VN business news (July 18)

[van <van@rock.civil.saitama-u.ac.jp>]

Asian Cash Rice Flat-Down; Vietnam, Thailand Offers Down
Vietnam To Vote For New National Assembly; Econ Tasks Ahead
Vietnam Govt Revenue Collection Up 5.4% On Year
Japan Cos. To Set Up Marine Transport Venture In Vietnam
Vietnam State Bank: No Plans To Widen Dong Trading Band
Avon cosmetics to set up Vietnam factory
Vietnam's Da Nang city seeks investment for projects
Vietnam PM encourages builders of Hanoi freeway project
Vietnam oil and gas corp to build Dung Quat oil refinery
Mitsui to cultivate Vietnamese sesame for sale to Japan

-------------------------------------------------------------------

Asian Cash Rice Flat-Down; Vietnam, Thailand Offers Down

SINGAPORE (Dow Jones)--Asian cash rice offers are flat to lower late
Friday on seasonal minimal demand, rice traders said.

Offers for Vietnamese 25% broken rice are heard at $220/ton, down from
$225/ton Thursday, and offers for Vietnamese 5% broken rice are heard
at $250/ton, down from $255-$260/ton Thursday.

Iran is still negotiating to purchase some 60,000 metric tons of Vietnamese
5% broken rice from the Vietnamese government, said a Ho Chi Minh City-based
rice trader.

In Thailand, offers for 100%B rice are heard at $345/ton, down from $350/ton
Thursday, and offers for 25% broken rice are heard at $265/ton, down from 
$280/ton.

-------------------------------------------------------------------

Vietnam To Vote For New National Assembly; Econ Tasks Ahead

Hanoi, July 18 (Dow Jones) -- Vietnamese voters go to the polls Sunday to elect 
a National Assembly whose first duties will be to select the country's new prime 
minister and president.

The 450-member body is also expected to ratify comprehensive new banking laws 
and work on legislation to curtail corruption in a number of the country's 
businesses and institutions.

The deputies will take office at a time when corruption scandals have affected a 
number of Vietnam's businesses, foreign investment has dropped and Communist 
Party officials remain divided as to where Vietnam's economy should go.

The National Assembly has become more independent in recent years and the new 
host of candidates are younger and better-educated than those running in the 
past, observers say.

A recent change in government laws allowed independent candidates to run for 
office and of the 663 candidates who made it through the Communist Party's 
selection procedures, only 117 are incumbents.

The elections of the country's new leaders are expected to take place once the 
National Assembly's first session begins, no later than Sept 20.

The strongest contender for the job of prime minister, replacing Premier Vo Van 
Kiet, is seen to be Deputy Prime Minister Phan Van Khai, while foreign minister 
Nguyen Manh Cam is seen taking over from president Le Duc Anh.

Observers are not convinced the National Assembly will have time to vote on the 
banking laws before next year. These laws, which have been through a number of 
revisions, according to western bankers and attorneys who have seen them, are 
meant to replace current legislation which is now hopelessly outdated.

The new commercial banking law is critical because it will give the mandate
for a host of related legislation regulating to a number of practices in the 
troubled sector, a Western economist based in Hanoi said.

As well, the National Assembly may also strengthen the laws dealing with 
corruption following measures taken earlier this year, which amended the penal 
code to make bribery involving amounts of 500,000 dong or more a criminal 
offense.

But it's not clear whether comprehensive action will be taken or whether the 
Assembly will simply ratify piecemeal legislation.

The question will continue to simmer as observers note the Communist Party is 
split over whether there should be an independent political force to tackle 
corruption.

In many cases the job has fallen to local officials who have been lax in 
following up complaints about corruption, government officials have noted.

-------------------------------------------------------------------

Vietnam Govt Revenue Collection Up 5.4% On Year: Report

Hanoi, July 18 (Dow Jones) -- The Vietnamese government has collected just 5.4% 
more in taxes and other revenues in the first half of 1997 than it did in the 
first half of 1996, a Vietnamese newspaper reported Friday. This is the lowest 
increase seen in the last ten years.Meanwhile, tax revenues from imports and 
exports decreased 5% on the year, partly because imports declined slightly.

