Monday, November 17, 2008

Vietnam: Opportunities emerge amid chaos

09:50' 15/11/2008 (GMT+7)

Any time a stock market falls over 60 per cent within one year, you must ask if an opportunity is emerging or whether the coffin is truly being lowered into the ground. 

As one door closes, another one rich in opportunity opens

Investors in Vietnam and around the world are facing huge material declines in the value of their portfolios. Nathan Rothschild, one of history’s most famous financiers, said you invest when there was blood in the street. The lesson is simple, when the market mood is exuberant, people will buy at irrationally high prices. 

You can’t profit in such times. Rather it is when people are panic selling, at depressed prices, that you can buy into investments that will result in truly impressive profits. 

I believe Vietnam today offers many investment opportunities. There are strong economic challenges facing Vietnam as a result of the global financial crisis, but the country is nonetheless well placed to face these challenges and overcome the ‘growing pains’ that have stressed the economy thus far in 2008. The prices in the market today indicate that many companies are suffering. But those with strong management teams will find a way to survive and build value in the future.

A well-timed event

This message, of Vietnam’s resilience, is what VinaCapital will deliver to foreign investors at our 2008 Investor Conference, to be held 10-11 November in Ho Chi Minh City. The conference will gather investors and industry experts from Vietnam’s top companies, to discuss market conditions and trends. This year, we will not have the luxury of telling investors that huge returns are just around the corner. It will take time for the market to rebound. 

But long-term investors who missed entering the Vietnam market in 2005-2006 have a chance to correct that mistake. The foreign companies that so far in 2008 have contributed to record FDI commitments of over $57 billion, right in the midst of the stock market decline, certainly feel the country’s prospects remain strong. 

VinaCapital now manages five funds, three of which are listed on the Alternative Investment Market of the London Stock Exchange. Investors in our funds come from all over the world and include both individuals and institutions.
This year’s conference will draw about 100 participants, only a few less than last year. We expect there will be a very high level of interest among the participants at our conference, as they face tough decisions in the coming time.

They will want answers to three main questions. How have the VinaCapital funds performed this year? How will the funds cope with the current environment? And most importantly, is Vietnam still where they want to invest their money, and if yes, in what sectors?

While these questions do not have simple answers, we can say that despite the difficulties VinaCapital remains very happy to be focused on investing in Vietnam. 

Fund performance tested in 2008

VinaCapital’s three largest funds are closed-end funds that trade on the stock exchange. As such, even if their investments are sound, they are subject to market sentiment that can see their share prices rise and fall regardless of our assets here in Vietnam. And this is what has happened in September and October of 2008, market sentiment fell sharply and our funds saw their traded values plummet.

But what about our actual investments? Thankfully, we can report to our investors that our funds have very strong portfolios, including investments in companies and projects that have remained profitable throughout this difficult year. Only Vietnam Opportunity Fund, which invests in equities, has seen its asset value drop noticeable in 2008, as a result of the poor stock market performance.

In terms of how our funds will cope with the current environment, there are many strategies that we will discuss with our investors. Most importantly, none of our funds have any debt at fund level. This is a crucial point, because the sharp decline in closed-end funds around the world is due to the perception that they are heavily leveraged. That is not true in our case. 

In general, we feel our funds are well-placed despite the dire market conditions. VinaLand Ltd, for example, is invested in a large number of real estate projects that gives us flexibility in prioritising those that are best-placed to profit from the ongoing demand for retail, hotel and residential space. Vietnam Opportunity Fund has several options to free up capital to invest in Vietnam’s top blue chips, now trading at low prices. 

VOF is also looking at government bonds, which have emerged as an excellent value in the latter half of 2008. Perhaps best-placed of all is Vietnam Infrastructure Ltd, which has a strong pipeline of projects and over $100 million in cash available for investment. The question then becomes whether Vietnam remains a good place to invest. Will the country recover faster than other markets around the world, or will the current growing pains see Vietnam lag behind the markets in other nations?

We believe that Vietnam’s lack of integration with the global financial world and almost no exposure to subprime investments should keep Vietnam on the sidelines of the ongoing world financial storm. In addition, consumer demand should remain strong for the foreseeable future, which will help domestic businesses remain solvent. 

Furthermore, many of Vietnam’s exports are agricultural products that should not see significant demand declines, although commodity prices are currently falling. As Vietnam’s first oil refinery comes online next year, the country also stands to move up the value chain in the profitable oil sector. However, if the crisis worsens or is prolonged we can expect to see an impact on Vietnam. 

Exports will be affected, and there may be a slower disbursement of FDI commitments and a repatriation of indirect investments through the sale of equities and bonds. VinaCapital and other investment funds will find it difficult to raise more money to invest here, given the restrictive credit environment around the world.

Focus on domestic growth

For the investments we will make soon, our choices will be critical in terms of protecting shareholder value in the short term and building wealth in the long run. VinaCapital will continue to stay away from export-oriented investments. We have not really focused on this sector in the past, and will continue to look first to companies that promote and benefit from domestic economic growth. 

Domestically produced consumer goods, financial services, healthcare, education, tourism and technology are all sectors we remain bullish on. Property and infrastructure are also focus sectors, but in this case the quality of projects in terms of fundamentals like location is the determining factor in their potential for success. We will strive to find companies with strong balance sheets and good earnings prospects. The skill and dedication of management teams is also very important, particularly in difficult times.

With the VN Index now at a very low 370-380, valuations of Vietnamese companies are very attractive, with price-to-earnings ratios of about 10x, comparing favourably to regional markets with PEs ranging from 12-15x such as Hong Kong, China, Japan, Malaysia and Indonesia. The third quarter saw improved economic figures in terms of inflation and the trade deficit. Company earnings this year are sharply lower, however, and it will probably take several quarters of solid economic figures before positive sentiment returns to the market. The potential for growth is there, but it will likely be well into 2009 before the market makes a strong rebound.

