Hard sell
HANOI - With a jolt of Techno music, Unilever
Vietnam chairman Michel Dallemagne launched a slick
video presentation at Singapore's Shangri-La Hotel. He
trumpeted his company's $175 million in annual
turnover, projected to double by 2006. But Dallemagne
wasn't just blowing his own horn--he was there to pitch
Vietnam's potential to other foreign investors. The
Unilever video concluded with the question: "Can You
Afford to Wait?"
For many global investors, the answer might well be,
"Yes," given the red-hot prospects in China and falling
interest in Southeast Asia. That's why the Vietnamese
have realized they can't afford to sit back and wait for
more foreign investment. Displaying a new verve for
overseas promotion, the Hanoi government put together
its first roadshow on March 15 in Singapore. Figuring
that foreigners could help make a convincing case, top
Vietnamese officials shared the podium with friends
from the Singaporean government, the World Bank and
top firms like Unilever and Coca-Cola.
The show marked a shift in mindset. During the
foreign-investor rush in the early to mid-1990s, "the
Vietnamese acted as though they were doing you a
favour by allowing you to come in. Now they
understand that they have to market themselves," notes
a Singapore-based financial consultant.
Vietnam hopes to build on the new optimism stemming
from a bilateral trade agreement with the United States,
signed last July. While the pact awaits ratification on
both sides, it has rekindled some interest among
potential investors, according to lawyers and
consultants. By holding out the promise of easier access
to U.S. markets and a more competitive business
climate in Vietnam, the trade accord has started to
dispel some of the negative sentiment clouding recent
years. In aiming to attract long-term investment,
Vietnamese officials don't see the current economic
slowdown in America as a major threat.
Vietnam still has a long way to go to recapture the
buoyancy of 1996, when pledged foreign direct
investment, or FDI, topped $8.6 billion--actual
investment reached only $2.6 billion. By 1999 FDI
pledges had plunged to $1.5 billion, recovering slightly
in 2000 to $2.3 billion. It's still too early to argue that
Vietnam has turned the corner, but local officials were
cheered by the news that in the first two months of
2001, Vietnam licensed 35 new FDI projects worth
$71.3 million, a 16% gain over the same period last
year.
A February 8 report from Salomon Smith Barney
forecast 8.5 % real export growth and 5.8% GDP
growth in 2001, predicting that Vietnam "should still
outperform most of its East Asian neighbours except
China, and perhaps Taiwan."
"It's going in the right direction," says Steve Brice, an
economist in global markets with Standard Chartered
Singapore. "There's been an acceleration of reforms in
the last 12 months, but there's always the risk they'll
backtrack."
The Communist Party of Vietnam did announce
recently that the state sector will retain the "leading role"
in the economy. This has prompted some worry over
continuing discrimination against domestic private firms,
which could deter potential foreign investors looking for
strong private business partners. During the roadshow,
however, Deputy Prime Minister Nguyen Tan Dung
affirmed his commitment to healthy competition. "Of
course it is also important to further strengthen and
consolidate state-owned enterprises in major sectors of
the economy," Dung told the Review. "But we are
willing to play fair in those major sectors, operating on
market-based principles."
Rusty organization
Vietnam could have used a little more market savvy in
organizing the show. Despite the help of a Singaporean
PR firm, publicity was minimal and organizers
acknowledged that many of the 500 invitations were
mislaid. The list of 150 participants included executives
from only 68 firms--with more than half of them already
investing in Vietnam.
Old corporate hands acknowledge Vietnam's problems
with legal enforcement and bureaucratic inefficiency.
They also complain about the tax structure. But
Singapore Acting Minister for Trade and Industry Peter
Chen echoed the universal praise for the workforce,
which he called "full of enthusiasm, quick to
comprehend and execute newly learned skills."
Singapore is currently the top source for foreign
investment in Vietnam, with FDI pledges of $6.75
billion; bilateral trade rose 47% last year to $2.9 billion.
Some analysts reckon Vietnam could benefit from
Indonesia's woes. But don't expect any gloating. "We
are very keen for stability in the region, as a whole,"
says Nguyen Xuan Chuan, vice-minister of industry.
Otherwise, China looks likely to gobble up even more
foreign dollars.
By Margot Cohen - The Far Eastern Economic Review - March 29, 2001.
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