VN Business News (Apr 5-6) (1)

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

Vietnam and US to sign war debt agreement 
Tourism brings a boom and a threat to Vietnam's "love market" village 
Vietnam-US-auto : Chrysler to pull out of Vietnam: report 
Nike tells Vietnamese suppliers to toe the line: report 
U.S.'s Rubin/Hanoi: Only Limited Forex Discussions At APEC
U.S.'s Rubin Arrives In Hanoi For Debt Deal, Trade Matters 
Vietnam to Hold World Computer Exhibition 
Vietnam's History of Assistance 
Vietnam: Victorious Hanoi Handed Defeated Saigon's Debt 


Vietnam and US to sign war debt agreement 

By Frederik Balfour

HANOI (AFP) - It has taken the United States and Vietnam nearly 22
years to reschedule debts racked up by the former Saigon regime in a
deal that will be signed here Monday by US Treasury Secretary Robert
Rubin.

That Hanoi is willing to assume the debts amassed by its former enemy
in the Vietnam War illustrates how anxious it is to move ahead with a
trade agreement with Washington.

With a ballooning trade deficit -- more than four billion dollars last
year and worth about 17 percent of it gross domestic product --
Vietnam is desperate to boost exports.

A trade accord would pave the way for Vietnam to receive
most-favoured-nation (MFN) trading privileges with the United States
and open the US market to a flood of cheap, labour-intensive
Vietnamese goods.

But while the 140 million dollar rescheduling accord removes an
important obstacle to establishing full economic relations, reaching
an actual trade agreement is many months away, a source close to the
talks said.

Meanwhile, US businesses are getting impatient.

More than three years since the lifting of the US trade embargo
against Hanoi in February 1994, and 20 months since Washington and
Hanoi established diplomatic ties, progress on the economic front has
been frustratingly slow.

"The pace of economic normalisation has been slower than anyone has
hoped and has made for a more difficult environment," Virginia Foote,
the Hanoi-based president of the private US-Vietnam Trade Council,
told AFP.

Although US negotiators will arrive in Hanoi next week to discuss a
draft agreement, people familiar with its provisions say hammering out
a final version with the Vietnamese will not be easy.

The agreement would see Vietnam open its market to US businesses,
streamline the licencing approval process and level the playing field
with local companies by granting them national treatment.

To be sure, all foreign companies must deal with the frustrations of
doing business here: red tape wrapped up in red tape, rampant
corruption, opaque laws and appalling accounting practices.

"These are problems for any western business, but especially for US
companies," said Norris Hickerson, Vietnam country manager for Digital
Equipment.

But analysts said the United States would meet stiff resistance from
government ministries who control state-owned enterprises (SOEs) that
have the most to lose from foreign competition.

"They have deep vested interests (in preserving the status quo). The
same guys who own the SOEs are the ones negotiating," said a US source
close to the talks.

It will also likely contain clauses to provide against trademark
infringements and intellectual property right violations, which are
hurting sales of US goods ranging from shampoo to computer software.

US companies complain that they cannot compete with Japanese and
European firms which receive export credits and government loan
guarantees, compounding the formidable trading barriers all foreign
companies here face.

A number of US companies have scaled back plans or withdrawn
altogether. One of the first arrivals, Bank of America has pulled out
all its expatriate staff, and Chrysler looks likely to scrap plans to
build a 192 million dollar assembly plant.

American Oil Company (Amoco) closed its doors at the end of last year,
leaving behind a skeleton staff of locals.

The largest US investment licenced to date, a 247 million dollar joint
venture tourist resort at China Beach, collapsed after bitter and
irreconciliable differences between Vietnamese and US partners.
  ___________________________________

Tourism brings a boom and a threat to Vietnam's "love market"
village 

by Pascale Trouillaud

SAPA - Vietnam (AFP) - Tourists are bringing welcome cash into Sapa, a
Vietnamese village near the Chinese border which is famous as a "love
market," but some fear their presence could threaten the very thing
that draws them to the area.

At dawn every Saturday, members of the minority Dao people set out to
cover the 40 kilometres (25 miles) from their homes to Sapa to reach
the market by nightfall.

