VN Bus. News (May 9, 1997)

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

May 09: U.S.  Ambassador  to  Vietnam Faces  Dissent  and  Exodus  among
Businesses
May 09: Vietnam sees trade deal with U.S. as soon as August 
May 09: Asian Cash Coffee Steady;  Vietnam Supply Scarce 
May 09: Asian Cash Rice Flat; More  Vietnamese Seen Headed To Africa 
May 09: IFC, Vietnam Securities Commission Organize Training Session 


 Ambassador  to  Vietnam Faces  Dissent  and  Exodus  among  Businesses

By  Kristin  Huckshorn
San  Jose  Mercury  News,  Calif.

HANOI-- When  Pete  Peterson  arrives  today  to  begin  his  tenure  as 
U.S.  ambassador  to  Vietnam,  he  will  find  both  an  American
community  and  a
bilateral  relationship  in  need  of  strong  leadership  and  a  healing
touch.

Among  the  problems  facing  him:

Total  U.S.  investment  is  in  a  free  fall  with  two  blue-chip  companies 
abandoning  major  projects,  including  Chrysler's  pullout  last  week.

Preliminary  talks  on  a  bilateral  trade  pact  reveal  such  a  vast  gap 
between  Vietnam and  the  United  States  that  no  accord  is  expected
before  late 
1998.

The  small  U.S.  business  contingent  in  Hanoi  is  riddled  with  internal
dissent.

And  Peterson's  own  one-year  wait  for  U.S.  Senate  confirmation
following 
his  nomination  by  President  Clinton  highlights  the  political  baggage
still 
handicapping  renewed  ties  with  communist  Vietnam.

Against  that  backdrop,  Americans  in  Vietnam want  Peterson,  a  former 
prisoner  of  war,  to  take  on  an  ambitious  role,  playing  ambassador,
advocate, 
therapist  and  peacemaker.

"People  are  vesting  huge  hopes  in  him,"  said  an  American
businessman  in 
Hanoi  who  did  not  want  his  name  used.  "And  that  is  an  indication
of  how  most 
Americans  view  the  way  things  are  going  here."

Peterson  joins  an  American  community  estimated  at  4,000,  including  700 
in  Hanoi  and  about  3,000  in  Ho  Chi  Minh  City.  That  compares  with
35,000
Americans  living  in  nearby  Hong  Kong.

The  community  is  expanding,  albeit  slowly.  Three  years  ago,  after  the 
United  States  lifted  its  trade  embargo,  a  Chamber  of  Commerce
formed  in  Hanoi 
with  five  members.  Today,  it  counts  about  200  members.  But  after
a  growth 
spurt  in  1995,  only  13  new  companies  joined  last  year.

The  Ho  Chi  Minh  City  chapter,  which  counts  280  members,  is  enjoying 
steadier  expansion  largely  because  the  former  Saigon  operated  as  a
market 
economy  during  the  war  and  remains  Vietnam's  economic  engine.

U.S.  citizens  who  arrived  six  years  ago  remember  both  cities  as 
frontiers  with  drab  streets,  few  shops  and  no  American  products.
"I  will 
never  forget  the  day  `Nescafe'  hit  town,"  said  Robert  Watts,  a
computer 
programmer.

Steve  Bruny,  a  consultant  from  Fresno  who  came  to  Hanoi  in  1991,  at 
first  told  Vietnamese  he  was  Canadian.  "I  was  embarrassed  to  say
I  was  an 
American,"  he  said.  "I  did  not  know  how  people  would  react."

Today,  from  backpackers  to  embassy  officials,  Americans  report  a 
remarkable  lack  of  hostility  from  ordinary  Vietnamese.  "There  is  no 
bitterness  or  anger,"  said  Chuck  Searcy,  director  of  a  U.S.-funded 
humanitarian  project  providing  prosthetics  for  war  victims  and  children.

But  almost  two  years  after  the  Clinton  administration  restored 
diplomatic  relations,  mutual  distrust  still  colors  official  contacts.

"At  some  point,  the  Vietnamese  government  has  got  to  get  past  the
idea 
that  everything  the  U.S.  does  is  designed  to  topple  the  government
or  effect 
radical  change,"  said  Michael  Scown,  an  attorney  in  Ho  Chi  Minh
City.  "And 
the  U.S.  government  has  got  to  get  over  its  lingering  mistrust
that  stems 
from  the  war."

Among  Vietnamese  officials,  early  enthusiasm  toward  America's  return  is 
giving  way  to  frustration  over  slow  expansion  of  political  and
economic  ties. 
The  president  of  Vietnam's  Chamber  of  Commerce  and  Industry,  Doan
Duy  Thanh, 
said  at  a  recent  gathering  that  economic  links  "have  not  met  our
expectations 
and  wishes."

