GAO CENTER

Vietnam stocks: up on Vinamilk issue, new listings

The VN Index on the Ho Chi Minh City Securities Trading Center closed at 573.79 points, bringing its gains so far in 2006 to nearly 87 percent, making it the best performing index in Asia so far this year.

US President George W. Bush, who arrived in Hanoi on Friday to attend the Asia Pacific Economic Cooperation summit this weekend, is scheduled to visit the six-year-old exchange on Monday during a trip to Ho Chi Minh City, formerly Saigon.

Vinamilk, Vietnam's largest listed firm, will issue 18,050,475 shares in three phases and use the proceeds "to raise investment, expand production and business and restructure the firm's finance", the State Securities Commission said late on Thursday.

Vinamilk shares rose VND3,500, or 3.87 percent, to VND94,000 ($5.85) on Friday, giving the firm a market value of $830 million, or 22 percent of the Ho Chi Minh City stock market capitalisation of $3.73 billion.

The State Securities Commission did not say how much Vinamilk planned to raise, but at current market prices its issue could bring in around $100 million.

The Ho Chi Minh City stock market is expected to see the debuts of at least 15 companies between now and the end of the year while a dozen more have sought licences to list.

Petrovietnam Drilling and Well Services Co, or PV Drilling, which has a market value of $262 million, said on Friday it had been given permission to list all its 68 million shares on Dec. 5.

Last year, shares in PV Drilling, the drilling arm of state oil monopoly Petrovietnam, surged more than 30 percent at their initial public offering as investors sought to invest in the fast-growing energy sector.

The sector has grown rapidly in recent years along with the economy, the world's fastest growing after China.

Vietnam's GDP growth is forecast to accelerate to 8.2 percent to 8.5 percent next year from 8.2 percent estimated for 2006.

Crude oil is its largest foreign exchange earner and Vietnam is the third-biggest crude producer in Southeast Asia.

In Hanoi, the small over-the-counter market is expected to double in size on Tuesday with the debut of Asia Commercial Bank (ACB), the country's fifth-largest bank valued on unofficial markets at $737 million.

ACB, the biggest of Vietnam's more than 30 equitized banks with assets of $2.5 billion last month, is set to become its second listed bank after Sacombank , which made its debut in Ho Chi Minh City in July.

Vietnam's main share index rose 2.49 percent on Friday after the country's largest listed firm won approval for a major share issue and as investors awaited a flood of new listings.
TNnews 11/17/06

China, Vietnam agree to enhance friendly ties, overall cooperation

China and Vietnam have agreed to enhance good-neighborly and friendly ties and overall cooperation, said a joint declaration issued by the two countries on Friday.

In the declaration, the two sides expressed satisfaction with the ever-reinforcing ties between the two parties and countries, adding that China and Vietnam share strategic interests over many major issues.

Under an international situation that is undergoing profound changes, enhancing the Sino-Vietnam good-neighborly and friendly ties and comprehensive cooperation is in the fundamental interests of the two parties, countries and peoples, and conducive to peace and development in the region and the world as a whole, the declaration said.

According to the declaration, issued during Chinese President Hu Jintao's visit to Vietnam, the two sides agree to enhance high-level exchanges of visits and expand pragmatic cooperation in economy and trade, technology and science, education and culture.

The two countries will be committed to the principle of "friendly neighborliness, comprehensive cooperation, long-term stability, future orientation" and the four-good spirit -- good neighbors, good friends, good comrades and good partners -- in their relationship development, the declaration said.

Hu is in Vietnam for a state visit and has held talks with General Secretary of the Central Committee of the Communist Party of Vietnam Nong Duc Manh, President Nguyen Minh Triet, Prime Minister Nguyen Tan Dung and National Assembly Chairman Nguyen Phu Trong.

In the declaration, the two sides also expressed satisfaction over their cooperation in regional and international affairs, reaffirming willingness to continue to enhance their coordination and to work together to safeguard and promote peace, stability and development in the region and the world at large.

They also called on the United Nations to play a bigger role in meeting the new challenges and threats, safeguarding peace and security of the world and promoting common development of its member states.

China also expresses its support for Vietnam in its bid for the non-permanent membership of the UN Security Council in 2008-2009.

In the declaration, Vietnam also reiterates its adherence to the one-China policy and its support for China's Anti-Secession Law.

Reaffirming its firm opposition to "Taiwan independence" and pledging not to have official ties with Taiwan, Vietnam said it hopes to see an early reunification of China, according to the declaration.

Vietnam is the first leg of Hu's four-nation tour, which will also take him to Laos, India and Pakistan.

Source: Xinhua 11/18/06

Editorial - Houston Chronicle Unfair trade

Unfair trade
Congress' vote against a speedy trade agreement with Vietnam shows politics trumping the national good

When Congress failed to pass a measure to fast-track trade normalization with Vietnam, it robbed the visiting President Bush of a timely gift to his hosts in Vietnam. It also revealed an unwise tradeoff at home: protectionist pandering deprived the United States of a foreign policy tool.

To Republicans' chagrin, the House of Representatives this week failed to deliver the two-thirds majority that would have let normalization move quickly into law. Lawmakers have now postponed the vote until December.

Too bad: President Bush was correct in calling for starting permanent normal trade relations for the first time in 30 years. Such a measure, he argued, would encourage Vietnam's government to open up to private investment.

The good news is that Democrats and Republicans in Congress both predict this measure ultimately will pass. The bad news: This sound idea was sabotaged by misplaced protectionism, not to mention Democratic pique against a lame-duck president. If continued, those trends may prove more damaging for the United States than any short-term delay in normalizing trade means for Vietnam.

Country-by-country trade deals such as this one, many economists say, don't really wield much economic impact on the United States. "The United States allows almost full access to our markets," said economist Barry Bosworth of the Brookings Institution in Washington, D.C. "If other countries don't open up, it's their loss."

But normalizing trade would have considerable effect as a foreign policy tool. It gives foreign investors to Vietnam more confidence in the country's stability. For Vietnam, meanwhile, any liberalization, even minimal, will help its economy. Crucially, it also strengthens the foundation for democratic governance there.

Although Vietnam's economy is still heavily shaped by the government, the country will have to improve its transparency, rule of law and legal system if it wants to take advantage of foreign investors' interest there.

For the United States, trade liberalization will always have winners and losers. Often, the losers tend to be workers. Yet trade is only part of the equation that determines job stability in this country. Our wage structure, pension portability and above all our health care inefficiency are several of the weakest spots in job security.

Vietnam, which has joined the World Trade Organization, can expect to normalize trade with America soon. But in slowing down that process, protectionists on both sides of the aisle robbed the president of a useful diplomatic tool. That's a poor tradeoff for the United States.

Houston Chronicle 11/17/06

All online game operators in Vietnam hub fined, games banned

The Department of Posts and Telematics fined the six VTC Intercom, VinaGame, VDC, Asia Soft, Cyberworld Corporation, and FPT Telecom VND15-VND20 million each (up to US$1,250).

Three of the games they provide, Legend of Three Kingdoms Online, Silkroad Online, and Nine Dragons, are to be shut down by December 1.

The 10 others, including Space Cowboy, Swordsman Online, Ragnarok, Gunbound, MU, and PTV are to be stopped by January 1.

The companies were penalized for lacking certificates either from the Ministry of Posts and Telematics or from the Ministry of Culture and Information, the department said.

Game providers seek licenses in vain

Pham Thanh Duc, deputy director of FPT Telecom, said earlier he had applied to the culture ministry for a censorship certificate last July but the ministry had rejected the application.

He had submitted it for a second time last month and was waiting since, he said.

VinaGame chairman Le Hong Minh said the culture ministry had issued censorship certificates for all his companys games but they lacked technical certification from the post and telematics ministry.

VinaGame had applied for them last September but had received no reply yet, Minh told Thanh Nien newspaper earlier this month.

In one fell swoop, Ho Chi Minh City authorities fined all six online game operators in the city and banned all 13 games they have been providing for lack of permits and other papers.
TNnews 11/17/06

Vietnam approves Posco's plan to invest $361 million in steel plant

HANOI (MarketWatch 11/16/06) -- Vietnamese Prime Minister Nguyen Tan Dung has agreed to allow South Korea's Posco (PKX) to invest $361 million to build a steel plant in Ba Ria-Vung Tau province, a government official said Thursday.

The world's fifth-largest steel maker by output will be the sole owner of the plant, which will be built 100 kilometers east of Ho Chi Minh City.

