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Vietnam-US Trade Blooming: Says US Diplomat

The bilateral trade between Vietnam and the US has sky-rocketed after the signing of the Bilateral Trade Agreement (BTA) and is expected to grow faster in the next five to seven years, said Ho Chi Minh City's U.S. Consul General Seth D. Winnick on the eve of three year implementation of the accord.  

Vietnam exported about $500 million to the US in 1999 before the BTA. The figure will be tenfold this year, just three year after the agreement went into effect in 2001, the diplomat said.

"The BTA is a good stepping stone for Vietnam integration into the international economy," he said, adding that the participation of Vietnam in the World Trade Organization (WTO) will further increase both trade and investment between the two countries.

He, however, suggested that Vietnam needs to open telecoms and energy soon as the potential fields will attract a large amount of US investment, which is so modest in the Asian country.   

Vietnam attracted 24 US investment projects with total registered investment capital of $63.84 million in the first 11 months of this year. So far, about 230 US firms with a total registered capital of $1.3 billion are investing in Vietnam.
The diplomat also referred to the launch of direct flights from Vietnam to San Francisco, saying it is an important event as it is the first direct air service between the US and Vietnam for 30 years. "It demonstrates that Americans are coming to Vietnam, air traffic is going up, tourism is going up, and business is going up," he said.  

Vietnam and the US signed the BTA in July 2000 to normalize trade ties, with the granting of reciprocal Most Favored Nation (MFN), also known as Normal Trade Relations (NTR), status.

Official statistical figures show that Vietnam exported $4.5 billion to the US last year, a rise of 329% from $1.05 billion in 2001 before the BTA. Vietnam's imports from the US also rose to $1.32 billion in 2003, up 186% from 2001.

Apparels are the key exports from Vietnam. The country earned $2.48 billion from selling its garments to the US last year, from just $500 million in 2001. The figure is expected to reach $2.6 billion this year. (Young People Dec 10 p4) 
US, Vietnamese Beer Makers Join Hands to Boost Sales
US beer maker Anheuser Busch International (AB) and Vietnam's State-owned Saigon Beer, Alcohol & Beverage Corp. (Sabeco) have recently signed a memorandum of understanding to cooperate and share experience regarding the producing and selling of beer.

According to the MoU, the two companies will exchange experience in training, management, technology, trademark and market development. They will also establish a distribution system in the high-class market for their products, including Budweiser and Saigon Beer.
"Saigon Beer has been sold widely in Vietnam and even exported to foreign countries. However, most of the Saigon beer has been sold in the popular markets," said Sabeco chairman Nguyen Ba Thi.
"AB's products are common in the high-class market and we hope the MoU will help enhance the presence of Saigon beer in this market," he said.
The two companies have also discussed measures to boost sales on Saigon beer in the US market, which has two million Vietnamese Americans. Sales of Saigon beer in the US market is expected to see a 100% rise in 2005.

