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  VIETNAM

REPUBLICAN REFERENCE

Area (sq.km)
329,560

Population
79,939,000

Capital
Hanoi

Currency
dong

President
Tran Duc Luong

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Background:
France occupied all of Vietnam by 1884. Independence was declared after World War II, but the French continued to rule until 1954 when they were defeated by communist forces under Ho Chi MINH, who took control of the north. US economic and military aid to South Vietnam grew through the 1960s in an attempt to bolster the government, but US armed forces were withdrawn following a cease-fire agreement in 1973. Two years later North Vietnamese forces overran the south. Economic reconstruction of the reunited country has proven difficult as aging Communist Party leaders have only grudgingly initiated reforms necessary for a free market.

Update No: 09 - (29/08/02)

The newly-approved cabinet of Vietnam has pledged to build an increasingly efficient and competitive economy, foster a clean administration and promote human development in its new term of office.
The cabinet was approved by the National Assembly with three deputy ministers and 26 ministers. Fifteen of the ministers are new to their posts, including Deputy Prime Minister Vu Khoan, Minister of Planning and Investment Do Hong Phuc, and Minister of Industry Hoang Trung Hai, Minister of Post and Telecommunication Do Trung Ta. 
Speaking at the National Assembly gathering to appoint the new cabinet in early August, Prime Minister Phan Van Khai frankly criticized his own record for socio-economic development during the first 8 months of the year which was weak and not sustainable, and which was reflected in declining exports and foreign investment as well as weak economIC competitiveness. Therefore, he said, a new period of in-depth development in economic transformation, management and technology was needed to boost productivity and competition. 
The first cabinet meeting in mid-August also set directions for key economic sectors. The export sector needed to focus its attention on processed products, improved agricultural production, energy sector development and the implementation of infrastructure projects. 
The cabinet was committed to further improving the business and production environment, facilitating capital market development, stock market expansion and attracting foreign direct investment while gradually applying indirect investment forms.
In order not to be accused of going off the track, the new cabinet said it would format institutional systems of a socialist-oriented market economy quickly and install a legal framework which would shape a fair business environment among economic sectors in terms of capital, land, technology and information access.
Ministers are busy mapping out strategies for their sectors, and those new to their posts are especially taking initiatives to make milestone innovations to their fields. 
Stepping into the office of deputy prime minister, Vu Khoan said he would give top priority to the country's bid to join the World Trade Organization (WTO) and to economic integration in general.
Vietnam has finished its first round of negotiations for WTO membership and will begin the second series late this year.

Export statistics:
Vietnam's exports in the first eight months of the year are reported to have decreased by 1.2% to $10.3 billion against the same period last year, while import spending increased by 15% to $11.98 billion. This will bring the country's trade deficit to $1.67 billion in the January-August period.
The country's eight-month export decline is blamed on poor sales of crude oil and other key farm produce such as coffee, rice, and fruit and vegetables.
The country only sold about 11.03 million tons of crude oil worth $1.94 billion in the first eight months, down 5.1% in volume and 17.2% in value, the statistics office revealed.
Rice shipments also recorded a decline to 2.27 million tons worth $487 million in the January-August period, down 24.5% in volume and 1% in value. The respective figures for coffee were 481 tons worth $188 million, down 26.2% and 36.9%. Fruit and vegetable exports also fell by 39.9% to $149 million in the period. 
The country earned $1.59 billion from exporting garments and textiles in the first eight months, up 16.2% on-year. Footwear exports meanwhile brought into $1.25 billion, up 20.9%.
Firms across the country exported 255,000 tons of rubber worth $136 million in the first eight months, up 45.6% in volume and 36.4% in value against the same period last year. Export of cashews were 36,700 tons and $121.3 million, up 41.2% and 24.3% respectively; 41,000 tons and $40.4 million for tea, up 58.5% and 50.7%; and 99,100 tons and $47.4 million for peanuts, up 64.7% and 63.5%.
Its export activities, however, look better in August when export turnover reached $1.5 billion, up $100 million against July, hitting the highest figure so far this year. Such an increase is due to higher export revenues from garments and textiles, footwear, handicrafts and other agro products such as rubber, cashew, tea and peanuts.
State-owned enterprises are predicted to earn $840 million from export sales in August, bringing eight-month exports to $5.57 billion, down 0.9% against the same period last year. Meanwhile, they spent about $7.93 billion on imports, up 11.4% on-year.
Foreign invested firms also saw a decrease in exports of 1.5% to $4.73 billion, including $660 million in August. Their import spending increased by 22.8% to $4.05 billion.