The plant will have a production capacity of 700,000 metric tons of cold-rolled steel products a year, said the official from the Ministry of Planning & Investment.

"The ministry will issue an investment license soon, and Posco is expected to start operating the plant by the end of 2009," the official told Dow Jones Newswires.

In 2005, Vietnam produced 3.66 million tons of steel products, of which 1.2 million tons were cold-rolled steel.

However, the country's demand for cold-rolled steel far exceeded domestic output, resulting in 3.35 million tons of cold-rolled steel product imports.

Last month, Posco said it was considering expanding the capacity of the soon-to-be-built plant to 1.5 million tons after 2009.

The company also plans to build a 3-million-ton hot-rolled steel plant in Vietnam from 2010, according to Vietnamese state media.

Posco officials weren't immediately available for comment.

Vietnam's Growth to Be a Focus of Summit

Vietnam's Booming Economy to Be in Spotlight at 
Pacific Rim CEO Summit

 HANOI, Vietnam (AP 11/16/06) -- Vietnam's booming economy will be in the  spotlight when 1,200 business 
executives from corporations around the  Pacific Rim descend on Hanoi on 
Friday for three days of speeches,  seminars and hobnobbing.
  
  
The annual CEO Summit of the Asia-Pacific Economic Cooperation  forum, 
which overlaps with the APEC leaders' weekend gathering, will  address 
issues such as attracting foreign direct investment, security  threats 
and how to revive stalled world trade talks.

Delegates will hear from nine leaders of APEC's 21 member economies, according to a preliminary program, as well as top executives from multinational corporations such as HSBC, Sinopec Corp. and Qualcomm Inc.

There is sure to be plenty of talk about Asia's dynamic economic growth, but host nation Vietnam and its dramatic development will likely grab m uch of the attention.

In fortuitous timing, the CEO gathering comes fresh on the heels of two of the biggest business developments to hit Vietnam in years -- its approval for membership in the World Trade Organization and Intel Corp.'s announcement last week that it will invest $1 billion in a chip plant in Ho Chi Minh City.

Foreign investment is surging, authorities are accelerating market reforms and economic growth has been racing ahead at a remarkable 7.5 percent pace.

Vietnam's fledgling stock market -- just 52 listed companies and growing rapidly -- has seen its overall value increase tenfold in less than a year.

"We see our customers coming to Vietnam, and that's one of the drivers for us coming here," said Chris Rooney, a senior vice president at AT&T Inc., who will be participating in a panel discussion at the gathering.

This week, AT&T said it has expanded its global networking servic es for multinational companies to Vietnam through an agreement with Viettel Corp., a government-owned telecommunications company.

Just about the only recent disappointment for Vietnam was the U.S. House of Representative's rejection on Tuesday of a bill to permanently normalize trade relations. Approval of the bill is required for American businesses to take full advantage of Vietnam's entry into the WTO, which is officially expected to occur next month.

But Susan Schwab, the top U.S. trade negotiator who is also in Hanoi for APEC, expressed confidence that the bill will pass next month.

Still, business executives point out that Vietnam faces plenty of challenges as it seeks to integrate into the world economy.

Than Trong Phuc, Intel's country manager for Vietnam, Laos and Cambodia, said Vietnam needs to invest in training more engineers and make its university education more practical and less theoretical.

"We would like to work with the government to develop a pipeline to encourage more students to get technical training," Phuc said in a panel discussion Thursday sponsored by Vietnam Chamber of Commerce and Industry.

The CEO summit kicks off Friday morning with a welcome from Vietnamese President Nguyen Minh Triet, followed by a panel discussing the state of the world economy and what's needed to revive World Trade Organization talks that broke down in July.

Members of that panel include Supachai Panitchpakdi, the former head of the WTO, HSBC CEO Michael Smith, PetroVietnam Vice President Do Van Hau and Nick Reilly, president of General Motors Asia Pacific.

Vietnam's Economy Making Strides

Vietnam's Economy Making Progress but Held Back by 
Lack of Infrastructure, Tech Training

HANOI, Vietnam (AP 11/16/06) -- Vietnam's economy is making impressive strides,  but is 
still encumbered by obstacles such as poor port facilities, a  dearth of 
highly trained engineers and a university system that doesn't  do 
enough to reward innovation, experts said Thursday.
  
Intel Corp., which just last week said it was investing $1 billion  in a chip plant 
in Ho Chi Minh City, would like the government to  invest more in 
technical training, said Than Trong Phuc, Intel's  country manager for 
Vietnam, Laos and Cambodia.  

"There are more  students that go into business and marketing and finance than technical   studies. We would like 
to work with the government to develop a  pipeline to encourage more 
students to get technical training," Phuc  said during a panel discussion 
on "Doing Business with Vietnam"  sponsored by the Vietnam  Chamb
 er of Commerce and Industry.
  "This  is understandable because Vietnam does not yet have a high-tech market  that will employ 
these students. But we are here and we are willing to  help develop this 
pipeline," he said during the seminar, held on the  sidelines of the 
Asia-Pacific Economic Cooperation forum.
  Intel  also wants to work with universities and the Ministry of Education to  modernize the 
curriculum to include more courses that emphasize  hands-on experience 
and rely less on theory, Phuc said.
  Vietnam's  economy is expected to expand by 8.2  percent this year, the highest  rate in 
Southeast Asia, and government authorities have accelerated  market 
reforms.
  But the country needs to develop a "culture of  innovation," 
particularly at the university level, said Jonathan  Pincus, senior 
country economist with the U.N. Development Program.
  Vietnam needs "universities that reward excellence, universities  that res
 pond  more quickly to demand from industry for innovation, 
universities that  have more autonomy that reward researchers for creativity and  
initiative," Pincus said.
  Vietnam's approval for membership in  the World Trade Organization last week will help make it "one of 
the  most open economies in the entire region," said Christoph Wiesner, a  
member of the European Commission's delegation.
  But the country's  still-developing infrastructure "is an obstacle to investors," 
he said.
  "Ports  are one major headache. Despite some improvements, it takes too long to  ship a container to main overseas 
destinations and it's quite a bit  more expensive than elsewhere in the 
region," Wiesner said.
  Intel's Phuc also said a better command of English would help workers in the technology industry.
  
"When employees have a good idea, but cannot sell the idea within the team 
or within the company, that's very key," he  said.

Japanese business mission to visit Vietnam with PM

TOKYO, Nov 16 (Reuters) - When Japanese Prime Minister Shinzo Abe visits Vietnam from Friday for a Pacific leaders meeting, a business delegation more than 100 strong will go with him in a rare move for a Japanese leader.

The 134-person delegation will be led by Fujio Mitarai, the head of Japan's biggest business lobby, the Japan Business Federation (Keidanren), who is also chairman of Canon Inc. .

Other key members include top personnel from such firms as Sony and Toshiba as well as several regional electric power companies.

Japanese Chief Cabinet Secretary Yasuhisa Shiozaki said the mission aimed at deepening ties in a wide range of fields, adding that a similar delegation had accompanied Vietnamese Prime Minister Nguyen Tan Dung to Japan earlier this year.

"We don't see Vietnam just as a market, but as a nation with which we want warmer ties in a number of fields," Shiozaki told a news conference on Thursday.

Last year, Japan was the No. 2 destination for Vietnamese exports after the United States, at $4.4 billion, according to the Japan External Trade Organization.

HSBC sells $12 mln Vietnam credit linked note

HONG KONG, Nov 16 (Reuters) - HSBC has sold a five-year note linked to the credit risk of BB rated Vietnam and its dong currency -- the first such note linked to the fast-growing country's domestic interest rates, the bank said on Thursday.

The return on the credit linked note (CLN) is linked to the yield on the five-year Vietnam government bond and the initial coupon on the bond is 8.38 percent.

The instrument allows global investors to gain exposure to Vietnamese interest rate and currency risks without them having to set up custodian accounts.

Marubeni,Dongfang Elec to build Vietnam power plant

TOKYO, Nov 16 (Reuters) - Japanese trading house Marubeni Corp. said on Thursday it and Chinese partner Dongfang Electric Corp. have won a $460 million contract to build a coal-fired power plant in Vietnam.

Marubeni, Japan's fifth-biggest trading company, will partner with China's biggest heavy machinery maker, to build a 600 megawatt plant adjacent to another plant of the same size that the two firms are building for a government-owned company.