In chaos, opportunity emerges

Earlier I invoked Rothschild’s quote about ‘blood in the street’. To be clear, no one wants to see chaos in world financial markets, and we should remember that real human beings have suffered because of the mortgage crisis in America and the spread of the credit crisis around the world. But in troubled times there is always opportunity, and investors should always view their role as searching out the best way to grow their money and, by extension, grow national economies.

Vietnam remains this region’s most dynamic emerging economy – based on a young, increasingly well-educated population; a stable political regime and rich natural resources tied to a long coastline in the heart of Asia. The world’s hottest economic sectors – oil, agribusiness, tourism – are all among Vietnam’s leading earners. Look for the market to stabilise in the coming months, and then look closely at the opportunities that emerge.

(*) Horst Geicke is chairman of VinaCapital Group, established in 2003 and now Vietnam’s leading investment management and financial services group, with over $1.8 billion in assets under management. He has been an active investor in Vietnam for over 15 years. Geicke is also the chairman of Hong Kong’s Pacific Alliance Group.

By Horst Geicke (*)

Vietnam to allow dual nationality

HANOI (AFP) — Vietnam has amended its nationality law to legalise dual citizenship, a change that could affect many in the Vietnamese diaspora of more than three million people, officials said Friday.

The legislature of the communist country on Thursday passed a revised law that maintains Vietnam's long standing single-nationality principle but, for the first time, allows for a number of exceptions.

The change means that many post-war refugees and other overseas Vietnamese who have become citizens of second countries can officially reclaim their lapsed Vietnamese nationality without losing their new citizenship.

"Those who apply to regain Vietnamese nationality can retain their foreign citizenship if they have justified cause and with permission from the state president," reported the state-run Vietnam News Agency (VNA).

The law also says that children born overseas to at least one Vietnamese parent will be able to claim citizenship of the Southeast Asian country.

The amendment brings the decade-old law in line with what has long been common practice, as many Vietnamese immigrants in the United States, Europe, Canada, Australia and elsewhere hold two or more passports.

Vietnam has in recent years stepped up efforts to lure back overseas Vietnamese or 'Viet Kieu' -- many of whom still harbour a deep distrust of the state they once fled -- along with their capital and expertise.

Many of them fled their homeland during and after the Vietnam war, which ended in 1975, often surviving harrowing journeys as boat people followed by years in crowded refugee camps to start new lives in about 100 countries.

The VNA report said a strict single-nationality rule "no longer conforms to real-life, practical situations" and had led to many violations.

The text of the amended law said that those who regain their Vietnamese nationality are "assured... all rights of citizenship and must obey all citizens' duties towards the state and society according to its laws."

This would suggest that those who regain their Vietnamese nationality will enjoy full rights, such as being able to buy property, but may also be subject to obligations such as military service for males.

However, the law also states that further government decrees will be issued to clarify some of the finer points of the amended law.

National Assembly deputy and Vietnamese historian Duong Trung Quoc told AFP legislators had debated whether those who regain citizenship could buy property, vote in elections and would have to do military service.

"These are not simple issues and deputies only dealt with them in principle," he said. "Ensuring their full rights to citizenship is a huge task.

"Legal conflicts will be dealt with on a case-by-case basis and in concrete circumstances, depending on Vietnamese laws and international conventions signed by Vietnam."

Saturday, November 15, 2008

National Geographic: Hanoi’s Old Quarter And Hoi An In 110 Historic Places

Hoi An ancient town

Every five years, the American-reputed magazine, National Geographic, releases its ranked list of 110 historic destinations in the world. From Vietnam, Hanoi’s Old Quarter and the ancient town of Hoi An are both on the list.

This year, the number-one destinations on the list include Wachau valley and Welk monastery (Austria), Rideau Canal (Canada), Ghent City (Belgium), and Nikko (Japan). At the bottom of the list are the City of Central (USA), and Phnom Penh (Cambodia).

Vietnam’s Hanoi ranks at the 94th while Hoi An is at the 83rd position.

Here are National Geographic’s comments about Hanoi: “"The old part of Hanoi is attractive but is becoming very busy, commercial, and somewhat over-developed. Pedestrian zones are recommended."

"Hanoi is not a Hong Kong or a Ho Chi Minh City (Saigon), or a Shanghai undergoing constant high-rise construction. Surprisingly, some of the back streets in the old French Quarter and the strip parks around the inner lakes retain immense charm."

"The parks and public areas are very well maintained, and the visit to Ho Chi Minh's tomb is still an exceptional experience."

"The 36 Streets area of Hanoi is lively and full of charm, but low on authenticity. The Thang Long citadel is authentic but presented without interpretation and therefore meaningless; in fact, boring to visit. Other so-called historic sites in Hanoi are all modern reconstructions. The problem in Hanoi is that while the city is beautiful and full of charm and an easy urbanity, the story told to the tourist is heavy handed and just not historically accurate."

About Hoi An, it wrote: “"A great place to be when the tourism buses have left in the afternoon."

"Authentic, accurately restored, and well-managed small town that has been brought back from sure death by culture-tourism industry. The problem is that it is just too small to accommodate all the tourists who want to visit it."

"What makes it unique is the historical blending of cultural influences."

"Beautiful architecturally, but the whole town has been 'repurposed' as a shopping opportunity for tourists; ultimately not a satisfying experience to visit."

