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Interactive Newsletter of economic news and analysis from VietnamNEWS:
Viet- USA Trade agreement - Bilateral trade may top 1 B$
Execution for Bank fraud
Korean Manager abuses workers
New Telecom Apparatus factory (US JointVenture)
Growth of small industrial units in Vietnam
ICI Group acquires major stake in Vietnamese Paint Manufacturer
9-10 pct GDP growth in 1997
Vietnam lowers the interest rate - Financial reforms
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Vietnam and the United States could sign a trade agreement
Two-way trade volume could reach $1 billion this year and U.S. investment in Vietnam now totalled $1.2 billion. Vietnam and the United States could sign a trade agreement by early next year if negotiations make fast progress, Vietnamese Foreign Minister Nguyen Manh Cam said in an interview published Tuesday. ``This year, despite it being a busy time with the presidential election, the American side is continuing expert-level talks with the Vietnamese side,'' Cam told the official daily Saigon Giai Phong. ``If the talks move ahead quickly, the two sides will sign a trade treaty early next year,'' he added, commenting on a meeting with Secretary of State Warren Christopher and National Security Advisor Anthony Lake in Washington last week. Washington and Hanoi normalized diplomatic ties 15 months ago, 20 years after the end of the Vietnam War. But the former adversaries have not yet reached agreement on full economic and trade normalization. Vietnam is anxious to win most-favored-nation (MFN) import tax reductions, which would help its textiles and other manufactured goods compete in U.S. markets. But first the two countries must enter into a commercial trade agreement providing for reciprocal non-discriminatory treatment. Cam said another obstacle was the Jackson-Vanik amendment, which establishes that a communist country denying or restricting its citizens' right to emigrate cannot be granted MFN treatment unless the U.S. president issues a waiver. A waiver would open the way for the Overseas Private Investment Corporation (OPIC) and the Export-Import Bank (Ex-Im Bank) to provide financial assistance to U.S. companies wanting to invest in Vietnam. ``After one year of normalization of diplomatic relations, economic and trade links between the two countries have developed rather quickly,'' Cam said. ``But there are still some obstacles.''Execution for Bank fraud
Vietnam follows China in major fraud cases with severe punishment like life sentence or execution. A court in southern Vietnam has sentenced a Vietnam has sentenced a man to death and imposed jail terms ranging from 42 months to life on six others for involvement in a $6.1 million bank fraud. A court official in Ho Chi Minh City confirmed reports in Vietnam's official media Tuesday which said investigators also suggested punishment for some senior officials at the central State Bank of Vietnam over the affair. ``These offenders do not deserve to exist in our community anymore,'' a prosecution official was quoted as saying in the official Saigon Giai Phong daily. Saigon Giai Phong and the Tuoi Tre newspaper said the seven accused succeeded in setting up a bank in 1992 using lists of invented shareholders, fake documents and counterfeit receipts. They said that over a period of several years the Gia Dinh bank obtained $6.5 million from investors and lost $6.1 million. The court sentences come in the wake of a hard-hitting commentary in Vietnam's official Communist Party mouthpiece, the Nhan Dan daily, which last week criticized the country's banks for incompetence in managing debt and for corruption. Tuesday's Tuoi Tre report said that in addition to the sentence, the court ordered gold confiscated from a high-ranking state bank official and from investigators to whom it had been given as a bribe. The death sentence is normally used in Vietnam for serious crimes such as rape and murder. Its use in economic crimes such as fraud or embezzlement is less common.Korean Manager abuses workers
A court in southern Vietnam has sentenced a South Korean woman to a three month suspended prison term on charges of labour abuse, justice officials said this last week. Jang Mi-baek, 29, a supervisor at a shoe factory outside Ho Chi Minh City, was accused of prompting a strike earlier this year by hitting 15 Vietnamese workers on the head with a shoe. Korean Managers have been mistreating their workers in many countries including China. Wall Street Journal reported recently in a shocking report that Korean managers specially female managers were harsh and dictatorial and used workers as if they were prisoners. A fine of 50,000 Vietnamese dong ($4.50) had also been imposed, but gave no further details. South Korea is a leading foreign investor in Vietnam with $1.7 billion pledged towards nearly 160 projects. However labour relations between Korean employees and Vietnamese workers have not been smooth. The Saigon Giai Phong newspaper reported earlier this year some 35 strikes in Ho Chi Minh City since 1990 involving Vietnamese employees at foreign firms. In 20 cases the disputes stemmed from charges that foreign employers had violated ``worker dignity.''New Telecom Apparatus factory (US JointVenture)
Reuter agency reported on July 16th the U.S.-based consortium NewTel and a company onwed by Vietnam's Ministry of Defence broke ground on Tuesday for a $20 million electronics and telecom equipment factory just outside Hanoi.
Vietel Technologies Limited, the joint venture firm, said in a media statement the 17,500 sq metre (188,375 sq ft) factory would manufacture equipment including telephone handsets, pagers and printed circuit boards for both domestic and export markets.
The factory is scheduled for completion in mid-1997.
The joint venture is 70 percent owned by NewTel, whose shareholders include New York-based investment bank Goldman Sachs, Thailand's Jasmine International, One Holding and Japan's Nikko Securities <8603.T>.
Vietnam's Military Electronics and Telecommunications Company, an affiliate of the Ministry of Defence, has the remaining 30 percent stake.
CGTD has published a business report and a comprehensive directory on Telecom industry opportunities in Vietnam.
