu succeeds
Do Muoi as Communist Party chief.

Earlier this week Muoi told reporters he wanted to step down as party
general secretary, fanning rumours about his successor.

Phieu is ranked number five on the all-powerful Communist Party political
bureau and heads the Political Department of the Military, providing
a vital link between party and army.

fb/cf

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Vietnam Says Taking Action over Province Unrest 

By Adrian Edwards

HANOI, Vietnam (Reuter) - Vietnam said Thursday the authorities in northern
Thai Binh province were taking steps to restore order after reports of
some of the communist country's worst unrest in years.

A Foreign Ministry spokesman, in the first formal statement on the troubles,
said officials had been disciplined over the matter and added that provincial
authorities were working to bring matters under control.

"At some places in the province, officials in communes and hamlets were
not explicit about their financial dealings, resulting in farmers bringing
their claims to the attention of the province authorities," he said.

"The provincial government has conducted checks and disciplined some
officials in those places. At present the province is continuing to solve
the pending issues," he added, reading from a statement.

The troubles in Thai Binh began in May when thousands of angry farmers
and other villagers converged on the province capital, by foot and bicycle,
in peaceful protests over local tax demands and alleged official corruption.

The situation turned violent after officials reportedly refused to address
their concerns. Local residents told Reuters trouble had spread rapidly
across the province with incidents reported in six of the seven districts.

In one area, near Quynh Phu district, houses of local government workers
were burnt down. Some reports said a People's Committee chairman in Thai
Thuy district had been beaten to death, while other reports indicated
he had survived the attack and been evacuated to a Hanoi hospital.

Some other officials and their families were said to have been moved
to neighboring provinces for their safety. In one commune a state prosecutor
was held briefly as hostage to negotiations.

Recent visitors to Thai Binh said Thursday the authorities had acted
to restore order shortly before last weekend's parliamentary elections
by arresting more than 100 people and then showing some on local television
confessing to their wrongdoings.

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Internet -- Vietnam tip-toes to the internet 

Network Briefing
07/23/97 The government of Vietnam has designated the appropriately named
Vietnam Data Control as the only company in the country with a license
to sell permits for public internet access.

State-run VDC is the middle tier of a tightly controlled system in Vietnam
designed to stop the spread of what the government feels is undesirable
material. The ministry of information and culture and other government
authorities control the two main gateways, in Hanoi and Ho Chi Minh City,
and the infrastructure is owned by Vietnam Post and Telecommunications
Co.

Below VDC and future internet access providers the former Saigon Post
and Telecommunications and the Vietnamese military are through to want
a piece of the market comes the third tier of the internet business in
Vietnam; the content providers. These too are licensed to publish information,
and the first of them Pacific RIM, a Hanoi-based venture gained the first
license last week. E-mail in Vietnam is not governed by such restrictions.

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Vietnam's national military cemetery reopens 

Hanoi, July 23 (AFP) - A cemetery containing more than 10,000 fallen
soldiers from the Vietnam War held its official inauguration in central
Quang Tri province, a report said Wednesday.

Many Vietnamese and Laotian officials including Laos Minister of Labour
Thongbunxin Xulit attended a ceremony marking the 50th anniversary of
the Invalids and War Heroes, which is celebrated on July 27, the Vietnam
News Agency said.

Vietnam spent more than one million dollars to renovate the cemetery
and erect a monument along national route 9 which connects Quang Tri
with Savannakhet in southern Laos.

It was along this route that tens of thousands of "Vietcong" communist
soldiers infiltrated Laos to fight alongside Laos revolutionary forces
against the Americans and their allies.

Meanwhile, the bodies of 65 Vietnamese soldiers who died during the Vietnam
war were found buried with their military equipment in a tunnel in central
Vietnam.

The bodies were found after two weeks of excavation on the Dam Toai tunnel
in Binh Son district, Quang Ngai province, the Lao Dong newspaper reported.

Two of the dead have been identified.

US troops bombed the tunnel after it was discovered following the Van
Tuong battle on August 19, 1965, killing the Vietnamese soldiers receiving
medical treatment there.

More than 300,000 Vietnamese and 1,584 US servicemen are still missing
from the war.

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Vietnamese former banker died by electrocution: report 

Hanoi, July 23 (AFP) - A former vice director of finance at scandal ridden
Minh Phung company in Vietnam, whose body was found on a bank rooftop,
was electrocuted, a local report said Wednesday.