"AB has expressed its wish to invest in Sabeco, but it is still too soon to talk about this. If Sabeco is allowed to be privatized, we will sell our shares to AB," said Sabeco's Nguyen Ba Thi.
Sabeco, which has beer production facilities in Ho Chi Minh City, Phu Yen, Can Tho and Soc Trang provinces, has set a target to produce 390 million liters of beer this year, up 14.7% against last year. (Investment Dec 13 p13) 
US Airline Lands Safely in Vietnam After 30-Year Interruption
A United Airlines plane coming from San Francisco, California arrived in Ho Chi Minh City on December 10 evening, marking the first time a commercial American airline has landed in Vietnam in almost 30 years, State media said.  
The Flight No.869 carried more than 300 passengers including a group of Vietnamese and American government officials, Vietnamese general consulate to San Francisco Tran Anh Tuan, the city's officials, and US entrepreneurs.
A brief welcoming ceremony was held in Tan Son Nhat International Airport, with the participation of Nguyen Thien Nhan, vice chairman of the HCMC People's Committee.
"The flight represents a new beginning of closer and strengthened relations that will reunite families and open new doors for businesses in both countries", according to US. Transportation Secretary Norman Y. Mineta.
"Today's flight capitalizes on the opportunities created by this agreement and serves as a springboard for expanded travel between the US and Vietnam", Mr. Mineta added.
The US-Vietnam trade this year is at least $4.8 billion, up from nearly $3 billion in 2002.
United Airlines will offer daily flights to Vietnam, with a stopover in Hong Kong. The service is part of a larger expansion plan into Asia for United, according to an airline official.
On December 11 morning, another United Airlines flight took off from Tan Son Nhat Airport back to San Francisco via a Hong Kong stopover.
A year ago, Vietnam and the US struck an aviation agreement that paves the way for the resumption of commercial flights between the two countries. The competition on routes between Vietnam and the US has become fiercer with the emergence of American Airlines.
Foreign airlines in Vietnam have slashed their prices on international routes in an aggressive attempt to boost their share of the country's aviation market. "Though we can not reveal the ticket prices yet, we have prepared our own weapon for this price war", said marketing executive of Hong Kong's Cathay Pacific in Vietnam Tom Li.
A price war has begun and "now is the best time for the airlines to further improve their quality of services", said an official from United Airlines.
"We [the airlines] need to react or we will lose customers", said Pham Ngoc Minh, deputy chief executive of Vietnamese national flag carrier Vietnam Airlines. (Youth Dec 13 p11, New Hanoi Dec 11 p8, Liberated Saigon Dec 11 p7)

Vietnam Parliamentarian Meets US Media in Washington D.C
Some individuals and organizations in the US are spreading biased and erroneous information about the current situation in Vietnam, a senior official of the Vietnam National Assembly, the country's top legislator, recently told the US press in Washington D.C.  
Vice-chairwoman Ton Nu Thi Ninh of the NA's Foreign Affairs Committee made the statement in reply to questions about "Vietnam's human rights and religious freedom" at a press conference held as part of her tour of eight states and 12 cities in the US from November 30-December 19.
On the refusal to grant an entry visa to US Representative Loretta Sanchez to Vietnam, Ninh said that Ms. Sanchez's case is "one of exceptions" because her purpose to Vietnam was not to serve Vietnam-US relations, but to meet the demands of some of her voters.
"The Vietnamese NA has over the past years welcomed many US parliamentary delegations to create favorable conditions for US congressmen to achieve the purpose of their visits," the official pointed out.
She told the reporters that her visit took place at a significant time - the US presidential and parliamentary elections have taken place and Vietnam is ready to mark next year the 30th anniversary of the end of the war and national reunification (April 30), and the 10th anniversary of the normalization of Vietnam-US diplomatic ties (July 11).
The NA official and her entourage had met people from universities, research institutions, non-governmental organizations, associations, the American Vietnamese community, and companies having economic and commercial relations with Vietnam. The two sides exchanged views on issues of mutual concern in order to boost relations between the two countries in many fields, especially economic and commercial, and strengthen mutual understanding.
Ninh's visit is aimed at maintaining and expanding "Vietnam-US dialogue", and promoting the relations between the two peoples.
Vietnam and the US marked the first three-year implementation of their Bilateral Trade Agreement (BTA) on December 10.  
Official statistical figures show that Vietnam exported $4.5 billion to the US last year, a rise of 329% from $1.05 billion in 2001 before the BTA. Vietnam's imports from the US also rose to $1.32 billion in 2003, up 186% from 2001.
Their two-way trade has seen a very impressive increase to nearly $6 billion this year, up from $1.4 billion in 2001. (thanhniennews.com, VietNamNet Dec 12, VNA Dec 11)

US Congressman Visits Vietnam
The Chairman of the Constitution Subcommittee of the Judiciary Committee and member of the East Asian-Pacific Subcommittee of the External Relations Committee of the US House of Representatives, Steve Chabot, started his visit to Vietnam yesterday.
During the trip, the congressman is scheduled to meet with representatives of the Foreign Ministry, the Ministry of Planning and Investment, the Ministry of Trade, the Finance Ministry and the Government Committee for Religious Affairs.
After two days in Hanoi, the US Congressman and his delegation will visit Ho Chi Minh City.
He is expected to leave Vietnam on December 17.
Recently, the Vietnamese government had refused to grant a visa for US Representative Loretta Sanchez. Her visit at this time has been reported not to serve Vietnam-US relations as Sanchez has engaged in activities and statements that are totally biased and ill-willed towards Vietnam, causing dissent among Vietnamese public opinion, after her two trips to Vietnam in 1999 and 2000, the communist nation said. (New Hanoi Dec 10 p8)