Husbands and wives who arrived in the village together then separate
as the ritual begins. The men and women begin searching for new
partners -- always other Dao -- for the night, to sing with, to dance
with and then to have sex with.

The wedded couples regroup early in the morning to make the return
trip home.

The children of these one-night unions are accepted by the husbands in
the name of an ancient custom, apparently intended to ensure survival
of the minority by maintaining birth rates.

On a recent spring weekend, dozens of scared young women in elaborate
traditional dress scampered through the market under the gaze of
curious Vietnamese and foreign visitors, some taking photographs.

They headed down a stairway where their partners for the night waited
in a shed. But the tourists were too close, too noisy and too
intrusive and the women turned back. The ritual mating game is
threatened by foreign visitors.

"We want to protect our culture," said the chief of the provincial
international relations office, Dao Manh Co, who cites a case in which
a foreign television crew offered to pay the Dao to film some torrid
"love market" scenes.

"The tourists who come here must respect the regulations and the
culture."

But some are happy with the change that tourism has brought to remote
Sapa, some 400 kilometres (250 miles) northwest of Hanoi.

Guesthouse owner Dang Trung said the standard of living for the
village's 3,000 people had improved markedly with the influx of cash
and demand for services.

"For three years I was very poor," Trung said.

"I had borrowed from everyone. Today, not only have I repaid my debts,
I have also started a 30,000 dollar project to extend the hotel."

A few years ago, Sapa offered only a single, spartan state-run hotel,
but today there are some 60 options for accommodation.

"There is work for all -- builders, carpenters, traders," explains
Trung, who has also witnessed the arrival of electricity in Sapa and
the repair of the road to the border centre of Lao Cai, the provincial
capital.

But he also says Sapa has been "disfigured" by tourism and "behind the
smiles there are tears."

The prostitution of ethnic minorities with tourists has emerged, as
have foreign opium-smokers, attracted by the fields of poppies in the
mountainous environment.

"The love market will disappear," he predicts.

"They will look for another place and all will change here."

Provincial official Co says large tracts of forest are being destroyed
across the village for new buildings, including villas for the new
rich, replacing resorts of the French colonial era, which were mostly
destroyed during the 1979 border war with China.

Despite the problems, Sapa remains a site of beauty, surrounded by
terraced paddy fields and mountains shielded by thick mist.

It is also a model of co-habitation between Vietnam's Kinh majority
and Dao and Hmong minorities.

Sitting on the doorstep of his guesthouse, elderly Nguyen Chien
watches with amusement as the young Dao women pass by.

"All the same, the love market is bizarre."
  ___________________________________

Vietnam-US-auto : Chrysler to pull out of Vietnam: report 

HANOI (AFP) - US auto giant Chrysler Corporation is pulling the plug
on its 192 million dollar Vietnam auto plant near Ho Chi Minh City, it
was reported here Sunday.

"Sources close to the project say the car manufacturer will announce
its official withdrawal from the country's largest ever auto project
this month," the Vietnam Investment Review (VIR) reported.

The company's Hanoi representative office has been closed and the
rented villa which served as its headquarters has been returned to its
owner, the English-language VIR, published by the ministry of planning
and investment, said.

Licenced in 1995 to build joint-venture auto assembly plant in Dong
Nai province about 20 kilometres outside of the former Saigon, the
project never got off the ground.

Rumours that Chrysler was pulling out have been circulating for
months, and were fanned by the announcement last year when Chrysler's
chief representative in Vietnam relocated to Thailand.

An AFP correspondent was unable to contact Chrysler officials on
Sunday.

But if the rumour is correct, a high profile investment cancellation
could prove embarassing for Vietnam at a time when it is trying to
hammer out a trade and investment agreement with the United States,
and especially on the eve of the signing of a debt accord between
Hanoi and Washington.

On Monday US Treasury Secretary Robert Rubin will sign a deal to
reschedule about 140 million dollars of debt incurred by the former
Saigon regime, removing one of last obstacles to a US-Vietnam trade
accord.

Do Hoang Thinh, general director of Vietnam's Engineering and
Agricultural Machinery Corp (VEAM) a state-owned company controlled by
the industry ministry, whose subsidiary owns the 30 percent local
stake in the joint venture (Chrysler has 70 percent), said the
withdrawal was "rumour with solid grounds" the newspaper reported.

