To protect the health of the public and stop the spread of smoking, Vietnam long held to a solid ban on smoking promotions. The word “tobacco” for many years was banned from print media so  that even the name British American Tobacco company was shown only as BAT.

Jessie Helms, former powerful US Senator from North Carolina, stopped protesting normalization of relations between the US and Vietnam when the Tobacco Lobby in America impressed him with the fact that nearly 80 million smokers and candidate smokers live here.  Senator Helms’ state is one of the foremost growers and exporters of tobacco.

Vietnam, long troubled with a lack of new manufacturing plants, already is blessed with numerous processing plants that hire hundreds of workers to use imported tobacco to process foreign brands such as 555, Marlboro, and Mild Seven, and domestic brand, Vinataba.

America’s interest in Tobacco is two sided.  On the health side, a nearly total ban on sales to minors was contrasted with long running ads that appealed to children; millions of dollars are spent by the nation on the cost of health care arising from tobacco related injuries – mainly cancer, and more millions in revenues are lost due to price supports paid to tobacco growers.

Photos of Vietnamese children under 10 years old smoking cigarettes are not pleasing to look at, even as they smile with tar-stained teeth and fingers, both tinted orange. The image is not nearly as hard to find in the streets of Vietnam as it is in the media.  But then, we also see car and motorbike repair men (children too) walking bare-foot in pools of spent oil, their oil stained  hands sporting missing digits as signs of their hard work in a dangerous industry.

America’s slowed domestic sales of tobacco is being made up with ever increasing export sales of tobacco to Vietnam where it is locally processed. But those America exports may soon be slowing down as Vietnam expands its own domestic production of the weed that so often had (still has in Vietnam?) extra nicotine added to insure addiction.

For its part, Vietnam recently announced a new boost to the tobacco sector with a US$ 40 million plant in HCMC to process a minimum of 40% of the home grown weed, proficient enough to spew out 20 billion cigarettes a year and pollute the lungs of innocent non-smokers with fumes filing the ambient air of cars, offices, restaurants, and homes. 

Jessie Helms may soon want to return to the Senate to reconsider the BTA, as the goal in Vietnam is to step up home grown tobacco growth, and thus reduce imports of foreign tobacco by about US$ 500 million.

While there are no truly international standard hospitals in all of Vietnam to care for its swelling ranks of lung cancer patients, the nation expects this “processing plant to be the first step in developing local growing areas that produce high quality tobacco,” proclaimed Deputy Minister of Industry Chau Hue Cam. 

There is little doubt that area for this new growth industry is the same fertile land the ethnic minority people were compelled to leave so that the majority Kanh could plant coffee trees, whose excess growth and sales help to force a collapse in the world price to less than the cost of production.  Coffee trees were then torn down and turned in to ugly lamp stands and tables.

Well, maybe there is some hope.  While we may soon see a “Vinataba Man” promoting domestically grown and processed tobacco products, with high productivity and insensitively to world markets a hall-mark of Vietnamese production, if the market price in tobacco products falls as fast as coffee, tobacco bush stems can always be used to weave baskets.

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VVG began tracking Vietnam’s Economic Indicators in October 1998 when there were 1,770 projects showing a total capital investment of US$ 33.05 billion for an average project value of US$ 18.67 million.

The numbers we published for May 2003 show there are 3,818 projects with a combined total capital value of US$ 38.472 for an average project value of US$ 10.08 million.

Thus while the growth in number of projects over that period is 216%,  the value of the individual projects lost 54% in overall average value in the same 4 ½ years.

HCMC currently has a total of 1,246 FDI projects with Total Capital invested of US$ 10.077 billion for an average project value of US$ 8.09 million.  The "second city" is typical of the current trend: more, smaller projects. This is NOT a bad development unless viewed with blinders or lack of knowledge.

While Vietnam still looks to the presence or absence of large projects as an indicator of growth, sustained economic growth in the nation as a whole requires the nation to place its real emphasis on developing its Small and Medium Business (SMB) sector, without which large projects must depend on foreign imports for support. 

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A solution eyed by all is the opportunity to list foreign owned enterprises. This would require foreign invested enterprises to convert their current license (joint venture or wholly foreign invested) into a Vietnamese Joint Stock Company. When that happens, foreign invested companies will be able to sell shares on the HCMC Securities Trading Center.

Many other Asian nations allow this action. Japan’s Tokyo Stock Exchange has an average of US$ 4.7 billion traded daily that can only be contrasted with Vietnam's daily trades.

Reportedly, 15 Vietnamese foreign invested companies are expressing an interest in converting to a Joint Stock Company, although none has done so as of this writing.

Vinausteel expressed interest in going in that direction.  It is one of four steel enterprises (this one 70%) owned by Vietnam Industrial Investments, Ltd.  Based in Perth, Australia, with a registered investment capital of VND 844 billion (US$ 54.45 million ). Vinausteel posted a 2002 net profit of VND 53 billion (US$ 3.4 million) and thus meets all the criteria. 

Those include being in operation for at least three years and being profitable for the last year before conversion.  Foreign investors may not hold more than 20% of a company listed on the local exchange, unless foreign ownership exceeds that limit at the time of its listing.

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