More Remains of US Servicemen to Return Home
Vietnam will repatriate three sets of remains reported to be American soldiers missing in action (MIA) from the Vietnam War in a ceremony on December 14 in Hanoi, according to a news release by the US Embassy in Vietnam on December 10.
The remains were recovered by joint U.S.-Vietnamese teams during the 79th Joint Field Activity from October 18 through November 19, 2004, said the news release.
The repatriation ceremony will be held at Noi Bai International Airport where a US military honor guard will load the remains onto a U.S. Air Force C-130 Hercules aircraft for repatriation to the US.
The first stop in the US will be an identification laboratory in Hawaii used by the US Department of Defense for identifying the remains of all MIAs.
This was the 95th handover of missing American servicemen's remains in Vietnam since 1973, bringing the total number of repatriated sets of remains to 830.
Some 3.14 million Americans served in Vietnam during the war and over 58,000 were killed with 1,855 still unaccounted for. Almost all US personnel lost in North Vietnam were reportedly aircrew members on bombing missions during the war. (VNA Dec 12, US Embassy Press Release Dec 10)
Quota priority to be given to US
Viet Nam News

Ha Noi - The Government has announced a list of 14 large American clients
tying up with whom will entitle Vietnamese firms to priority in textile and
garments quota allocations next year.

The list announced by the Ministries of Industry and Trade and the Viet Nam Textile and Apparel Association includes Gap Inc, AMC-Target, JC Penney, Mast Industries Inc, The Children's Place, American Eagle Outfitters, Perry Ellis-Supreme, Columbia Sportswear [sic], Seattle Pacific Industries, the Levi Group, Nike, Adidas Salomon, Sears and Jones Apparel Group.

Among them, the biggest is Gap Inc with import turnover of more than US $300 million in 2002-2004, followed by AMC Target (almost $169 million), and JC Penney ($166 million).  Their combined import value during this period was around $1.53 billion.

Next year, Gap plans to import $92 million worth of garments, AMC-Target about $130 million and JC Penney about $147 million.  However, Mast Industries Inc will be likely to lead the pack with proposed import turnover of $197 million, according to the Ministry of Trade report.

The ministry expects total imports from Viet Nam by all 14 companies next year to reach $1.04 billion.

According to regulations for setting textile and garment quota allocations in 2005, 7 percent of quotas will be provided for enterprises that have export contracts with large US clients.  The volume of quotas allocated to textile and garments enterprises will be based upon their fulfilling of orders from large American clients and the request of American importers.

Viet Nam has earned nearly $2.25 billion from US clothing exports this year
to date, and around $650 million from the EU, according to preliminary
statistics from Viet Nam Textile and Apparel Association.