Thinh noted that Chrysler's decision to set up a plant in China worth
hundreds of millions of dollars portended the scraping of the Vietnam
plant.

Thinh did not provide reasons for the expected withdrawal, but
indicated there was no love lost between local and foreign partners.

Thinh said that Chrysler was sending a delegation to Hanoi this month,
and when asked of his reaction should the group withdraw, he replied
"I won't be sorry about it. We were aware this was going to happen."

Chrysler would be joining a growing list of frustrated US investors
who have either scaled back projects or pulled out altogether.

Bank of America, one of the first US companies to reopen an office
after the lifting of the embargo in 1994 has withdrawn its expatriate
staff while American Oil Company, (AMOCO) has closed up shop
altogether.

Industry analysts were sceptical of the Chrsyler project from the
beginning, saying it was far too big for a country of Vietnam's size
and level of development.

Though Vietnam has a population of 74 million people, with average
income of about 280 dollars a year, many cannot contemplate buying a
motor scooter, let alone a four wheeled vehicle.

Vietnam has licenced 14 auto assembly joint ventures, with
heavyweights including Mercedes Benz AG, Ford Motor Company and Toyota
either in production or expected to begin assembly this year.

But any one of the auto assembly plants could singlehandedly satisfy
new vehicle demand which is estimated at less than 15,000 units per
year.
  ___________________________________

Nike tells Vietnamese suppliers to toe the line: report 

HANOI (AFP) - US sportswear giant Nike has warned that it could reduce
orders to suppliers in Vietnam following reports of mistreatment of
local employees, a report said Sunday.

"Depending on the severity of the situation there could be a reduction
of business with the subcontractors," Martha Benson, a Hongkong-based
Nike spokeswoman, was quoted by the Vietnam Investment Review (VIR) as
saying.

"The overall evaluation would dictate the number of orders they get
from Nike," said Benson, who flew in last week for an inspection tour
of suppliers here.

During her visit, Benson inspected the Pou Chen Shoe company, a
Taiwanese factory located in Dong Nai province employing 8,000 workers
who produce shoes exclusively for Nike.

Pou Chen hit the news earlier this month when a Taiwanese supervisor,
Hsu Jiu Yun allegedly forced 56 Vietnamese female workers to jog
around the company workshop area twice, a distance of more than one
kilometer (0.6 miles). Twelve of the workers fainted and were taken to
hospital.

VIR quoted Benson as describing the case as "totally unacceptable."

But the spokesman told AFP last week that her Vietnam trip was not in
response to allegations of labour abuse at the factories made in a
recent report released in New York by labour activist group Vietnam
Labour Watch.

Benson vowed that Nike would take tough measures if suppliers did not
tow the line. Reached by telephone in Ho Chi Minh City earlier this
week, Benson told AFP that Nike has been working closely with its
suppliers here in Vietnam and elsewhere in the region to "improve a
number of issues."

The shoe manufacturing giant maintains extremely close scrutiny of its
suppliers, who produce exclusively for Nike, she said.

"We have had production managers who are Nike employees working in the
factories (in Vietnam) since day one. But we recognise the need to
increase the level of oversight, especially in working conditions and
labour practices" Benson said.

"There are things we can do to improve working conditions," she said.

Benson said the 35,000 odd employees working for the five foreign
owned factories supplying Nike make a least 45 dollars per month --
the minimum salary -- for a 60 hour work week.

Last fall Nike, which operates a representative office in Vietnam
appointed a dedicated labour practices manager in Vietnam after an
incident at its Korean supplier, Sam Yang Company.

In April 1996, 29 year old Yang Mi Baek slapped 15 Vietnamese workers
at the factory on the side of the head with a shoe upper as punishment
for turning out poor quality.

Benson said Sam Yang had "made a mistake" by sending home supervisor
Yang after she received a suspended three month sentence, VIR
reported.
  ___________________________________

U.S.'s Rubin/Hanoi: Only Limited Forex Discussions At APEC

U.S. and Vietnamese officials are still negotiating a bilateral trade
agreement, which is essential before Vietnam can gain most favored
nation (MFN) trade status, a key treatment for any exporters to the
U.S. As well, a number of steps on labor rights are required before
the nation will be eligible for assistance from the Overseas Private
Investment Corp., although an executive decision on Export-Import Bank
support could come much sooner.