China-Vietnam ties remain more sour than sweet

Written by Roger Mitton   
Friday, 14 November 2008
ImageA long-simmering squabble over the Paracels and Spratlys heats up again 

Despite official attempts to paper over their differences, the historically fractious ties between Beijing and Hanoi have recently taken a turn for the worse over a flock of geographically insignificant but strategically important dots in the South China Sea that are claimed by every country that abuts them.

The disputed islands, known to the west as the Paracels and Spratlys, lie amid strategic sea lanes and lucrative fishing grounds and are believed to harbor rich oil and gas deposits. Although Brunei, Malaysia, Taiwan and the Philippines are also claimants, the major dispute is between China and Vietnam, who assert sovereignty over almost the entire island chains.

Last December, after China planted new markers on the Paracels, Hanoi isued a rare public rebuke and officially sanctioned raucous street protests outside the Chinese diplomatic missions in Hanoi and Ho Chi Minh City. Beijing angrily reasserted its right to the islands and warned the Vietnamese not to go too far. Calling the islands by their Chinese names, foreign ministry spokesman Liu Jianchao said: "China has indisputable sovereignty over the Xisha and Nansha islands, and we have all the historical and legal evidence to prove it."

So the maritime skirmishes and the deep-rooted animosity has continued unabated.

In the latest incident, a Norwegian-registered vessel hired by Russian interests to undertake offshore oil exploration work for the Vietnamese was intercepted by Chinese naval ships and ordered to leave the area or risk being fired upon.

The Norwegian boat promptly left the area, exacerbating the chagrin of Hanoi, which was still festering from a decision by the US oil giant ExxonMobil to suddenly terminate its joint oil exploration plans with PetroVietnam. ExxonMobil's decision in July, like that made by its fellow American oil company ConocoPhilips in May, was due to pressure from Beijing, which made it known that any company seeking to exploit the disputed offshore region could kiss goodbye to any plans to do business with China.

To reinforce its hardening position, China reportedly dispatched five naval vessels and two submarines to the area around the Paracels earlier this year. More recently, some military sources say they believe China may deploy a JIN Class 094 nuclear submarine to the area, although others are doubtful since the seas around the islands are relatively shallow and viewed as unsuited for deep water submarine activity.

Still, the effect of China's toughening stance has meant that the energy-starved Vietnamese, who desperately want to develop the offshore oil and gas deposits, have once again been left fuming. Vietnam Communist Party members expressed their anger at the situation in no uncertain terms at the hurriedly-called party plenum on Oct 2-4 in Hanoi. Just prior to the plenum, Deputy Foreign Minister Vo Dung was dispatched to Beijing as a special envoy of the Hanoi leadership to deliver a Note from Vietnam about the state of bilateral ties.

In unusually strong wording, the Note referred to several sensitive issues, including the recent incidents in the disputed areas of the South China Sea and the threats against the foreign oil companies hired by Vietnam.

The Vietnamese state-controlled press reported that the deputy minister and his Chinese counterpart engaged in "frank discussions on the East Sea issue."

Afterwards, the two sides said they had agreed to set up a comprehensive strategic partnership in line with the motto "friendly neighborliness, comprehensive cooperation, durable stability and future-oriented vision." Precisely what this nebulous agreement will mean in practice is unclear.

Certainly, the omens are not good, if the question of the far less sensitive land border demarcation is anything to go by. When the deputy minister returned to Hanoi on Sept 27, he reported that both sides had agreed to speed up work on the demarcation of this 1,350-kilometre (840-mile) land border in order to complete it by the end of this year – a deadline set a decade ago.

But the Vietnamese remain doubtful that the deadline will be met. Furthermore, they claim the Chinese are duplicitous – repositioning markers that have already been put in place and turning a blind eye when their citizens plant crops and even bury bodies on the Vietnamese side.

Hanoi has decided that it cannot sit idly back and accept the stiff-arm tactics of the Chinese, particularly in the disputed offshore areas. And it has been moving to solidify other strategic alliances. Russia, the United States and India have all been actively cultivated – and have responded positively,since they view Vietnam as a potential hedge against the dominance of China in the Asia Pacific region.

Shortly before the October party plenum convened in Hanoi, Vietnam's defence minister visited Russia and Belarus, two of Vietnam's key suppliers of arms, naval equipment and military hardware. Later last month, the first ever US-Vietnam security dialogue was quietly held and further security sessions are planned.

The key issue of US oil companies being forced by China to pull out of the offshore waters claimed by Vietnam was on the agenda at the security dialogue, as it was when US Deputy Secretary of State John Negroponte visited Hanoi in September. Sources familiar with the talks say Negroponte made no attempt to hide his sympathy for Hanoi's position and that furthermore the US would do what it could to support Vietnam, short of openly antagonizing China.

This tacit support led Hanoi to subtlely alter the arrangements for the visit of the American guided-missile destroyer USS Mustin last month.

US Pacific Command (PACOM) sources confirm, the USS Mustin, which has 32 officers and 348 crew and is part of the US 7th Fleet, was originally scheduled to visit the port of Ho Chi Minh City in mid-October. But after China's threatened attack on the Norwegian oil exploration vessel, Vietnam asked the Americans to re-route the ship to Danang's Tien Sa port instead.

Washington happily agreed, knowing full well the significance of the change.

Not only is the High Command of Vietnam's 5th Military Region headquartered in Danang, but so too is the High Command of its Navy Zone No. 3, which patrols the disputed offshore region around both the Paracels and the Spratlys. Although the US vessel was officially only visiting to participate in community relations projects and for its crew to play a volleyball game against seamen from the Vietnam People's Navy, the symbolism of its visit to Danang at that time was lost on no one.