Revenues from the state sector also failed to meet government targets and the 
deputy minister of the Ministry of Planning and Investment said it will be tough 
to meet its targets for the full year of 1997 and 1998,Dau Tu reported.

-------------------------------------------------------------------

Japan Cos. To Set Up Marine Transport Venture In Vietnam

TOKYO, July 18 (Dow Jones) -- A group of Japanese companies, including the major 
trading house Itochu Corp. (J.CIT), will establish a joint venture in Vietnam to 
operate a marine transportation business in the country, company officials said 
Friday.

Other Japanese companies involved in the venture are Nippon Yusen K.K.(J.NPY), a 
leading shipping company, Japan Logistic Systems Corp.,a transportation company, 
and Itochu Express Co., a wholly-owned Itochu subsidiary. Vietnamese investors 
in the venture include state-run Vietnam National Shipping Lines.

The joint venture, Vietnam High-Tech Transportation Co., will be capitalized at 
$3 million. It will be 40% held by the Japanese consortium, while the Vietnamese 
side will hold the remaining 60% stake. Headquartered in Hanoi, the venture will 
go into operation by the end of 1997.

The joint venture marine transportation business will link the ports of Ho Chi 
Minh City and Haiphong, southeast of Hanoi, once every 10 days.In addition, the 
venture will conduct land transportation services from the respective ports, 
allowing door-to-door delivery services between Ho Chi Minh City and Hanoi.

Company officials said growing demand for domestic transportation in Vietnam by 
Japanese companies advancing into the country prompted the establishment of the 
venture. They said the joint venture is the first marine transport venture to 
operate in Vietnam involving foreign capital.The joint venture aims to post 
sales of $10 million in the initial year.

Itochu Corp. is one of Japan's six big general trading houses. The company has 
about 800 subsidiaries.

Headquarters: 4-1-3, Kyutaro-machi, Chuo-ku, Osaka 541-77.

Significant developments: In June, Itochu said a group of Japanese companies,
including Itochu, will establish a joint venture in Vietnam to operate a marine 
transportation business in the country.

In May, Itochu said its parent pretax profit rose 27% in the year ended March 31 
from a year earlier to Y51.68 billion, after posting Y6.58 billion in profits 
from sales of stock holdings. It also posted an extraordinary charge of Y30.26 
billion as it doesn't expect to be able to collect credit from its clients. It 
also wrote off Y9.00 billion to liquidate a subsidiary.

For the current year, Itochu sees an unconsolidated pretax profit of Y45.0 
billion, net profit of Y13.0 billion, sales of Y14.500 trillion.

In December, Itochu said it will form a venture with Japanese life insurance
retailer Global Insurance Co. to sell insurance policies. It said in November it 
established a marketing unit in Australia to help local companies promote their 
products in Japan using the Internet.

-------------------------------------------------------------------

Vietnam State Bank: No Plans To Widen Dong Trading Band

Hanoi, July 18 (Dow Jones) -- Vietnam's central bank would like to see a weaker 
dong so as to boost the country's exports but has no plans to widen the band in 
which the Vietnamese unit trades against the dollar,a central bank official said 
Friday.

This means the State Bank of Vietnam is likely to continue its policy of 
weakening the dong by adjusting the target rate for the Vietnamese unit, set 
every morning on instructions from the bank governor's office.

'We will keep the dong weaker to encourage exports,' Vu Phuong Lien, the deputy 
director of the foreign exchange department told Dow Jones, adding that 'in my 
opinion a five percent (trading) band is enough,'

Some foreign bankers have said the State Bank of Vietnam may attempt to weaken 
the notoriously overvalued dong, as devaluations across the region threaten to 
make Vietnamese exports even more expensive.

For the last three years the State Bank has simply adjusted the middle rate of 
the band to guide the dong's value. But in March it took a more dramatic step by 
widening the trading band to plus-or-minus 5% from the target rate.

This caused an effective 4% devaluation as the dong immediately fell to the 
bottom of the band.