A delegation of U.S. officials are due in Hanoi after Rubin's visit to
continue bilateral trade talks, which center around written proposals
drafted by the U.S., trade officials say.

The last chapter of the trade proposal was delivered to Hanoi three
weeks ago covering trade in services, including financial services.
Other chapters, however, have been in Vietnam's hands for a number of
months.

Rubin also reviewed en route to Hanoi the latest meeting of the
finance ministers of the 18-nation Asia Pacific Economic Cooperation
(APEC) forum, who met for two days in Cebu, the Philippines.

He called the APEC meeting the 'most useful' of the three annual
sessions he has attended, citing a number of 'very practical'
recommendations issued by the group for developing deeper capital
markets in the emerging economies of the Asia Pacific region.

While the APEC ministers also formally endorsed the foreign exchange
statement issued in February by the Group of Seven nations, which
noted that 'major misalignments in currencies' had been corrected,
Rubin told reporters that foreign exchange didn't figure prominently
in the APEC meeting.

'They weren't obsessed with exchange rates,' Rubin said of his Asian
counterparts. 'In fact, I would say there wasn't much discussion of
it.'
  ___________________________________

U.S.'s Rubin Arrives In Hanoi For Debt Deal, Trade Matters 

Hanoi (AP) -- U.S. Treasury Secretary Robert Rubin arrived Sunday in
Vietnam's capital to sign a $145 million official debt rescheduling
agreement and to review the status of bilateral trade negotiations and
other matters of economic normalization.

Rubin, the most senior U.S. economic policy official to visit Vietnam
in the postwar period, also billed his visit as a potential
opportunity to learn more about the nation and its economic needs.

'We're all going through this together,' Rubin told reporters
traveling with him. 'I'm learning with you about Vietnam.'

The Treasury secretary, who will meet with senior Vietnamese officials
on Monday to initial a debt agreement covering certain U.S. credit to
the former South Vietnamese government, is also scheduled to travel to
Ho Chi Minh City on Tuesday to review economic development in the
Southeast Asian nation.

'This is a country that is just in the early stages of reform,' Rubin
said, noting that there is 'an awful lot here that is still statist.'

Rubin noted that if Vietnam's development is 'successful' then it
becomes a 'better market for use over the long run.' And he added that
his visit will involve seeing 'what are the things that we an do to
help Vietnam be successful' in its economic development.

With 8% to 9% growth annually for several years now, Rubin noted that
as an accomplishment for Vietnam. But he added that a number of
reforms are still required before 'they can have sustained success
over the long run.'
  ___________________________________

Vietnam to Hold World Computer Exhibition 

Hanoi (Xinhua News) - Vietnam will hold a world computer exhibition in
Ho Chi Minh City between April 23 and April 26, local reports said
today.

On display at the exhibition will be the latest software, hardware,
networking and peripheral products from leading manufacturers
worldwide with a special emphasis on banking, CAD/CAM and automation,
networking and multimedia products.

During the show, computer managers, experts and operators will have a
chance to exchange experience and solutions about the latest computer
developments as well as the relevant projects in Vietnam, both at the
national and local levels.

Vietnam has become one of the most rapidly developing markets of
computer in the region thanks to stable economic development and
soaring demand for computers, said Vietnamese officials.

The market in Vietnam is expected to exceed one billion U.S. dollars
by the year 2000, they said.
  ___________________________________

Vietnam's History of Assistance 

Examples of Vietnam's aid and loan dependency:

--1950, President Truman pledges $15 million aid package to Vietnam,
then part of French-ruled Indochina.

--1954, following demarcation of South and North Vietnam, United
States supports southern regime of President Ngo Dinh Diem and pledges
$100 million in aid.

--1955, North Vietnamese leader Ho Chi Minh begins accepting aid from
Soviet Union.

--1963, U.S. military, humanitarian and development aid to Saigon tops
$500 million in one year.