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AUTOMOBILES

Construction begins on new automobile plant

Following its completion, a new automobile plant in suburban Dong Anh District of Hanoi will manufacture different kinds of buses besides chassis for several kinds of lorries and other vehicles. 
Construction began on August 24th on the factory belonging to the Ministry of Transport's Transport Industry Corporation (Transinco). When it goes on stream in two years time, it will manufacture annually 3,000 buses of 7-9m length and 2,000 buses 10-12m long. 
The US$40 million factory, which will spread over 20ha in the outlying district, 20km north of Hanoi, will have production lines from the Republic of Korea's Hyundai Corporation and China's No.1 Auto Assembly Corporation. 
The corporation also has on the cards, plans to build other plants for manufacturing 12,000 lorries a year and 30,000 diesel engines. 

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AVIATION

US Assistant Secretary of Commerce to visit Vietnam

US Assistant Secretary of Commerce for Trade Development Linda Conlin will lead more than a dozen US aerospace companies on a trade mission to Vietnam between August 25th and 30th to boost business relationships between the two countries, according to a source from the US International Trade Administration. 
"Vietnam is an important trading partner for the US," said Conlin. The two countries' trade turnover stood at $1.5 billion last year. 
The 13 aerospace companies selected to participate in the trade mission include Advanced Naviation & Positioning Corp.; ARINC; Bell Helicopters; Boeing Air Traffic Management; The Boeing Company; Gravitas Digital Solutions, Inc.; Lockheed Martin Global, Inc.; the LPA Group; Orbital Communications International; Pratt & Whitney; Ratheon International, Inc.; Sikorsky Aircraft Corp.; and Uplift Inc. 
The delegation will visit Hanoi and Ho Chi Minh City to develop contacts with key Vietnamese government officials. US company executives will also meet individually with potential business partners, including representatives from organizations involved in airport development, air traffic management, air terminal communications, airport security, aircraft and aircraft parts, global positioning systems, and helicopters and parts. 
Boeing and the state-run national flag carrier, Vietnam Airlines, have signed the first major deal since the US-Vietnam Bilateral Trade Agreement came into being last December for the purchase of four new Boeing 777-200ER aircraft at a cost of $680 million, with delivery to be made in the third quarter of next year. 

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CONSTRUCTION

Vietnam to build plastics plant

Vietnam's plastic association plans to build a $250 million plastics plant powered by natural gas to reduce the country's reliance on imports, an official has said.
The government has given the Vietnam Saigon Plastic Association approval to build the plant that will be one of the country's biggest plastics facilities, association chairman Tran Cong Hoang Quoc Trang said. 
The plant, due to become operational in 2004, will be the first in Vietnam to use natural gas to produce polyethylene and polypropylene, Trang said.
It will be located in the southern province of Ba Ria-Vung Tau, where the government wants to set up more factories to take advantage of large offshore gas fields.
Trang said the association is looking for potential investors in the plant, which will supply the domestic market with 175,000 tons of polyethylene and 175,000 tons of polypropylene each year.
Vietnam spent $540 million importing more than 900,000 tons of plastics last year, including 300,000 tons of polyethylene and 300,000 tons of polypropylene, Trang said.
"Our demand for plastics will grow fast," he said. Each Vietnamese consumes an average of only 30 pounds of plastics products each year, compared with average annual consumption of 66 pounds per person in other developing countries and 220 pounds in the United States," he said.
State-owned PetroVietnam is preparing to build another large plastics plant in Dung Cat Industrial Park, beside the country's first oil refinery. That plant will use crude oil as an energy source, the company said.
Vietnam has 800 enterprises specializing in plastics products. Of these, 600 are domestic and 200 have received foreign investment. The country has attracted $2 billion in foreign investment for its plastics industry, Trang said. 

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ENERGY

Plei Krong hydropower plant gets approval 

Electricity of Vietnam (EVN) has got government agreement to build the 110-MW Plei Krong hydropower plant in the central highlands province of Kon Tum at a cost of VND3,000 billion ($197 million) by the end of next year. The plant will be capable of turning out 452 million kWh per annum when it becomes operational. 
The deadline for the completion, however, is not available at the moment. This project is part of EVN's master plan to build seven hydropower plants in the Central Highlands in the 2001-2005 period, including Dong Nai No 3 and 4 capable of producing 510 MW each in Dak Lak and Lam Dong provinces, 300-MW Dai Ninh in Lam Dong province, 273-MW Se San in Gia Lai - Kon Tum provinces. 
EVN has altered the electricity development plan to increase the country's power supply to over 20,000 MW by 2010 instead of 16,000 MW it set initially. To meet the ever-increasing domestic demand, EVN plans to put into operation additional 24 power plants with a combined annual capacity of 4,600 MW from now until 2010. 
EVN, the country's sole power retailer, reported output of 18.9 billion kWh of electricity in the first seven months of this year, up by more than 17% over the same period last year. It plans to generate 13.4-13.6 billion kWh in the last five months of the year. 

