VN business news (June 19)

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

New Route for Sino-Vietnamese Trade
Golden Tiger Resources finds manganese deposit in Vietnam 
Mitsui Develops Vietnam Container Port 
Vietnam's banking sector in disarray 
Vietnam to Boost Steel Production 
Vietnam: Communist Nation Gets High Marks For Pro-Poor Growth
ASEAN Countries Invest 8 Billion Dollars in Vietnam
United States awaits word from Vietnam on proposed trade pact
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New Route for Sino-Vietnamese Trade 

NANNING (June 19) XINHUA - China and Vietnam have opened a new route for
motor vehicles to transport goods for sale. 

Early this month, south China's Guangxi Zhuang Autonomous Region opened
the border near Jingxi County which is adjacent to Vietnam, after a
Sino-Vietnamese conference on trade in May that agreed on large numbers of
goods being allowed to be unloaded at designated sites. 

Officials in Guangxi say they believe the new route will make a
contribution to bilateral trade. 
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Golden Tiger Resources finds manganese deposit in Vietnam 

HANOI, June 19 (AFP) - Australia's Golden Tiger Resources has discovered a
manganese deposit in a northern Vietnamese province, a report said
Thursday. 

The deposit found in Na Tum, Bac Can province, has an initial estimated
reserve of 13 million tonnes with a manganese content of 9.9 percent, the
Thanh Nien newspaper said. 

Golden Tiger Resources has received permission from the Vietnamese
government to carry out explorations for gold and copper in an area of
1,300 square kilometers (520 square miles) also in Bac Can province. 

The Australian firm has invested more than four million dollars for mining
activities in Vietnam since 1993. 

The company entered a joint venture agreement with Canada's Teck in order
to apply for gold exploration in Bac Can and Quang Binh province. 
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Mitsui Develops Vietnam Container Port 

Comline Daily News Transportation
06/19/97

Mitsui & Co. {8031} has begun work on the Vietnam International Container
Terminal in Ho Chi Minh City with partners including Singapore marine
transport company Neptune Orient Lines. The number of containers handled
through the port of Ho Chi Minh City has been growing 30% each year
recently, making the building of the terminal timely. It will be the only
Vietnamese port with modern gantry cranes. The first phase will open in
mid-1998. Presently Ho Chi Minh City has three operating ports, which last
year handled more than 500,000 containers (20- foot container basis.) The
new port, when all three phases are complete, will have a capacity of
550,000 20-foot containers per year with five berths and five gantry
cranes. Ships of up to the 1000-container class will be able to use the
port. 
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Vietnam's banking sector in disarray 

By Frederik Balfour

HANOI, June 19 (AFP) - A series of bank scandals and a flurry of defaults
on letters of credit have raised new questions about the health of
Vietnam's banking sector and could scupper the country's plans to float
its first international bond issue, bankers say. 

Foreign bankers have been nervous about the fragile condition of the 54
private joint stock banks for months, but now lenders have even grown
chary of doing business with Vietnam's flagship state-owned Vietcombank. 

"A number of banks are handling this with extreme caution, and won't grant
letters of credit to Vietcombank without receiving cash deposits first,"
said David Hutcheson, chief executive for Hongkong Bank in Ho Chi Minh
City. 

Vietcombank's reputation, which has already been tarnished for failing to
honour letters of credit owed abroad, suffered another jolt on Monday
following the arrest of two of its senior executives. 

They were charged with overvaluing mortgages Minh Phung Garment Co, a high
flying conglomerate that since April has been the focus of a police
investigation into what is allegedly the country's biggest bank fraud
involving more than 370 million dollars. 

Thirty people have been arrested for their role in the scheme. 

Earlier this month the body of Minh Phung vice Finance director Nguyen Van
Ha was found on the rooftop of Incombank, which financed the lion's share
of the group's borrowings. Police have not ruled out murder. 

These revelations have sent a chill through the international financial
community, and foreign bankers, some of whom have been forced to accept
late payment on letters of credit, are bracing themselves for more bad
news. 

"Clearly this has forced everybody to be more prudent, but we expect more
problems to come," said a European banker in Hanoi. 

"It depends on bringing under control the apparent implosion of the
banking system," said a Hongkong-based investment banker. 

Unable to collect from their domestic customers, Vietnamese banks have in
turn defaulted on their obligations abroad. 

Foreign bankers say this unwillingness to play by international rules is
seriously damaging its international reputation and could jeopardize the
Ministry of Finance's plans for a debut 150 million dollar bond issue this
year. 