Construction will start in early 2007.

It will be Marubeni's eighth power plant project in Vietnam.

The contract price relates to the construction of the plant, though not to actual power generation.

Marubeni has built seven power generation plants in Vietnam with a total generation capacity of 2,400 megawatts, about 20 percent of the country's total power capacity, Marubeni said in a statement.

Demand for electricity in Vietnam grew more than 15 percent annually between 2003 and 2005.

Marubeni is one of the biggest Japanese trading houses involved in power generation projects in Asia. A consortium led by Marubeni last month won a $2.3 billion contract to build and operate a natural gas power plant in Qatar that can generate 2,000 megawatts, big enough to power 600,000 homes.

Shares in Marubeni finished up 0.18 percent at 572 yen, outperforming a 0.49 percent fall in the benchmark Nikkei average . ($1=117.95 Yen)

Vietnam's Vinalines Forms $100 Million JV With SSA Marine

HANOI -(Dow Jones 11/15/06)- State-owned Vietnam National Shipping Lines, or Vinalines, has signed an agreement to form a $100-million container terminal joint venture with Washington-based SSA Marine, a Vinalines official said Thursday.

The joint venture will build three large wharves at Cai Lan port, about 200 kilometers east of Hanoi, said Bui Van Chung, director of Vinalines' international business department.

"This is the first joint venture formed with a U.S. company to build a Vietnamese port. It is expected to become operational in 2008," Chung told Dow Jones Newswires.

The agreement was signed on the sidelines of the Asia-Pacific Economic Cooperation forum being hosted in Hanoi, and was witnessed by Vietnamese Prime Minister Nguyen Tan Dung.

Vinalines will contribute 51% of total funding for the facility, with SSA Marine providing the balance. The joint venture has a 50-year operating license, Chung said.

"Vietnam needs to improve its infrastructure to facilitate exports," he added.

Vinalines plans to raise VND51 trillion ($3.2 billion) between 2006 and 2010 to invest in its shipping fleet and upgrade its ports.

In the first half of this year, Vinalines reported a net profit of $13.4 million on revenue of $327 million, down 34% on year in profit terms, but up 4% in revenue terms.

US assures Vietnam it will soon normalize trade ties

ABOARD AIR FORCE ONE (AFP 11/15/06) - The United States assured Vietnam it would quickly normalize trade ties, days after Congress failed to pass such a bill in time for President George W. Bush's arrival there for a regional summit.

"It is unfortunate that it could not have been done before the president arrived, but I think the message for the Vietnamese people will be, 'this is going to get done,'" Bush's national security advisor Steve Hadley told reporters on Air Force One taking the president to Asia.

Hadley said the White House believed there were majorities in both the House of Representatives and the Senate to back "permanent normal trade relations" (PNTR) to Vietnam.

Bush and the Hanoi leadership had hoped the House and Senate would approve PNTR with the communist nation before Bush arrives in Hanoi Friday for an Asia-Pacific Economic Cooperation ( APEC) summit.

The bill would grant full US trading rights not subject to annual review to Vietnam, a fast-emerging economy that is expected to become the 150th member of the World Trade Organisation (WTO) before the end of the year.

It would also ensure that US companies enjoy full market access under Vietnam's WTO accession as they seek to step up business in the country of 84 million people, which has Southeast Asia's highest economic growth rate.

"This is a clear priority for the administration, and we are confident that ultimately PNTR will be passed for Vietnam," US Trade Representative Susan Schwab told a briefing in Hanoi.

"The Bush administration and the leadership in the Congress -- Republican and Democrat -- are clearly committed to enact Permanent Normal Trade Relations for Vietnam when Vietnam joins the World Trade Organisation."

Washington and Hanoi have worked hard to make Bush's visit a success, with Vietnam expelling a jailed US dissident last week and the United States taking Vietnam off a blacklist of countries repressing religious freedom.

Schwab said Monday's vote had failed because the procedure used required a two-thirds majority at a time when many legislators were absent following the mid-term elections, in which Democrats took both chambers in a landslide.

When the US legislature reconvenes in early December, Schwab said, "we would expect Congress to take up PNTR in both houses of Congress under normal procedures," requiring only a simple majority for the draft to pass.

"We will continue to press very hard to see that enactment takes place before Vietnam actually joins the WTO," she said.

Bush goes East

Wednesday 11/15/06

Moscow - Met with President Vladimir Putin.

Thursday 11/16/06

Singapore - Meets with the prime minister.

Friday 11/07/06

Hanoi, Vietnam - Meets with the prime minister of Australia; meets with top Vietnamese leaders.

Nov. 18

Hanoi, Vietnam - Meets with the president of the Republic of Korea; attends the Asia-Pacific Economic Cooperation meeting (through Nov. 19).

Nov. 19

Hanoi, Vietnam - Meets with the president of China; meets with the president of Russia.

Nov. 20

Ho Chi Minh City, Vietnam - Participates in round table with business leaders; participates in a briefing on HIV/AIDS and avian influenza.

Bogor, Indonesia - Meets with the president of Indonesia.

Nov. 21

Honolulu - Participates in a breakfast with US troops.

- Reuters

Russia's leading bank to expand to Vietnam

Yulia Chulina, a member of the VTB Management Board, said at a seminar on Vietnam-Russia economic cooperation in Moscow that Vietnam's economy was growing well with a lot of potential for the banking sector.

The seminar, hosted by the Vietnamese Embassy in Russia, also aims to introduce the Vietnam-Russia Bank (VRB), which is a joint venture between the VTB and the Bank for Investment and Development of Vietnam (BIDV).

The VRB is scheduled to become operational by November 19 with the opening of an office in Hanoi.

The event expects to draw the presence of the two countries' top leaders, President Nguyen Minh Triet and President Vladimir Putin, who will visit Vietnam to attend an Asia-Pacific Economic Cooperation (APEC) summit meeting.

The Russian Bank for Foreign Trade (VTB), which will launch a joint venture in Hanoi next week, considers Vietnam an important part of its expansion plans in Asia, a bank representative said Tuesday.

TNnews 11/15/06

Behind Congress's delay of Vietnam trade vote

Postponement of a decision on Vietnam's trade status reveals concern over the growth of free-trade pacts.

NEW YORK US pork producers foresee a boom if the United States adds Vietnam to its list of countries that enjoy permanent normal trade relations.

Other companies ranging from Harley-Davidson to Citigroup are also eager to gain access to one of the world's most vibrant developing economies.

But they will have to learn an Asian virtue - patience - because Congress this week postponed a vote that would have added Vietnam to the list of nations enjoying this trade status. The delay was an embarrassment to the White House since President Bush is on his way to Vietnam for an Asian summit meeting and would have touted the benefits of a completed pact. Now, most analysts anticipate Congress will vote on it next month.

Behind the delay is an underlying concern, reflected in the election results, over the growth of free-trade pacts. Politicians are once again focusing on the giant US trade deficit, now at about $684 billion this year and growing. One particular area of concern is China: Trade analysts anticipate the administration will be under pressure to get results in its negotiations with Beijing over revaluing its currency.

"In terms of protectionism, we appear to be tilting that way," says Clayton Yeutter, a former US trade representative. "In terms of the US-China relationship, I think the patience has worn thin."

The Vietnam vote may indicate how hard it will be to pass any trade legislation next year. For one thing, trade analysts doubt Mr. Bush can win approval for an extension of fast-track authority (which means Congress can vote only up or down on a trade pact).

Several bilateral trade agreements, for such countries as Peru and South Korea, may also be in trouble. For example, the US wants to add rice to the South Korean negotiations, says Ben Carliner, director of research at the Economic Strategy Institute in Washington. Rice has been a sticking point in past negotiations with Asian nations.

"If we were to get the Korean trade pact through, it would put a lot of pressure on Japan since they now compete with Korea very strongly in electronics and autos," says Mr. Carliner. "It would give a big advantage to Korea."

If the Bush completes the negotiations, he would have to make a major push to get Congress to approve them. "A lot of members of Congress don't want to vote for anything that speaks to trade liberalization," says Mr. Yeutter.

In fact, business interests who are in favor of the Vietnam bill point out that it wouldn't lower tariffs for Vietnam. "This is removing tariffs in Vietnam for us and other [World Trade Organization] countries," says Christopher Wenk, director of international trade at the National Association of Manufacturers in Washington.

