VN Bus. News (Apr. 24, 1997)

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

April 24: Laos, Vietnam Govts To Co-invest In Laos Coffee Plantation 
April 24: Asian Cash Rice Flat; Vietnam Grades Seen Up After Mid-May 
April 24: Vietnam: Petrovietnam Moves Forward On Dung Quat Refinery 
April 24: Taiwan:Jin Wen Leads JV To Invest U.S.$520M In Vietnam
April 24: Thailand: Karat Sanitaryware To Take 70% In Vietnam JV 
April 24: Vietnam: S. Korea's Daewoo Gets A Strong Foothold 
April 24: Sumitomo Corp. gains licence for Vietnam electronic compononent plant 
April 24: Vietnam set to issue Brady bonds in June 


Laos, Vietnam Govts To Co-invest In Laos Coffee Plantation 

BANGKOK (AP)--Laotian and Vietnamese agricultural experts met this
week to finalize plans for a joint-venture coffee plantation owned by
the two governments, Laos's government radio said Thursday.

Vietnam will provide the technical expertise and 80% of the investment
in the 710-hectare coffee plantation near the southern Laotian city of
Paksong. Only 10 hectares are scheduled for clearing, however, this
year.

The project's startup cost is $4,700. The joint-venture agreement is
valid for 55 years, and both governments expect to see profits in 11
years.

Landlocked Laos is one of the world's least developed countries owing
to a communist isolationism imposed by its government since 1975.

In the past few years, however, the government has been making some
modest moves to open up and liberalize its agriculture-based economy.

Coffee plantations in Laos' cooler mountain ranges have drawn the
interest of some foreign investors.
                 ___________________________________


Asian Cash Rice Flat; Vietnam Grades Seen Up After Mid-May 

SINGAPORE (Dow Jones)--Physical rice offers are steady late Thursday
in Asia as enquiries continue to flood the Vietnamese market, trade
sources said.

Many buyers are now looking to Vietnam because offers there are
currently the lowest in Asia.

Offers for Vietnamese 25% broken rice are at $200-$205/ton, with the
state-owned Vietnam Southern Food Corp. largely holding offers at the
higher end of the range. Late last week, it concluded a deal for 7,000
tons of 25% broken rice with an African party at $203/ton, FOB, said a
trade source in Ho Chi Minh city.

Offers for the Vietnamese high grade 5% brokens are still heard around
$235-$240/ton.

The Ho Chi Minh city trade source said exporters and foreign traders
are eager to arrange shipments for early May, before prices rise.

Harvest of the winter-spring crop is expected to end in mid-May, after
which prices are likely to trudge up, he said, adding some farmers are
keeping a portion of their stocks to sell at higher prices at a later
date.

Meanwhile, an official from the Vietnam Southern Food Corp. said it
has yet to conclude any deals with Iran, one of its biggest customers.

In Thailand, 100%B rice prices are kept steady at $325/ton by recent
Iranian deals, said to be for 200,000 tons of the grade, said a trade
source there.

Quotes for the 25% broken rice are firm at $260/ton amid ongoing
shipments of the grade to the Philippines, while pure Thai fragrant
rice prices are still pegged at a high $700/ton.

-By Joyce Teo 65-421-4825
                 ___________________________________


Vietnam: Petrovietnam Moves Forward On Dung Quat Refinery 

SINGAPORE (DJ) -- State-owned Vietnam Oil & Gas Corp. (Petrovietnam)
is moving ahead on its go-it-alone strategy for the controversial Dung
Quat refinery, despite foreign industry pessimism about the wisdom of
the approach.

In recent weeks the oil enterprise completed and submitted for
government review a feasibility study proposing four Vietnamese-only
options for building the refinery, according to local news reports and
Petrovietnam officials.

The feasibility study proposes four options that would allow Vietnam
to build the refinery at less cost than would be required with foreign
investment, according to Thursday's Vietnamese-lanugage Thoi Bao Tai
Chinh (Financial Times). The option the study deemed most attractive
is to build a 6.5-million-ton-per-year plant. Offering a 13.8% rate of
return and 10% net present value over the life of the project, the
refinery would yield products suitable for customers in Southeast
Asia, the newspaper said.

That option would include a propylene-manufacturing facility that
would help Vietnam establish a domestic petrochemical industry.

The newspaper also reported that Petrovietnam would use Foster Wheeler
Energy Ltd. of the U.S. as a consultant.

Last month, Petrovietnam reported the completed feasibility study to
the government, Vu Van Mao, director of Petrovietnam's Petroleum
Information Center, confirmed. However, Mao said he didn't have
details on the alternatives outlined in the study. Nor did he know
when the government was expected to complete its review.

Mao said the company is in the process of selecting a foreign company
to act as project management consultant.

'Petrovietnam has no experience, so of course we have to find a
company who has experience,' Mao said. 'Of course (it will be) a
foreign company.'

The feasibility study is the third conducted for the refinery but the
first to examine strictly Vietnamese options.