Said the USS Mustin Commanding Officer, Cmdr. James Jones: "This visit emphasizes the growing cooperation between the United States and Vietnam."

SACOM sources, who confirmed that they have also been checking into the reported skirmish involving the Norwegian vessel, said that the re-routing of the USS Mustin for its Oct 18-21 visit to Vietnam was timed to send a clear message to China.

Having sent that message, Vietnam's Prime Minister Nguyen Tan Dung left for China to attend the 7th Asia-Europe Summit. He pointedly arrived in Beijing on Oct 21, a day earlier than originally planned. That enabled him to have an extra day before the summit began in order to discuss the sovereignty flare-up with his Chinese counterpart Premier Wen Jiaobao and to protest the action taken against the Norwegian vessel.

It was Dung's first official visit to Beijing since becoming prime minister back in July 2006. Observers say the delay of more than two years before visiting the capital of his country's giant northern neighbor bespeaks volumes about the hyper-sensitive relationship between China and Vietnam. The impact of his delay was compounded by the fact that during the past two years Dung not only found it more important to visit places like Dublin and Canberra before Beijing, but that he pointedly decided to make his first overseas visit as PM to China's regional rival Japan.

Such slights, and they were clearly intended, and certainly noted in Beijing, reflected the depth of animosity that all Vietnamese feel towards China and the extreme sensitivity of any moves relating to Sino-Viet relations. Still, during their meeting, Dung and Wen did reportedly under oversee the signing of a strategic cooperation agreement between their respective state-run oil companies, China National Offshore Oil Corp and PetroVietnam, but the precise terms of the pact were not revealed.

And perhaps most significantly, the agreement itself was not released at the completion of Dung's bilateral talks on Oct 22 as is normally done, but instead it was delayed until after the ASEM summit ended on Oct 25, the day Dung left China. When it was eventually released, the agreement stated in vague terms that both sides hoped to increase economic cooperation and boost bilateral trade to US$25 billion by 2010.

While the overall amount is relatively large, it is massively in favour of China. Last year, Vietnam's trade deficit with China hit $9 billion and it is expected to reach $13 billion this year.

In contrast, Vietnam's increasingly warm ties with the US are firmly anchored by a large trade surplus with America which reached $12 billion last year. In fact, trade with the US now constitutes around 20 percent of Vietnam's exports, while that with China is only 15 percent.

Vietnam's trade and overall relations with Taiwan are far  better than those with mainland China. Taiwan remains one of the top three investors in Vietnam, while the mainland is down at number ten. Indeed, there are more flights from Vietnam to Taiwan than to mainland China.

So, despite last month's vaguely-worded joint agreement, the atmosphere between Beijing and Hanoi regarding sovereignty over the offshore remains as poisonous as ever. But as a partial antidote to the poison and in a bid to assuage Chinese fears over its growing naval ties with the US, Russia and India, Hanoi has just agreed to allow the Chinese Navy training vessel Zheng He to pay a short visit to Danang starting on November 18.

In recent years, there have been many port calls by naval ships from India, Thailand, Australia, France, Japan and the US, but this will mark only the second time since Hanoi and Beijing established diplomatic ties in 1991 that a Chinese naval vessel has visited Vietnam. Aware of sensitivies, the Vietnamese have carefully arranged for the Zheng He's program to exactly mimic that followed by the USS Mustin last month. Its officers will meet Danang municipal leaders and their military counterparts, while crew members will play vollyball with local seamen.

While this fraternal jollity ensues, however, websites in both nations continue to crank out virulently nationalistic messages that display the disputed offshore areas as entirely their own sovereign territory and show the other side attempting to make a bullying landgrab for them. And ironically, while Prime Minister Dung appears to make conciliatory gestures by signing the cooperation pact and approving the Zheng He visit, the fact that he studied in China during the late 1960s when schooling was difficult in North Vietnam due to the American bombing campaign, means that he must be extra careful in not appearing to be too pro-Chinese.

No Vietnamese leader can maintain his standing in the party and among the general public without taking a firm stand on the sovereignty dispute with China. Some years ago when Dung visited to his old school in Guanxi province, the Chinese media carried extensive reports of the event with photographs of the garlanded Vietnamese leader; but no reports or pictures appeared in the state-run media back home.

Posco Looks To Expand As Rivals Stall

Market Scan

Tina Wang, 11.14.08, 7:12 AM ET

Undeterred by the global slowdown, South Korean steel maker Pohang Iron & Steel, better known as Posco, has set its sights on expanding in Vietnam, despite the failure on environmental grounds of its initial proposal for a billion-dollar steel mill there. It considers Vietnam a good opportunity to expand globally, even as rivals' growth plans stall as a result of weakened demand.

Posco, the world's fourth-biggest steel maker by output, may be in a better position than its competitors to weather further price declines in prospect as China allows its own steel producers more leeway to export.

In a reversal, the Vietnamese government prohibited Posco from building a $5.4 billion steel mill at Van Phong Bay, a picturesque, tourist-frequented area along the country's south-central coast, the country's state media reported Friday. Posco's proposal, originally greenlighted by local authorities, sparked an outcry among residents, environmentalists and tourism operators.

Posco "will still be able to build another mill, but they're currently looking for a new site," the location of which is still unclear, said Lee Chang-mok, a Seoul-based analyst for Woori Investment & Securities. A plant of such scale takes four to five years of construction before production comes onstream, he said.

Posco is being aggressive about overseas expansion while others pull back on projects, in response to steel prices having halved from their peaks in July. Bigger rival ArcelorMittal is said to be delaying construction or capacity expansion plans in India, Canada and Romania, while Japan's JFE Holdings is reportedly mulling suspending new steel mill investments in Brazil and Vietnam.