--1960s-early 1970s, billions of dollars from various U.S. agencies
channeled to South Vietnam.

--January 1975, Congress rejects President Ford's request for $300
million in military aid to South Vietnam.

--April 1975, Congress rejects second request from Ford to help
Saigon, this time for $722 million in military aid and $250 million in
economic and humanitarian aid.

--April 30, 1975, Saigon falls to advancing North Vietnamese troops.

--1978, Soviet assistance to united Vietnam tops $1 billion a year.

--1991, aid from Moscow peters out after collapse of Soviet Union;
Moscow begins to push for repayment of loans.

--1993, Paris Club accord reschedules Vietnam's more than $4 billion
in debts to West with relief of up to 50 percent. -- AP
  ___________________________________

Vietnam: Victorious Hanoi Handed Defeated Saigon's Debt 

Hanoi (DJ) -- The Communists are still paying for their victory over
Saigon 22 years ago, this time to the tune of $146 million owed to the
main ally of its vanquished enemy.

U.S. Treasury Secretary Robert Rubin arrives in Hanoi on Sunday to
sign a pact obliging united Vietnam to pay for debts incurred in 1973
and 1974 by South Vietnam.

Rubin will be the highest-ranking American economic official to visit
Hanoi since the end of the Vietnam War in 1975, a trip that may hail a
new chapter in contemporary U.S.-Vietnam economic relations, business
executives say.

The debt owed the United States is a financial burden willingly
accepted by Vietnam, but the wartime price tag falls on top of
millions dead and decades of isolation that left the victorious
Communist government a pauper.

'This is part of an international convention that regulates the
responsibility of a government taking over another after a war,' said
Nguyen Manh Hoa, director of the Ministry of Finance's International
Financial Relations Department.

'You can inherit interests, but also responsibilities of that
government to the world,' he said.

Paying back its enemy's debts is just part of Hanoi's effort to wipe
the slate clean and begin a new era of cooperation with the U.S.

'It's a very important step,' said Virginia Foote, president of the
U.S.-Vietnam Trade Council. 'Economic normalization can't happen
without clearing up old issues.'

Rubin has described the debt agreement as 'an important and meaningful
signal to the international financial community that Vietnam takes
seriously its obligations.'

The pact clears one more hurdle blocking a trade agreement between
Washington and Hanoi and moves Vietnam closer toward potential
financing from the Export-Import Bank and other U.S. agencies, Rubin
said.

Vietnam has emerged from its Cold War isolation rejuvenated by
economic reform and liberalization, but a full trade deal with the
U.S. remains elusive.

'This high-level visit by the secretary of the Treasury certainly
symbolizes that the relationship is moving into a new phase,' said
Brad LaLonde, the chairman of the American Chamber of Commerce in
Hanoi.

Overdue debts are a lasting legacy for Vietnam, whose warring halves
became heavily dependent on aid from Moscow and Washington during the
Vietnam War. The winning Cmmunist regime also relied on Moscow's help
in the 1970s and 1980s, until the Soviet Union began unraveling.

The overdue loans tied to Rubin's visit date to a time when Washington
was channeling hundreds of millions of dollars into South Vietnam to
try to prop up its besieged government.

According to U.S. Treasury Department figures obtained by The
Associated Press, about $75 million of the debt is principal owed from
agricultural and development loans. The remaining $70 million is based
on negotiated interest payments to cover 24 years worth of arrears.

Four farm loans, worth a fraction of the total, were forgiven.

Although an exact breakdown of how the loans were used hasn't been
disclosed, an official familiar with the debt agreement said most of
the money was spent on road building and power development. The
official spoke on condition of anonymity.

Apart from its military assistance for Saigon, the U.S. provided about
1 billion dollars in loans and aid for grain imports, infrastructure
development, education and health. A small army of U.S. aid workers
was based in South Vietnam in the 1960s and early '70s.

Paying their defeated enemy's bills may be a bitter pill to swallow,
but Hanoi has been stoical about the additional burden - on top of
Saigon's debts, Hanoi still owes the former Soviet Union billions in
outstanding loans.

'The United States returned to Vietnam a long time ago property that
the Saigon government used to own, so we should do the same thing,'
Hoa said.