September 2001 - VVG reports to clients on Vietnamese foreign direct investment.

Issue No. 47
September 2001
Our 8th year in Vietnam & 4th year on the Internet
A Periodic Report to Our Clients

IN THIS ISSUE Note: We are using a new, softer background to ease eye-stain for on-line readers. This will not effect B&W printing
COMMENTARY: Succeed, Don't Merely Try To Understand Cultural Differences.
There is something tragic when it comes to cultural differences left ignored or unresolved. Involving human emotions and not always rational thought, there can be wide gaps never bridged unless both sides open their hearts and their minds. See our commentary (linked above) and our dispatches (linked below).
Hanoi To Ease It's Hold on HCMC State Salaries To Be Reformed....? USA Airlines Battle For Air Rights to Vietnam New Rules For Visas Conoco Find Contains 200 Million Barrels of Oil* Pipeline to HCMC Gets the Nod	FDI Improves but the Economy Slows Economic Outlook: Vietnam - Sheltered* Gas Link To Saigon Planned* Puppies Rescued From Meat Market* Hanoi Keeps Lock On But Expands Internet Access*

CULTURAL DIFFERENCES ARE NOT TO BE IGNORED - There is something tragic when it comes to cultural differences left ignored or unresolved. Involving human emotions and not always rational thought, there can be wide gaps never bridged unless both sides open their hearts and their minds.

We have long admired the hard working, industrious, innovative, intellectually curious, well schooled, and easily trained Vietnamese at every level of work. From having lived and worked here for nearly 8 years, from having distributed and received (each) well over 4,000 name cards in that time, we have a good idea and frequently write about the benefits to foreign direct investors who hire loyal domestic Vietnamese staff.

With our ear to the ground from our nation-wide travels and letters from some of our nearly 10,000 monthly readers, it was unusual to meet the Chinese apologist, an academic from Iowa, more recently Boston, out in the field but with her head stuck far up her … books.

Decrying how American’s all seek to proliferate “their way of life upon world, dictating as the Americans will how to behave, such as how the Striates of Taiwan is an American and not a Taiwan or China issue,” as she told us, we were reminded of and mentioned her freedom to have such thoughts. How wonderful (really) it is that she can express them without any concern of government action, although she might not escape public ridicule.

More usual is the British instructor who caught the young Vietnamese student in a glaring error, only to be flabbergasted and insulted by the smile she saw growing on the teenage boy’s face. That display only helped to agitate the teacher. Thinking the boy rude and insolent, the teacher in her two years living in Asia failed to be aware that the “Asian smile” following a chastisement is meant only to relieve the discomfort of the teacher, who so obviously is not able to politely mask her negative feelings.

We recognize the stated desire of the Government to encourage investment but …, provided Americans do not attempt to set up shop in the Central Highlands. Long before the authorities took away the locals land use, imported "foreigners" in the form of the majority ethnic Khan people, encouraged the Khan to strip the land to plant coffee and disrupt the lives of tens of thousands of the most poor in the land before the same authorities elected to burn 20% of the coffee fields, Central and Regional Authorities touted the benefits of forming FDI enterprises in the highlands -- but failed to say that American investors need not apply.

The authorities make no real effort to ease restrictions on repatriation of profits in spite of years of plans and programs for just that purpose. And there is no change in the now decade-long advice that investors need patience as the nation is young. Do they think foreign investors are blind to the fact that corruption, overpricing, bureaucracy, and procrastination are all very old?

We know Vietnam is proud of its 4,000-year heritage, but independence came more than 50 years ago, the last large war was won long before more than half the population was born, and the embargo was lifted nearly 8 years ago. Perhaps it is that the phrase “the nation is young” means that as the nation has more than 40 million young people (under 25 years old), foreign investors must wait until those children grow to be senior citizens (over 65 years old)?

Vietkieu are indeed a national resource as claimed by the government, our VK friends write to us after years of trying here. Just like iron and tin, they say, VK are harvested and exploited before being tossed away as scrap.

Domestic and FDI Projects led by their management, long working to achieve a favorable investment climate in Vietnam in order to attract more foreign direct investment, are hounded to produce results as if the investors have any if not full responsibility for the economic down turn of the nation, the region, and the world.

It is the go-go nature of Vietnamese, including government authorities, to exhort their people to “try harder” and to “do your best.” However, it is the western nature that those cries are simply excuses used by weak performers when they fail. We who achieve it only strive for success.