Meanwhile, China is reversing its policy of discouraging the outflow of domestically manufactured steel; previously, it had aimed to keep commodities within its borders to feed the country's industrial boom. With economic growth having slowed to lows not seen in years, Beijing will roll back taxes on exports of cold-rolled, galvanized and other high-value-added steel starting Dec. 1, the Ministry of Finance said Thursday. A surge of output from China would further drive down the prices that South Korean and Japanese steel makers can command. Lee said, however, that Posco's manufacturing costs are 20% less than the global average, thereby cushioning the impact.

Lee forecast that Posco's profit would come in at 6.5 trillion won ($4.6 billion) in 2008 and 6.1 trillion won ($4.4 billion) in 2009. In Seoul trading Friday, Posco shares closed 3,500 won ($2.51), or 1.1%, lower, at 318,500 won ($228.71).

Friday, November 14, 2008

Chinese Warship To Make Vietnam Port Call


Published: 13 Nov 06:40 EST (11:40 GMT)

HANOI - A Chinese warship will next week make a port call in central Vietnam as part of efforts to boost military ties between the communist nations, a government spokesman in Hanoi said Nov. 13.

News of the November 18-22 visit follows a meeting between both countries' premiers in Beijing last month at which both sides, despite a history of distrust and conflict, pledged closer bilateral cooperation.

"This visit will help promote the friendship and cooperation between the two ministries of defense," said foreign ministry spokesman Le Dung.

Dung said that the ship's commanders would meet leaders of the central city of Danang as well as Vietnamese senior naval and army officials, while the ship's crew would play a football match while on shore.

China and Vietnam are communist allies but have a history of animosity and fought their most recent border war in 1979. Last year a Chinese naval ship reportedly fired at a Vietnamese fishing vessel in disputed waters.

Both are among countries laying claim to the Spratly islands in the South China Sea, believed to be rich in oil and gas reserves, and both claim sovereignty over the Paracel islands, which are occupied by China.

At their October meeting, premiers Wen Jiabao of China and Nguyen Tan Dung of Vietnam agreed on a series of steps, including collaboration on oil exploration and information exchanges by the two armed forces.

Vietnam expert Carl Thayer said the Chinese port call next week would be the first to Vietnam since November 2001 when the People's Liberation Army's guided missile frigate Yulin docked in Ho Chi Minh City.

"It's highly significant because of the reported build-up of tension last year in the South China Sea and the attempts this year by the party chiefs and prime ministers to prevent incidents in the South China Sea from damaging bilateral relations," said Thayer of the Australian Defense Force Academy.

"They have had four our five joint naval patrols in the Gulf of Tonkin, and this is a continuation of steps to build trust between the two navies."

The visit comes one month after guided missile destroyer Mustin docked at Danang in the latest of a series of American port calls designed to boost relations between the former enemies.

Tuesday, November 11, 2008

US Congressman opposes opening Vietnamese consulate

U.S. Rep. Al Green joined leaders of Houston's Vietnamese community in opposing plans to open a Vietnamese consulate here, citing concerns about the country's human rights record.

In a letter sent Monday to the U.S. State Department, the Houston Democrat wrote that opening a consular office in Houston could "undermine" the U.S. government's efforts to persuade Vietnam to improve religious and political freedom.

In addition, Green wrote that opening a consulate in Houston would "represent an affront" to the region's Vietnamese community, which numbers nearly 85,000 and has rallied against the proposal. The plan was first announced this summer during a visit to Houston by Vietnamese Prime Minister Nguyen Tan Dung, sparking protests that drew hundreds of Vietnamese.

Al Hoang, a Houston attorney and president of the Vietnamese Community in Houston and Vicinity, said community organizers have collected more than 15,800 signatures on a petition opposing the opening of a consulate. Hoang likened it to "having a German concentration camp in the middle of a Jewish community. That's exactly what it is like."

The State Department did not return phone calls Monday. Pham Tung, a spokesman for the Vietnamese Embassy in Washington, said negotiations are continuing between the two governments, calling efforts to delay the opening based on allegations of human rights abuses "unfair."

"The relations between the two countries has improved so far, and opening of the Consulate General in Houston will further improve the relations," Tung said. "It's unfair to try to delay or hinder the opening."

U.S. trade with Vietnam topped $10 billion in the first eight months of 2008. In 2007, when Vietnam joined the World Trade Organization, its trade with the U.S. topped $12 billion.

President Clinton lifted the embargo on Vietnam in 1994. The U.S. established a liaison office there in January 1995 and normalized relations six months later.

"We want Vietnam to prosper," said Hoang, who immigrated to the U.S. from Vietnam in 1975. "But not only in the economy. In the spirit, in the soul. We want people in Vietnam to enjoy what we enjoy in the United States — freedom. That's what we want."

Hoang said the community has serious reservations about the country's actions when it comes to human rights and religious and political freedom.

In his letter to the State Department, Green cited a Human Rights Watch report that found last year to be "characterized by the harshest crackdown on peaceful dissent in 20 years."

In its 2007 report on human rights practices in Vietnam, the U.S. State Department describes the government as an authoritarian state ruled by the Communist Party of Vietnam. The report also said the government prohibited political movements and arrested activists.

Last year, a Houston-based Vietnamese human rights group erected a billboard calling for "Human Rights for Vietnam Now!" with an iconic photo of a plainclothes Vietnamese guard muzzling religious leader Father Nguyen Van Ly during a government trial.

