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VN Buss. News (Mar. 21-23/1997)
Mar 23: Toyota may be forced to shut-down Vietnam assembly: report
Mar 22: Warnings of bad-loan crisis sound in Vietnam
Mar 21: Indochina Gold, Olympus To Pursue Opportunities In Vietnam
Mar 21: Vietnam Aims To Spend $4.4B On Transport Upgrades: Report
Mar 21: Vietnam Central Bank Official Sees Near-Term Dong Stability
Mar 21: Vietnam Petrolimex/Products Buy Tender: Closes March 28
Mar 21: Vietnam's Rollercoaster Perception: Analysis
Mar 21: Hanoi urges faster ``equitisation'' in state sector
Mar 21: Asian Devt Bank To Lend Vietnam $33 Mln For Reforestation
Mar 21: Vietnamese Industrial Park Group To Handle Its Own Licensing
Mar 21: Proctor and Gamble to build 20 million dollar Vietnam plant
Mar 21: Japanese group to build 22 storey building in Ho Chi Minh City
Sunday, Mar 23, 1997
Toyota may be forced to shut-down Vietnam assembly: report
HANOI (AFP) - Toyota Vietnam said its local
assembly plant in Hanoi may have to cease operation next
month unless it receives an import licence from the
Ministry of Trade, a local report said Sunday.
"It's all the same to a government official if he decides
on a request today or tomorrow--but for a company, it means
money, gains and losses," Nguyen Thanh Giang, deputy
director of Toyota Vietnam told the Vietnam Investment
Review (VIR).
Toyota reportedly sent a letter to the Government office on
March 14 saying: "Toyota Vietnam will have to stop
production, more than 200 employees will be without jobs,
at least in the April to September period, beacuse the
company cannot import CKD1 (completely knocked down one)
pieces," VIR said.
Toyota reportedly sent its first request for a licence in
February, the paper said.
Toyota executives could not be reached for comment.
However its request came just days before a three-day visit
to Vietnam by a high level delegation of Vietnamese
businessmen of the Keidanren group, part of a delegation
led by Japanese deputy foreign minister Ogura Kazuo.
According to a Japanese embassy source, the group handed
the Vietnamese a list of grievances including the
labyrinthine bureaucracy and opaque legal system.
Toyota started assembling completely knocked down kits
(CKDs) last October in Vinh Phu province about 35
kilometres (22 miles) from Hanoi, and plans to start full
production when its 35 million dollar plant comes on stream
in the fall.
Toyota Vietnam joint venture partners are Toyota Motor Corp
with 70 percent, Singapore's Kuo (Asia) Pte. Ltd. with 20
percent, and state-owned Vietnam Engineering and
Agricultural Machinery Corp. with 10 percent.
Toyota is one of 14 auto and truck assembly joint ventures
vying for Vietnam's fledgling auto market, where annual new
vehicle sales are only about 20,000.
Other auto giants including Daewoo Motor Corp, Mercedes
Benz AG, Mitsubishi Motors Corp and Ford have linked up
with local partners, but have complained about the dearth
of local parts for assembly.
Vietnam has chosen the auto industry to spearhead its
import substitution development policy, and has slapped
local content requirements of five percent in five years
and 30 percent in ten years.
Toyota isn't the only firm plagued with problems, VIR said.
The Mekong Corporation, the first auto company to begin
production in 1991, faces a possible fine from the Customs
Department if it does not obtain a licence from the
Ministry of Trade within 30 days for parts it has already
imported.
Saturday, Mar 22, 1997
Warnings of bad-loan crisis sound in Vietnam
HO CHI MINH CITY (Reuter) - Top bankers and economists in this southern city
are warning that Vietnam's banking system faces a major bad-loan problem
following failed property speculation by domestic firms.
In a series of interviews over the past week, banking executives and others
painted a picture of an industry owing millions of dollars as a result of
bad debts, and saddled with near-worthless collateral.
They said a handful of companies had used influence and connections to secure
huge multiple loans from both joint-stock and state-owned commercial banks to
finance real estate deals during the early 1990s, mostly through letters of
credit.
A property market downturn since 1995 has left these companies and
individual lenders unable to repay banks.