According to reports from the Ho Chi Minh City Police Inspectorate, Nguyen
Van Ha died from electric shock from zinc wires found wound around his
neck, the Lao Dong Newspaper said.

Ho Chi Minh City police refused to comment on the report saying only
that investigations were ongoing. Foul play has not been ruled out.

Ha's badly decomposed body was found by bank employees working at a branch
of Incombank in Ho Chi Minh City on May 31, and he was believed to have
been dead for several days.

As vice director of finance at Minh Phung, Ha was responsible for incurring
more than 300 million dollars of debts to Incombank, and was reportedly
distraught when investigations of the company began.

Minh Phung's troubles first surfaced in March when its director and that
of its affiliate company Epco Ltd were arrested on fraud charges.

More than 30 people, including senior state bank officers and city officials
have been linked to the case involving fraud and bad debts reportedly
in excess of 360 million dollars.

Using more than 40 subsidiary companies Minh Phung wove an elaborate
web of deceit in order to borrow money used to finance massive property
speculation.

The case, which appears to have involved massive collusion by state bank
employees, has also affected foreign banks who have not been paid letters
of credit issued in the name of Minh Phung.

Police have established a telephone hotline for debtors and creditors
of Minh Phung.

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Vietnam's Emergency Services on Flood Alert 

HANOI (July 23) XINHUA - Vietnam's emergency services have been put on
full alert as major northern rivers continue to rise because of torrential
rains over the past few days.

The Central Committee for Floods and Storms Control (CCFSC) Tuesday warned
15 riverine provinces and cities in the north against possible flooding.

Meanwhile, the water in the Mekong River in the south is rising slowly
but is already threatening the delta of the river, the country's biggest
rice basket.

The committee said anti-flood measures already taken include the manning
of vulnerable spots along riverbanks and sea dikes so that any break
can be immediately plugged.

Hanoi authorities demanded the dike system be monitored long before the
water in the Red river rose to the present level.

The unseasonal heavy rains made it possible for the annual floods to
arrive several weeks earlier than usual in both the Red river in the
north and the Mekong river networks, CCFSC officials said.

Vietnam uses a three-tiered monitoring and warning system for water levels
of rivers in the country.

The third level in Hanoi (at 11.50m) indicates that the water of the
Red river is likely to overflow its banks.

Currently Hanoi is on the second level warning, but a red alert has been
issued, because the water was climbing up to the third level.

Last year's floods began in mid-August, a week before tropical storm
Niki lashed across the north from Thanh Hoa and killed about 100 fishermen
off the coast.

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Vietnam-Politics: Old Guard May Be out, but New Policies Uncertain

HANOI, (Jul. 18) IPS - Parliamentary elections on July 20 are expected
to lead to the rise of a new leadership at Vietnam's helm, but the change
does not necessarily entail a shift in the country's policies.

Vietnamese are preparing to vote on July 20 for their new parliament,
called the National Assembly, in elections held once in every five years.

But whatever changes in leadership are upcoming, Vu Mao, general secretary
of the National Electoral Committee, says the new Parliament will continue
the country's economic renovation or "doi moi" policy.

When state media last month published the list of candidates for the
polls, it did not include the names of Vietnam's leadership triumvirate:
76-year-old Prime Minister Le Duc Anh, 80-year-old Communist Party chief
Do Muoi, and 74-year-old Prime Minister Vo Van Kiet.

The omission meant they had decided against running for reelection, because
the Constitution says both president and prime minister must be members
of the National Assembly.

Muoi's position as Communist Party chief does not require him to be elected,
so he will keep that post. Some analysts however suggest he may not be
extending his term for too long.

Out of the National Assembly, Anh, Muoi and Kiet will remain key figures
as members of the Politburo.

Members of the triumvirate balanced one another in setting the direction
for Vietnam's adherence to socialist practice while pursuing market economics.

Anh, who suffered a stroke in mid-November 1996, is believed to be the
key figure within the troika and represented close links between the
Communist Party and the armed forces.

As general secretary of the Communist Party, Muoi represented Communist
doctrine, while Kiet is often described as more of a reformer.

Last month, a spokesman for the National Assembly said the three were
stepping down due to individual decisions and not out of a desire to
change the leadership. They had been asked to run again but all "requested
to stay out right from the beginning."