The local Vietnamese community is one of the largest international populations with no consular office in Houston. More than 75 countries, many with significantly smaller populations than Vietnam, have consulates or consul generals in Houston, including the Kyrgyz Republic and Namibia, according to the Greater Houston Partnership. Vietnamese immigrants living in the U.S. generally rely on a consulate in San Francisco, opened in 1997, or the embassy in Washington to get visas and other documents.

Vietnam, Central African Republic establish diplomatic ties

HANOI, Nov. 10 (Xinhua) -- Vietnam and the Central African Republic have officially established diplomatic ties, the Vietnam News Agency reported here on Monday.

    A joint statement was signed by Vietnamese Deputy Prime Minister and Foreign Minister Pham Gia Khiem, and Central African Minister of Foreign Affairs, Regional Integration and Francophone Affairs Dieudonne Kombo-Yaya in Hanoi on Monday.

    At earlier talks, the two FMs placed great value on the establishment of Vietnam-Central African Republic diplomatic ties, describing the move as a turning point in bilateral relations.

    They expressed their determination to further develop bilateral relations for their people and for peace, stability, cooperation and development, both regionally and globally, the agency reported.

    Khiem affirmed that Vietnam attaches importance to developing friendship and mutually-beneficial cooperation with African nations, including the Central African Republic.

    The Central African Republic Foreign Minister said that, within the framework of his country's South-South cooperation program, top priority is given to promoting friendship and cooperation with Vietnam in the Asian region.

    He affirmed that as an agriculture-driven country, the Central African Republic would love the sharing of experiences in coffee plantation, rice farming, and aquaculture with Vietnam.

    The Central African Republic is also eager to cooperate with Vietnam in the fields of energy, textile and garments, footwear, and pharmacy, the foreign minister added.

Shipping fee plunging, pushing Vietnam's firms against the wall

15:42' 10/11/2008 (GMT+7)

VietNamNet Bridge – The shipping fee has dropped by 90% just over the last three months after a long period of skyrocketing. The downturn in shipping fees has been described as terrible and unprecedented over the last few decades.


No one could imagine that the dry carriers with the tonnage of 40,000 to over 100,000 tonnes could see such a sharp fee decrease of 90%

Ta Hoa Binh, Director of Dong Do Shipping Company, said that this is the most terrible decrease in the last few decades of the world’s shipping history. The periodic ups and downs of shipping fees is a normal thing in business, but Binh said he has never seen such a plunge.


No one could imagine that the dry carriers with the tonnage of 40,000 to over 100,000 tonnes could see such a sharp fee decrease of 90%. It happened within just one week that the time chartering fee for bulk cargo ships with the tonnage of 74,000 DWT fell from $40,000/day to $19,000/day.


At the time when the shipping fee was at its highest peak, the time chartering fee of this kind of ship reached $70,000/day, while it is now hovering around $10-12,000/day.


Since the beginning of July, the average shipping fee has decreased by 30-70%. Small ships still receive regular small orders, while big tonnage ships seemed to have no consignments to carry.


Container carriers have also seen their fees decrease sharply, slightly less of the shipping fees of big tonnage ships. Currently, only oil tankers can keep the fee fixed as single hull tankers have been prohibited by the International Maritime Organization (IMO). As many new double hull tankers have not been built, oil tankers still have many jobs to do.


Binh said that the sharp fall of shipping fees have been anticipated for the last two years because of many reasons. He said that the sharp falls of shipping fees have been attributed to the global economic recession, which has led to the sharp falls of cargo in the last few months. However, this is just one of the reasons.


The direct reason, according to Binh, is that a lot of single hull tankers, which are unable to meet the requirements set by IMO’s convention, have been turned into large cargo carriers, which has led to the excessive carry capacity.


Experts have warned that the ‘shipping fee storm’ will have severe impacts on Vietnam’s shipping industry. As Vietnam’s fleet is not big and it does not have stable clients, when the tonnage capacity excess occurs, Vietnamwill be eliminated as the weak rival.


Meanwhile, Vietnam’s fleet has been built with loans rather than businesses’ own capital, and therefore Vietnamese enterprises have been put under the hard pressure of paying debts. The enterprises, which have only invested in large tonnage ships and will see the sharpest falls in shipping fees, will suffer the most. No one can say for sure what will happen if the market continues to plummet.


Vu Huu Chinh, General Director of Vosco, one of Vietnam’s biggest shipping firms, said that Israeli ship owners have decided to keep their ships idle because of overly low shipping fees. Chinh said that Vosco, the company that has its brand name well known in the world’s shipping market, also finds it very difficult now to find cargo for large tonnage ships.


Nguyen Van Hanh, Director of Vinalines, said that it is now a very difficult period for Vietnam’s shipping firms, and that it will require a big exertion to survive the difficulties. Representatives from Vinaship also said that it just strives to break even while not dreaming of making profit, something they haven’t done in the last three months of the year.


The lifebuoy for Vietnam’s shipping firms is the long term contracts on time chartering that were signed before. However, the lifebuoy may go flat if the fee decreases continue for a long time as the clients who charter ships may break contracts.


There would be two choices for Vietnamese firms and their clients in case the shipping fee continues dropping; either to cancel contracts and accepting compensation, or to continue chartering but with lower chartering fee. In both cases, Vietnamese ship owners will be put at a disadvantage. The worse scenario could occur when the foreign chartering partners announce the bankruptcy.

Monday, November 10, 2008

Japan's Denso to Build Auto Parts Facility in North Vietnam

HANOI, Nov 10 Asia Pulse - The Hamanakodenso Co Ltd, a subsidiary of the Japanese Denso Corporation, established a new company last month to produce auto parts in Hung Yen Province.

The new company, Hamaden Vietnam Co Ltd (HDVN), is scheduled to begin operations in June 2010 with 1.3 billion yen (about US$12.6 million) in capital.