Two foreign consortia hoping to build the refinery have collapsed in
the last two years over disagreements with the Vietnamese government
over incentives.

The facility, originally estimated to cost $1.3 billion to $1.5
billion, is slated to be built in Dung Quat, a remote fishing village
on the central coast, about 900 kilometers north of Ho Chi Minh City.

-By Belinda Rabano 65-421-4815
                 ___________________________________


Taiwan:Jin Wen Leads JV To Invest U.S.$520M In Vietnam

TAIPEI (DJ) -- Taiwan-based Jin Wen group will lead a joint venture to
invest a total of around U.S.$520.0 million to establish a
multipurpose complex in Ho Chi Minh city of Vietnam, an official with
the Business Management Committee, KMT of Taiwan said Thursday.

Jin Wen will hold a 70% stake at the partnership, while the rest goes
to the Vietnam government, he said.

The Committee, which manages the business affairs of the island's
governing political party, Kuomintang, is evaluating the project and
will decide later whether to purchase a stake from Jin Wen, said the
official who declined to be named.

According to the blueprint, the joint-venture company will develop a
complex in Ho Chi Minh, including a park, office building, department
store, mall and an entertainment area, the official said.

The first phase will start to operate in 1998 and the construction of
the second phase will begin later this year, while construction of the
final part will begin 1998.

The whole project will provide around 5000 jobs, emphasized the
official.
                 ___________________________________


Thailand: Karat Sanitaryware To Take 70% In Vietnam JV 

BANGKOK (DJ) -- Thailand's Karat Sanitaryware PCL (P.KSW) said
Thursday it has agreed to take a 70% stake in a $16 million joint
venture with Vietnam's Hai Hung Construction Co. and Hai Hung
Investment & Development Co.

In a filing to the Stock Exchange of Thailand, Karat said the three
companies will build a sanitaryware factory under the name of Karat
Hai Hung (Vietnam) Co. The joint venture is licensed for a 30-year
term, and the Vietnamese government investment license was issued in
November last year.

Karat said the plant will reach its full capacity of 500,000 units per
year after three years of operation.

Total value of the investment is $16 million, with a registered
capital of $5 million. Karat will hold a 70% stake, with Hai Hung
Construction taking 20% and Hai Hung Investment taking up the
remaining 10% stake.
                 ___________________________________


Vietnam: S. Korea's Daewoo Gets A Strong Foothold 

Hanoi (FEER) -- Connections count for a lot in Vietnam, and Kim Joo
Sung has plenty. Everywhere one looks in Kim's Hanoi office there are
photographs of him posing with Vietnam's communist leadership.

But then Kim isn't just any foreigner: He's the head of Daewoo's
operations in Vietnam, reports the latest edition of the Far Eastern
Economic Review published Thursday.

And Daewoo itself is Vietnam's biggest foreign investor. From the
moment six years ago that it first considered pumping money into
Vietnam, high-level connections have been key to its getting a
foothold in one of Southeast Asia's toughest markets. Indeed, many
sources say it was personal chemistry between Daewoo Chairman Kim Woo
Choong and Premier Kiet that accounts for the chaebol's presence in
Vietnam at all.

With 17 projects licensed and a further 12 in the pipeline, Daewoo has
committed about $600 million, a hefty chunk of South Korea's
investment there.

Its project portfolio is astonishingly diverse. It includes car
assembly, plastics, glass, steel, electronics, pesticides, paints,
paper, oil exploration, telecoms, a five-star hotel and a
joint-venture bank. Kim Joo Sung won't disclose precisely how it's all
financed, saying only that 20% is bank loans and the rest Daewoo
money, backed by South Korea's Eximbank.

All but seven projects are in northern Vietnam, a fact that helps
explain Daewoo's large presence in the country.

With the industrial south rapidly attracting the bulk of foreign
investment in the early 1990s, the government started to worry about
the agrarian north being left behind. Daewoo's early enthusiasm
offered one way to help kick-start foreign investment there. In
exchange, the authorities granted rapid project approvals and easy
access to land. 'We checked the government's plans [for the north] and
compared it with ours,' says Kim. 'Then we chose which fields we
wanted to go into.'

At the time, Daewoo saw Vietnam as one of three priority markets, the
others being China and Eastern Europe. It offered political stability,
an untapped market of 77 million people and the prospect of growth
through membership in the Association of Southeast Asian Nations,
which plans its own, seven-nation free-trade zone. 'After we produce
here, we can sell in all Asean countries,' says Kim. 'We're targeting
not only Vietnam but also south China.'

While Daewoo's projects appear to be going smoothly, it's hard to tell
if they're making money. Daewoo, like other foreign companies, is wary
of attracting the taxman, so discloses little about earnings.

But Daewoo's impeccable connections don't always shield it from the
difficulties experienced by all investors in Vietnam: red tape,
bureaucratic inertia, rampant corruption and a hopelessly muddled
legal regime. Topping Kim's list of complaints is the high 'turnover
tax,' a sort of value-added levy that effectively taxes some
components twice or more. Then there's the hassle - and cost - of
clearing people from land ear-marked for development.

