VN Buss. News (Mar. 13-15/1997)

[vuca@envi.env.civil.saitama-u.ac.jp (Vu Thanh Ca)]

Mar 15: Vietnamese currency in crisis amid dollar shortage 
Mar 14: Vietnam Fines Philip Morris
Mar 13: Vietnam-Business: Government determined to plug tax loopholes
Mar 13: Indochina, Olympus in Vietnam gold deal
Mar 13: Indochina Goldfields To Sell Vietnam Property Stake

Saturday, Mar 15, 1997  

Vietnamese currency in crisis amid dollar shortage

HO CHI MINH CITY (AFP) - Foreign bankers here have
sounded the alarm over the Vietnmese currency's rapid depreciation
against the US dollar and a tight hard currency market.

The  Vietnamese dong, which over the last three years has been
remarkably stable against the dollar, has lost 4.4 percent of its
value since the start of the year, the bankers said.

The  Vietnamese currency now trades at around 11,650 to the
dollar, following a series of falls since October last year when it
traded around 11,025.

Bankers said loss of confidence in the dong has triggered a
dollar-buying run here, leaving foreign enterprises scrambling for
greenbacks amid a shortage that is already hurting business.

Part of the reason for the local currency's continued fall was a
decision by  Vietnam's central bank earlier this month to increase
the daily exchange margin for the dong against the dollar from two
percent to 10 percent.

The move led to an effective mini-devaluation of the dong, the
bankers said.

The slide has triggered rumours of an official devaluation, with
some sources putting the value of the expected move as high as 40
percent, despite assurances in the local press Friday from central
bank governor Cao Sy Kiem that "there is no policy to devalue the
dong."

"Some days there is not even one dollar to buy on the interbank
market and clients are worried," said one western banker based here.

"They cannot find any dollars to finance imports, pay dividends,
or pay off their foreign currency loans," said the banker who
requested anonymity.

For some enterprises, finding enough dollars has taken priority
over regular business, he added.

The situation has been further complicated by the devaluation
rumours which have resulted in a tight market even for the dong.

"All the rumours of a devaluation in the press have contributed
to withdrawals from local banks by the  Vietnamese," said one
European banker. "The banks are getting fewer deposits.

"Before 1996 they had too much dong, now they are suffering a
shortage," he added.

The biggest victim of the currency crisis however has been
overall confidence in the economy.

Many people here would have preferred an official devaluation of
the dong, rather than let it slide out of control, bankers said.

"The way in which this has been managed is not positive since it
is so disorderly," the western banker said.

"They ( Vietnamese authorities) are afraid of making a bad
decision but by waiting the situation is getting out of control,"
he said. "The central bank is not doing its job."

"This is destabilising for foreign investors in  Vietnam and
certainly will not encourage those who are looking at investing to
come in," he added.

However, a depreciation of the dong is not likely to have
immediate effects on decreasing  Vietnam's trade deficit, which
reached four billion dollars last year.

Such a move would benefit exports but will also make imports
more costly and again put direct pressure on foreign investment in 
Vietnam.


Friday, Mar 14, 1997 

Vietnam Fines Philip Morris

HO CHI MINH CITY  (AP)  Philip Morris Cos. was fined
and hundreds of its Marlboro posters and promotional materials were
confiscated after the company violated a ban on tobacco
advertising.
Philip Morris Vietnam, a subsidiary of the U.S. tobacco giant,
was slapped with a symbolic fine of $2,700, the state-run Saigon
Times Daily reported Friday.
In addition, the Ho Chi Minh City officials ordered about 800
Marlboro posters, 720 lighters and 72 cigarette cases confiscated.
It was the first time officials in Ho Chi Minh City, formerly
Saigon, enforced a decree against advertising tobacco and liquor
products.
Prime Minister Vo Van Kiet issued the decree in January as part
of a nationwide campaign to curb smoking and drinking. It forbids
all ads for tobacco and liquor, apart from beer.
Vietnam, where more than 70 percent of the adult male population
smokes, is a potential gold mine for foreign tobacco companies.


Thursday, Mar 13, 1997 

Vietnam-Business: Government determined to plug tax loopholes

HANOI (IPS) -- The government is in hot pursuit of
small private enterprises that have managed to dodge taxes by
operating without business licenses. Its threat: no license, no
business.

Vietnamese authorities say they are determined to go ahead with
the plan to regulate their operations as well as those of an
estimated two million small vendors even though the plan is already
behind schedule.

The registration is going too slow, says Nguyen Ba Lam, director
of the market control department of the  Vietnamese Trade Ministry.

At the end of February, declaration forms were yet to be
distributed in the country's largest economic hub, Ho Chi Minh, as
well as in Haiphong and several newly-created provinces, although
the first stage of the campaign was supposed to be have been
completed earlier.

The regulations are intended to tighten control over small and
medium businesses that sprouted across  Vietnam since the government
opened up the economy.

Prime Minister Vo Van Kiet issued last September a decree
requiring all businesses to be registered with the government. It
came into effect Jan. 1 but the official text is yet to be made
public.

Under the decree, whose implementing guidelines were drawn up
by the ministries of trade, finance, justice, planning and
investment and the department of statistics, " unlicensed business
must be stopped."

The directive was the government's response to tax evasion by
a growing number of individual traders and small firms which have
thrived, largely because they were unregulated.

 Hanoi authorities cite the example of some unlicensed traders
who they say destabilise the market by selling their products way
below average prices.

The government officially encourages the development of small
and medium enterprises (SMEs) in  Vietnam within the framework of
its "socialist orientation."