The company will initially invest around 2.2 billion yen (about $21.2 million) to build a factory to produce automotive sensors and solenoid valves in Thang Long Industrial Park 2 in the northern province of Hung Yen.

Construction of the factory is expected to begin in February 2009 and to be completed by September 2009.

The factory is expected to create approximately 800 new jobs by 2012.

The factory will produce sensors for the ASEAN market, as well as solenoid valves for world-wide markets, except for Japan.

The sensors will include those used to control engine air-intake, and the solenoid valves will be used to send vaporised gasoline from the tank to the engine.

HDVN is Hamanakodenso's second overseas company. It's first is a production company in Indonesia that produces horns.

The Denso Corporation, headquartered in Kariya, Aichi prefecture, Japan, is a leading global supplier of advanced technology, systems and components.

Customers include major global car-makers. World-wide, the company employs around 119,000 people in 32 countries and regions, including Japan.

Consolidated global sales for the fiscal year ending March 31, 2008 totalled $40.2 billion.

Vietnam has attracted many Japanese auto parts suppliers, including Takanichi Vietnam Company, the Yazaki FDS Vietnam Ltd Company and the Harada Vietnam Ltd Company.

Cambodia and Vietnam agree rail link: Foreign Minister

PHNOM PENH (AFP) — Cambodia and Vietnam have signed a deal to link their railways, Cambodia's foreign minister said Saturday, helping revive long-running plans to link Asia by rail.

Foreign Minister Hor Namhong said China would help Cambodia with the railroad link to Vietnam, which will cost more than 500 million dollars.

"China has promised to build the railroad from Phnom Penh to Vietnam as part of the project to create a link from Singapore to Kunming in China," Hor Namhong said on his return from regional meetings in Hanoi, Vietnam.

"The railroads are very important for Cambodia's economy because we can then export goods to other southeast Asian countries at low cost," he told reporters at Phnom Penh International airport.

Cross-border trade between Cambodia and Vietnam totalled 1.7 billion dollars in the first eight months of this year, Hor Namhong added.

Cambodia is linked to its western neighbour Thailand by a track that is no longer in use.

Cambodia's civil war only ended in the 1990s, and trains throughout the impoverished nation crawl along dilapidated tracks.

It has long been a dream to connect Asia by rail, and many of the gaps in the railway are in Southeast Asia, with only Singapore, Malaysia and Thailand operating cross-border links.

The Asian Development Bank has stepped in with funds to help overhaul Cambodia's railways, a project many hope will be finished within the next few years.

Vietnam Needs US$48 Billion To Develop Highways

HANOI, Nov 7 (Bernama) -- Vietnam will need some US$48 billion for the construction of 20 highways with a total length of over 5,870km, according to a proposed scheme to develop the country's highways network between now and 2020 and beyond, which have been scrutinised by the Government.

Vietnam News Agency (VNA) reported Friday that at a seminar held here on Thursday, Deputy Prime Minister Nguyen Sinh Hung said developing the domestic road network, including the highways, is considered a matter of great importance for Vietnam to create impetus for socio-economic development.

Under the master plan, the trans-national express system will include two routes, the systems in the north and south will have six routes each, the system in the central and central highlands region will have three routes and there will be three routes in the beltways in Hanoi and Ho Chi Minh City.

The target of the plan, formulated by the Ministry of Transport, is to form a network of modern national highways linking key economic hubs, main border gates and important traffic points that is able to coordinate with other modern modes of transport.

The plan is expected to help tackle the issue of traffic jams, as well as effectively reducing traffic accidents, initially in big cities such as Hanoi and Ho Chi Minh City.

According to the plan, highway routes connecting key economic zones, major cities and their beltways, and big sea ports will be prioritised for investment.

Vietnam now has 18 highway projects in the pipeline, including six under construction or to begin construction next year. Many of these projects have received funding from international organisations such as the Asian Development Bank (ADB), the German Reconstruction and Development Bank (KFW) and the Japanese International Cooperation Agency (JICA).

At the seminar, Deputy PM Hung called on international donors to give more assistance, both financial and technological, in order to develop Vietnam's traffic network to meet increasing demand, reduce traffic accidents and minimise the impact on the environment.

The World Bank (WB) Acting Country Director in Vietnam Martin Rama pledged to increase levels of assistance to Vietnam in developing its transport infrastructure and to mobilise all available investment resources.

Martin Rama said the WB is ready to partner Vietnam in this area, financing and sharing experiences related to forming sustainable management and financial mechanisms.

According to a recent World Bank survey, Vietnam's rapid economic growth associated with a high-speed urbanisation process and an increasing number of transport facilities, has put unrelenting pressure on the existing road systems.

In addition, poor infrastructure and the high rate of traffic accidents are additional factors influencing Vietnam in its decision to build new roads.


Beauty-pageant scandal rocks Vietnam

Miss Vietnam lost her title after "government inspectors found that [she] didn't live up to their exacting standards," according toThe Wall Street Journal.

The scandal began when the Culture Ministry learned that Trần Thị Thuỳ Dung, the 18-year-old they crowned Aug. 31, is a high-school dropout. Apparently, that's a big no-no in the Vietnamese pageant system.

"If we didn't have the education requirement, then lots of girls would drop out of school to focus on beauty pageants, and we can't let that happen," Le Ngoc Cuong, head of the Performing Arts Agency, tells the paper.

They're having trouble finding a replacement to send to the Miss World pageant. VietNamNet has photos of two potential replacements.

Fri, 11/07/2008 - 5:14pm

The Wall Street Journal reports today that Miss Vietnam 2008, 18-year-old Trãn Thi Thuý Dung, was stripped of her crown after officials discovered she hadn't completed high school. The scandal puts Vietnam in a tough spot, as it might not have a viable contestant to send to the Miss World competition on Nov. 15th.