Lien said the fact that widening the band would cause a de facto devaluation
is one of the reasons the State Bank will not widen the band any further. The 
current 5% is 'rather large for the commercial banks,' she said.

But she said the recent sharp depreciations of the Malaysian ringgit,Thai bhat 
and Philippine peso will not affect the dong, because Vietnam's capital markets 
are still undeveloped.

She also said the government is worried about the prospects for gross domestic 
product growth, especially given the fact inflation is so subdued.

GDP growth slowed to 9.1% in the first half of 1997 from 9.3% growth last year,

The inflation rate was 4.5% in 1996 but Lien noted it was only 1.1% in the first 
half of this year with prices held back by lower food costs.

'We don't like inflation to be so low because it affects GDP. Our government
thinks 1% for the first half of this year is too low,' Lien said.

On Friday the dong is trading at 11,690-11,710, lower than the official
target rate of 11,125.

On Thursday the central level was set by the State Bank at 11,125 while
in the market the dong traded around 11,660-11,680.

-------------------------------------------------------------------

Avon cosmetics to set up Vietnam factory

HANOI, July 18 (AFP) - US cosmetics giant Avon plans to build a factory in Amata 
Industrial Park in Southern Vietnam, a park official said on Friday.

The official declined to give details of the project but the Vietnam Economic 
Times reported that Avon plans to spend nine million dollars to build a 100 
percent foreign owned plant.

The factory will be located in the industrial park in Dong Nai province adjacent 
to Ho Chi Minh City and will produce perfumes and cosmetics.

According to the newspaper, Avon has applied to the Ministry of Planning and 
Investment for a licence of 47 years and plans to produce primarily for export.

-------------------------------------------------------------------

Vietnam's Da Nang city seeks investment for projects

Hanoi, July 17 (VNA) - Foreign invested businesses in Da Nang city (central
Vietnam) grossed an export turnover of US$20 million in the first half of this 
year, representing one-third of the city's total exports.

To date, Da Nang has 41 licensed foreign investment projects with total capital 
of nearly US$433.5 million.

In addition, 22 branches and representative offices of foreign invested 
businesses licensed in other parts of Vietnam are operating in the city.

Da Nang is also seeking US$250 million foreign investment for six other 
projects.

Eight of the 27 projects which are now operating in the city are making a 
profit.

Over the past six months, they remitted US$2.33 million to the State budget, a 
1.35 percent increase compared to the corresponding period last year.

The foreign-invested enterprises created jobs for 17,000 workers in 
construction,garments, consumption agents, forestry, farm produce and sea 
product trade, contributing considerably to Danang's economic development.

However, some projects especially construction of hotels are behind schedule.
In addition, the BGI and Biofarmtech companies are running at a loss, and wood 
processing joint ventures are facing material shortages.

Labour violations continue to occur in 100-percent foreign invested enterprises
in areas such as over time and extending probation. Some enterprises have also 
violated regulations on social insurance and hygienic conditions for employees.

The decline of foreign investment in Da Nang has been attributed to the city's 
poor infrastructure facilities, high transportation fees, low consumption level, 
cumbersome investment procedures, high costs of land leases, and slow speed of 
projected and clearing.

The Government's recent decision allowing the Ministry of Planning and 
Investment to authorise the Da Nang Export Processing Zone to license foreign 
invested-projects in its own territory is expected to ease the situation.

The local authorities also proposed that the Government should grant 
preferential treatment, such as reducing land lease costs and revenue taxes, to 
foreign investors in the city. Meanwhile construction of infrastructure
facilities has been accelerated.

-------------------------------------------------------------------

Vietnam PM encourages builders of Hanoi freeway project

Hanoi, July 17 (VNA) - Prime Minister Vo Van Kiet has urged project management
not to allow technological and capital shortage problems to delay the scheduled 
completion of the first phase of Hanoi's Lang-Hoa Lac freeway by the end of the 
year.

Transport and communications officials briefed the PM on the difficulties when 
he visited the site last week.

