November-December 2003 - VVG reports to clients on Vietnamese foreign direct investment.

VIETNAM VIGNETTES^®
Copyright © 1997-2003 Vietnam Venture Group, Inc.^® All rights reserved. November 15, 2003

Issue No. 73
November-December 2003

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Our 6th year on the Internet & 10th year in Vietnam
A Periodic Report to Our Clients

IN THIS ISSUE
COMMENTARY: Investment Call To Action
Production is up in many factories. Rents and Sales are going in the same direction. There is an air of success that cannot be ignored as we walk the shopping malls and drive down the shopping streets of HCMC. With the GDP second in the region only to China, we yet know the success is not in Vietnam alone. This is the time to grab hold of opportunities, not to wait longer to see if they will mature. To gain a better perspective, see our commentary (linked above) and our dispatches (linked below).
Japan Ranks No. 1 USA - Leading Importer Nation Death Sentences - not very rare 2nd Largest Oilfield Starts Production	Vietnam's 2004 Budget Telecom Companies to Set Own Rates U.S. Supports Education

See VVG's monthly feature on Current Economic Indicators of Foreign Direct Investment in Vietnam

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COMMENTARY

Investment Call To Action.
We've seen this before but in 1994 there was a lot more hype. That has gone as the markets matured in the past decade of progress.

Progress has not all been for the best, and the downturns have not all been bad. Lessons are learned and we proceed -- ever in a forward direction. We remember clearly events of the past but do not well there. This is the time to take a long, hard look at projects. We've all been following our own favorites and some are looking much better than ever before.

The forecasted growth in Gross Domestic Product at 7% to 7.5% is topped only by China that seems poised to exceed 8% in this year. Yet Thailand's forecasted GDP of over 6% is also a wake up call; growth at a lower rate starting from a higher base means that Vietnam is no longer catching up but actually falling behind its neighbors.

The city centers of entertainment are nearly filled with domestic Vietnamese where before it was the foreigners who filled the ranks. Office towers are near to bursting with occupancy rates at some topping 95 percent. Retail space in the towers and the low-rise projects that took the place of un-built towers is occupied at the same high rates.

All the signs are there for those who are looking. New inquiries on old projects are growing . We are asked more and more often by seemingly qualified investors interested in our own Cua Lap Resort Project. Not a small investment at all as it calls for over US$ 276 million.

As the BTA goes to its third year of operation, Vietnam is beginning to feel the success of that action. The trade deficit between America and Vietnam now favors Vietnam by nearly US$ 1.5 billion. The money is being re-invested in Vietnam by Vietnamese.

There is no secret to success: it's being able to see an opportunity when it arises and having the skill to capture it.

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Dispatches

Japan Ranks No. 1 In Vietnam
Japan and Vietnam in mid November 2003 signed an agreement to attract Japanese investors to the communist nation by guaranteeing them access to its tightly controlled markets.

The pact bans Vietnam from demanding Japanese companies procure parts from local companies or export certain percentages of their products. This is the only exception publicly acknowledged to what for others is a disturbing requirement due to the still developing nature of Vietnam's manufacturing abilities.

Japan is the third largest investor in the Southeast Asian nation, with cumulative pledged investment totaling 4.45 billion dollars.

The pact was line with an agreement reached between Japanese Prime Minister Koizumi and his Vietnamese counterpart Phan Van Khai in Tokyo in April to improve investment conditions in Vietnam.

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U.S.A. Leading Importer Nation
The United States of America has become Vietnam’s biggest importer, with total import turnover of US$3.195 billion in the Jan.-Aug. period. With that figure, the US outclassed Vietnam’s long held importers of the European Union and Japan. It also surpassed Vietnam’s total export value of US$2.394 billion to the US last year.

Vietnam’s Ministry of Trade predicted that exports to the US would increase 130 percent per annum in coming years, with garments and textiles recording the highest rate.

US’s exports to Vietnam are also on the rise thanks to large orders. In the Jan-Aug. period, the US posted more than US$944 million worth of exports to Vietnam, while last year’s figure was US$580 million.

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Death sentences

For crime boss
The Supreme People's Court has upheld death sentences for five members of the most notorious criminal gang after six weeks of appeal hearings.

In its final verdicts on 69 appellants, the court rejected appeals to death sentences by the crime boss Truong Van Cam, a.k.a Nam Cam, and four others-Nguyen Huu Thinh, Chau Phat Lai Em, Nguyen Viet Hung and Pham Van Minh. Nam Cam, 56, committed serious crimes, including murder, assault, bribery, gambling, organizing illegal emigration, and aiding and abetting criminals.

Other defendants, including government officials, police officers, journalists, gang members and accomplices, will serve jail terms ranging between several years and life. Bui Quoc Huy, former HCM City police chief and vice minister of public security, will serve four years in jail for irresponsibility leading to serious consequences. Pham Sy Chien, former deputy head of the Supreme People's Bureau of Prosecution, will serve six years; and Tran Mai Hanh, former vice chairman and secretary general of Vietnam Journalists Association, nine years, both for taking bribes. Former HCM City anti-crime police chief Duong Minh Ngoc will serve six years for taking bribes and power abuse. Hoang Linh, former Tuoi Tre reporter, was sentenced to 12 years; and Vo Quang Thang, former Cong An (Police) reporter 10 years, for power abuse for personal gains.