"Do we want to be involved with the same institution (Vietcombank) that is
being bailed out with Brady bonds when they are defaulting letters of
credit? They are shooting themselves in the foot," said the Hongkong
banker. 

Estimates of deferred letters of credit falling due this year could be as
high as 1.5 billion dollars, a condition compounded by an overvalued
exchange rate, bankers say. 

At the root of the problem is legislation which has failed to keep pace
with the growth of the banking industry. 

Standard prudent banking practices such as bad debt provisioning, credit
risk evaluation and compulsory bank audits are non existent in Vietnam,
and the State Bank's supervisory role is murky at best. 

The Ministry of Finance has not instilled much confidence either. It
recently instructed Vietcombank to withhold payment on a 5.6 million
dollar LC owed to an Australian shipbuilder, Brisbane Ship Constructions
Pty Ltd commissioned to build four coastal patrol boats for the customs
department. 

According to Rolo Prendergast, a Hongkong based executive at ANZ bank
which masterminded the Brady-style rescheduling package of 900 million
dollars in debt --some 750 million nominally held by Vietcombank--said the
deal would still go ahead as planned. 
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Vietnam to Boost Steel Production 

Xinhua English Newswire 06/18

Vietnam is launching five major steel projects to boost its steel
production, local press reported today.

The Vietnam Steel Corporation (VSC), which has set up 13 joint
ventures with foreign partners in steel production, will put more
stress on the production of wire to get free from dependence on
foreign supply.

At present, wire and other important materials for making special
steel, as well as plate steel used in shipbuilding, automobile, oil
and gas industries, have to be imported.
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Vietnam: Communist Nation Gets High Marks For Pro-Poor Growth 

By Johanna Son
06/18/97
Inter Press Service

Hanoi, June 18 (IPS) -- Vietnam has been praised for its economic
ascent over the past decade, but this communist country has not been
given as much credit for an even tougher accomplishment: using growth
to chip away at its people's poverty.

Many other nations are richer than Vietnam, but it has managed to make
better use of recent growth to produce relatively quick results in
fighting poverty since it first embarked on reforms toward a market
economy in 1986. Today, many of its human development indicators are
only slightly less than those of Asia's tiger economies.

The Vietnamese government basked in the praises of development experts
at the Asia-Pacific launch here last week of the Human Development
Report 1997, the eighth such report issued by the United Nations
Development Program (UNDP).

"Since 1986 poverty has been reduced by 35 percent -- an incredible
achievement in 10 years," said Nay Htun, UNDP's regional director for
Asia and the Pacific.

" Vietnam has emphasized growth, stability and equity. Clearly there
are lessons for all countries in this experience," he added.

A World Bank study using international comparative standards found
that poverty in Vietnam fell from 70 percent of the population in 1992
to 50 percent in 1993.

The UNDP report ranks Vietnam 33rd out of 78 developing countries,
with a human poverty index (HPI) value of 26.2 percent, putting it at
par with the average for developing countries.

This means 26.2 percent of the country's population are affected by
human poverty, which defined as not just income poverty but
deprivation measured by life expectancy, adult literacy, and access to
health care.

The HPI was introduced in this year's human development report.

UNDP officials say the HPI is a better indicator of deprivation than
the Capability Poverty Measure presented in the 1996 report and uses
different measurements of non-income poverty.

Vietnam is also one of only a handful of countries whose human
development ranking is at least 20 places higher than its GDP rank.

This means that while Vietnam's income remains small, it does better
in ensuring human well-being.

"This shows this country is successfully translating the benefits of
economic growth into improving the lives of the people," said Eduoard
Wattez, UNDP resident representative in Vietnam.

The country's per capita income stands at only about $200, far behind
Asia's more robust economies, but life expectancy is 66 years, adult
literacy 93 percent, and access to health services 90 percent.

Vietnam's adult literacy level is at par with Singapore and Hong Kong.

Between 1990 and 1995, Vietnam reduced the mortality rate of children
under five years old from 55 per 1,000 live births to 46, below the
level for a number of other developing Asian countries.

So far, the UNDP report says, "doi moi," Vietnam's economic reform
program, is working to ensure that more poor people can help
themselves and that poverty reduction becomes sustainable.

"This broad-based strategy has been quite successful, in part because,
besides creating an enabling environment for poor people, it has
emphasized a supportive environment for the non-poor and some social
assistance for those who may not rise on the tide of development," it
added.