Famous Singer Protests Restriction on Pre-1975 Songs
Renowned singer Anh Tuyet has raised her voice against official restriction on the majority of songs written by musicians living in the US-backed regime in Southern Vietnam before 1975, saying such a ban is stripping local audiences of the right to enjoy many musical masterpieces.
"It is unfair," Tuyet told the local Lao Dong newspaper, pouring serious criticism on cultural managers who are still trapped in a wartime prejudice, although nearly 30 years have passed since the war ended with the reunification of North and South Vietnam under the Communist rule in April 1975.
Tuyet also blamed the Ministry of Culture and Information for its the bureaucratize, conservative and discriminating attitude for the past decades as it has not made any moves in studying the value of songs composed in the pre-1975 era nor permitting more works to be performed in the country.
The list of 200 allowed songs is too tiny compared to the large volume of songs written in the 50-year period to 1975, she said.
"The ministry should add more compositions to the permitted list," the singer urged, saying many of the currently prohibited musical works can be considered the country's cultural heritage.
Tuyet also called on the cultural authority to have a consistent policy towards such songs and explain to the public the political reasons for its ban on specific ones.
Singer Anh Tuyet, who is especially well-known for lyric songs by reputed composer Van Cao, said she is now facing many difficulty in running her owned stage called ATB in Ho Chi Minh City due to such bias against prewar music as well as harassment by some State bodies.
According to musician Le Nam, head of the Arts, Discs and Tapes Management Department under the Ministry of Culture and Information, only 200 out of the approximately 30,000 songs composed by hundreds of southern Vietnamese songwriters before 1975 have gained government approval to be published. The remainder are sung or listened to openly aboard, and at home by local music lovers, he said.
Some of the banned compositions include the world-recognized printed selection Ca Khuc Da Vang (Songs about Oriental People) by the late popular musician, Trinh Cong Son, which unveils his anti-war spirit and the sorrow of war and human misery in wartime and the longing for peace. Other banned songs but still well-known by local audiences are Tinh Ca (Love Song) and Ba Me Gio Linh (A Mother in Gio Linh) by Pham Duy; Paris Co Gi La Khong Em (Is There Anything New in Paris) by Ngo Thuy Mien; and many others. (Labor Dec 13 p5)
Vietnam Likely to Tighten Licensing for Foreign Banks

The State Bank of Vietnam, the country's central bank, is compiling a draft decree on the operations of foreign banks, including conditions to prevent the infiltration of small foreign banks with unhealthy financial situations.

According to the draft decree, foreign banks must have total assets worth at least $20 billion for opening branches or at least $10 billion for establishing joint ventures or wholly foreign owned subsidy banks in Vietnam.

The draft also cements Vietnam's commitments in trade agreements as well as the country's plans to open its finance and banking market.

Under this draft, the regulations on operations of foreign banks in Vietnam are adjusted like domestic ones. Accordingly, they are allowed to expand their network and their duration is increased to 99 years.

In addition, the conditions for licensing for foreign banks in Vietnam will be made suitably transparent for international practices.

For the first time, the draft also mentions measures to protect the banking system and the interest of depositors at foreign banks (special supervision, bankruptcy, liquidation and dissolution. (VoV Dec 12, Youth Dec 9 p11)

Vietnam Sets up Law Committee

Vietnam's Prime Minister has approved the establishment of the Legislation Committee under the Government Office, which is based on the re-organization of the Government Office's Legislation Department.

The committee will act as an advisor to the Government and the Prime Minister in guiding the development of bills and draft ordinances to submit to the National Assembly. It will also compile draft legal documents under the issuance competence of the Government and Prime Minister.

The Chairman of the Government Office Doan Manh Giao has assigned the Government Inspectors to urgently prepare the anti-corruption bill to submit to the Government at the cabinet meeting in February 2005.

At the meeting, the Government will also consider other important bills such as the Housing Law, the amended Import-Export Tariff Law and the Intellectual Property Law.

Law construction and reform is now one of the most important tasks for Vietnam's legislature in an attempt to create a transparent investment environment in the country and to integrate into regional and world economies.

Vietnam is required to revise at least 30 laws and ordinances before it can be admitted to the World Trade Organization.

The country's highest legislative body, the National Assembly, have so far this year adopted 19 new and revised laws and codes so far this year and is expected to ratify 20 draft laws in 2005. (Investment Dec 13 p2, Vietnam Economic Times Dec 13 p15)

Stock Trading Becomes Easier for Foreigners

The central bank has issued new rules, giving up some of its control on foreign administration of foreigners' stock trading in Vietnam.

Decision 1550 dated December 6 allows foreign investors to open trading accounts at any bank that keeps share certificates in custody rather than only at Hong Kong and Shanghai Banking Corp. (HSBC) and Deutsche Bank.

The decision also clarifies the capital sources foreigners can draw from to invest in the bourse. Now foreigners, even those who do not live in Vietnam, can open trading accounts at local banks.

The decision aims to make it easier for foreigners to trade stocks, according to an official at the Member Regulation Department of the Ho Chi Minh City Securities Trading Center. (Saigon Times Daily Dec 10 p2, Labor Dec 13 p3)

Canada Lifts Quota on Vietnamese Garment & Textile Exports

Canada has decided to remove its export quota restrictions on Vietnamese garment and textile products starting from January 1 of next year, Vietnam's Ministry of Trade (MoT) announced on December 10.

