From: Christina_N._Tran.LAX1B@xerox.com
Subject: [ARTICLE]VIETNAM IN THE '90s - PART IV (complete)
Originator: daemon@media.mit.edu
Reply-To: Christina_N._Tran.LAX1B@xerox.com
Organization: N/A
Date: Thu, 9 Apr 1992 03:28:42 GMT



Hello everyone,

A friend of mine showed me this article.  I found it interesting so i share it with you...

/tn
--------------------
Posted without permission.

From magazine "Insight On the News" dated February 3, 1992.

(continued)

--------
Driving a Long, Costly Road to Success
						by Stephen Brooks

"We're just going to tear all this down and start over from scratch," says Fernando 
Teano, the president of Vietnam Motors Corp., gesturing from the balcony of his 
office over a dusty half-acre of low, ramshackle buildings a few miles southwest 
of Hanoi.  "It's junk."

Teano, a Filipino whose company put together a joint venture with the transport 
ministry last year, has been getting an education in Vietnamese business practices.  
To secure the deal, he had to agree to provide all the technology, all the financing, 
all the training for the workers and all the marketing expertise -- while Hanoi 
provided the land.

That's a fairly typical arrangement, and Teano thinks the venture -- assembling 
minivans from Mazda, Daihatsu and a South Korean company called Kia and selling 
them for up to $30,000 to hotels and tour services -- will be profitable. "Right 
now, we're trying to get a feel for what the market needs," he says. "We think 
it's growing fast -- sounder or later, the demand will really take off.  Just look at 
Thailand, Korea and Singapore."

But he's already running into trouble.  The company won't make money unless it 
gets a tax break on imports of the partially assembled vans.  But the government, 
mired in official deadlock, has yet to make a decision on what kinds of kits qualify 
for the tax break.  "We're waiting for the government to come up with their 
definition," Teano says, shrugging wearily.  "We've submitted our own proposals, 
and they're reviewing them.  When we get an answer we'll start bringing in the 
inventory.  We hope it will be soon, but we don't know." 

Teano faces problems that other investors complain about too, especially unrealistic 
expectations on the part of the government.  The new plant won't be as technologically 
advanced as Hanoi would like, for example.  "They want us to put in the most 
modern equipment, but on the other hand they want us to provide jobs!" he says.  
"It's a contradiction!"

The workers-- some 300 of them -- will have to be trained in the Philippines, 
adding to the expanse.  Skills and productivity are lacking, and while  wages are 
nominally low, Teano says there's a catch.  "One problem with investors coming 
into Vietnam is that we are always paying in dollars, but we're earning in Vietnamese 
dong.  And every time the dollar moves, the dong drops.  So when you're earning
 in dong and paying in dollars, you've got a problem."

As he moves among the factory buildings, sketching out the new plan, Teano seems 
by turns excited and a little overwhelmed by the task ahead. Turning into one of the 
buildings, he gestures toward a group of about a dozen men crouched on the concrete 
floor, lazily hammering long, narrow sheets of metal into tubes.  "This is the level of 
technology they're at -- they don't even have pipe-rolling machinery," he shouts 
over the din.  "Can you imagine it?  Whatever they want, they have to make by hand."

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

A Nation Hopes to Strike Gold - Black Gold
							by Stephen Brooks

In all the conjecture about Vietnam's future, there's one wild card that comes up 
again and again:  the possibility of vast oil fields off the coast that could propel 
the country into sudden wealth.  so far it's just conjecture; ironically, the only field 
in the country now producing -- known as the White Tiger -- was discovered 
by Mobil in 1974, just before the end of the war.  Hanoi set up a joint venture 
with Moscow to work the field and has been able to extract about 70,000 barrels 
of crude a day -- enough to make the country self-sufficient in oil.

But the promise of even bigger deposits has put a gleam in the eye of the Vietnam 
Oil and Gas Corp., the state entity that oversees oil development.  The Soviets 
discovered another important field a few years ago, called the Big Bear, which is 
thought to have some 300 million recoverable barrels.  Unlike the White Tiger, 
however, the Big Bear is in deep water -- too deep for Soviet drilling technology.  
So the Vietnamese have been looking for other companies to develop it and to 
explore other promising areas.  Hanoi started issuing exploration licenses to to 
foreign companies in 1988, and since then 10 companies have come in, most of 
them European.

Hanoi thinks it can raise production to 124,000 barrels per day this year, but that 
may be only the beginning:  According to a recent study by the East-West Center 
in Honolulu, the flow of crude could reach 500,000 barrels a day by early next 
century.  And the area offshore of the Mekong Delta, which is only now starting 
to be explored, is considered one of the most promising areas in Southeast Asia.  
"If the finds are as big as a lot of people expect," says a Hong Kong investment 
adviser, "Vietnam could be the next Kuwait." 

But others are skeptical.  "That's all a myth," says Thomas Duerst, managing 
director of Royal Dutch/Shell in Vietnam.  In his office -- an elegant French villa 
on a quiet Saigon street near the Presidential Palace -- Duerst has little time for 
overblown expectations.

"There just aren't any huge deposits to be found," he says, raising his hands in 
exasperation.  "In the last three years, 10 production-sharing contracts have been 
signed and about 15 wells drilled.  Something like $500 million has been spent. 
 And there hasn't been a single commercial find!  The most prolific well so far 
produced about  300 barrels a day -- but only for about three hours.  So this isn't 
El Dorado."

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

Direct Foreign Investment in Vietnam
					by Doug Stevens/Insight

(in millions of U.S. dollars)


Investment in Major Businesses (figures as of Oct. 30, 1991)

Industry					$628
Hotel, Services				  608
Gas and Oil 					  588
Agriculture, Foresty, Fishery			  444
Transportation, Telecommunications	  185
Others						    17

Total					          $2,470


Number of Foreign Projects Under Way (figures as of Sept. 30, 1991)

Hong Kong		80
Taiwan		39
France			26
Japan			21
Thailand		19
Others		           129

Total		           314


The Biggest Spenders

Taiwan		$538
Hong Kong		  350
Australia		  280
France			  273
U.K.			  148
Holland		  124


Rapid Investment Growth

'88 ---------->$359
'89 ---------->$510
'90 ---------->$592
'91 ---------->$1,009

Source: State Committee for Cooperation and Investment


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