The distinction is more than semantic - it is cultural. If times are bad for a western investor, we cut our losses and go to another adventure, or we hunker down and prepare to sustain ourselves for the long haul. In either case, we are poised and ready to pounce on opportunities when they again present themselves. We know that the future will be better than the past when we properly prepare ourselves for it.

However, it is the eastern cultural norm to give in to and accept one’s fate, after all, the next life might just be better, so why worry now?

In the east they are used to devour table scraps such as fish, chicken, and pork bones. As pets, they live barely for 3 years no matter what their breed. We are told by the local vets (university grads but not even a holder of a Masters Degree much less a DVM in all of Vietnam we are told), that they mostly die of the “French Disease,” evidenced by blood in the stool, soon followed by a painful, slow death. Of course attachments do form by their human owners in the short life span of the dog, but it is just their fate to die young, we are assured. Or is it?

When times are hard, hearty (read that starving) people learn to eat everything. Insects, rotting meat, vermin, even tree bark become staples in “hearty” diets. Old habits die hard, particularly acquired tastes. As a dog's life span is short, and as they formed a part of the diet for so long when times were difficult, the Eastern mind in some nations holds that why not breed or steal them for food, make a particular time of month “traditional” for eating them, and then devise as many ways to forget the barbarian nature of eating adorable, loveable, loyal, best friends as clever minds can produce?

But we in the west know that dogs do not fine chew their food (as do cats) but gulp it down, relying on their more rugged digestive systems to grind large chunks down. We know that chicken and pork bones splinter and pierce stomach and intestines, while fish bones simply pierce … directly. We have not ever in the west heard of the “French Disease,” as our dogs eat only hard, non-splintering bones that actually clean the dog's teeth. And with proper medical treatment, often better than that available for the people in many parts of Asia, our dogs often live for 15 to 20 years. The emotional attachments to our pets over that long period grow to the point where our dogs are often as loved as (some more loved than) our children.

It is because they ignore basic cultural differences that many easterners and westerners think they know but really don’t have a clue as to what life across the world is all about. That is perhaps why we shudder, contemplating the lives of puppies raised “on the farm” for consumption. See below where Canadians Rescue Puppies.

Rarely do westerners go to efforts to save chickens, ducks, or pigs that often have an even more terrible “fate” than dogs. We awaken to the squealing of pigs at 5 AM and want to believe (as we are told) that they are simply expressing pleasure for receiving their morning meal!

Can those good Canadians imagine what it must be like to be tied by one’s feet, bunched in groups of 30 or 40, suspended from motorbikes, having to keep their heads level with exhaust fumes to prevent them from striking the ground along the 40 minute drive in nearly every city and town, as chickens and ducks are taken to slaughter?

We hate all eaters of dog meat, including those who raise, steal, cook, eat, and particularly westerners who write gourmet articles of their experiences. During the life of our dog, we vowed to beat to death with our bare hands any who dared to even try to steal one. The dog-nappers do that from their motorbikes. They loop a rope over the heads of family pets out for a stroll to relieve themselves, and then drag the pets who scream until they pass out or die, still bouncing along down the road (tenderizing them?) to the nearest “thit cho” or dog meat restaurant.

We sympathize with the good thoughts of the rescuers of puppies. We hope their efforts will raise the coconsciousness of all to take better care of pets and live stock. But we are also aware that such stories, even this article, will not bridge the cultural divide.

However, we can hope this piece will help both sides realize that a much greater effort to succeed, not merely to try -- and most certainly not just greater patience -- is needed to bridge these gaps in our understandings.

*Hanoi to Ease Its Hold ~ Ho Chi Minh City is set to win some autonomy from the central government in Hanoi by promising the move will attract business and generate more revenues LOOSEN UP OR LOSE OUT. That's the message that leaders of Ho Chi Minh City have long tried to drive home to Vietnam's restrictive central government. In return for greater freedom to manage their fiscal and administrative affairs, they promise faster economic growth to pump more money into Hanoi's pocket for national development.

But if the central government's straitjacket remains intact, this vibrant southern city will never fulfill its dreams of becoming a regional economic powerhouse, and the whole country will suffer, local officials argue. "The clothing we are wearing is too tight. We have to change," says Mai Quoc Binh, vice-chairman of the Ho Chi Minh City People's Committee. The city submitted a wish-list to Hanoi in June.

Now it looks like the cautious tailors of Hanoi are finally willing to let out the seams. In late August the central government drafted a pivotal decree granting greater autonomy to Ho Chi Minh City, following Prime Minister Phan Van Khai's verbal agreement in principle. The new communist party chief, Nong Duc Manh, has also given the nod--his first major decision since coming to power in April. But wrangling over critical details has delayed the issuing of the final decree and highlights Hanoi's fears of helping the south's rich get richer. Read the full FEER article on line with VVG.