Conversely,  U.S.  investors  criticize  Vietnamese  leaders  for  failing  to 
accelerate  economic  reform  and  reduce  red  tape,  and  for  pervasive
corruption 
and  indecisiveness.  Numerous  business  people,  including  non-Americans,
privately  admit  they  are  scaling  back  until  Vietnam moves  its
nascent  legal 
and  tax  systems  toward  regional  standards  and  a  more  vibrant
consumer  or 
export  market  emerges.

The  bleak  mood  is  confirmed  by  numbers.  There  are  now  61  projects
worth 
less  than  $600  million  in  pledged  investment,  compared  with  $1.3
billion  in 
pledged  capital  eight  months  ago.  That  ranks  the  United  States
about  13th 
overall  --  down  from  sixth  just  10  months  ago.

Since  then,  three  significant  projects  have  collapsed.  Chrysler  Corp. 
announced  it  is  dropping  plans  for  a  $192  million  auto  assembly
plant,  the 
largest  U.S.  project  in  Vietnam.  That  follows  the  pullout  five
months  ago  by 
Occidental  Chemical,  which  was  slated  to  build  a  $109  million
plastics 
factory.  Both  companies  complained  Vietnam licensed  competing  projects 
despite  promising  to  limit  manufacturing  in  those  sectors.

Additionally,  a  $234  million  beach  resort  project  lost  its  license
last
fall  when  the  American  investors  could  not  produce  a  scheduled
down  payment.

But  at  least  four  major  U.S.  projects  are  in  the  pipeline,  said  an 
American  with  an  intimate  knowledge  of  investment  in  Vietnam.

A  potential  market  of  76  million  consumers,  as  well  as  a  literate, 
low-wage  workforce,  justifies  the  risks,  some  business  people  said.
"We're 
here  for  the  long  term,"  said  Keith  Budge,  country  manager  of
software 
company  Oracle  Corp.  The  company  just  took  over  a  new  eight-story
building 
and  plans  to  double  its  staff  of  56  within  one  year.

In  fact,  many  American  investors  are  as  critical  of  their  own 
government's  policies  here  as  they  are  of  Vietnam's.

The  U.S.  government  has  not  opened  a  consulate  in  Ho  Chi  Minh
City  and 
continues  denying  access  to  financing  from  institutions  like  the 
Export-Import  Bank  because  Vietnam does  not  allow  free  emigration.

Those  two  issues  could  become  early  triumphs  for  Peterson.  He
reportedly 
is  lobbying  former  colleagues  in  Congress  to  approve  money  for  the
consulate, 
and  is  pushing  the  administration  for  a  waiver  of  the  legislation
that  ties 
the  free  movement  of  people  to  some  trade  benefits  to  non-market
economies.

Peterson  also  must  unite  a  divided  U.S.  business  community  in  Hanoi.
The Chamber  of  Commerce  has  spent  several  meetings  bickering  over
personal 
differences.  So  much  hostility  surrounded  the  last  officers'
election  that 
non-Americans  were  recruited  to  count  ballots.  One  embassy  official
called 
the  trend  "counterproductive,  to  say  the  least."

Peterson  faces  a  more  formidable  battle  in  convincing  Vietnamese
leaders 
that  only  fundamental  reform  can  produce  a  trade  pact  acceptable
to  Congress.

Indeed,  those  negotiations  could  "raise  conflicts  and  create  such  a 
negative  backlash"  from  Vietnamese  officials  that  the  talks  would  harm 
bilateral  relations,  said  Michael  Samuels,  a  former  deputy  U.S.  trade 
representative.

Considering  the  challenges  facing  Peterson,  one  investor  offered  a 
suggestion:  "What  we  need  is  a  combination  of  Mother  Teresa  and
Superman. I 
hope  he  is  bringing  his  cape."


Fridayy - May 09, 1997

Vietnam sees trade deal with U.S. as soon as August 

Hanoi(Reuter) - Vietnam's official news agency said on Friday that experts
involved in trade negotiations between Hanoi and Washington believe an
agreement is likely to be reached in August.


``The two countries are likely to reach agreement on commerce and the
most-favoured nation (MFN) status by August this year, say experts involved
in the negotiations,'' the Vietnam News Agency (VNA) said.

The agency also said that the two countries had reached a draft agreement on
trade.

However, a U.S. diplomat in Hanoi said the agency was clearly referring to
the fact that the United States had presented Vietnam with its draft of an
eventual agreement.

``That is the only thing that has happened,'' he said, adding that he was
both surprised and delighted to hear that Vietnam was thinking of agreeing
to the draft's terms so soon.

VNA's report was issued shortly after the arrival of the United States'
first ambassador to unified Vietnam, Douglas ``Pete'' Peterson, who said he
hoped a trade deal would be agreed soon.

Progress on the accord, which would lead to the MFN trading status that
Vietnam so desperately wants, has been slow since the two countries
normalised relations in mid-1995.

Washington has urged Hanoi to quicken reform, liberalising both its trade
and investment regimes. Vietnam has countered that the United States should
soften its demands on a country still stricken by poverty.