The banks, in turn, were having to delay repayments on letters of credit
because collateral on the loans was taken in the form of real estate, which
is losing value and tangled in the red tape of Vietnam's archaic land
ownership laws.
``We should blame the property speculators,'' said an industry source who
requested anonymity. ``They tried to create monopolies in the real estate
sector. They're the ones who should be paying the price now that it's gone
wrong.''
Official figures for the sums involved were not available, but some bankers
spoke of debt levels of around $1 billion. An estimate by a senior banking
executive put the total overdue payments at around $500 million.
``It's a serious problem,'' said Tran Trong Do, banking operations director at
the central State Bank of Vietnam. ``Due to our poor experience in supervision,
big problems have been caused for the national banking system.''
Economists and academics said that trouble has loomed in communist Vietnam's
still-nascent domestic banking system for some time due to a number of
shortcomings, including lax management and corruption.
An indication of the problems arose in February when the Joint-Stock Commercial
Bank for Private Enterprises (VP Bank) came under scrutiny for extending the
payment period under a letter of credit to South Korea's Ssangyong.
But economists said the problems at private banks such as VP paled in
comparison
to the level of debt in state-owned commercial banks.
The Tai Chinh and Thi Truong newspaper (EDS: one newspaper) warned in early
March that the
problem had reached the point where state intervention was needed
``immediately to save a
chain reaction collapse of the whole banking system.''
A State Bank official said the government was extremely concerned.
But an international economist in Hanoi downplayed the magnitude of the
problem,
saying the fundamentals of Vietnam's banking system remained reasonably healthy.
``I think it's too early at this stage to talk about it as a crisis,'' he said.
Friday, Mar 21, 1997
Indochina Gold, Olympus To Pursue Opportunities In Vietnam
SINGAPORE (DJ) -- Indochina Goldfields Ltd. (T.ING) said it and Olympus Pacific
Minerals Inc., together with Iddison Group Vietnam Ltd. of New Zealand, will
jointly
pursue mining and exploration opportunities in Vietnam.
In a news release, Indochina said the proposed new strategic alliance
outlined in recent announcements will focus the technical and organizational
capabilities of each company ''to accelerate exploration and development
programs on existing licenses and new exploration programs.''</p>
Olympus would be manager and operator for all exploration and development
activities for the company's interests within Vietnam, it noted.</p>
Indochina also said that, under the deal, it would become one of the
largest shareholders in Olympus, retaining about a 19.5% stake.</p>
Indochina is a mining company.
Friday, Mar 21, 1997
Vietnam Aims To Spend $4.4B On Transport Upgrades: Report
Hanoi (DJ) -- Vietnam will need to spend about $4.4 billion in the next four
years to meet its goals for developing transport infrastructure, according
to an official media report Friday.</p>
The government aims to attract approximately $2.0 billion of this amount
from foreign investors, according to Pham Quang Tuyen, deputy minister of
transport, the English-language Vietnam News said.</p>
Although the national government is giving priority to transport
infrastructure development, incentives are needed to draw more investment to
the sector, Tuyen said.</p>
The government is prepared to offer land-use rights to companies in return
for developing infrastructure, the newspaper noted.</p>
This approach already has been used with one Taiwanese-funded road project
in Ho Chi Minh City.</p>
Vietnam is seeking to improve its road, port, rail and air infrastructure
because transport bottlenecks are regarded as one of the biggest brakes on
the nation's economic development. Poor transport slows commerce and adds to
costs, notably for exporters.