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FINANCIAL NEWS

Eight-month industrial output up 14% 

Total industrial output throughout Vietnam in August is estimated at VND23.636 trillion ($1.544 billion) up 1.6% against July and 14.2% on August last year, bringing total output in the first eight months to VND172.855 trillion ($11.3 billion), up 14% year-on-year, according to the General Statistics Office.
State-owned enterprises recorded total industrial output of VND69.177 trillion ($4.52 billion), up 11.7%, the private sector VND41.638 trillion ($2.72 billion), up 19.2%, and the foreign investment sector (crude oil excluded) VND44.538 trillion ($2.9 billion), up 21.6% against the same period last year.
Key industrial zones of the country still posted high industrial growth rates, such as Hanoi with 24.7%, Hai Phong 26.3%, Da Nang 19%, Khanh Hoa 28.7%, Binh Duong 32.4%, and Dong Nai 16.6%. Ho Chi Minh City, the country's most dynamic economic hub, recorded lower industrial growth of 12%, which was still higher than the 9% growth in the first half.

Vietnam scales down export targets

Vietnam hopes to gain an increase of 4.1% year-on-year in export revenue to $20.2 billion in 2003, according to the Ministry of Trade (MoT).
It set an ambitious plan to increase export sales by 11% on-year to $19.4 billion in 2002, which now seems difficult to reach after the poor export result in the first seven months of the year.
MoT predicts that Vietnam will be able to earn $16.6-17 billion from shipping commodities abroad next year, up 7-8% against this year.
Industrial and mineral product exports are expected to reach $4.5 billion, light industrial and handicraft goods $7.2 billion, and agricultural, forestry and fishery products $5.3 billion.
MoT also forecasts that the country's import spending will increase 7.6% to $21.2 billion next year.
The country's export turnover fell 4.2% while import revenue rose 11.6% in the first seven months of the year against the same period last year. That was a result of falls in exports of its major products such as crude oil and agricultural commodities.
The trade deficit stood at $1.44 billion for the first seven months. The country needs to earn around $2 billion from exports each month in the remainder of the year, to enable it to realize its annual targets.

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FOREIGN ECONOMIC RELATIONS

Vietnam, India trade revenue reaches $170m 

Bilateral Vietnamese-Indian trade revenue in the first half was $170 million, of which Indian exports accounted for $150 million, according to the Indian Chamber of Business in Vietnam (Incham). The chamber said they are trying to boost commercial and investment bilateral ties between the two countries. 
In mid-March this year, Vietnam and India reached an agreement to develop economic cooperation ties and joint efforts in fighting terrorism, drug trafficking and money laundering. 

Garment, textile & footwear firms expect larger US market share

Local garment, textile and footwear enterprises will have a good opportunity to resolve difficulties and boost export to the US in seminars to be co-held by the American Apparel & Footwear Association (AAFA) and the Vietnam Garment & Textile Association in Hanoi and Ho Chi Minh City from August 19th-23rd.
Experts from the AAFA will answer questions raised by Vietnamese enterprises about customs procedures, trademark registration, and regulations on goods' origin in the US as well as American tastes and quality standards. 
Vietnamese enterprises still have a long road to travel to obtain wide access to the American market. Up to 80% of garment and textile bases in Vietnam do not meet SA 8000 standards, the key standards on the working environment applied in the US and Europe, and only half of the manufacturers under the Vietnam Textile & Garment Corp. have obtained ISO 9000 certificates.
In the first seven months of this year Vietnam exported over $100 million worth of garments and textiles to the US, from which the Vietnam National Garment and Textile Corporation earned $45 million, a 4.5-fold increase from the year-earlier period. The country targets export turnover of $300 million to the foreign market this year. 
The US is also the second biggest importer of Vietnamese leather and footwear products. The Ministry of Trade forecasts footwear export turnover of $200 million from now to the end of this year, up 75.4% against the same period last year. 
Early this year, a 17-member-delegation from the AAFA arrived in Vietnam to study Vietnam's stipulations and needs regarding the import of material, equipment and machinery, and to seek local partners for garment, textile and footwear sales to the US. 