[NOTE: The current base pay for all government workers doubled in VND denominated terms from 120,000 in 1993 (US$10 at the time) to the current 240,000 per month ($14 today). When government workers who, even with fringe benefits from cars to homes, earn less than $25 a month and must pass on multimillion projects where domestic factory workers earn 4 times that amount, it is no wonder that corruption is ever present]

VNS reports on plans to overhaul the salaries and social allowances paid to State employees that sparked heated debate in late August at the monthly meeting of senior Government ministers.

Cabinet members attending the two-day meeting agreed that salary and social allowance reform was an urgent issue that had to be fundamentally addressed in the 2001-05 period.

They quoted the resolution adopted at the Ninth Party Congress earlier this year which said that the payment of appropriate salaries and social allowances to employees was a significant investment in human resource development. The resolution also said this policy would help ensure long-term stability and development.

They said that proper salary levels would also help clean up the State apparatus, creating conditions for employees to devote their time and energy to their jobs, and strengthen workers’ attachment to the regime.

The meeting, presided over by Prime Minister Phan Van Khai, also agreed that an improved salary level would engender better and more positive payment of social allowances.

The ministers were told that the existing salaries and social allowances system, first amended in 1993, had removed some fundamental contradictions by abolishing government subsidies of the payroll left over from 1985. As a result, the minimum monthly payment of VND120,000 in 1993 has risen to the current monthly amount of VND210,000, the base rate for all workers at institutions whose wages bill comes out of the State budget.

But the cabinet members acknowledged that the existing salaries policy remains beset by several urgent problems.

They said the current salary levels did not yet equitably and transparently reflect employees’ actual work, and most payments are not based on the amount of work done. The meeting also highlighted the increasing amount of fringe benefits in State workers’ monthly earnings. The fringe benefits policies and practices at different offices and institutions now varied widely, creating inconsistency and inequity.

For the time being, ministers agreed that the draft committee working on salaries and wages reform should separate employment into two categories: administrative (whose workers are paid from the State budget) and special-interest (where fees or charges collected by that agency are used to pay its wage bill).

The committee should also draw up plans for restructuring the workforce to make State administrative offices and State-owned enterprises more efficient.

The Government meeting also settled its recommendations on the draft laws to reform the organization of the Government, people’s councils and people’s committees.

USA Airlines Battle for Air Rights ~ Late July saw American Airlines ink a Code Share Agreement with Vietnam Airlines subject to an air services agreement between the two nations (separate from and only after the BTA). See Vietnam Vignettes Issue No. 46. The U.S. Department of Transportation (DOT) in early August then tentatively granted rights to three other U.S. airlines to provide air service to Vietnam in conjunction with their third-country airline partners.

"Travelers now will have access to Vietnam in conjunction with U.S. airline services for the first time in decades," U.S. Transportation Secretary Norman Y. Mineta said. "Today's action is an important step in what I am confident will be a growing aviation relationship between the United States and Vietnam in the coming years."

DOT tentatively awarded U.S.-Vietnam code-sharing rights to Delta Air Lines, Northwest Airlines and United Airlines, subject to the right of others affected (e.g. American Airlines) to file objections (show cause) why the order should not be made final. A total of 21 round-trip code-sharing flights are available to be awarded, and DOT’s tentative decision gave each carrier seven of the flights.

In a March 2000 Memorandum of Discussion, the United States and Vietnam agreed to allow code-sharing services between their countries. These services could be operated through arrangements between U.S. and third-country carriers, as in this tentative decision, as well as between U.S. and Vietnamese airlines and between Vietnamese airlines and third-country carriers. Code sharing is a common airline industry practice in which one airline offers service in its own name to a particular destination, but some or all of the transportation is provided by another carrier which carries the designator code of the airline that sold the transportation. The March 2000 memorandum did not address direct service by U.S. and Vietnamese carriers with their own aircraft.

Delta would code-share with its partner Air France for service to Ho Chi Minh City and Hanoi. Northwest plans to place its code on flights of Malaysia Airlines and KLM Royal Dutch Airlines to Ho Chi Minh City and Hanoi. United would code-share with partners All Nippon Airlines, Thai Airways International and Lufthansa German Airlines for service to Ho Chi Minh City.