The Nam Cam is the biggest criminal case ever tried in Vietnam.

For 13 others
Thirteen people were executed by firing squad in Vietnam over two days in November 2003 for drug trafficking and murder, court officials said.

Three people were shot at dawn at central province of Ha Tinh for trafficking seven kilograms (15 and a half pounds) of heroin from neighboring Laos. They were sentenced to death in January 2002.

Ten others were executed for drug trafficking and murder the day before at Le Xa shooting ground, in northern province of Nam Dinh, in front of nearly one thousand local people.

No explanation was given for the execution of ten people on the same day. "The execution deadline expired for those people who all had their appeal or presidential clemency rejected", a court official said.

"Executions were carried out following orders from the highest justice authorities in the country", he added.

There was no official information about how long they had been held on death row before execution. Blindfolded and tied to a stake, the ten were executed simultaneously by ten marksmen, according to a witness.

Eight of them belonged to a drug network that was convicted in June 2000 for smuggling 275.97 kilos of (607.1 pounds) heroin and 289 kilos of opium from neighboring Laos between 1992 and 1999 to Vietnam.

The government has carried out a long-running campaign to wipe out the narcotics trade. Around half of the 95 people sentenced to death so far this year were convicted of drug trafficking, according to statistics compiled from state-media.

In September, public security vice-minister Le The Tiem said Vietnam believed the death penalty was an effective method of preventing drugs production and trafficking.

"This is a very effective measure," he said. "In the near future, it will be our policy to maintain strong measures against these extremely serious crimes."

At least 48 people have been executed in the communist nation since the beginning of 2003, according to the same local sources. - AFP

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Second largest oilfield in Vietnam starts commercial production
The first flow of crude oil was pumped from the Su Tu Den (black lion) Oilfield off the southern coast last week, marking a milestone in Vietnam's oil and gas industry.

Cuu Long Joint Operating Company (Cuu Long JOC), the operator of the oil field, expects to produce 132,000 tons this year and 1.58 million tons next year. The Su Tu Den, located in Block 15-1 in the Cuu Long Basin, 114km southeast of Vung Tau, has estimated reserves of 500 million barrels, the second largest in Vietnam after the Bach Ho (white tiger) with proven reserves of 2.3 billion barrels.

According to a company official, JOC has discovered an oilfield called Su Tu Vang (yellow lion) and is test drilling to see whether it is commercially viable. The company expects to find crude in another oilfield called Su Tu Trang (white lion) which is being test drilled.
Cuu Long JOC is a joint venture established in 1998, with PetroVietnam holding a 50% stake, Conoco (U.S.) 23.25%, Korea National Oil Company 14.25%, SK Corp 9% and.

PetroVietnam expects the combined reserves of the black, yellow and white lion oilfields to equal to those of Bach Ho. If this comes true, Vietnam will be able to retain annual crude oil output of 18-20 million tons when Bach Ho runs out.

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Vietnam’s 2004 Budget
Revenue......................................................................................VND149.32 tri.
Domestic revenue ...........................................................VND83 tri.
Crude oil export ..........................................................VND25.82 tri.
Import-export duty .......................................................VND38.5 tri.
Non-refundable aid ............................................................VND2 tri.
Spending ......................................................................................VND186.67 tri.
Investment and development ...........................................VND53.5 tri.
Debt repayment .........................................................VND29.375 tri.
Economic development, defense and security ....................VND92.51 tri.
Wage reform .....................................................................VND7 tri.
Staff redundancy ............................................................VND0.3 tri.
Financial reserve fund ..................................................... VND0.1 tri.
Reserve budget ...........................................................VND4.885 tri.

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Vietnam lets telecom companies fix their own rates
The Government has allowed telecom companies to fix prices at their own will, a move to break State monopoly in the sector and further open up the telecom market.

According to the Prime Minister's Decision 217/2003/QD-TTg on managing post and telecom service prices, telecom fees must be calculated on the basis of input costs and comparable to the rates in the region and the world. The State will intervene to stabilize telecom fees to protect the legitimate rights and interests of users and telecom businesses when necessary. The decision also seeks to prevent unhealthy competition by regulating telecom charges and banning price discrimination.

Following this decision, the Ministry of Post and Telematics has done away with the price bands for telecom services, a move that is hailed as conforming to the international practice of liberalizing the telecom market.

The Government has cut telecom charges in recent years to help businesses reduce cost, attract more foreign investment and enable low-income people to have access to telecom services.

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U.S. supports education
Vietnam Education Fund (VEF) will provide US$5 million a year for Vietnamese students to pursue post-graduate studies in the U.S. following a deal signed in Hanoi last week. According to VEF Chairman Herbert Allison, U.S. professors will be sent to Vietnam to help candidates obtain admission for higher education at U.S. universities. The fund was established in 2000 by the U.S. Congress.

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Vietnam Vignettes is a periodic report distributed since early 1994. It is NOT a newsletter although for the ease of linkage we have called it that. It is a summary of domestically published media reports from more than 17 industrial sectors that we at VVG follow and report upon for our clients. Our primary sources are: Vietnam Economic Times, Saigon Weekly News, Viet Nam Daily News, Vietnam Investment Review, and Vietnam Business Journal. * Due to the importance of certain topics of key importance to trade with Vietnam, we will occasionally include some wire and other media reports.

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