The 30km freeway will link Hanoi's Lang Road to the future western suburb of Hoa 
Lac in Ha Tay province.

The Hoa Lac site, currently a barren hill area, is expected to become the hub of 
the planned urbanisation of Hanoi next century.

The Prime Minister's instruction to quickly surmount current difficulties on the 
freeway comes with over a fifth of the work of the first phase already 
completed. Work started on the project in August last year.

Prime Minister Kiet told construction executors and workers they should use 
initiative, improve technology and be creative to ensure the projects quality 
and safety while trying to stay within the projected budget.

He also asked authorities in Hanoi city and Ha Tay province to appropriately
compensate residents who had to move homes to make way for the project.

The 30km Lang Trung-Hoa Lac road will feed into the Ba Vi-Ha Tay region which 
will feature a hi-tech zone, a Vietnamese cultural village and a national 
university.

Total cost for the freeway is projected at VND 392.6 billion (about US$39
million).Two-thirds of that total figure will be raised from domestic sources.

-------------------------------------------------------------------

Vietnam oil and gas corp to build Dung Quat oil refinery

Hanoi, July 17 (VNA) - Vietnam Oil and Gas Corporation will be the investor
of a project to build Dung Quat oil refinery in Quang Ngai central province,
according to a Prime Minister decision dated July 10.

Total investment for the project is estimated at US$1.5 billion with US$600 
million mobilised from the State budget, US$400 million from long-term
foreign loans and bonds, and the remaining from other sources.

Main construction items of the project include a 110-ha factory, a 42-ha crude 
oil tank area, a 28-ha storage tank area, a 135-ha tanker terminal, and a 40-ha 
pipeline safety corridor, an underwater pipeline system and port facilities 
covering 336-ha.

Construction of the refinery, which has a designed capacity of 6.5 million
tonnes of crude oil per year (equivalent to 130,000 barrels per day) will 
commence later this year and is expected to be complete in 2001.

Once completed, the factory will turn out high-grade products including
propylene, liquefied petroleum gas, regular and super grade petrols, aviation 
fuel, diesel oil, and F.O. gas for both domestic consumption and export.

The Prime Minister also instructed the Ministries of Planning and Investment;
Finance; Construction; Science, Technology and Environment; Transport and 
Communications; Trade; and Agriculture and Rural Development, the Vietnam Oil 
and Gas Corporation, and local authorities to accelerate construction of 
infrastructural facilities so that construction of the refinery can be carried 
out as scheduled.

-------------------------------------------------------------------

Mitsui to cultivate Vietnamese sesame for sale to Japan

TOKYO, July 17 (Nikkei) - Mitsui and Kadoya Sesame Mills Inc., a leading
manufacturer of sesame oil, have signed letters of memorandum with 15 Vietnamese 
provinces to cultivate sesame seeds for export to Japan.

Mitsui and Kadoya Sesame Mills plan to harvest between 4,000 tons and 5,000 tons 
of sesame seed annually on a total of 6,000 hectares in 1997 and intend to 
further expand their shipments in 1998.

Kadoya Sesame Mills will use the sesame seed for foods and to produce sesame 
oil.

The sesame seed to be exported is an improved type developed specifically
for the Japanese market by Mitsui and Kadoya Sesame Mills based on research
conducted by the two companies in Vietnam since 1993.

Mitsui will be Japan's first large general trading company to import sesame seed 
from Vietnam that has been developed specifically for the Japanese market.

Although the sesame seed will initially be exported solely to Japan, there is a 
possibility of shipments being expanded to other countries.

Mitsui and Kadoya Sesame Mills are carrying out the sesame business in Vietnam 
to diversify their supply sources and respond to a Vietnamese government request 
for assistance in expanding that country's agricultural industry and developing 
competitive products for export to international markets. Mitsui and Kadoya 
Sesame Mills are aiming for first-year sales of approximately 500 million yen.

Mitsui handles approximately 50,000 tons of imported sesame seed annually,
equivalent to a more than 30% share of the domestic market, which is estimated 
to be 145,000 tons.

-------------------------------------------------------------------