US pork producers are particularly eager to gain access to Vietnam. Vietnamese cuisine uses parts of the hog that are not of great interest to Americans. A study has found that the sale of these parts would add about 52 cents a hog to profits over 10 years, according to Nick Giordano of the National Pork Producers Council. "That's a significant increase in profit," he says.

Despite such profit prospects, the Bush administration has had to work hard to get elected officials in the South on board because of concerns about large surges of textile and apparel imports from Vietnam. The US has an estimated $5.7 billion trade deficit with the Asian nation, and most of it is from textiles.

Christian Science Monitor 11/16/06

APEC members count Vietnam advantages

Sachio Kageyama, general director of Canon Vietnam, told the forum that Vietnam had abundant human resources and skilled labor.

They are well-trained, creative, and good at English, he said.

Many workers catch up after only two weeks of training. Particularly, they can work with extreme precision.

Canon decided to enlarge its investment in Vietnam not only due to the incentives offered by the Vietnamese government but also because of the sharp rise in the number of local suppliers and vastly improved infrastructure, he said.

David Knapp, president of the American Chamber of Commerce in Vietnam, said the nation had an advantageous geographical and political position.

As a new World Trade Organization member with a stable socio-political situation and good business opportunities, Vietnam would become more attractive to US investors, he said.

An official from Thailand admitted that Vietnam had advantages compared to his country, especially in low investment-related costs as mentioned in a recent survey by the United Nations Conference on Trade and Development (UNCTAD).

An UNCTAD official, Hafiz Mirza, said Vietnams prospects of attracting FDI had become brighter after its WTO accession.

What it should do was restructure and give priority to sharpening its strong points to attract further FDI from the Asia Pacific region and elsewhere, he said.

Kenjiro Ishiwata, head of the Japan External Trade Organization office in Hanoi, said more Japanese investors had rushed to Vietnam recently, creating a second wave of investment from Japan into Vietnam.

Besides services I think more manufacturers too would come to Vietnam, he said.


Mr. Kenjiro Ishiwata, head of the Japan External Trade Organization office in Hanoi

Low costs and a skilled workforce give Vietnam an edge over many other APEC member economies in attracting foreign investment, the APEC investment forum heard in Hanoi Wednesday.
TNnews 11/15/06

US company mulls $1 bln tourist project in Vietnam island

The island, which is part of Kien Giang province, is 300 kilometers west of Ho Chi Minh City.

"Rockingham Corp. is looking at building various tourist facilities on the island between 2006 and 2015," Thai Dac Liet, director of Kien Giang province's investment and planning department, told Dow Jones Newswires.

Liet said that Nevada-based Rockingham was studying local investment conditions and would submit a formal application for the project later.

He didn't elaborate on when this might happen.

He noted that the development of projects on the island could be slow because the authorities haven't upgraded a local airport and the island lacks major infrastructure.

Local media reported that 150 foreign investors were applying for investment licenses to build tourism projects on Phu Quoc Island.

Dow Jones Newswire said Rockingham officials weren't immediately available for comment.

US-based Rockingham Corp. is considering investing up to US$1 billion in tourist projects on Phu Quoc Island in south Vietnam, a Vietnamese government official said Wednesday.
TNnews 11/15/06

AT&T expands corporate networking services to Vietnam in deal with local telecom

HANOI, Vietnam: AT&T Inc. said Wednesday it has expanded its global networking services for multinational companies to Vietnam through an agreement with Viettel Corp., a telecommunications company run by the military.

The agreement will allow AT&T to use Viettel's domestic network to provide the same level of data delivery and communications service for its corporate clients in Vietnam as it does in more than 120 other nations around the world, AT&T executives said.

No financial terms of the contract, signed last week, were released.

"Our customers were coming to Vietnam because of the growth of the market here, and we were driven by that demand to find a good partner here," Chris Rooney, AT&T's senior vice president of worldwide customer service, said in an interview in Hanoi.

Rooney was in town to attend the Asia-Pacific Economic Cooperation forum's annual CEO Summit, which will bring to together 1,200 business executives starting Friday. The gathering overlaps with the APEC leader's meeting this weekend.

Viettel Corp. is also the holding company for Viettel Mobile, one of the country's six mobile phone carriers. Viettel Mobile is planning to sell shares to the public after receiving government approval earlier this year.

AT&T's corporate clients including Intel Corp. and General Motors Corp. of the U.S., Bluescope Steel Ltd. of Australia and Evergreen Marine Corp. of Taiwan.

International Herald Tribune 11/15/06

Vietnam miner, medicine firm get listing permits

Hanoi-based Cavico Vietnam Mining and Construction Co. was licensed to list all its 3.1 million shares on the Ho Chi Minh City Securities Trading Center, the State Securities Commission (SSC) said in a statement on Wednesday.

It also said Ho Chi Minh City-based Imexpharm Pharmaceutical Co had been given permission to list 8.4 million shares.

The values of the two firms were not immediately available and they have yet to announce their debut dates.

In September, Cavico said it sold a 5 percent stake to a Vietnamese equitized bank at face value for VND1.55 billion ($96,500). The firm has a registered capital of $1.93 million.

Cavico and Imexpharm are among two dozen firms seeking to trade on the Ho Chi Minh City market, Asia's fastest rising bourse of 2006, by the end of the year to win tax relief.

In order to boost the capital market, the government has been offering two years of 50 percent corporate income tax relief to companies which make their market debuts by the end of 2006.

A race to meet the deadline has produced a rash of IPOs in recent months.

From Thursday to Dec. 21, seven companies are scheduled to make their debuts in Ho Chi Minh City and 10 more have permission to list but have not announced dates.

The VN index rose 1.32 percent to close at 563.77 points on Wednesday and is now up 83 percent so far this year, making it Asia's fastest rising index this year.

The six-year-old market now has 53 companies and a capitalisation of $3.6 billion, adding one debutant on Wednesday.

In May, Cavico Corp. began trading on the U.S. market for small pink-sheet stocks, the first Vietnamese firm to list overseas. It builds power plants and roads and operates coal mines in Vietnam.

Cavico Corp., with assets of $64 million, owns 50 percent of Cavico Vietnam Mining.

A mining company, half owned by Cavico Corp., Vietnam's first overseas-listed firm, and a pharmaceutical firm have been licensed to list shares on the country's main stock exchange, regulators said.

TNnews 11/15/06

Show Business With A Difference

Chan Chao International is working hard to penetrate further into the exhibition business in Vietnam

When Tiger Lin came to Vietnam several years ago, he did not imagine that one day he would be involved in a different kind of business. As a construction engineer, he arrived in 1998 to cooperate with a company that specialized in building high-rises and apartments. However, he realized the great potential of the exhibition business here, and in 2001 persuaded his brother-in-law, who was chairman of Chan Chao International, an exhibition company in Taiwan, to let him set up a Vietnam branch.

Vietnam is a rapidly industrializing country and has great demand for machinery. Organizing industrial machinery exhibitions is a business of great potential, he said. Lin is now general manager of Chan Chao International and Yorkers Trade & Marketing Service, an exhibition marketing and service company based in Hong Kong.

Chan Chao has chosen Vietnam Advertising & Trade Fair National Company (Vinexad) to be its local partner as it has brought many Vietnamese businesses to Taiwan to participate in exhibitions and Chan Chao has established good relations with it.

Experience

Chan Chao is the second largest exhibition company in Taiwan after Taiwan External Trade Development Association (Taitra), with more than 20 years of experience. Besides its own exhibitions, Chan Chao cooperates with international exhibition companies to bring exhibitors to Vietnam. On average, the company organizes 25 international exhibitions a year in many countries. In Vietnam, it holds the Linkage Vietnam series of six exhibitions, with five in HCM City and one in Hanoi.

Lin said that in the first few years of operation, the company organized exhibitions of machinery in the textile, garment, woodwork, plastic and automation industries. Later, it widened the scope to include printing, packaging, information and communication technologies, and food processing. Though there are many exhibitions in the same fields in Vietnam, Chan Chao is able to attract exhibitors as its exhibitions have been successful. We usually attract exhibitors from at least 20 countries to join our exhibitions. Besides Taiwanese businesses, there are businesses from Europe and Asian countries, Lin said.

Chan Chaos exhibitions are becoming larger in scale because the theme of exhibitions is widened to meet exhibitors demand. Other international exhibition companies have visited Chan Chaos exhibitions, and appreciated its good organization and marketing expertise. Therefore they want to cooperate with the company. The exhibitions are becoming larger and more effective thanks to the cooperation and support from these partners, Lin said.