The new set of leaders will not be known for certain until September.
Vietnam should have a new National Assembly by September 20, the latest
possible date for Parliament to convene.

Rumored to be candidates for the presidency are foreign minister Nguyen
Manh Cam, 68, and the current chair of the National Assembly, Nong Duc
Manh, 57. The current deputy premier, 64-year-old Phan Van Kai, is expected
to assume the premiership.

Local sources agree that the current chief of the armed forces' political
department, Le Kha Phieu, is likely to assume the post of Communist Party
chief when Muoi leaves. Phieu is viewed more as a hardliner, though with
some support from both the political and military sectors of the government.

In the time before a new leadership is formally put in place, analysts
expect a slowdown in decision-making, including in foreign policy. They
say the new set of leaders will need to develop a shared consensus about
how to go ahead with reforms, a process that may see conflicting pressures
within the Communist Party play out.

In fact, some say the unresolved issue of succession has slowed down
the pace of economic reform over the past year. Since embarking on reforms
a decade ago, Vietnam's economy has boomed and lured sizable foreign
investments. Its GDP growth rate has exceeded 8 percent a year since
1992.

The elections also bear watching for other reasons. New legislation affecting
campaigning and expanding the number of Assembly members who are not
from the Communist Party will apply to the polls. The number of seats
have also been increased from 395 to 450.

These reforms are part of a package designed to respond to criticism
that the Assembly was a rubber-stamp of the Communist Party. Demonstrating
a measure of independent judgment, it declined to confirm the government's
choice for transportation minister in November 1996.

Under a new law, candidates are now allowed to campaign for free in state-run
media ahead of the election -- but only a few of them took advantage
of this opportunity.

While elections here are not quite the raucous event they are elsewhere,
they have their own share of controversy.

The campaign period was marred by a sex scandal that forced candidate
Nguyen Van Bu to withdraw his bid for a parliament seat after he admitted
having simultaneous extramarital affairs. He withdrew because of his
"failure to meet standards" for candidacy, Vietnam's electoral council
announced.

And on July 16, the local paper Lao Dong reported cheating in preparation
for the election. It said residents in Ha Ba Trung district complained
they had been given "detailed instructions" about who to vote for.

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Vietnam assembles just 3,000 vehicles in first six months 

Hanoi, July 24 (AFP) - Vietnam's fledgling auto industry assembled just
3,000 vehicles in the first six months of this year, a newspaper reported
here Thursday.

No comparative figures for 1996 are available from Ministry of Industry
which was cited in the Saigon Times Daily, but according to industry
sources demand for vehicles has barely grown from last year.

Production for the first half of 1997, comprising assembly of imported
auto kits, is just a fraction of the combined annual design capacity
of eight foreign manufacturers in excess of 60,000 vehicles per year.

Edgar Chiongbian, senior director at Vietnam Motors Corporation which
assembles BMW luxury cars said it produced 800 cars in the first six
months, compared with 1,200 in the same period last year.

This year, Vietnam Motors has had to share a barely growing market with
a larger number of competitors.

"The market is just not really enough, everybody is worried," he said,
adding that low capacity utilization was driving up per unit labour costs.

With the cheapest automobile in Vietnam selling for between 12,000 and
14,000 dollars, it will be a long time before any auto maker turns a
profit in Vietnam where annual per capita income is less than 300 dollars.

Auto giants Toyota, Daewoo, Mercedes-Benz, Mitsubishi Motors and Ford
are among those either already assembling with Vietnam or expected to
come on stream later this year.

fb/djw

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Vietnam Police Assess Minh Phung Debt At 6,200B Dong-Report 

Hanoi, July 24 (Dow Jones) -- Vietnam's police have concluded that textile
company Minh Phung Co. Ltd. has total debt of 6,200 billion dong while trading
company's Epco's debts total 1,700 billion dong (US$1 = 11,126 dong),
a Vietnamese newspaper reported Thursday.

The two companies have been involved in high profile corruption scandals
with a number of executives arrested and awaiting trial.

According to the Tuoi Tre newspaper, Minh Phung owes 5,700 billion dong
to banks and 500 billion dong to other businesses.

The police have investigated the company for misappropriation of funds,
misuse of loan money and possible forgery of loan documents.