HCM City to increase trade promotion in Australia

Ho Chi Minh City authorities will make every effort to further promote trade with Australia in the coming years, Trade Service director, Le Van Cong, said on August 7th. 
Australia has a large demand for a variety of Vietnamese goods. Local enterprises last year earned some $500 million from the export of consumer goods, including shoes, textiles, garments and food.
"Actually, the potential to export locally made goods to Australia is much bigger but we have paid little attention to this market. Local enterprises can also ship farm produce and materials there," Cong said at the meeting.
In a meeting with the city authorities, Jeff Turner, head of the commercial section of the Australian general consulate in the city said his agency would initially help Australian companies produce materials for leather and footwear makers in Vietnam, process wood products and cooperate in raising dairy cows by using modern technology.
The commercial section is planning a trip for Vietnamese beverage and food enterprises to showcase their products in Australia, while 20 Australian companies are expected to join an export goods exhibition in Ho Chi Minh City in October. 

Vietnam to open showroom in the US shortly

Vietnam plans to launch showrooms for local products in the US in late November or early December, according to head of the Trade Promotion Department under the Ministry of Trade.
Leaving the US on July 27th after a fortnight's investigative visit, Ngo Van Thoan revealed that the showrooms will likely be located in San Francisco and will also perform as a trade promotion centre for 23,000 local export firms.
The move is part of Vietnam's programme to open professional trade promotion centres overseas to boost exports, firstly in the US, Russia and the United Arab Emirates. At present, all 41 commercial affairs offices that Vietnam has opened abroad are both undertaking the promotion of Vietnam's official ties with the host country and seeking to boost bilateral trade and lure more investment from the country into Vietnam. 
Thoan said Vietnam could increase sales of household utensils and handicrafts to the US since these commodities are highly competitive. 
A recent survey conducted by the Finance Ministry, however, showed that Vietnam was competitively inferior to penetrate the US market despite the bilateral trade agreement between the two countries. According to the survey, most shipments from Vietnam to the US are seafood, agro- and forestry products with annual value of $440 million, or 60% of Vietnam's total export turnover to the US. These commodities, mostly unprocessed, enjoy a very slight decrease in tariffs. Moreover, Vietnam also meets fierce competition from Thailand and India, which are also big seafood and agro exporters.
Sales of garments and textiles, though having high value, do not bring much benefit since Vietnamese firms mostly make products as contracted and designed by foreign partners.
Other Vietnamese commodities such as pharmaceuticals, machinery, automobiles and fertilizers, are totally unable to compete with their American-made counterparts.
Vietnam will gain $2 billion from exports to the US this year and $10 billion in 2010, up from $1.1-1.2 billion in 2001, the US Commercial Counsellor to Vietnam, Michael Frisby predicted. 
US investors poured $14 million of capital in to 16 projects in Vietnam in the first seven months of this year, bringing the total capital and number of US-invested projects in Vietnam to $1.03 billion and 143 projects. The US now ranks the 13th largest foreign investor in the country.

Armenian, Vietnamese foreign ministers discuss "revival of ties"

The establishment of an Armenian-Vietnamese intergovernmental commission for coordinating a programme of bilateral cooperation in the economic, cultural and educational spheres will help the reconsideration and application of the existing contractual-legal field. A relevant proposal was made in the course of a meeting between the Armenian foreign minister, Vardan Oskanyan, and his Vietnamese counterpart, Dy Nien Nguyen.
Arminfo News Agency has learnt from the Armenian Foreign Ministry press service that during the meeting, the Armenian foreign minister noted that the revival of Armenian-Vietnamese ties would be very useful for the peoples of Armenia and Vietnam. The sides stressed the importance of the visit of the Armenian foreign minister to Vietnam which signifies a new stage in relations between the countries following a long break.
During the meeting, the ministers discussed directions of development of Armenian-Vietnamese cooperation and highlighted the economic and educational spheres. Vardan Oskanyan and Dy Nien Nguyen discussed the foreign policy and regional problems of Armenia and Vietnam, as well the process of reforms carried out in both countries and economic progress registered in the past 10 years.

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FOREIGN INVESTMENT

HCM City to call for US investment in five projects

Authorities in Ho Chi Minh City will send a delegation to the US in September to introduce the city's five projects and key industries to US partners in an attempt to lure more investment into the city from this foreign country.
The city will call for US investment in building an underground rail network and solid waste treatment systems, a hi-tech park, and the two urban areas of Thu Thiem 1 and Nam Saigon (Southern Saigon). It also seeks more investment in the wood processing, information technology and plastic industries. 