The only other existing U.S.-Vietnam service is operated under a code- share arrangement between Vietnam Airlines and China Airlines, using the latter's direct service to the United States.

The show-cause order, carrier applications and other documents in this case are available on line at http://dms.dot.gov , docket number OST-2000-7194.

NEW RULES FOR VISAS TO VIETNAM ~ Effective from this past June 28, 2001, the rules for issuing visa have changed a bit.

It is notable that Decree 21 clearly provides that foreigners holding permanent or temporary residency status of more than six months in Vietnam, and Vietnamese citizens temporarily resident if Vietnam are entitled to invite foreigners. Previously under Decree 24, only Vietnamese citizens residing permanently in Vietnam could invite their overseas relatives.

Foreigners are now also able to visit Vietnam without any invitation. The previous requirement that these people (including tourists) had to have a service company engaged to act as a local agent to liaise with the Immigration Department is now abolished.

Upon expiry of a visa, a foreigner must obtain a new visa as opposed to renewing the existing visa as was permitted under the now repealed regulations. This may be considered a set back as visa extensions involve a simpler procedure and are cheaper (US$ 10) than new visa issuance (US$ 100). It is hoped that the visa fees will be reduced.

HOUSTON, Aug 13 (Reuters) - Conoco Inc. (NYSE:COCb - news) said on Monday the Sutu Den discovery offshore Vietnam has been declared commercial and is expected to produce at least 200 million barrels of oil and perhaps as much as 400 million barrels.

Houston-based Conoco, which holds a 23.5% interest in the discovery in offshore Block 15-1, said first production is targeted in less than three years.

The Cuu Long Joint Operating Company operates Block 15-1. The other partners in the project are state-owned PetroVietnam (50 percent), Korean National Oil Corporation (14.25 percent), SK Corp (9 percent) and Geopetrol (3.5 percent).

Block 15-1, long sought after and held unproductive for many years while Vietnam took its time in granting leases, is located in the Cuu Long Basin, 120 miles (193 km) southeast of Ho Chi Minh City, and covers 1.15 million acres (465,400 hectares).

The project partners' declaration that the field contains commercially viable quantities of oil is based on a comprehensive analysis of results from three wells drilled in Block 15-1,

Conoco also has interests in four other offshore Vietnam blocks and holds 5.75 million acres (2.327 million hectares) offshore Vietnam, more than any other foreign oil company.

Exports of crude oil are being considered to Burma for teak, and to Chile for cash.

PIPELINE TO HCMC GETS THE NOD ~ A $70 million, 70km long line from landfall at Phu My in BaRia-VungTau province to HCMC’s Thu

Duc District will be a 22-inch diameter pipe, scheduled for completion in 2002. With a capacity of 2 billion cu m per year, gas from the Nam Con Son sea basin will transform two old oil powered plants, the 275 MW Thu Duc, and the 365 MS Hop Phuoc plants, to cleaner (and hopefully less costly) gas.

With the Nam Con Son fields due to come on line soon, predictions for an increase usage of gas for power generation is projected at 6-7 bcm by 2010 and possibly as high as 12 bcm in succeeding years.

FDI Improves but the Economy Slows ~ An increase in Foreign Direct Investment (FDI) for the first half of the year (29% over the same period last year) amounts to US$900. Gross receipts for this period reached $3 billion, excluding the petroleum sector, a 15% gain over the same period last year. For the same period, exports increased 6% to $1.6 billion and Imports increased 15% to $2.2 billion.

People within the sphere of FDI employment totaled 361,000, up 10% over last year. One hundred ninety-seven foreign invested projects up 30%) were licensed over the first six months with a registered capital of $973 million (up 240%). Most of the new projects are in the Industry and Construction Sectors.

Notable projects include the 717 MW Phu My-3 thermal power plant (a BOT project at $413 million), Metro-Cash-and-Carry (at $ 120 million), and Canon’s ink-jet printer plant (at $77 million).

Vietnam’s economy showed a growth rate of 7.1% to 7.3%; lower then the projected 7.5%. Vietnam expects a higher first half growth rate as it includes the important Tet season. Disbursed capital on FDI projects were also down to $900 million against last year’s $1.1 billion for the same period.

Total FDI is expected to grow by year-end with the Nam Con Son Pipe Line, and two more power plants at Phu My (between HCMC and Vung Tau).

Recent World Bank estimates have driven Vietnam’s per capita GDP to $400, up from $220 in 1994. It is also estimated that 37% of the nation lives below the poverty line (by Vietnamese standards) and that 60% of the nation is underemployed or unemployed.