Epco itself owes 700 billion dong, with the balance consisting of debts
from some of its affiliated companies.

In another matter, trading company Tamexco is estimated to have debts
of 200 billion dong, and is also under investigation by Vietnamese authorities,
Tuoi Tre reported.

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Vietnam HCMC Banks' Guaranteed Letters Of Credit At $737Mln 

Hanoi, July 24 (Dow Jones) -- Vietnam's commercial banks in Ho Chi Minh
City have guaranteed $737 million through letters of credit at the end
of June, down $200 million from the end of 1996, a Vietnamese newspaper
reported Thursday.

Overdue letters of credit stood at $58 million, the paper said.

Of the total guaranteed letters of credit, letters for less than a year's
deferral made up $359 million, those with a one- to five-year deferral
made up $190 million and those for more than five years were valued at
$8 million.

Letters of credit are a controversial subject in Vietnam as several banks
have issued them to financially unsound companies that later defaulted
on their obligations.

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Vietnam Still Counting Costs of Business Scandals 

HANOI, July 24 (Reuter) - State investigators have revised estimates
of debt owed to banks by two scandal-plagued conglomerates, Minh Phung
and Epco, to some $675 million, significantly more than previously thought.

A state news journal, Tuoi Tre, reported on Thursday that money owed
by Minh Phung to state and private banks was now estimated by officials
at more than $530 million. Previously the figure was put at $430 million.

The magazine said Epco's debts totalled $145 million, and added that
the money might not be recovered.

"However, most of Epco's property was state-owned. The company did not
have any goods left, therefore the loss is serious," it said.

Scandal at the two companies erupted in March when top executives were
arrested on fraud charges as details of shady and interrelated borrowing
to finance vast property deals began appearing in the news media.

They are alleged to have used contacts and influence to secure huge loans
from both state-owned and private commercial banks. Much was in the form
of letters of credit and was used in failed property speculation.

The problems at Minh Phung and Epco have sent shockwaves through Vietnam's
domestic banking system, prompting moves to defend the industry's reputation.

Senior bankers said the investigation into the affair had caused delays
in the repayment of money owed on deferred letters of credit (LC). However
state press reported on Wednesday that Prime Minister Vo Van Kiet had
authorised commercial banks to honour LC's issued on behalf of the two
firms.

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Vietnam Overseas workforce doubles 

South China Morning Post
07/23/97

Hanoi sent 5,100 workers overseas during the first half of the year -
double last year's figure - but a lack of technical and language skills
is hampering a faster expansion of this new foreign currency income stream,
an official report said yesterday. More than half the workers are employed
in South Korea. New markets include the Japanese fishing sector, which
this year signed on more than 700 Vietnamese and Kuwait, where there
are now roughly 300 workers in construction. Vietnamese also work in
Libya and Laos.

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Vietnam Tightens Control of Cash Flow of Foreign Currencies 

HANOI (July 23) XINHUA - Vietnam has managed to tighten the control of
cash flow of foreign currencies to avoid a situation in which U.S. dollars
are being taken out of the country without official approval.

According to the latest issue of the Vietnam Investment Review, foreign-funded
companies have been ordered by the State Bank of Vietnam (SBV) to conduct
all their capital dealings through foreign currency bank accounts in
a crackdown on illegal profit withdrawals.

The move was aimed at stopping firms from holding onto profits and taking
them out of the country without putting them through a bank account,
SBV officials were quoted by the review as saying.

Experts said the bank's measure will impose tougher rules on the operation
of some foreign-funded companies operating in Vietnam, stopping them
from processing foreign money illegally.

Despite increasing hard currency shortages, a total of 84 million U.S.
dollars left Vietnam in the first six months of this year, said the General
Department of Customs.

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Hanoi Says Banks to Honour Lc's on Debt-Torn Firms 

HANOI, July 23 (Reuter) - Vietnam's state press reported on Wednesday
that Prime Minister Vo Van Kiet had authorised commercial banks to honour
letters of credit issued on behalf of two debt-torn conglomerates.

The official Saigon Times Daily said the prime minister had issued instructions
on July 15 permitting banks to settle the LCs when they become due.

Senior banking officials said repayment had previously been delayed because
executives at the two firms involved, garments-to-property giants Minh
Phung and Epco, had been arrested and were being investigated on fraud
charges.