Organization

Lin said successful exhibitions require good organization, but the main factor is the state of the market. Before organizing an exhibition, the company studies the market very carefully to determine the theme of exhibition. We determine the theme based on the demand of each specific market. In Vietnam, we choose industry because it is a growing sector, he said.

Chan Chao does not organize exhibitions on themes where competition is stiff. Therefore, the company does not hold exhibitions on food and consumer goods, as these are held many times in a year by many companies. It focuses on industrial exhibitions, where it can attract international exhibitors.

Lin said the exhibition theme is important but so are demand and timing. He cited an example that in 1998 Chan Chao intended to hold an exhibition on some industrial machinery, but after learning that there was no demand for such machinery, it decided to delay the event to 2001 when there was real market demand. In recent years the company has focused on the woodwork industry, as many investors in regional countries have turned to Vietnam to set up factories to avoid the anti-dumping tariff in the U.S. Larger space

Lin noted that exhibition centers in Vietnam are not big enough to meet the need. The country should have large exhibition centers, he said. Because of the lack of such centers, Chan Chao has to hold smaller exhibitions. It plans to organize Linkage Vietnam 2006, an international industrial exhibition, in November, with the participation of an estimated 1,500 exhibitors. However, due to the lack of a large exhibition center, the company must divide it into five separate exhibitions. This will increase the cost for exhibitors, he said. Worse, they dont have a choice over which center to use and some large exhibition centers charge a lot for their services.

To solve the problem, Chan Chao plans to organize its exhibitions later this year in the new urban center of Phu My Hung instead of at the HCM City International Exhibition and Convention Center in Tan Binh District as before. Besides the limited space, traffic to the center is often jammed and many exhibitors are not satisfied with the service, Lin said.

Access to Phu My Hung now is easier, especially from industrial zones and ports. In July, the Ministry of Planning and Investment granted a license for the construction of an international exhibition center in Phu My Hung. The Saigon World Trade Center, a US$20-million joint venture between Saigontourist and Phu My Hung Corp., will cover 118,000 square meters with four exhibition halls, each with 12,000 square meters able to hold 1,500 booths. The project will also have an outdoor exhibition area of 20,000-25,000 square meters, a hotel, office tower and convention center.

Chan Chao will regularly hold exhibitions at the center after it is completed, expected in October next year. However, pending the completion of this large-scale project, the company will build a temporary exhibition center on an area of 12,000 square meters in Phu My Hung to serve its exhibitions. The center will be a pre-engineered building to be brought from Malaysia. It is used in international sports competitions and has international standard refrigeration and lighting systems. The building has been used for exhibitions in Pakistan and Bangladesh because there are no large exhibition centers there, Lin said. The assembly of the building will be finished in October, in time for the companys exhibitions.

Fresh goals

Lin said Chan Chao has plans to establish a company in Vietnam and is studying the market demand to make a final decision. One of the businesses it is aiming at for the immediate future is to gain the right of organizing and managing the new exhibition center in Phu My Hung. We have discussed this with Saigontourist and Phu My Hung. They are the owners of the project, while we have experience in organizing exhibitions, he said. Saigontourist and Phu My Hung may select the most suitable candidate for running the center through auction. At present, some companies are very keen on this undertaking. To maximize its advantage and chances of winning, Chan Chao plans to form an alliance with an exhibition company in Hong Kong.

Lin hopes that once there are large exhibition centers like that in Phu My Hung, the company will not have to hold small exhibitions and can combine them into a big one that is convenient for both exhibitors and visitors. The efficiency of the exhibition will also be greater, Lin said.

Saigon Times Weekly Issue No. 37 (780) 9/9/06

The Industry Land Dilemma

Seeking land to set up production facilities proves to be a tough experience for businesses, as leasing land in industrial parks is expensive while buying land elsewhere is risky and neither procedure is fool-proof

Le Duy Tuong, director of a wood processing enterprise in HCM City, never imagined the wood processing factory he wanted to build would end up in Dong Nai Province. Three years ago, Tuong planned to develop the project in HCM City, where he had been operating for dozens of years. To seek land for the project, he aimed at industrial parks in the city, but was deterred by high rent, averaging US$0.9-1.1/square meter/year, in addition to other expenses like environment and greenery fees. These costs would make his investment inefficient.

Tuong then sought land outside industrial parks, but could not find one suitable to the scale of his project. Issues like zoning and compensation made him hesitant. In the end, he bought land in Trang Bom District, Dong Nai Province, as it is farmland with few inhabitants, easy to negotiate on compensation and purchase. Its still cheaper than land in industrial parks and we can sell the land when our project is finished, he said. Tuong paid a total of VND2.6 billion for the three-hectare land plot.

Cao Tien Vi, director of Saigon Paper, said that when seeking land for factory construction, investors should first determine the goal, strategy and scale of the investment before choosing a suitable location. The investment should also be planned beforehand. Investors should not wait until they have a demand for land, as they could easily run into time trouble, Vi said.

He said small businesses that have operations with little effect on the environment do not usually think much about a location, as long as it is convenient for their operations. However, they may have to relocate their operations later if they dont have proper information on zoning or the larger scale of their operations, as their chosen location may one day be no longer suitable. Investors should not miss Vis advice, as it comes from his bitter experience with land.

In 1997, Vi set up Saigon Paper Company and built a paper factory in Go Vap District, HCM City. He felt safe about the land because authorities said it was zoned for industrial operations. However, seven years later, he was informed that the land would be zoned for residential purpose and he had to relocate his operation. He did not receive relocation support fees because the land was leased, not in his ownership.

In 2004, Vi built a new paper factory in My Xuan A Industrial Park in Ba Ria-Vung Tau Province. At that time, the park had just completed infrastructure construction and there were not many factories there. However, Vi thought that he had considered the move carefully. Compared with industrial parks in other localities like HCM City, Binh Duong and Dong Nai provinces, My Xuan A had a lower land rent by 30%. Enterprises can enjoy tax exemption and reduction in the first seven years and pay only 15% in the following years.

He admitted that for the time being, his new location is not favorable for transport of materials and goods. However, things will change in the future when seaports and expressways will be built, which will make transport easier. He also expects that his paper packaging will find a wider market when industry in neighboring localities grows and more businesses create demand.

Where to look

Nguyen Thi Cam Van, head of the HCM City Department of Natural Resources and Environments planning and general office, said HCM City authorities are very keen on creating a land fund to serve investors but they do not have enough money to pay for compensation and relocation. Therefore, investors have to negotiate land purchase with landowners before they can complete land lease or allocation procedures. This often proves to be an overly-arduous process.

Chinas New Hope commercial center is one example. The company spent many months approaching authorities and real estate businesses but have yet to find a five-hectare land plot in downtown to build the complex. According to Truong Thai Son, deputy general director of Hoang Quan Real Estate Company, it is hard to seek land in the inner city, however, more opportunities for investors looking for land exist in the outlying districts.

Loc Thanh Company is one that has found such an opportunity. The company has just leased a large land plot near Thu Duc Market in Thu Duc District to build an export woodwork processing workshop. Vu Hong Minh, Loc Thanh director, spent months scouting for land in Nha Be District and District 9 as well as Di An District in neighboring Binh Duong Province. He worked through real estate businesses and local authorities, but was eventually lucky enough to find a good land plot at a reasonable price in Thu Duc with the help of his friends.

Land in outlying districts is abundant, but investors must still make an effort to find the land suitable to their demand. A case in point is the owner of an industrial operation who just bought a plot of 2,000 square-meter farmland in Binh Chanh District and built a factory there. He has spent VND10 billion on the land and factory construction, but his factory cannot operate because it is still unable to treat solid waste and is located in an area zoned for non-polluting industries.

To avoid this situation, Nguyen Thi Cam Van advised that investors should come to the Department of Zoning and Architecture to seek information before completing land procedures at the Department of Natural Resources and Environment.

Industrial parkprocedure

Industrial parks (IPs) and export processing zones (EPZs) in HCM City provide an easier, more effective, productive and economic route for many investors in need of factory land. The key contact is the HCM City EPZ and IP Authority (HEPZA). Investors can easily lease land in IPs. What matters is they must choose the park suitable to their operations, said Pham Thi Trang, HEPZA office manager.