Overseas Development Assistance (ODA) funds were pledged at $2.4 billion in 2000, exceeding FDI for the second year in a row. The World Bank forecasts GDP growth of 7% annually from 2000 to 2005 provided that the government its lets list of reform projects. Vietnam’s on projections are slightly higher at 7.5% for the same period. (VET)

VIETNAM'S SLUGGISH integration into the international marketplace should cushion any major blow from the global economic downturn. While starting from a low base, Vietnam is expected to maintain steady GDP growth of 5.9% for 2001 and 6.1 % for 2002. Foreign investors are not expected to pull out. "Vietnam is still a strategic investment location rather than a short-term commercial investment location for them," says a banker in Ho Chi Minh City.

In the first eight months of 2001, Vietnam licensed 281 new foreign investment projects worth $1.13 billion, a 35% increase in the number of projects over the same period last year. Energy-related projects will continue to make up a large chunk of the investment pie. Bright spots include infrastructure, property, and food processing.

Some expect new opportunities with the U.S.-Vietnam bilateral trade agreement, slated for ratification by Congress before October 1. Vietnam can still count on an expanding market in the U.S. for seafood and textiles.

But serious challenges remain in the agricultural-export sector. Plunging prices for rice, coffee, and cashew nuts spell continued hardship in the countryside, where 80% of Vietnam's 80-million population resides. Growth in textile and garment exports will be hit by lower prices, competition and a shrinking market. If crude-oil prices decline significantly, that would put Vietnam in a major bind.
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HANOI, Aug 24 (Reuters) - Vietnam state oil monopoly Petrovietnam is studying the possibility of a $69.9 million pipeline to bring gas ashore to supply Ho Chi Minh City, the country's commercial center, a company official said on Friday.

The official said the project being studied envisaged a three-stage on land pipeline system stretching about 70 km (44 miles) from the southern Ba Ria-Vung Tau province to Ho Chi Minh City's Hiep Phuoc district.

The natural gas is to be extracted from the offshore Nam Con Son basin and partly from Cuu Long gas field.

The pipeline would supply gas to power plants in Hiep Phuoc and Thu Duc districts as well as consumers in industrial parks, she said.

It was expected to able to supply 1.5 billion cubic meters of gas a year initially and up to 2.0 billion cubic meters in the following phase depending on demand.

The project would be completed in 25 months, able to start supply gas to the Hiep Phuoc power plant in the second quarter of 2003 and the Thu Duc power plant by the end of 2003, the official said.

She said Petrovietnam would finance the project with its own fund and loans from banks and other sources.

In February this year BP Amoco (quote from Yahoo! UK & Ireland: BP.L), India's ONGC Videsh Ltd and Petrovietnam which own the Nam Con Son field signed an agreement to bring the gas onshore with Norway's Statoil [STAT.UL], BP Amoco and Petrovietnam, as the owner of the $580 million gas pipe line.

Houston-based Conoco Inc (NYSE:COCb - news) operates in the Cuu Long basin, 193 km (120 miles) southeast of Ho Chi Minh City, with partners including Petrovietnam, Korean National Oil Corporation, SK Corp and Geopetrol.

TORONTO, Aug. 24 /CNW/ - After an exhausting 58-hour journey of 7,900 miles (13,640 kilometers) from Vietnam to Canada, three puppies rescued from a meat market by The Humane Society of Canada have found safe and loving homes.

"The market was full of terrified puppies and kittens in cramped wire cages, awaiting slaughter. I still have nightmares about leaving dozens of them behind. I can still hear their cries," said HSC Executive Director, Michael O'Sullivan, who has worked in more than 85 countries over the last 30 years.

O'Sullivan wants to work with the Government of Vietnam and Vietnamese animal protectionists to phase out the practice of killing puppies and kittens. He says that improving the lives of other animals begins with dogs and cats, our closest companions and that there is link between the way we treat animals and the way we treat each other.

NEWS CONFERENCE: Sunday, August 26/2001 from 11 am to 1 pm at the home of HSC Executive Director, Michael O'Sullivan, located at 28 Fernwood Park Avenue, Toronto (map with directions available). O'Sullivan will be available to answer questions, accompanied by the three surviving puppies he rescued.

BETA SP footage, color photographs and a typical cage used in the meat markets are also available.

TORONTO (CP) - The Canadian Humane Society's executive director says he has seen the worst cases of animal abuse after visiting Vietnam for a United Nations conference. Michael O'Sullivan returned from Hanoi, Vietnam nearly one month ago with five dogs rescued from a local meat market, where they were being sold as food and caged under horrible conditions.