Friday, Mar 21, 1997
Vietnam Central Bank Official Sees Near-Term Dong Stability
Hanoi (DJ) -- There aren't likely to be major changes in the value of the
dong in coming months, Nguyen Doan Hung, director of the foreign exchange
department at the State Bank of Vietnam said, according to an official media
report Friday.</p>
While demand for imports is likely to remain brisk in the next months, there
are likely to be offsetting incoming flows of foreign exchange, Hung said in
an interview with the newspaper Thuong Mai (Commerce).</p>
According to the central bank's Hung, inflows of direct foreign investment
and foreign aid are expected to increase. Additionally, he pointed out the
recent conclusion of Vietnam's London Club commercial bank debt rescheduling
will help cut the country's debt servicing requirements and make it possible
to borrow more hard currency from abroad.</p>
'Therefore, there will be no big change in the dong's exchange rate,' Hung
said, the newspaper reported.</p>
Late Friday, the dong traded at 11,655 to $1, essentially flat from the day
before.</p>
The currency has depreciated about 3.9% against the dollar since March 3,
when the central bank widened the local currency's daily trading band.</p>
Hung added, 'the State Bank won't let any major change in the exchange rate
happen.'</p>
But in a remark that would seem to signal an acceptance of a weaker dong,
Hung also said, 'The best exchange rate at the present is a rate that can
promote exports and control imports.'</p>
Vietnam's menacingly large trade deficit is the prime factor behind the
downward pressure on the dong in recent months. In 1996, Vietnam's trade
deficit was nearly $4.00 billion, or about 17% of gross domestic product.</p>
There isn't any consensus among traders in Vietnam's interbank foreign
exchange market as to whether the State Bank, despite its rhetoric about
rate stability, will engineer another devaluation of the dong by widening
the currency's trading band or rapidly adjusting the so-called central rate
that determines the margins of the band.
Friday, Mar 21, 1997
Vietnam Petrolimex/Products Buy Tender: Closes March 28
SINGAPORE (DJ) -- Vietnam's national oil company, Vietnam National Petroleum
Import-Export Corp., has issued a petroleum products buy tender for the second
quarter, a Petrolimex official told Dow Jones Friday.
Petrolimex is seeking offers mainly on a cost-and-freight or a free-on-board
basis for delivery during April to June 1997.</p>
Five gasoil cargoes totaling 107,500 tons are being sought, two for 0.5%
sulfur gasoil and three for 1% sulfur gasoil.</p>
Petrolimex is also inviting offers for a combination cargo of 15,000 tons of
gasoil and 5,000 tons of kerosene, and another for 15,000 tons of gasoil and
5,000 tons of jet fuel.</p>
Finally, the tender calls for eight cargoes of 83 RON 0.15 g/l leaded
gasoline totaling 144,000 tons and five cargoes of cst170 3% sulfur fuel oil
totaling 130,000 tons.</p>
Offers are to be submitted to Petrolimex by March 28.</p>
Breakdown of Vietnam's second-quarter tender, in metric tons:</p>
CARGO DATE DESTINATION
Gasoil 0.5% sulfur 20,000 April 15-20 Free on board
20,000 June 3-7 Free on board
Gasoil 1% sulfur 22,500 May 10-15 Hongai
22,500 June 13-18 Hongai
22,500 June 25-30 Hongai
Cst170 3% sulfur 26,000 May 1-5 Ho Chi Minh City
fuel oil 26,000 May 14-18 Ho Chi Minh City
26,000 May 26-30 Ho Chi Minh City
26,000 June 9-14 Ho Chi Minh City
26,000 June 18-22 Ho Chi Minh City
83 RON 0.15 g/l 18,000 April 15-20 Ho Chi Minh City
leaded gasoline 18,000 May 10-15 Ho Chi Minh City
18,000 May 20-25 Danang
18,000 May 10-15 Hongai
18,000 June 1-10 Ho Chi Minh City
18,000 June 1-10 Hongai
18,000 June 20-30 Hongai
18,000 June 25-30 Ho Chi Minh City
Gasoil 0.5% sulfur 15,000 May 13-17 Free on board</pre>
and kerosene combo 5,000</p>
Gasoil 1% sulfur 15,000 June 13-17 Free on board</pre>
and jet fuel combo 5,000</p>
-By Jamilah Leman 65-421-4813
Friday, Mar 21, 1997
Vietnam's Rollercoaster Perception: Analysis
HONG KONG (WSJ) -- Vietnam's fall has been dramatic. Three years ago it was the
hot prospect to join neighboring economies that have created the East Asian
Miracle. Today, it is engulfed by a rising tide of woes that deters all but
the most intrepid of foreign investors.