Telecom directory Growth of small industrial units in VietnamVietnam achieved almost 14% growth in industrial output. Considering the rate of heavy investments and industrial development, the growth rate will be sustainable or surpassed in coming years.
CGTD believes that industrial growth, fuelled by serious investment in infrastructure, in next 4 years, will create great opportunties in Vietnam.
Many of the small units in Taiwan are shifting their manufacturing base to new Vietnamese industrial parks and many of them have started exporting from Vietnamese ports. By mid 1997, this phenomenon will create an unprecedented growth of over 30% per annum in non-traditional/non-commodities exports for next many years.Atleast 500 new such units are coming up every three months. The investment is usually very low between 300.000 $ to about 3 million but each unit creates lots of jobs.
The average Vietnamese worker is youthful and eager to learn.
There are many state companies in small towns without big resources to embrace businessmen from Taiwan.
Taiwanese labor shortages and higher costs of life have forced them to move the units to Mainland China or various Asean nations.
Since 1993, Vietnam has attracted many smaller entrepreneurs from Taiwan and S. Korea. Many just start simple assembly but gradually they are beginning to source few materials locally.CGTD Publications have compiled and published very useful industry specific directories and reports. To receive a complete list automatically send e-mail to vietnam , without writing anything in Subject or Content area. You may also view more information and business opportunities on web site: www.cgtd.com/global/vietnam.html
ICI Group acquires major stake in Vietnamese Paint Manufacturer
Britain's Imperial Chemical Industries Plc said on Friday it will buy a 70 percent stake in a Vietnamese paints manufacturer.
The company, Vina Paint, has been operating since November 1992 and will be renamed ICI paints (Vietnam) Ltd. ICI said in a statement that the value of the purchase is less than one percent of ICI group net assets.
The paints market in Vietnam is small, but growing at 10 percent a year. The factory can produce around five million litres annually and employs 60 staff.
``This value creating acquisition marks yet another milestone in the development of the strategy for ICI paints,'' said Chew Gaik Hean, chief executive of ICI Paints Asia.
``It signals ICI's ongoing commitment to the emerging economies of Asia.''
ICI said just last month that it planned to invest $1 billion in China alone in the coming years and last November signed a letter of intent with a Chinese chemical company to form a joint venture to build a chemical plant in Shanghai.
CGTD has published a complete business directory on Chemicals and Allied Products industry. One can order directly online http://www.cgtd.com/global/directory/vtdichem.html
or send a fax to : 1-602-966-4699 for more info.Vietnam expects its gross domestic product (GDP) to grow by 9-10 percent next year, the official Vietnam News Agency and the Communist Party newspaper Nhan Dan said this week.
The reports said industrial production was expected to grow by 14-15 percent in 1997, agriculture and forestry output by 4.5-4.9 percent and services output by 12-13 percent.
The report said the government's projections for trade included a 28-percent rise in exports and a 23-percent rise in imports.
In the first six months of this year, exports were estimated to have risen by 16.5 percent from the same period of last year and imports by 28.9 percent, giving a trade deficit of $1.77 billion.
In a policy blueprint for the next five years, ratified at the Communist Party congress earlier this week, the government targets an average annual GDP growth rate of 9-10 percent.GDP growth was 9.5 percent in 1995 and since 1991 it has averaged 8.2 percent.
The Lao Dong (Labour) newspaper said on Friday that the government was now targeting inflation, currently running at an annual rate of 4.6 percent, of less than 10 percent for 1996. Originally it had set a limit of 14 percent for this year.
Vietnam lowers the interest rate - Financial reforms
The governor of Vietnam's central State Bank said in an interview on Monday lower interest rates would help reduce a surplus of funds in the banking system and create more favourable borrowing conditions for business.
"If we keep the same situation as before, our interest rates will still be very high compared with the world interest rate base...Vietnamese enterprises would not be able to compete in the world market," Cao Si Kiem told the Lao Dong newspaper.Interest rates have fallen sharply in Vietnam since the State Bank cut the ceiling on lending rates at the beginning of this year to 1.75 percent a month from 2.00 percent.
Since then the Bank, encouraged by a drop in the annual inflation rate to a three-year low of 4.6 percent, has kept up pressure for easier rates. It is keen to cut the premium of Vietnamese dong rates over U.S. dollar rates to encourage borrowing in the local currency.
A good illustration of the drop in money market rates has been the annual rate at Treasury paper auctions, which dropped to 8.50 percent last month from 12.3 percent in mid-March.
Bankers say the declining trend has been fueled by a rise in the savings ratio, which is now growing from the 1991-1995 average of about 14.5 percent.
Planning and Investment Minister Do Quoc Sam said last month he was looking for the savings ratio to rise to 21-22 percent by the end of the century.
However, the rapid growth in deposits at commercial banks has left banks with dong surpluses, leading to aggressive bidding at Treasury paper auctions.
Kiem told Lao Dong that the central bank was seeking ways to encourage long-term mobilisation of capital with issues of bonds and notes and, ultimately, a stock market.
"So the banking system is continuing an all-round reform in credit policies...not a half-reform," he said.
CGTD Publications Dept. has a volume (Guide to Business Laws and Regulations - 1996)
available, containing the best translation in English of all latest business laws,
regulations and their amendments.
You can send order by email or send an order online.
It is an essential reading if you are seriously interested in a business presence in
Vietnam. A free update for the subscribers.
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