There are 15 IPs in the city, and three or five more will be developed between now and 2010. The city government has plans to build three new IPs in Phu Huu, District 9, and Tan Quy and Phuoc Hiep in Cu Chi District. As well, Tai said existing IPs such as Le Minh Xuan, Vinh Loc, Tan Binh and Hiep Phuoc will be expanded to provide more land for investors.

At present, most IPs in HCM City still have land for lease. Tan Thuan EPZ has four hectares unoccupied, with priority for investors in hi-tech industries. Tan Tao IP has 30ha for non-polluting industries. Phong Phu IP (148ha) has 10ha for immediate occupancy. Tan Phu Trung IP (542ha) has 117ha with infrastructure ready for non-polluting enterprises relocated from the inner city. Cat Lai 2 IP has 11.7ha for investors.

IPs that will have land available for lease over the next six months to one year are expanded Vinh Loc (68ha), expanded Tan Binh (25ha), expanded Le Minh Xuan (800ha) and Tay Bac Cu Chi (170ha). However, the expansion will be implemented in stages and depend on compensation and site clearance.

According to some consultants, IPs have some advantages, such as fairly good infrastructure, wastewater treatment, simple land rent procedures and incentive policies for investors. However, they also have some unfavorable conditions, such as higher land rent compared with outside land and possibly less favorable access to human resources, and the market.

At present, Tan Thuan EPZ has the highest land rent, at US$108/m2/40 years. Tay Bac Cu Chi IP has the lowest rent, US$35/m2/46 years. The rent in other IPs ranges between US$75 and US$100/m2/50 years. However, there may be some differences depending on the lease term and payment mode.

To lease or allocate?

Investors seeking land outside IPs must first buy land and then apply for land allocation or lease at the Department of Natural Resources and Environment to obtain the land-use rights certificate. The department must contact relevant authorities to process the application. As a rule, the application will be processed within 20 days if it is in order; otherwise the department must notify the investors concerned.

The greatest difficulty for investors seeking land outside IPs is land transfer procedures, compensation and site clearance. In many cases, the ownership of the land they aim at has not yet been established, and the legal procedures are time consuming.

Meanwhile, land lease or allocation procedures in IPs are simpler because investors do not have to engage in compensation and site clearance. For land lease procedures, they just have to sign a lease with the representative of the IP and make a 10% deposit of the rent. Then they submit the investment application to HEPZA. If the application is in order, the authority will grant a license. Investors then sign an official land lease contract with the IP authority and pay 40% of the rent and complete post-licensing procedures. The remaining 50% rent will be paid in installment. All these affairs can be solved within three days.

However, for land allocation, the procedure is more complicated. The application for land allocation must be submitted to the Department of Natural Resources and Environment to determine the financial obligation. In addition to the land rent, investors must pay land-use fee to be eligible for receiving the land-use right certificate. However, a change in the price of farmland required under the revised Land Law has caused a problem in land allocation procedures at present and many land allocation applications have been caught in the red-tape. The city government has yet to work out the specific price frame.

At present, many local investors want to shift from land lease to land allocation because under the law, investors cannot transfer leased land, while those having allocated land can transfer it and contribute the land as capital. Moreover, investors receiving allocated land can mortgage it at banks to get loans as much as 80% or 90% of the land value. Meanwhile, investors leasing land can only get a maximum loan equivalent to 50% of the value of the land.

Saigont Times Weekly Issue No. 37 (780) 9/9/06

Vietnam sees many changes on trade front

We think that is a major step, not only for the Vietnamese, but also a tag on American history as well. It doesn't seem that long ago when American troops were fighting on Vietnam soil to keep this same communist regime from gaining a stronghold in Southeast Asia.

Today, however, much has changed. America and Vietnam are wholesome trade partners. Vietnam, soon to be a WTO member, is now set to expand its already considerable wealth as a true member of world commerce. That also means more business with the United States.

According to the Associated Press, trade between the United States and Vietnam has grown from $1.2 billion in 2000 to $7.8 billion last year since the two countries implemented a bilateral trade agreement five years ago.

Vietnam is Asia's fastest-growing economy after China, and the Asian Development Bank in August has projected Vietnam's economy will expand by 7.8 percent this year.

Membership of the global trade body will give Vietnam increased access to foreign markets and the opportunity to take trade grievances to a neutral arbiter.

In return, Vietnam will be required to drop its high tariffs on foreign imports and eliminate subsidies for state-owned companies.

Many in America are looking forward to doing more business with Vietnam. Foreign investors, including Americans, eye the nation as fertile territory. Investment in the country has already sky-rocketed 41 percent in just the last year.

So far, the major breakthrough Vietnam has seen in regards to the United States is from garment exports to the U.S. Vietnam's garment industry is hoping to reap even greater profits after joining the WTO, which will require the United States to lift quotas on Vietnamese exports.

Still, there are some problems to be worked out as you might expect between two countries with a mutual, but sordid past. The U.S. has yet to approve a trade normalization bill.

Somewhere down the line, that drawback will be straightened out and the U.S. and Vietnam will be trade partners. That's a long way from the days of napalm bombs and AK 47s.

TNnews 11/14/06

Vietnam's booming stock exchange attracts attention at APEC summit

HO CHI MINH CITY, Vietnam: Pushing and jostling for position, a crowd of investors surged to the center of Ho Chi Minh City's stock exchange to drop bids into several large boxes.

Vietnam's latest IPO an initial public offering of stocks drew about 1,000 people eager to cash in on a transportation and logistics company called Sotrans. Spilling into the adjacent lobby, they offered boisterous testimony to the communist country's deepening embrace of capitalism.

The market is emblematic of Vietnam's overall economy: energetic, fast-growing and still in the early stages of its development. It poses greater risks to investors than a more advanced economy, but also the promise of great returns.

U.S. President George W. Bush is scheduled to visit the exchange when he comes to Vietnam this week for the Asia-Pacific Economic Cooperation summit.

He will find a market on the move.

Vietnam's stock exchange is still tiny by global standards: the companies traded are worth roughly 2 percent of those listed in Thailand. But the number listed currently 52 is growing rapidly, and overall stock value increased tenfold in less than a year.

"You'd have to go quite a long way to find a stock market that's grown 10 times in 10 months, even though it started from a very small base," said Dominic Scriven of Dragon Capital, which manages an US$860 million investment fund in Vietnam. "And it probably will have grown 15 times by the end of the year."

When it opened six years ago, the market was the laughingstock of Southeast Asia. Few companies were listed, and foreign investors kept their distance. But it has taken off in the last couple of years, attracting the attention of investment firms such as Credit Suisse and Citigroup.

"Vietnam is beginning to deliver on a decade of promise," a recent Merrill Lynch report said.

Vietnam's GDP is expected to grow by more than 8 percent this year, second in Asia behind China and one of the highest rates in the world.

Investors are eager for a piece of the action.

Standing in line for the Sotrans IPO was Vo Van Dung, 36, a Ho Chi Minh City businessman. He began investing in the Thai stock exchange 13 years ago, before Vietnam had a formal market.

"When the market first opened here, I made good money because most people did not understand investing, but I already had experience," Dung said. "The market here is very promising. I don't think I will go back to Thailand."

On a recent day at the HSC securities firm in Ho Chi Minh City, about 50 people crowded around a stock ticker, eyes glued to the board. Brokers in their 20s took orders from behind a nearby counter.

Some of these eager investors will inevitably lose money. Others already have struck it rich.

A young man named Hung sat in the lobby in jeans and T-shirt, waiting to talk to his broker. Hung declined to give his full name because he didn't want his friends to think he was boasting about his wealth, a faux pas in Vietnam.

He said his initial investments of US$30,000 have grown to US$5 million. His best performer is the Export-Import Bank of Vietnam. A US$100,000 investment a year ago is now worth about US$800,000.

"A lot of my friends have made more money than I have," Hung said.

While such stories are legion, Scriven of Dragon Capital preaches caution. Reliable information about companies is far more difficult to obtain than on Wall Street, where Securities and Exchange Commission requirements lay out detailed disclosure requirements.

Vietnam has approved a new securities law that Scriven called "a huge leap forward." Effective Jan. 1, it will clarify investment rules and bring more transparency to the market, though still not as much as in developed countries.

Investors have more choices every day. The number of listed companies has risen by 50 percent in 2006 and is expected to double again by year's end, when tax incentives for listing will expire, said Tran Dac Sinh, director of the Ho Chi Minh City Stock Trading Center.