However, the central State Bank of Vietnam recently denied talk that
banks had been instructed to withhold payment on LCs opened by the two
firms.

Faith in Vietnam's primitive financial sector sagged earlier this year
amid reports of defaults by some small, privately held banks on money
owed to foreign banks and companies.

Confidence was further damaged by a string of corruption and fraud scandals
and news that several banks had refused to pay money owed in respect
of LC's opened for Minh Phung and Epco.

The official Vietnam News Agency reported earlier this month that the
State Bank had pledged to intervene to ensure that commercial banks repay
LCs to foreign financial institutions if Vietnamese borrowers became
insolvent.

Wednesday's Vietnam News daily said the State Bank was taking further
steps to defend the reputation of the domestic banking system by tightening
letter of credit rules.

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Feature Vietnam Needles Europe over Textile Quot 

By John Chalmers

HANOI, July 23 (Reuter) - Vietnam and the European Union are squaring
up for a tussle over T-shirts and trousers.

With a textile trade pact set to expire at the end of the year, bureaucrats
in Hanoi and Brussels are now lobbying hard behind the scenes to tailor
a new deal which suits their side best.

Keen to win a bigger slice of the European market for its burgeoning
garments industry, Vietnam wants more generous quotas, the scrapping
of quotas for many products and more flexibility in how they are applied.

The EU, under pressure from textile federations in some of the union's
most unemployment-plagued countries, is digging in its heels.

"We love Vietnam very much, but we can't accept all the garments from
around the world," says Riccardo Ravenna, the EU's ambassador to Vietnam.
"In the European Union there is a lot of unemployment, especially in
the less developed countries producing garments."

Officials in Hanoi were reluctant to discuss the debate. Hoang Thich
Phuc, head of the Import-Export Department at Vietnam's Ministry of Trade,
replied briefly and in writing to questions after a delay of more than
two weeks.

Vietnam's imports to the EU came to about $1.2 billion in 1996, with
textiles accounting for $420 million.

That is a huge leap from the $250 million of 1993, putting Vietnam behind
only China and Indonesia in terms of Asian garment sales to Europe and
representing a third of the country's target for textile exports this
year.

When negotiators meet in Brussels in September to stitch together a deal
for 1998 to 2002, Hanoi will ask for the number of products subject to
quotas to be cut to levels enjoyed by its partners in the Association
of South East Asian Nations (ASEAN).

But Ravenna says that will fall on deaf ears because Vietnam, a communist
country which lost its best textile markets when the former Soviet bloc
collapsed, is a latecomer to the market.

"They want to be treated on the same terms as countries in ASEAN,"
he told Reuters in an interview. "This is unrealistic because they are
starting from a lower base. If today they were given a quota of 600,000
T-shirts they would want two million."

He said Vietnam should seek to bump up production of products not governed
by quotas rather than focusing on T-shirts, shirts, blouses, dresses
and trousers.

The Trade Ministry's Phuc says that is all very well -- providing the
demand is there for other kinds of garments.

"We think it would be very efficient to diversify goods," he wrote.
"But current consumer demand is still limited."

The EU will also challenge Hanoi over persistent quota overruns and its
habit of allocating an unfair share of quotas to state-owned enterprises.

Ravenna says a reference to the discriminatory allocation of quotas was
made in the existing pact, when it was renegotiated in 1995, but it has
not been respected as the EU had hoped.

Asked if Vietnam was ready to make concessions on the carve-up of quotas,
Phuc was evasive.

"The textile quota given to Vietnam by the EU in the past was too little,
meeting only about 35 percent of Vietnam's productive capacity," he
said. "Despite that, Vietnam still allocated quotas to enterprises with
foreign investment from the EU."

However, he said Vietnam was ready to open its doors to European investors
producing high-quality textiles and garments.

He also indicated that Hanoi might be prepared to make more market room
for European fabric producers, whose exports to Vietnam amounted to a
mere $2 million in 1996.

Ravenna says all this haggling could be avoided if Vietnam looked elsewhere
for its export market.

"We cannot absorb what they are asking for," he said. "We are ready
to take more, but we want to share the burden with other big partners
-- like the United States."

No doubt Hanoi would like that too. But until it wins most-favoured nation
(MFN) trading status from Washington -- and that is unlikely this year
-- its hands will be tied.

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