Vietnamese income has also been climbing, though per capita income
hovers an average of $200. On average, real income per capita has
grown by more than 6 percent a year since 1989.

To build on its achievements so far, minister of planning and
investment Tran Xuan Gia said that the Vietnamese government is
finalizing a national program against hunger and poverty "with the
main aim of further speeding up hunger eradication and poverty
reduction efforts of our people."

Its respectable indicators of quality of life aside, however, Vietnam
remains a poor agricultural country.

Progress has so far been uneven, with much of the growth occurring in
and around large cities like Hanoi, Da Nang, and Ho Chi Minh City. Per
capita income in these areas is up to four times the national average.

And while Vietnam has achieved a 35 percent fall in poverty in just 10
years, the incidence of poverty across the country remains high.
Vietnam's national poverty measure puts poverty incidence at less than
20 percent. But this rises to around 50 percent, or 37 million people,
if measured by international standards.

UNDP data show that nearly 30 million Vietnamese spend at least 66
percent of all their money on food, and 14 percent of all children in
the country suffer from severe malnutrition.

A survey by the Vietnamese government found that one in five people
eats less than the minimum 2,100 calories a day needed for adequate
nutrition.

Beneath the averages that show Vietnam is reducing poverty lie signs
that some groups are particularly deprived, such as the country's 53
ethnic minority groups, who often live in remote areas of the country.

Some 66 percent of ethnic minority people live in poverty, compared
with 38.5 percent of the majority Kinh people. Minorities typically
earn only 60 percent of what the Kinh make.

Ethnic communities live on the fringes of society often find little
relevance in the education curriculum and consequently see little
impetus to stay in school.
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ASEAN Countries Invest 8 Billion Dollars in Vietnam 

Xinhua English Newswire
06/18/97

Total investment from ASEAN nations in Vietnam totaled about 8 billion
U.S. dollars for 312 projects by the end of May, according to a
Vietnamese banking report.

Ninety percent of the investment came from Singapore, ranking first
with a total of 6 billion dollars in 156 projects, to be followed by
Malaysia and Thailand.

Indonesia and Malaysia have focused their efforts on oil exploitation
while Thailand is engaged in exploiting and processing minerals, said
the report.

Vietnam became a member of the (the Association of Southeast Asian
Nations) in 1995.
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United States awaits word from Vietnam on proposed trade pact 

WASHINGTON, June 18 (AFP) - The United States has proposed a trade
agreement to Vietnam and is awaiting Hanoi's response, the Office of
the US Trade Representative told Congress Wednesday.

The proposed agreement to the former US enemy is "a very detailed and
comprehensive agreement," said Susan Esserman, general counsel of the
USTR, which promotes US trade overseas.

Negotiations on a trade pact between Washington and Hanoi, which
reestablished diplomatic relations in 1995, have been under way for a
year.

An agreement in principle was reached on intellectual property rights
in April, which Secretary of State Madeleine Albright may sign when
she visits Hanoi next week, Esserman said.

Jeffrey Bader, deputy assistant secretary of state for East Asian and
Pacific affairs, urged lawmakers to grant Vietnam most favored nation
(MFN) trading status. Every country in the world except states
suspected of terrorism have MFN status, which lowers import tariffs.

"It is in the interest of the US to provide MFN so that our commercial
relationship can achieve its full potential," said Bader,
acknowledging that "real impediments" were standing in the way of good
trade relations between the two countries.

Noting that Vietnam "must do much more to open its economy," Bader
added: "The Administration will consult with the Congress on the
requirements and the timing of decisions to grant MFN."

MFN status will also depend on an overall trade accord being reached
and suspension of a congressional amendment which requires a country
to allow free emigration.

Last April, Treasury Secretary Robert Rubin signed a deal to
reschedule 145 million dollars in debts run up by the former South
Vietnamese government, removing one of the last obstacles to full
economic normalisation.

Hanoi consequently will be able to arrange loans from the United
States beginning June 23.

US lawmakers, however, stressed their concern about US personnel still
missing from the Vietnam War, which ended in 1976, and urged Vietnam
to demonstrate its openness to democracy by releasing 100 Buddhist
monks and other religious leaders during Albright's visit.

Bader also noted that the United States was prepared to cooperate with
Vietnam in several areas including research on the effects of Agent
Orange, a chemical defoliant sprayed by the United States to destroy
jungle hideouts of northern Vietnamese forces in the South.

"We have scientists who are prepared to study and work with Vietnamese
scientists on that," Bader said.
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