"It's one of the most heartbreaking sights I've ever seen," O'Sullivan said. "I've worked in 85 countries - a lot of them developing nations - over the last 30 years, and I've seen a lot of pretty sad stuff but this was the worst."

O'Sullivan was attending a United Nations wildlife protection conference in Vietnam three weeks ago when he found the mutts.

"I felt like I was playing God, because there was no way you could rescue them all at the time," said O'Sullivan, who estimated there to be over 100 dogs in the market he visited. "The cruelty was just so overwhelming."

He added he also counted 47 kittens languishing in a single cage at the same market.

He haggled with the animals' owners and ended up buying five dogs for $11 Cdn each.

Since being brought to Toronto, two of the dogs have succumbed to disease. The remaining three found willing and adoptive families.

O'Sullivan said he intends to return on his rescue mission to Vietnam in a couple of months to bring home 20 puppies and 20 kittens.

"The most effective way of changing things is going to be a grassroots effort," he says. "A lot of people don't like the way animals are treated in their country.

On Saturday, police charged two Vaughan, Ont., residents after about 180 dogs and puppies were seized in what investigators are calling one of the largest puppy-mill closures ever made in the province.

About 150 dogs and 30 puppies, mostly small terriers, were found living in dirty, makeshift pens with little food and water, police said.

[Last month's hoped for speculation on more freedom to and over the Internet, were... right and wrong. See Vignettes No. 46.]

Reuters HANOI, Vietnam -- Vietnam's communist government has allowed all businesses, including foreign firms, to supply Internet service but will retain its monopoly in the Internet access provision, an industry official said on Monday.

An official from the Directorate General of Posts and Telecommunications (DGPT) said firms of all economic sectors could become Internet Service Providers (ISPs), once they obtained a DGPT license, following a government decree issued last week.

HANOI, Vietnam (AP) -- Vietnam has set new fines for illegal use of the Internet, including the spreading of prohibited information, and is tightening regulations on Internet cafes, an official said Monday.

Under a decree which takes effect September 7, spreading prohibited information, pornographic material, and stealing passwords or private information are subject to fines of 10 million dong to 20 million dong ($666 to $1,330), an official from the General Department of Post and Telecommunications said. He declined to be identified.

Currently, five state-owned enterprises provide Internet service in communist Vietnam. All use a gateway regulated by a government corporation, Vietnam Data Communications.

The decree says private companies may now become Internet service providers, the official said. The government expects to license 10 more ISPs by the end of this year, including some private corporations, he said.

The country's thousands of Internet cafes must sign formal contracts with ISPs to operate as their agents, and will be closed if they do not, he said.

The highest fine under the decree, 70 million dong ($4,666), is for providing Internet service without a license, the official said.

The decree sets fines of 20 million dong to 50 million dong ($1,330 to $3,330) for creating or spreading viruses on the Internet, he said.

Last month, authorities in southern Ho Chi Minh City apprehended two 17-year-old boys who allegedly spread viruses and stole Internet accounts belonging to others. The two boys were fined 5 million dong ($330) each in the country's first punishment of people accused of computer crimes.

The official said there are currently about 150,000 Internet subscribers in the country, where service was launched in 1997.

Some Vietnamese dissidents have used the Internet to spread documents critical of the communist government.

The Vietnamese government has overhauled its rules on the internet, paving the way for a further ten firms to be licensed as internet service providers by the end of the year.

There are currently five ISPs in Vietnam, all of them state-owned.

Internet penetration in Vietnam is low, with an estimated 150,000 internet subscribers out of a population of 78 million.

However, the government has made clear that even as it allows private firms to become ISPs, it wants to retain control of the medium.

The decree, which will take effect on 7 September, also sets new fines for the illegal use of the internet.

As well as prohibiting the spreading of pornographic material, and the stealing of private information, illegal activities include the reselling of a subscribers internet access.

Internet cafes will therefore have to register with authorities or be closed down.

Providing internet services without a license will incur a fine of 70 million dong ($4666).

Job creation?

John Shrimpton, a director of Dragon Capital in Ho Chi Min City, told the BBC's World Business Report that the government hopes that the internet will boost software development in Vietnam.

"Because of its demographics, there is about 1.3 million people coming onto the job market every year," he says. "And so the need to create jobs I think really is at the heart of all of these issues."

John Shrimpton says that the reforms are a result of political change.

"The country now has a new General Secretary, who is generally accepted to have a more reform minded outlook," he said.