In January, a dispute between farmers and local officials over
relocation compensation for a golf course planned by Daewoo turned
ugly when crowds attacked vehicles sent by a district office to start
erecting perimeter fencing.

However, there are other problems that strike at the heart of Daewoo's
global expansion strategy: labor and training. The company makes great
play of the need to localize staff wherever it goes.

Says Kim Chong Nak, general director of Daewoo's joint-venture
television-tube factory, Orion-Hanel, near Hanoi: 'The motto and the
philosophy of the chairman is global management and global business.
That means the globalization of management - not only using Koreans.'

But Orion-Hanel is finding it tough to train people for skilled
positions and management slots, even though it pays well for north
Vietnam. For starters, conscientious workers are thin on the ground in
a country just emerging from 20 years under a Soviet-style command
economy. Language is also a barrier to skills transfer.

For all its problems, however, Orion-Hanel's color-picture tubes are
selling well: The company projects $80 million in exports this year,
up from last year's $70 million. It exports about 80% of output.

Still, Kim is convinced the venture must speed up skills transfer if
it is to keep pace: 'We have to move faster and faster. That is my
anxiety at the moment.'
                 ___________________________________


Sumitomo Corp. gains licence for Vietnam electronic
compononent plant

HANOI (AFP) - Japan's Sumitomo Corp. said Thursday it had been granted
a licence for a joint venture electronic component assembly plant in
southern Vietnam.

Sumitomo was teaming up with Japan's Asti Corp. to build Asti Vietnam
Corp., a four million dollar plant to assemble and make electrical
parts for autos, washing machines and motorbikes, a Sumitomo official
said.

Asti would take a 50 percent stake in the factory, Sumitomo 16.67
percent, and local private company Viet Dien Electronics would hold
33.33 percent.

The project was licenced for 30 years and was to be located in Dong
Nai province outside of the southern city of Ho Chi Minh City, he
said.

Sumitomo's other projects in Vietnam include a 54 million dollar
industrial park in Hanoi, a stake in Hino Truck manufacturing, part of
Sanyo Electric's washing machine factory in Ho Chi Minh City, and a
wire harness factory in Hanoi that will supply Toyoto Motor Co's auto
assembly plant to come on stream this year.
                 ___________________________________


Vietnam set to issue Brady bonds in June 

HANOI (AFP) - Vietnam is to issue Brady bonds in June as part of a 900
million dollar debt rescheduling scheme aimed at clearing the way for
tapping international markets, a foreign banker in Hanoi said
Thursday.

"The vast majority of the creditors have accepted the deal and they
are now documenting it. It should be ready by June," said the banker
familiar with the rescheduling package.

About 94 percent of Vietnam's outstanding debt and interest arrears to
private creditors of the so-called London Club will be covered by the
deal, he told AFP on condition of anonymity.

Under the rescheduling package, foreign creditors would grant Vietnam
generous forgiveness of overdue interest payments penalties and a
reduction in the country's debt obligations.

According to the banker, for every one dollar Vietnam owes in debt, it
owes another 1.25 dollars in accrued interest and non payment
penalties.

Creditors involved in the deal, which was presented by Vietnam last
May, have three options.

The first two involve swapping old debt for new 30-year Brady bonds,
named after former US Treasury Secretary Nicholas Brady who devised
the instrument to help restructure Mexico's massive external debt in
the early 1980s.

Under one scheme, investors would receive new bonds of equivalent
value to their current debt, but bearing a fixed interest rate at well
below market levels, and are only partially collateralised.

In the second option, creditors will receive 50 cents worth of new
bonds for every dollar of old. But the new bonds would carry a
variable interest rate tied to market levels.

Both sets of "Brady Bonds" are backed by US Treasury bonds which the
State Bank of Vietnam will purchase with funds borrowed from the World
Bank, the Asian Development Bank, and other bilateral donor agencies.
The cost to Vietnam will be between 50 and 60 million dollars.

The third option involves a direct cash buy back for debt, in which
creditors would receive about 40 cents on the dollar immediately.

Vietnam must also pay a "goodwill interest payment" in June, that will
cost between 5 million and 10 million dollars.

With the debt restructuring deal complete, Vietnam will finally be
free to tap international capital markets, which have been effectively
closed to it since 1975.

Vietnam was assigned a Ba3 international credit rating by Moody's
Investors Service Inc and Standard and Poor's Inc last month, paving
the way for it to float its first bond issue at the end of 1997.

A Ba3 rating is below investment grade, which means institutional
investors are prohibited from buying the bonds, noted one other
foreign bank advising the Ministry of Finance.

According to another foreign banker, Merrill Lynch and Co. and Nomura
Securities have been chosen to underwrite the benchmark issue to be
floated by the Ministry of Finance, which is expected to raise about
150 million dollars with a five year maturity.