P&G: Vietnam pact good news
The trade agreement signed this week between the United
States and Vietnam could be a boon for the Procter &
Gamble Co.'s operations in the Southeast Asian country.
Based on reports about the
agreement, P&G and other
companies will find it easier
to operate in Vietnam, said
Scott Miller, a trade expert
in P&G's Washington
office.
Miller said the agreement is
still being translated by
both sides, and the actual
document won't be
available until next week.
It calls for Vietnam to lower
tariffs on a range of
agricultural and industrial
products, adopt global
standards to protect
intellectual property, and
allows financial,
telecommunications, engineering and other foreign
concerns to operate.
It also opens up legal proceedings and allows U.S.
citizens to appeal bureaucratic decisions, Miller said.
In exchange, the U.S. will lower its tariffs and grant
Vietnam normal trade status.
The tariff reductions will likely lower P&G's cost of bringing
raw materials, partially manufactured goods, and products
into Vietnam, where it has one plant, Miller said.
Opening up competition in a range of business services -
financial, telecommunications, engineering and computer
services - would make it less expensive to operate in the
country, he said.
''It would give us the opportunity to run the business the
way we want to run the business,'' Miller said. When China
allowed some competition in business services, P&G was
able to save about $1 million annually in operating costs,
he said.
The agreement must be approved by Congress, which
could happen this year, although time is running out.
P&G was one of the first companies to enter the
Vietnamese market after the U.S. lifted restrictions in
1994. It formed a joint venture in 1995 with a
government-owned company.
In 1998, after intense negotiations and threats by P&G to
declare the joint venture bankrupt, the Vietnamese
government waived rules that required 30 percent local
ownership. The waiver allowed P&G to invest an additional
$60 million, which it said was needed to make it profitable.
P&G's investment in Vietnam is now about $100 million.
The agreement could allow P&G to buy out the
government's remaining 7 percent stake in the joint
venture.
Although the Vietnamese economy has been in the dumps
recently, it has a population of 77 million, about half of
whom weren't alive when the Vietnam War ended. So it
does have potential.
''Any country with 77 million people is interesting to us,''
Miller said.
After all, P&G has a $1 billion business in Canada, which
has a population of about 30 million.
By Patrick Larkin - The Cincinnati Post - July 15, 2000.
|