The market is drawing many novice Vietnamese investors, who often seem to operate with a herd mentality, Sinh said. "A lot of them buy when prices are going up, not when they're going down."

Many took a hit when the market surged earlier this year, rising to 630 points before falling to 400.

"A lot of investors lost money, but it was a good lesson for them," Sinh said.

For the recent IPO of Vinaconex, a big state-owned construction firm, nearly 2,000 people turned up, spilling out the trading center's front door and lining up around the block.

Like many state-owned firms, Vinaconex is in the process of "equitizing," selling off shares to private investors to raise capital. While the state will keep a stake, private investors will soon own more than 50 percent, Sinh said.

Refrigeration Electrical Engineering Corp. was the first market listing, back in 2000. Once a state-owned firm, REE has since sold 93 percent of its shares to private investors. Last year, the company raised US$10 million on the market, issuing shares that have since tripled in value.

"Vietnam is an emerging market, so you can find many opportunities here," said Nguyen Thi Mai Thanh, REE's managing director. "It's very exciting."

International Herald Tribune/AP 11/14/06

Bush goes on Asia trip, first visit to Vietnam

WASHINGTON (Reuters) - President George W. Bush, politically weakened by U.S. congressional elections, heads to Asia on Tuesday on a three-nation swing likely to be dominated by North Korea and his views on fighting Islamic militancy.

The week-long trip to Singapore, Vietnam and Indonesia will allow Bush to leave the woes of Washington behind as opposition Democrats prepare to take command of the U.S. Congress and pressure him for a change of course on Iraq.

The trip will take him on his first visit to Vietnam, to attend the annual Asia Pacific Economic Cooperation summit that will put him face-to-face with leaders of the other four countries pressuring North Korea to give up nuclear weapons -- Russia, Japan, China and South Korea.

While in Singapore, Hanoi and Bogor, Indonesia, Bush will emphasize the importance he puts on fighting Islamic militancy that threatens security in parts of Southeast Asia.

Experts said Asian countries will be watching Bush to gauge how determined he is to confront foreign policy challenges after his Republican Party's election defeat on November 7 that meant he will have to deal with the Democrats for the remaining two years of his presidency.

"All Asian friends will be watching ... President Bush and his team in terms of his body language, his statements to see whether he will be weakened or committed to going forward with a broad and purposeful agenda in Asia as a whole," said Kurt Campbell, an Asia expert at the Center for Strategic and International Studies.

While in Hanoi, Bush will hold meetings with Japanese Prime Minister Shinzo Abe, Chinese President Hu Jintao, South Korea President Roh Moo-hyun and Russian President Vladimir Putin.

Bush's trip will take him on a round-the-world circuit. He was to leave Washington late on Tuesday for Moscow and he and his wife, Laura, were to have a brief social visit with Putin and his wife while Air Force One is refueled for the flight to Singapore.

Washington is seeking Russia's backing for a tougher line against both Iran and North Korea on their nuclear weapons programs. Meanwhile, Russia wants U.S. support for its bid to join the World Trade Organization.

Bush and Putin were once close but their relationship has been strained over U.S. criticisms of Russia's crackdown on democratic freedoms and Russian opposition to the Iraq war and what it sees as an overly aggressive U.S. foreign policy.

After visiting Singapore, Bush will become the second U.S. president to visit Vietnam -- after Bill Clinton -- since the war there scarred the American psyche. Bush himself was a pilot for the Texas Air National Guard rather than serving combat duty in Vietnam.

Comparisons between the Vietnam conflict and the 3-1/2 year Iraq war were bound to surface.

During Vietnam, the U.S. concern was the "domino theory" -- if it fell to communism, so would other nations. In Iraq, Bush says he fears that if U.S. troops pull out too fast and it falls into chaos, it and other nations will become part of a militant Islamic "caliphate."

But although last week's election result was driven in large part by U.S. public discontent with the Iraq war, White House national security adviser Stephen Hadley rejected Vietnam-Iraq comparisons. He said Americans are far more supportive of U.S. troops in Iraq and that they understand if Baghdad falls, Iraq would become a safe haven for terrorists.

Reuters 11/14/06

Vietnam regrets defeat of US trade bill, hopes for new vote soon

The Republican leadership of the US House of Representatives failed Monday to round up the two-thirds majority needed to rush through permanent normal trade relations (PNTR) with Vietnam.

The measure received 228 votes for passage and 161 against, falling short of the two-thirds needed for the passage in the 435-strong chamber under special rules to pass it without a debate.

"It is very regrettable that the US House of Representative has not approved the bill," said Le Dung, spokesman for the Foreign Affairs Ministry who said the early defeat failed "to meet with the interest and aspiration of the two countries, especially the interest of US business."

Vietnam was approved last week to become the 150th member of the World Trade Organization. However, until normal trade relations are approved, the WTO rules will not apply to trade between the United States and Vietnam.

Without the WTO regulations, Vietnamese exports - including garments, its largest non-oil export - would still be restricted in the United States while American companies could not take advantage of hard-fought WTO concessions in opening up Vietnamese markets.

The initial defeat came a few days before US President George W Bush, who has endorsed normal relations with Vietnam, is to arrive in Hanoi for the Asia-Pacific Economic Cooperation (APEC) summit.

Congressional leaders have said they would resubmit the bill this week under normal debate rules, which would require a simple majority.

The same 228 votes would allow the measure to pass by simple majority in the House, but the bill would still need to be approved by the US Senate, where lawmakers seeking to protect US textile industries or punish Vietnam's human-rights record could still block its passage.

"We hope that the US Congress will approve PNTR to Vietnam at an early date, thus contributing to promoting the relations between the two countries," Dung said Tuesday.

On Monday, the Bush administration formally endorsed the bill. The president's Office of Management and Budget said in a statement that the bill would allow the United States and Vietnam to enjoy the benefits of Vietnam's membership in the WTO.

Vietnam has been hoping President Bush would arrive to normal trade relations when he attends the APEC summit in the capital city of Hanoi Saturday and Sunday.

The United States is now Vietnam's largest export market with nearly US$6 billion in exports last year.

The United States exported only about 1 billion dollars in goods to Vietnam, a trade deficit that contributes to lingering opposition to easing trade restrictions for Vietnam.


Mr Le Dung, spokesman for the Foreign Affairs Ministry

Vietnam expressed disappointment Tuesday at the initial defeat of a key trade bill in the US Congress, and a government spokesman said he hoped the measure would be passed soon.
TNnews 11/14/06

Vietnam Trades Up - By joining the WTO, Asia's second-fastest-growing economy is poised to kick its exports into a higher gea

Anthony Salzman remembers the last time Vietnam was tipped to be Asia's next tiger economy. The former antiwar protester turned business consultant was representing Caterpillar in Vietnam when the country opened up to foreign investment in the early 1990s. Back then, Hanoi's streets were filled mostly with bicycles and all fax machines had to be registered with the police, but that didn't stop international executives from packing the bar of the only foreign-run hotel in Hanoi, the Metropole, to plot their future fortunes. "In that one bar on any given night," recalls Salzman, "there were people who, combined, could have pledged to invest $50 billion on the spot." The good times didn't last. In large part due to the communist government's murky investment rules and snail-pace economic reforms, investors grew frustrated and disillusioned over Vietnam's prospects. After the 1997 Asian financial crisis hit, the country's growth rate plunged from 8.2% to 4.8% in two years. "Vietnam didn't so much crash," Salzman recalls. "It was more like a dud."

Nearly a decade later, Vietnam's economy is sizzling, not fizzling?and investors are pouring back in, betting that the country is ready to adopt sweeping free-market reforms and open up to the world. There's a sound reason to think things are different this time. Last week, after many years of trying, Vietnam won its bid to join the World Trade Organization, a move that could help liberalize the country's economy and spark an export-driven boom similar to the boost China received after it joined the WTO in 2001. Vietnam is already on a roll. It's GDP growth rate this year is projected to be 8.2%, the second-fastest pace in Asia behind China and in a dead heat with India. Exports were up an estimated 24% in the first 10 months of 2006. The nascent stock market in Ho Chi Minh City is one of Asia's best-performing this year, up 70%. To top it all off, Hanoi is hosting this year's Asia-Pacific Economic Cooperation summit, on Nov. 18-19, which is expected to be attended by U.S. President George W. Bush and China President Hu Jintao. Salzman, who toughed out the lean years and built an industrial-materials distributorship with annual turnover of $100 million, says he thinks Vietnam has finally arrived as a modern economy. "Before, people said [the Vietnamese] weren't ready," he says. "Now, I think they're ready."