The decision will facilitate Vietnam's garment and textile exports to Canada, helping to bring the two-way trade relationship to a new height, Vietnamese trade officials said.

On December 3, the European Union (EU) also signed an agreement with Vietnam to lift quotas on Vietnamese garment and textile products from January 1 of next year.

Thus, amongst Vietnam's biggest textile markets, only the US will still uphold the quota system. Vietnam's MoT, therefore, plans to conduct negotiations with the US government in an effort to eliminate restrictions on garment and textile exports to this market, said MoT's officials.

Garment and textile are Vietnam's second largest export earner after crude oil, with a large part of the income coming from exports to the US.

The EU on December 10 also agreed to continue the application of the EU Generalized System of Preferences (GSP) on 15 Vietnamese exports, including major products like leather and footwear.

The GSP, which gives tariff preferences to developing countries, permits Vietnam to have preferential access to the EU market. (Liberated Saigon Dec 11 p2, thanhniennews.com)

Former Deputy Trade Minister, Son Hire Counsels for Court Hearings

Vietnam's former deputy trade minister and his son have recently hired two lawyers for the upcoming court hearings over their alleged involvement in a graft scam.

Lawyer Pham Hong Hai of the Hai Phong Bar Association will act as counsel for the former deputy minister Mai Van Dau who was arrested and charged with "abuse of power" in the scandal at the Ministry of Trade which forced textile producers to pay huge bribes to secure export quotas to the US.

The lawyer says he is preparing to register with the investigation department under the Ministry of Police to represent Mr. Dau.

Under Vietnam's prevailing penal code, criminal abuse of authority or office in the course of civic duty can be punished by a jail term ranging from one to 15 years with fines reaching VND30 million ($1,910) depending on the seriousness of the case.

Meanwhile, Mr. Dau's family has asked lawyer Ha Dang to act as counsel for his son, Mai Van Hai, who was also arrested and accused of taking bribes and being involved in the corruption ring. Hai was a former official in the trade ministry's Import-Export Department.

Mr. Dang of the Hanoi Lawyers Association says he has registered with the investigation department and is expecting a response from the department after the investigation of the case is complete.

So far, 15 trade officials and textile businessmen are in detention for alleged involvement in the quota scam. They are alleged of having solicited about $1 million in bribes from several local textile and garment companies seeking approval to ship their products to the US.

Garment and textile items are Vietnam's second largest export earner, with most products being exported to the US. (Young People Dec 11 p2)



Vietnam hosts human rights talks
10/Dec/2004 Vietnam News page 3

A two-day workshop opened yesterday in Hanoi that aims to tackle the weighty issues of women's rights, globalisation and freedom of expression, all under the auspices of improving human rights.

Freehills re arranges law operations
10/Dec/2004 Vietnam News page 16

International law firm Freehills has been legally transferred to Frasers Law Co and will operate under the name Frasers. The move comes following legislative developments that enable foreign law firms to advise on Vietnamese law.

Mark Fraser, previously Freehills' managing partner in HCM City with 11 years experience in law and commerce in Vietnam, will head up the re-organised operations as CEO and managing lawyer.

Wider tax liability for foreign contractors
09/Dec/2004 Vietnamnet

The Ministry of Finance is preparing to issue a new circular on foreign contractor's withholding tax (FCT) this month, under which FCT rates will not change from the current circular 169. The circular guiding the FCT regime is to be issued this month after long delays, according to Nguyen Dinh Cu, Head of the Tax Management Section for Foreign Invested Enterprises under the general Department of Taxation (GDT), who is charged with compiling the document.

VAT (value added tax) and CIT (corporate income tax) rates on taxable revenue will remain the same as stipulated in circular 169 on FCT enacted in 1998, but procedures for tax declaration and payment will be simplified, Cu said.

The circular is proposed for enactment on January 1, 2005. For contracts signed before January 1, 2005, taxes will be paid in accordance with the previous circular 169 until contract completion.