But it also wants to boost revenue collection and through the
registration scheme, authorities say they hope to be able to expand
the tax base.

The measure is expected to create new sources of tax revenue and
to curb the rising current account deficit, which is estimated by
foreign experts to be as high as 12 per cent of the gross domestic
product.

But experts from the United Nations Development Organization
(UNIDO) say the registration procedures could constitute a barrier
to further development of SMEs.

They say SMEs face a number of problems including poor access
to credit, outdated technology, poor management and lack of
information about foreign markets.

Trade ministry officials claim that there is nothing wrong with
the scheme, and that the measure is not going to hinder business
since the procedures are simple.

Under the implementing guidelines of the decree, an estimated
1.9 million small vendors and some 15,000 private companies and
cooperatives should have declared their businesses and applied for
licenses by the end of January.

Licenses were supposed to have been issued starting February 1
in order to complete the process by June. All non-state owned
enterprises are to be registered, including those which were
earlier permitted to do business without license.

But more than a month after the deadline the shakeup of 
Vietnam's private sector has not materialized. Skeptical observers
argue that the issuance of licenses is unlikely to restore order
in  Vietnam's chaotic private sector, and the measure only increases
opportunities for graft.

Authorities insist the registration scheme has to be completed
by the end of June as planned, and those who fail to declare their
activities properly will not get new business licenses.

Despite Hanoi's pressure, local officials in many areas are
reluctant to disclose the true extent of private business
activities, afraid of the prospects of being assigned higher tax
collection targets by the central government, Nguyen Ba Lam says.

Scores of businesses are reported to declare "unreasonably low"
turnovers and monthly salaries amounting to a measly 120,000 (11
dollars) or below the minimum wage in order to avoid taxes, he
said.

The registration scheme is also hindered by the government's
reluctance to fund it.

In 1995, some 100 billion dong (nine million dollars) were
allocated from the state coffers to finance a similar survey of
private businesses. But earlier this year, the finance ministry
announced that there was no money for registration so provincial
governments have to shell out the money. -- By Nguyen Phan Phuong 


Thursday, Mar 13, 1997  

Indochina, Olympus in  Vietnam gold deal

Indochina Goldfields Ltd. is selling its interests in adjoining
gold exploration prospects at Bong Mieu and Tien Ha in central 
Vietnam to Olympus Pacific Minerals Inc.

The proposed US$7.5-million sale, in cash and shares, would see
Indochina recover all acquisition and exploration expenses
incurred in  Vietnam.

The company holds the only foreign-owned investment and mining
licence in  Vietnam, at Bong Mieu and was recently awarded the Tien
Ha exploration licence.

The deal would also give it up to 20% of Olympus and a 2% gross
production royalty on future production from properties in 
Vietnam.

Indochina intends to join Olympus and a third partner in a venture
to explore Phuoc Son, once licences are received from the
government.

Terms of the proposed transaction provide for the transfer of
Indochina's  Vietnam subsidiary to Olympus. Olympus would pay
US$3.75 million on closing, by May 31, plus US$1 million a year
later.

The company would also issue to Indochina special warrants
exercisable for shares in Olympus worth US$2.75 million and
representing about 19.5% of outstanding share capital. Indochina
would have one director on the Olympus board.  -- Financial Post

Thursday, Mar 13, 1997 

Indochina Goldfields To Sell Vietnam Property Stake

SINGAPORE (AP, Dow Jones) -- Indochina Goldfields Ltd. (T.ING) said it has
agreed to sell its interests in adjoining gold exploration prospects at Bong
Mieu and Tien Ha in central Vietnam to Olympus Pacific Minerals Inc.</p>
In a news release, the company said the proposed sale, in cash and shares
valued at $7.5 million, would see Indochina recover all its acquisition and
exploration expenses incurred to date in Vietnam.</p>
The company said the transaction would also give it as much as 20% of the
shares of Olympus, and would allow it to retain a 2% gross production
royalty on future production from properties in Vietnam.</p>
In a related agreement, Indochina said it intends to join Olympus and a
third partner in a venture to explore the Phuoc Son area, subject to the
receipt of licenses from the Vietnam government.</p>
Indochina said terms of the proposed transaction provide for the transfer of
Indochina's Vietnam subsidiary to Olympus. It said Olympus would pay $3.75
million upon closing, by May 31, plus another $1 million one year later.</p>
The company said Olympus also would issue to Indochina special warrants
exercisable for shares in Olympus worth $2.75 million and representing about
19.5% of Olympus's outstanding share capital. Indochina would have one
appointee on the Olympus board, it said.</p>
Indochina said closing of the transaction is subject to regulatory approvals
and completion of a financing.</p>
Indochina said it currently holds the only foreign-owned investment and
mining licence in Vietnam, at Bong Mieu. It also was recently awarded the
Tien Ha exploration license.</p>
The company said Olympus is involved in an existing joint venture with New
Zealand-based Iddison Group Vietnam Ltd., which has rights to the Na Pai
gold prospect in northern Vietnam.</p>
Indochina said it has, through a separate subsidiary, applied for additional
exploration licences in the Phuoc Son area of Vietnam.</p>
Indochina said it, Olympus and Iddison have agreed to set up a joint
venture, in which Indochina would hold a 50%, to conduct any work that is
officially approved at Phuoc Son.</p>
Indochina has a portfolio of assets that includes gold and copper properties
and other interests in Indonesia, Myanmar, Kazakstan, South Korea, Vietnam
and Fiji.