There's little doubt the country has a lot going for it. The workforce is educated and young?54% of Vietnam's 84 million citizens are under the age of 30. Wages are lower than they are in China's coastal cities, which compete for manufacturing jobs. The Communist Party recently installed a new government led by Prime Minister Nguyen Tan Dung, who has vowed to continue economic reforms and to tackle the country's pervasive corruption. While it's true that Vietnam's economy is still relatively small?at $53 billion last year, the country's total GDP is about half that of the Philippines?it is also vibrant, with a growing entrepreneurial class (40,000 private businesses were launched in 2005) and thriving commodity businesses. Vietnam is now the world's largest pepper exporter and second-largest exporter of coffee, cashews and rice. And multinational companies are increasingly selecting the country as a manufacturing base. Canon Inc. has two giant printer factories in Vietnam and is building a third in Bac Ninh province, 20 miles northeast of Hanoi. The new plant will be the largest inkjet printer factory in the world. Nike recently increased its annual production in Vietnam from 54 million pairs of shoes to 70 million, making the country the world's second-largest source of Nike sneakers (China is the largest).

Government officials are counting on WTO entry to maintain that momentum. As the organization's 150th member, Vietnam stands to get greater access to overseas markets such as the U.S. and Europe for its agricultural and manufactured exports; by hewing more closely to free-trade policies the WTO requires of its members, it may also be able to attract additional foreign investment in everything from factories to petrochemical plants, fueling job growth. (In the first 10 months of this year, foreign direct investment in Vietnam was estimated at $6.5 billion, surpassing the $6.1 billion total for all of last year.) "The WTO is sort of the stamp of approval that many, many large companies have been waiting for," says Tim Tucker, country manager for Ford Vietnam, which has an assembly plant outside Hanoi. "They are just going to flood into this country."

But that investment has a price attached. To gain WTO entry, Vietnam made greater concessions than other nations have been required to make upon joining, agreeing to lower trade barriers, reduce many subsidies and allow virtually unfettered foreign competition in some sectors of its domestic economy. "It's a tougher deal than even China got," says Jonathan Pincus, a Hanoi-based economist for the United Nations Development Programme (). For example, next April, Vietnam must allow foreign banks to set up their own branch offices in the country, without requiring them to partner with domestic lenders as banks wanting to enter China have been obligated to do. Vietnamese law now protects its state-dominated insurers by banning foreign insurance companies from selling to individuals, but that will change under the WTO. The stakes are high: less than 5% of Vietnamese people now have bank accounts or insurance, so the potential market is enormous. In the retail sector, dominant state-owned companies and small-shop owners alike are certain to feel the pinch as foreign chains launch offensives. "It's going to change very quickly," Pincus says. "Big supermarkets, big restaurant chains, big auto-repair shops will come in and offer better service?and customers will flock to them."

What could be bad for domestic businesses is welcomed by many Vietnamese consumers. Le To Nga, 65, lived through the Vietnam War and stood in line for ration cards in the 1980s. Today, she's happily filling her shopping cart at Big C, a vast new supermarket on Hanoi's outskirts run by France's Casino Group in a joint venture with a local company. Shopping "is not a matter of patriotism at all," Nga says. "These days, we just buy what we like." Foreign giants entering Vietnam will likely create as many or more jobs than they'll destroy, Pincus says, and the influx of new banks will free up credit?now available chiefly to state-owned companies?for capital-starved private businesses. Some Vietnamese businesses even welcome the competition. "I'm not worried," says Ly Qui Trung, founder of Phó 24, a chain of noodle shops. "We've already got a head start and a strong brand. I think we can compete even against McDonald's." (Trung will have to wait for that matchup; McDonald's says it has no plan to enter Vietnam.)

While local businesses gear up for the fight, Vietnam's government will have to move fast to bring its legal system and infrastructure up to speed if the country hopes to attract more multinationals. Running a factory in Vietnam can be a frustrating proposition. Electricity production is barely meeting demand, which is growing at 15% per year. Roads and ports are increasingly congested. Nike Vietnam's general manager Amanda Tucker says the company's containers sometimes sit on the dock for 24 hours before shipping out. Because Vietnam has no deep-water port to handle the new larger "super-container" ships, most exports must first go to Singapore before shipping to the U.S. and Europe, meaning more expense and delay. "The system is definitely under strain," Tucker says, and with the expected post-WTO export surge, "it's only going to get worse." Le Cong Minh, general director of Saigon Port, says there are plans to spend $600 million for upgrades, including a deep-water port at Cai Mep on the southern coast, by 2010. But the project has yet to be approved.

Perhaps Vietnam's biggest adjustment in joining the global economy will be changing its ingrained culture of corruption, secrecy and state intervention. The government recently enacted extensive new laws covering enterprise, investment and securities, which would boost protection for private businesses and increase transparency. Still, it will take time to train thousands of bureaucrats to apply rules fairly. The country ranks in the bottom third of Transparency International's corruption index; a recent government inspection of state ministries uncovered 1,700 graft cases in the first nine months of this year. Some investors grumble the government is still apt to make sudden changes in taxes, for instance, without notice. "Information is a big issue," says Dominic Scriven, director of Dragon Capital, an investment-banking firm in Ho Chi Minh City. "What you thought was true in January, may no longer be true in December."

Plenty of foreign firms have learned that the hard way. One of their main concerns is government meddling?a practice that Carl Thayer, a political professor at the Australian Defence Force Academy, calls "kicking the foreigner in the shin and demanding compensation." In a recent instance, Dutch bank ABN AMRO was accused by authorities of illegal foreign-exchange trades with state-owned Incombank, costing the latter $5.4 million. The Vietnamese bank is demanding that ABN AMRO repay the losses?even though they were incurred by an Incombank employee. ABN AMRO says it has done nothing wrong. Incombank won't comment, and Vietnamese authorities haven't said exactly which banking regulations have been broken. But what has sent a chill through the foreign investment community is that local Hanoi police?not state banking regulators?are running the investigation. "The rule of law is manipulated in Vietnam to serve interests rather than as an objective force," Thayer says. If foreign companies can't be confident they'll get fair treatment, "it will make people more hesitant to invest."

Vietnamese leaders must be asking a similar question: now that the country is a WTO member, will it be treated with fairness by the international trading community? By joining the WTO, Vietnam hopes to become free from trade restrictions such as garment quotas that in the past have constrained its exports to the U.S. and Europe. Textile manufacturing employs 2 million Vietnamese and is the country's largest export earner after crude oil. But Vietnam's trade relations with the West have sometimes been prickly. The U.S. in recent years has imposed antidumping tariffs on Vietnamese shrimp and catfish; the E.U. recently placed similar restrictions on Vietnamese-made shoes. While WTO membership gives Vietnam the ability to challenge such barriers, the country may still find itself blocked by them because Vietnam joined the WTO as a "non-market economy," a classification that denies it some protections afforded to fully fledged members. To complicate matters, the U.S., the country's largest export market, has yet to legally recognize Vietnam's WTO membership. Although passage of the necessary legislation that would grant "permanent normal trade status" to Vietnam is usually a mere formality, it could get held up in Congress by lawmakers seeking to protect textile manufacturers in their home states, or by politicians wanting to punish Vietnam for its poor human-rights record. As a result, the country could find itself in the unusual position of joining the WTO but having none of the benefits apply to its trade with the U.S., which imported nearly $6 billion in goods from Vietnam last year. "There's no question that WTO is going to be a very good thing for Vietnam," says the UNDP's Pincus. "But the thing is, they don't know how dirty the U.S. is going to play. Is the U.S. going to raise antidumping [barriers] every time Vietnam increases its market share?"

Despite the uncertainties, optimism over Vietnam's economic prospects runs deep. Last week, Intel announced it would increase its investment in a planned computer-chip-assembly and testing plant to $1 billion, tripling the company's original commitment. Upon completion, the 500,000-square-foot facility in Ho Chi Minh City will be the largest of its kind in the world. "I think Vietnam is doing all the right things," says Rick Howarth, Intel's country production manager. Says Scriven of Dragon Capital: "This is one of the most pro-change places I've been in. But there is time required. The headlines will come and the headlines will go, but the battle ahead is a long one." With WTO membership promising to even up the odds, Vietnam is ready to rumble.

TIME 11/13/06 Issue