That, at least, is the perception. The reality, as experience elsewhere
might suggest, is somewhere in between. The country was touted a little too
uncritically in the early 1990s, attracting some companies that thought
they would make a killing. But the market proved difficult to crack, with
the result that a degree of disillusionment has set in.
At the same time, Vietnamese authorities are discovering that making the
transition to a market-oriented economy from central planning is a
potentially treacherous exercise. It's easy to make mistakes so, they
conclude, it is better to be ultra-cautious.</p>
Multinational corporations, which know they cannot afford not to be in a
country of 75 million in the long run, have mapped their strategies and
risked their money. They realize it may be a long wait for payday, just as
the government now recognizes that its success in the global system isn't
guaranteed.
The need for realism about Vietnam is brought home by the observations
of a seasoned analyst, Murray Hiebert, in "Chasing the Tigers: A Portrait
of the New Vietnam" (Kodansha International, 248 pages, $25). Written when
he was reassigned in 1994, after four years as the Far Eastern Economic
Review's correspondent in Hanoi, it reflects the optimism of the period.
(The Review is published by Dow Jones & Co., majority owner of The
Asian Wall Street Journal.)
The book's upbeat tone contrasts sharply with some recent gloomy
reporting and investor comments from the country. We'll have to wait a
couple of decades to see who is right.
Fortunately, since Mr. Hiebert roams the political and cultural
landscape as well, his tract doesn't depend on economic predictions for its
appeal. He has a good feel for the Vietnamese, devoting plenty of attention
to those missing out on the boom in urban areas.</p>
Indeed, he doesn't omit or gloss over any of the problems--corruption,
red tape and the lack of a legal framework are discussed in detail. But, in
the end, he endorses the view that pragmatism eventually will overcome
political impediments and propel "this long-time Spartan backwater into the
ranks of the region's tigers."
In retrospect, all the tiger talk has probably done more harm than good.
While irresistible as a marketing gimmick for everything from magazines to
conferences and T-shirts, tigerhood is irrelevant in many ways, at least
for the time being.
ruling Communist Party's commitment to economic liberalization isn't in
doubt. The internal debate is over the pace.
Vietnam is developing fairly rapidly from an extremely low base.
Opportunities to invest will continue to open in certain areas, even if the
economy falters and regardless of whether industrial takeoff occurs in 10
or 15 or 20 years.
The ruling Communist Party's commitment to economic liberalization isn't
in doubt, especially since Vietnam joined the Association of Southeast
Asian Nations in 1995 and is bound by the Asean Free Trade Area goals. The
internal debate is over the pace.
Le Mai, Vietnam's late vice foreign minister, used to remind Americans
that Vietnam is a country, not a war. It should also be said that the
country is dynamic, with a large, youthful population, limited land and
natural resources, trying to shake loose from stifling state control,
impatient to make up for lost time and facing trouble at every turn.
If foreigners have some way to go before they understand Vietnam, Hanoi
also has much to learn about free enterprise and the complexities of the
capital market. Take the government's desire--no, iron determination--to
establish an oil refinery.
Total SA withdrew from the $1.3 billion venture in 1995, when the
authorities insisted it be sited in an isolated town that the French
company said was too far from the main markets to be viable. "Officials
refused to back down, confident that other companies would soon offer to
take over the project, as indeed they did," writes Mr. Hiebert.
Yes, but now those companies have also pulled out. And the government is
threatening to compound a series of errors by trying to build the refinery
itself.
Instead of reacting with hubris, officials should reassess their plans,
starting with the basic question of whether it is wise for Vietnam to have
so much of its scarce resources tied up in a refinery. It surely would be
more rational to continue exporting crude oil and importing refined
product.
Next, would such a sophisticated installation really create jobs and
raise incomes in an impoverished area, as the government hopes?</p>
in China, the human rights situation has improved enormously for most
people under the impact of economic reform.
Finally, planners should accept that if it makes no commercial sense for
the private sector to build the plant, chances are it would be foolish for
the heavily indebted government to wade in. A quick look around the region
will inform Hanoi that the trend among its role models is toward
privatization, not the reverse.