Vietnam -- a country that's taking the bad news very seriously -- has an interesting history when it comes to beauty competitions. After the country's first national pageant in 1988, the grand prize, a bike, was stolen from the winner. Last July, Vietnam played host to the Miss Universe contest, with Jerry Springer and Scary Spice hosting the awards ceremony.

And yet, there is no formal requirement that contestants must complete a certain level of education before entering, a fact that Vietnam's contest organizers concede. The reaction over Thuý Dung's lost title has thus been mixed and the public has rallied to her defense.

Although other national pageants don't have such stringent rules (the United States gives its contestant winners a six-month window to complete high school), Le Ngoc Cuong, a spokesman for the contest, views a high-school diploma as vital. Otherwise, "lots of girls would drop out of school to focus on beauty pageants," he said.

As for Thuý Dung, crown or not, she's behaving like a true queen, sending a healthy message to young ladies of the world: She's going back to school, and says, "I wish Vietnam can still find the right candidate to send to Miss World, even if it isn't me."

ACMECS summit begins in Vietnam

Prime Minister Somchai Wongsawat on Friday participated in the official opening of the third Ayeyawady-Chao Phraya-Mekong Economic Cooperation Strategy (ACMECS) summit, held in the Vietnamese capital.

The summit is being attended by the five greater Mekong sub-region member countries, including Thailand, Vietnam, Burma, Cambodia, and Laos.

Thailand plans to propose the issue of capability in food production and agriculture and to grant 100 scholarships to country members for further studies in the kingdom.

Mr Somchai said he believed that cooperation among the country members will bring about achievement of agreement and benefits to all.

Foreign Minister Sompong Amornvivat said that at the ACMECS meeting will adopt a declaration on the facilitation and promotion of trade, investment and tourism.

Thailand and Vietnam will also sign a Memorandum of Understanding to develop vocational training between the two countries, he said.

In addition, Thailand will push for transportation links, development of tourism, human resources, and cooperation in public health activities, he added.

Under the ACMECS cooperation framework, the private sector will participate in trade and investment and "One Stop Service" centers will be set up to facilitate border trade.

During unofficial talks between the leaders of the five countries on Thursday, they discussed their potential to be the producers of over half of the world's total rice production. Such cooperation could lead to cooperatively pricing rice and sharing technology to increase productivity. (TNA)

Saturday, November 08, 2008

Vietnam's October car sales drop 37 percent on year

HANOI, Nov 7 (Reuters) - Vietnam's October car sales fell by 37 percent from the same month last year to 5,679 units due to higher taxes and registration fees, an industry report said on Friday.

However, sales by the 16 cars makers operating in Vietnam in the first 10 months still jumped 64 percent from the same period in 2007 to a record 95,736 units, the Vietnam Automobile Manufacturers Association said in its monthly report.

Dealers have said demand would slow for the rest of the year after the government tripled registration fees to 15 percent of the car's purchase price from August.

Toyota Motor Corp (7203.T: Quote,ProfileResearchStock Buzz) retained its pole position among the manufacturers with Jan-Oct sales surging more than 30 percent from a year earlier to 20,351 vehicles.

Sales by Ford Motor Co (F.N: QuoteProfileResearchStock Buzz) revved up nearly 40 percent in the period to 5,613 units.

Friday, November 07, 2008

Pearl Research Forecasts the Number of Online Gamers in Vietnam to Exceed 10 Million by 2011

SAN FRANCISCO, Nov 05, 2008 (BUSINESS WIRE) -- Pearl Research forecasts the number of users playing online games market in Vietnam to exceed 10 million by 2011, driven by rising incomes, increasing PC and Internet penetration rates, and a large population of youth that are actively seeking out entertainment content. These findings are contained in business intelligence and consulting firm Pearl Research's "Online Games Market in Vietnam" report.
Vietnam's economy has been growing by 7% in the past decade and is attracting significant investments from technology companies.
Pearl Research's key findings:
-- Approximately 50% of the total Vietnamese population is under the age of 25. This is an age range that is known for being tech savvy, making them a high priority demographic for digital entertainment companies. There are approximately 21 million Internet users in Vietnam with an Internet penetration rate of 23.5%.
-- In our interviews with Vietnamese gamers, many were spending 60,000 to 100,000 VND ($3 - $6) per month. In one high-end Internet cafe we visited, a few interviewees were spending an average of 500,000 VND ($31) per month. These consumers are driving the digital entertainment and online games market with virtual item purchases. Top online games in Vietnam can attract 200,000 users. The Internet cafes that Pearl Research visited in Vietnam were consistently crowded with users playing online games.
While Vietnam has a rapidly emerging games market, critical challenges include government regulations on online games, the worldwide slowing economy, developing infrastructure, and low income levels.
The "Online Games Market in Vietnam" report provides an in-depth analysis of the Vietnam online games market and contains an executive summary; 2007 to 2012 forecasts for the online games industry; inhibitors and drivers to growth; comprehensive socio-economic overview; discussion of key market players, and in-depth interviews with Vietnamese gamers. To purchase this report, please call (+1) 415-738-7660 or email
About Pearl Research
Pearl Research, a business intelligence and consulting firm, specializes in the Internet and technology markets with a special focus on emerging markets and platforms. Based in San Francisco and China, Pearl Research publishes in-depth research reports and provides customized research and consulting services. Visit or call 415-738-7660 for more information.
SOURCE: Pearl Research Contact
Pearl Research  Jeff Yip, 415-738-7660 ext. 4