Two small but symbolic steps towards an accord were taken recently when
Hanoi agreed to repay the United States debts which it inherited from the
former government of South Vietnam and when the two sides agreed on a treaty
on copyright protection.

VNA said that despite the absence of a trade agreement, two-way trade
between Vietnam and the United States had expanded to more than $1 billion
in 1996 from $225 million in 1994.

However, it said that the delay in MFN status was a major obstacle to
further development of trade.

``The delay in awarding Vietnam the MFN status by the U.S. has caused
difficulties for Vietnamese businesses in competition with other countries
on the U.S. market and losses to U.S. business interests and investors...''
it said. 

Friday- May 09, 1997 

Asian Cash Coffee Steady;  Vietnam Supply Scarce

SINGAPORE (Dow Jones)--Asian cash coffee prices are steady late Friday
in quiet trade following Thursday's regional holiday, traders in Asia
said.   

Coffee supply in  Vietnam is scarce because the country is at the end
of its 1996-97 crop, traders said.   

'Around 50% of the suppliers I called this morning aren't in a
position to supply any coffee,' the trader said. What coffee remains is
thought to be in the hands of farmers rather than exporters, traders
said.   

Given that the July contract on the London International Financial
Futures and Options Exchange has moved up $110/ton in the last week,
farmers in  Vietnam are holding stocks in hopes of a further move up next
week, traders said. 'We can't expect to get any offers from our local
suppliers today,' a Ho Chi Minh City-based trader said.   

 Vietnamese grade 2 (5% black and broken beans) is quoted at $200/ton
under Liffe July for prompt shipment, FOB, the Ho Chi Minh City-based
trader said. However, a Singapore-based trader disagreed, saying quotes
of $300/ton under Liffe July were available.   

Sellers in Indonesia aren't quoting late Friday following Thursday's
public holiday, traders said. However, prices are notionally assessed at
$270/ton under Liffe July, FOB, traders said.   

Liffe May and July finished $27/ton higher Thursday at $1,720/ton and
$1,780/ton, respectively, on speculative buying and bullish sentiment
carried over from the previous day.   

In New York, the May contract on the Coffee, Sugar & Cocoa Exchange
slid 5.65 cts/lb to close at 240.00 cts/lb, while the July contract
gained 5.50 cts/lb to settle at 216.90 cts/lb as players liquidated May
positions in favor of July.   

Liffe coffee futures are seen opening unchanged to $10 higher Friday,
traders said.   

-By Sarah Moore 65-421-4823 

Fridayy - May 09, 1997 

Asian Cash Rice Flat; More  Vietnamese Seen Headed To Africa 

SINGAPORE (Dow Jones)--Asian physical rice offers are largely stable
late Friday in Asia, with buyers busy enquiring for  Vietnamese rice,
currently the lowest priced in Asia, market sources said.   <P>Offers for
Vietnamese 25% broken rice are heard stable at
$195-$198/ton while the 5% broken rice is still quoted at $235/ton.<p>
The  Vietnamese 100% broken rice is offered unchanged at $205/ton, amid
fairly tight supply, according to a source with a provincial exporter in
Ho Chi Minh City.   <P>According to him, African countries and the United
Nation's World Food
Program, which is seeking rice for food aid, are likely to buy 
Vietnamese low-grade rice.   <P>In Thailand, exporters continue to cover
their outstanding orders,
said a trade source in Bangkok, adding shipments of 25% broken rice to
the Philippines are going on and should last through June.   <P>Thai 100%B
rice is offered flat at $335/ton, while quotes for the 25%
broken rice are heard higher at $260-$265/ton, up from $255/ton.   <P>'There
is short supply because there is still a lot of speculation.
Many local traders or the paddy merchants are still keeping the paddy,'
said the Bangkok trade source.   <P>Elsewhere, Indian 25% broken rice is
still offered around $260/ton,
while the Pakistani 25% brokens are stable around $220/ton.   <P>-By Joyce
Teo 65-421-4825


Fridayy - May 09, 1997 

IFC, Vietnam Securities Commission Organize Training Session

NEW YORK (DJ) -- The International Finance Corporation and the State
Securities Commission of Vietnam are organizing a two-week introductory
securities training program from May 12 to May 23 in Ho Chi Minh City, the
IFC said Friday.</p>
The program is being primarily sponsored through a grant from the Japan/IFC
Comprehensive Trust Frund, a technical assistance resource established in
1995 by Japan's Ministry of Finance, the IFC said in a news release.</p>
'To intregrate more fully into the global economy, Vietnam must develop a
securities market to provide enterprises with financing flexibility,
long-term funding and equity capital,' Jemal-ud-din Kassum, the IFC vice
president said.</p>
The IFC said that this program will be followed by a series of more
specialized training workshops offered to key regulators as well as
follow-up intensive training overseas. A training manual in Vietnamese has
been produced.</p>
A member of the World Bank group, the IFC has been assisting Vietnman in the
drafting of legal documents related to the establishment and regulation of a
securities market since 1992.