Thua Thien-Hue calls for foreign investment

The central province of Thua Thien-Hue is calling for foreign investors for 59 projects, according to an investment promotion meeting in Hanoi on August 12th, co-organized by provincial authorities and the Vietnam Chamber of Commerce and Industry (VCCI).
The projects are in the fields of information technology, software development, biology and new material technology, aquaculture and forestry processing, infrastructure and industrial zones, and several tourism projects in Chan May, Bach Ma and Lang Co resorts.
Provincial authorities introduced special support measures to investors, including exempted or reduced land rents for infrastructure projects, assignment of cleared land within 60 days of receiving a license, 0% corporate income tax for the first 14-18 years, financial support equalling 30% of labour training costs, and simplified licence granting procedures.
The meeting was attended by nearly 100 foreign investors from the US, South Korea, and Taiwan. 
Thua Thien-Hue province is famous for its tourism potential, with the UNESCO-acclaimed World Heritage Hue City, the nice beaches of Thuan An, Lang Co village and Chan May port. However, the province has so far only attracted 14 foreign projects with total capital of $140 million. 

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INFORMATION TECHNOLOGY

Second-hand computer devices threatening Vietnam 

Computer assemblers at a seminar held in Ho Chi Minh City on August 14th voiced their concerns over the recent bulk import of second-hand products such as monitors and components, and proposed the Government take strong action.
Such products will soon become scrap in the information technology industry, they said at the "How to Prevent Monitor and Computer Scrap in Vietnam" seminar jointly organized by the weekly publication Thoi Bao Kinh Te Viet Nam and the Korean-invested Samsung Vina. Most businesses also agreed that illegal imports also discourage investors in the industry.
The prevailing value added tax does not encourage the production of computers in Vietnam but facilitates the import of second-hand units, the seminar, attended by State administrators, was told. Participants explained that importers could sell their products to retail outlets that only have to pay lump sum tax, while producers were subject to the high tariffs imposed on components and VAT.
Moreover, importers of second-hand computers always manage to evade tax. For example, they often declare lower prices for their imported computers and components and it is difficult for State administrators to determine the true value of such PCs. Strict regulations governing the evaluation of secondhand computers also make imports of this kind soar.
Nguyen Tuong Vinh, head of the anti-smuggling team of the HCM City Customs Bureau, said that hundreds of containers of second-hand monitors worth $1.6 million entered the country in the first seven months of this year, and added that another 29 containers originating from the US are waiting for the completion of local customs procedures. 
"It is really difficult to evaluate the quality of second-hand computers and components so as to set a suitable tax rate," he said. Sharing this view, a local computer producer said importing second-hand computers often brought a 20% higher profit, and consumers prefer them as they do not have to pay VAT.
Pham Van Phu, chairman of the Ho Chi Minh City Information Technology and Electronic Association, estimated 231,000 PCs and component kits were imported illegally into Vietnam last year. He estimated that the country loses up to $260 million in taxes each year. The situation this year will be the same or even worse if the government cannot take control over the imports, he said. 
A Samsung Vina official said his company has seen a 16.5% fall in sales since early this year due to increased numbers of second-hand computers. He said Samsung Vina sold 12,000 monitors every month last year but the monthly figure this year dropped to only 10,000.
Participants also suggested the government give local enterprises financial support or preferences in order to help them work out development strategies for Vietnamese trademark computers.

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PHARMACEUTICALS

Vietnam to produce 60% of medicine demand by 2010 

The Vietnamese pharmaceutical sector will meet around 60% of demand from residents by 2010, up from the current 36%, according to a scheme approved by the government last Thursday. The scheme, aiming to turn pharmaceuticals into a spearhead technical economic sector, also targets to increase the country's per capita spending on medicine to between $12 and $15 by 2010 from $6 in 2001. 
Accordingly, all pharmaceuticals production establishments will have to gain a certificate of good production practice. The sector will spend much on building more industrial facilities to produce antibiotics and pharmaceutical chemicals, and advantageous medicinal materials, particularly from herbs. 
Major measures to realize the scheme include more spending on establishments for chemicals and materials, on production and bio-technology research, workforce training and reorganizing the State inspection system over drug quality. Vietnam now has 90 state-owned drug producers, as well as 316 limited, 43 joint stock and 15 private companies, according to the Vietnam's Pharmacy Management Department. 
By the end of March, 223 foreign companies had also been granted operation licences to trade in pharmaceutical products. The majority are from India, followed by France, Germany, China, South Korea, Japan and Singapore. Last year, the country imported $418 million worth of drugs, and raw materials for drug manufacture. 

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