VN news: Payments by credit cards/ FDI in Nghe An

[AnHai Doan <anhai@cs.washington.edu>]

Ba'o VN:

Expanding payments by credit card in Vietnam

In Vietnam payment by use of international credit cards began in
1990 although there were no Vietnamese banks that issued their own
cards at that time. In the early stages, cards were mainly brought
into Vietnam by tourists and businessmen and the outlets were
concentrated in large hotels and restaurants. However, in the past
year, the payment by cards has increased sharply with a total volume
of about US$160 million-US$170 million per year.

In 1996, four Vietnamese banks - Vietcombank,  First VinaBank,
Eximbank, and ACB - officially announced the issuance of
international Master Card and to use MasterCard in payment. Mr. Lam
Hoang Loc, director general of ACB, said that ACB has issued 1,000
MasterCards of which some 800 cards have been used for monthly
transactions both locally and overseas. Last year, the volume of
card holders reached some VND17 billion with 80% dealt abroad.

Vietcombank has issued some 500 MasterCards, said Mr. Vu Viet Ngoan,
vice director of Vietcombank, adding that after one year the volume
was about VND10 billion and the issuance was not as satisfactory as
expected. This was due to the fact that the number of tourists to
Vietnam has not increased and that the credit activity in 1996 faced
many difficulties thereby affecting credit card payment, Mr. Ngoan
said.

Eximbank and First Vinabank have not yet issued MasterCard because
they have faced many difficulties in investing in equipment and
technology to serve the card holder.

Customers using cards issued by local banks are mainly Vietnamese
and they use the cards when going abroad for work or traveling.
There are five kinds of cards which are in circulation on the
Vietnamese market: Visacard, MasterCard, JCB, American Express, and
Dinnerclub.

The use of these kinds of cards are being dealt with through the
outlets and merchants of Vietcombank and the total volume last year
was at least US$140 million, said Mr. Ngoan. Vietcombank has
installed automated teller machine (ATM) operating during the whole
day, and it also plans to issue Visacard between now and the end of
the year.

Meanwhile, ACB senior bankers revealed that they would issue
ACB-Visacard in August this year. ACB officially joined Asia-Pacific
International Visa Organization last year and it received permission
from the State Bank of Vietnam to issue and use Visacards for
payment. The ACB card payment system has been integrated into the
International Visa Organization and the use of Visacard for payment
has been dealt with through 700 outlets nationwide.

Also according to Mr. Ngoan, credit card issuance in Vietnam has not
developed greatly. The use of cards for payment has not become
popular since Vietnamese people still prefer using cash for payment
and they do not know the advantages of card payment. ACB and
Vietcombank show their interests in families which have children
studying abroad and help these families to pay cost for studying and
living in Vietnamese dong.
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Nghe An has yet to attract foreign investment

After 10 years of implementing the policy of attracting foreign
direct investment (FDI), Nghe An Province attained humble figures:
five joint ventures (JV) licensed with a total investment capital of
US$85.3 million and four projects underway with a total investment
of US$150 million.

Lying in the north of Central Vietnam, some 300km from Hanoi, Nghe
An is a large province with great potential for developing
agriculture, industry, trade and tourism. The province has an area
of 4,239 sq.km, a coastline of 82km and an arable land area of
189,000ha, favorable for growing food crops and short-term
industrial trees as well as aqua-product cultivation and
exploitation.

In addition to agricultural development, Nghe An is endowed with raw
materials for the production of cement, tiles and bricks, and
crystal. Its mineral mines such as coal in Tuong Duong, tin in Quy
Hop and Que Phong, gold in mountainous districts, and bauxite in
many places have not been industrially exploited.

The infrastructure in Nghe An is considered rather good. It is
crossed by National Highway 1A and the North-South railroad as well
as National Highway 7 linking Nghe An with Laos. Cua Lo Port is a
large seaport; in addition  to receiving and transporting goods for
Thanh Hoa, Nghe An and Ha Tinh provinces, it is also a transit port
for Laos. Vinh Airport has been upgraded and put into use.

At present, Nghe An ranks 33rd among 55 cities and provinces in
attracting FDI. There are five JV projects licensed with a total
investment capital of US$85.3 million but only two of these are
really in operation: Ru Muou Quarrying JV and Vinh Wood Processing
JV.

Assessing the FDI situation in Nghe An, Mr. Dang Duy Hoa, chief of
the Cooperation and Investment Office (under Nghe An Planning and
Investment Service), said that most FDI in the province is in small
and medium projects. Except for the two operational JVs, capital
contribution of the Vietnamese side in the three remaining projects
is slow for lack of capital.

Phu Quy Sugarcane JV is the biggest project of Nghe An with total
investment capital of US$71.5 million. Along with capital
contribution in the form of land use rights, the Vietnamese side
must contribute US$6.36 million, but just US$4 million has been lent
by the Government from the loans granted by the Asian Development
Bank (ADB) so far.

Together with capital shortage, some other obstacles have also
slowed down project implementation. Currently, Phu Quy Sugarcane JV
is facing bad roads in its sugarcane supply region. Vinh Wood
Processing JV does not have the local materials due to restrictions
on wood exploitation. The lack of well-trained officials who are
fluent in foreign languages also affects investment growth.

How about the orientation of FDI in Nghe An in the coming time? Mr.
Dang Duy Hoa revealed that the province continues to call for
foreign investment in the list of planned projects for the five-year
plan 1996-2000 and to the year 2010. In the short run, Nghe An will
focus on mammoth projects such as industrial parks, automobile
assembly and production, Nghi Thiet Tourist Site and Hon Ngu
Deep-water Port with suitable investment forms.
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