I agree with Mr. Hiebert that the Communist Party is facing no serious
threat and that Western-style democracy is unlikely in the foreseeable
future. As he notes, "Most people seem to be too busy pursuing the
opportunities of the free market to pay much attention" to the handful of
intellectuals advocating pluralism.
Although the political system hasn't changed much, a "de-Stalinization"
of society has taken place, converting Vietnam from a totalitarian state to
a more familiar East Asian authoritarianism. Individual Vietnamese are free
to do almost anything as long as they don't challenge the supremacy of the
party.
With the ready examples of formerly communist Eastern Europe and the
one-time Soviet republics, many Vietnamese have no trouble accepting the
government's contention that a plethora of parties could bring instability.
They all seem to fear "chaos," a word that crops up often.
As in China, the human rights situation has improved enormously for most
people under the impact of economic reform. A number of dissidents are in
jail, a fact that seems to attract little interest or concern among
ordinary Vietnamese.
In one chapter, Mr. Hiebert asks, "When will the party end?" Not for
some time yet, though it is possible to see trouble down the road for the
communists. All sorts of informal grass-roots organizations are springing
up, and it probably is a matter of time before they turn their focus to
politics.
Friday, Mar 21, 1997
Hanoi urges faster ``equitisation'' in state sector
Hanoi (Reuter) - Vietnam's Communist Party daily on Friday called for a drive
to quicken the pace of partial privatisation, or ``equitisation,'' in the
country's ailing state sector.
``Equitisation of state-owned companies is the correct policy of the party and
the state to mobilise resources for investment and production development,''
the Nhan Dan newspaper said in an editorial that bemoaned the glacial progress
of the programme.
The number of state-owned firms has been halved to some 6,250 during the
past decade of tentative reform along market lines, but so far just 10
companies have sold part of their equity to private interests.
Nhan Dan, echoing a report in the state-run Dau Tu (Investment) journal,
said those 10 ``equitised'' firms were already enjoying higher turnover and
profits and paying more to both their workers and the state budget in taxes.
Despite the momentum for reform, many in the party still feel uncomfortable
with the idea that the state should relinquish control of key economic sectors.
At a policy-defining conference last year, the party affirmed that the state
sector's ``leading role'' would be safeguarded. But it scrapped an original
plan to raise the state sector's share of economic output to 60 percent from
around 40-45 percent now.
Nhan Dan said party committees at all levels would ``propagandize'' the
benefits of equitisation, reassuring managers that they will not lose power
and workers and unions that jobs would not be at risk.
Vietnam's aid donors have put strong pressure on Vietnam to reform
state-owned companies, many of which are unproductive, unprofitable and
saddled with bank debts they cannot repay. A report in the daily Vietnam
News in December said that 70 percent of all public sector companies
suffered a loss in 1996.
``State enterprise reform has to be at the centre and not at the periphery
of the agenda,'' said a senior diplomat, who declined to be named.
``If the state-owned enterprises are not more efficient they run a risk of
not being able to compete with imports as Vietnam exposes itself to more
competitive pressures from outside,'' he said. ``Then there are the bad
debts, which could weaken the whole banking system.''
The government recently set up two steering committees for state-owned
enterprise renovation and equitisation, which are headed by the finance
minister and the minister for planning and investment. It has also asked
local authorities to come up with a list of up to 200 candidate companies
for equitisation.
``There is a recognition of the need to address state-owned enterprise
reforms more aggressively,'' the diplomat said. ``The question is whether
they are willing to subject these enterprises to true competitive pressure
and level the playing field.''
Friday, Mar 21, 1997
Asian Devt Bank To Lend Vietnam $33 Mln For Reforestation
Hanoi (AP-Dow Jones)--The Asian Development Bank (ADB) has approved a
$33-million concessional loan for the reforestation of 114,000 hectares
of degraded forest and bare lands in Vietnam, the Bank said Friday.
The project will restore vegetative cover in watersheds in the
provinces of Thanh Hoa, Quang Tri, Gia Lia and Phu Yen, ADB said in a
statement.
Forests cover 30% of Vietnam's land area, but the amount is dwindling
rapidly, with an estimated 100,000 hectares lost each year, the Bank
said.
The ADB loan will cover 62% of the reforestation project's total
$53.2-million cost. The Dutch and Vietnamese governments are also
contributing.
This will be the first major reforestation project in Vietnam carried
out with the participation of the affected local population, ADB said.
In an attempt to reduce the slash-and-burn techniques that account for
much deforestation in the nation about 10% of the land in the project
will be set aside for crops and a lesser amount for livestock raising.
The project is scheduled for completion in mid-2003.
Vietnam is the largest recipient of concessional loans from ADB.
Vietnamese Industrial Park Group To Handle Its Own Licensing
Hanoi (WSJ) -- In a step intended to facilitate foreign investment, the
Vietnamese government for the first time has authorized an industrial
park to license its own investment projects.
The Vietnam Singapore Industrial Park Joint Venture Co., or VSIP,
will be allowed to license most projects with a total value of less than
$40 million that are proposed to be located within it, Cheong Kai Kong,
the park's general director, said in a telephone interview.
An official at the Ministry of Planning and Investment, speaking on
condition of anonymity, confirmed that VSIP is the first industrial park
to get such authorization, although other parks also have applied for
the right.
According to Mr. Cheong, the committee that will license projects at
VSIP is composed of officials from a number of different Vietnamese
ministries. It doesn't actually include any officials from VSIP itself.
Mr. Cheong said he is confident the committee, which is formally
known as the management board, will decide on proposed investment
projects within the 45 days specified by Vietnamese law.
Many projects requiring approval at the national level fail to be
evaluated within the stipulated time frame, usually about 60 days.
Indications that industrial parks would get to authorize their own
projects were contained in Vietnam's recently revised foreign-investment
law.
Foreign investors in Vietnam have frequently complained about the
amount of time required for a project to gain all the necessary
approvals to move ahead. By decentralizing some decision-making away
from Hanoi, the government hopes approvals can flow more rapidly.
VSIP, which is about 20 kilometers north of Ho Chi Minh City in Song
Be province, aims to have its first factory operating in about two
months, Mr. Cheong said.
Ground was broken for the 500-hectare park in May.
About 75% of the infrastructure in the 100-hectare first phase is now
complete, Mr. Cheong said.
The park's joint-venture partners include Singapore's Sembawang
Industrial Pte. Ltd., Jurong Town Corp., UOL Overseas Investments Pte.
Ltd. and Singapore government holding company Temasek Holdings Pte.
Ltd., as well as a unit of Japan's Mitsubishi Corp. and a member of
Indonesia's Salim Group.
The Vietnamese partner is government-owned Song Be Import-Export
Trading Co.
Friday, Mar 21, 1997
Proctor and Gamble to build 20 million dollar Vietnam plant
HANOI (AFP) - US consumer products giant Proctor
and Gamble Co. has received a licence to build a 20 million
dollar sanitary napkin plant in the southern province of
Binh Duong, a company official said Friday.
Alan Hed, managing director of Proctor and Gamble Vietnam
told AFP that the group had received the green light from
the Ministry of Planning and Investment for a 100 percent
foreign owned plant, licenced for 30 years.
Hed said there was "major potential for growth" in the
market.
The project is Proctor and Gamble's second in Vietnam. The
group has a 70 percent interest in a 36 million dollar
joint venture producing shampoo, toothpaste and detergent.
A local company controlled by the Ministry of Industry
holds the remaining stake.
Friday, Mar 21, 1997
Japanese group to build 22 storey building in Ho Chi Minh City
HANOI (AFP) - A Tokyo-based development company
has received a licence to build a 20 million dollar office
and apartment complex in downtown Ho Chi Minh City, one of
the investors said Friday.
Holding company Vina Investment Ltd. is teaming up with
Bach Dang Commercial Services Co., controlled by the
District One People's Committee of Ho Chi Minh City, to
form Saigon Sakura Co. Ltd.
Vina Investment would hold 60 percent and the local
partners 40 percent in the joint venture, that is licenced
for 32 years.
Construction of the 22-storey structure in the central
business district is expected to be completed by mid-1999,
Sadazo Uda, managing director of Tokyo-based Doyu Co. Ltd.
told AFP.
Doyu is one of the principal partners in Vina Investment.