Hanoi Times – Within the first decade after the 1975 end of the war, Vietnam’s economy faced stagnation, with inflation hitting 700 percent in 1986 and a serious shortage of funds for investment. In that year, the Communist Party in its Sixth Congress approved a broad reform package, “Doi Moi” (or Renovation), that introduced market reforms and dramatically improved Vietnam’s business climate.
The country started shifting its central-planning economy based on the Soviet style toward a market-oriented mechanism.
The country issued the law on foreign investment in Vietnam in 1987, which reaffirmed the market opening policy that provided a higher legal framework to help the country attract foreign investment.
Over the past two decades ending in 2007, Vietnam has attracted $98 billion of foreign investment, of which operational projects totaled $83 billion. Foreign investment projects had yet to pick during the first three years of 1988-1990 since the law came into effect but the next five years ending in 1995 witnessed a remarkable change with the so-called “the first wave of foreign investment arriving in Vietnam”, said a Planning and Investment Ministry report.
Reaping the first fruit of reforms, Vietnam enjoyed a robust economic growth averaging 8 percent a year between 1990 and 1997, becoming one of the world’s fastest-growing economies.
The Asian financial crisis in the late 1990s slowed Vietnam’s growth to 6.5 percent a year in the period from 1998 to 2003 but ongoing economic and trade liberation has accelerated the pace again and move forward for further growth.
“For the last 20 years of Doi Moi and reform process, we have drawn a very important lesson that we need to continue the reforms to have success. Political reforms and economic reforms should be closely harmonized,” Prime Minister Phan Van Khai said in an interview with the Washington Post as he made his official visit to the United States in June 2005.
In December 2001 the Bilateral Trade Agreement (BTA) it signed with the United States after a long negotiation process came into effect. Two-way trade value jumped to $1.4 billion in 2001 from $220 million in 1994 when the United States lifted the trade embargo.
The country first filed its application for the WTO membership in December 1994. Since then a negotiation team had conducted talks and reached agreements with all the 28 partners requiring bilateral talks, including many major partners such as the European Union, Switzerland, Canada, Japan, China, the Republic of Korea, Singapore, Australia, New Zealand and the United States.
In May, 2006 Vietnam reached a WTO agreement with the United States, ending the 12th round of bilateral negotiations with the world’s largest economy and marked a new stage in the Viet Nam-U.S. relationship.
In June the United States Congress extended PNTR status to Vietnam as part of its accession to the WTO. The grant of the PNTR status is viewed as the final and important step in the process of normalising Vietnam-U.S. relations while in the economic front, the status will help them implement the commitments made under the WTO rules and the bilateral agreement for Vietnam to accede to the global trading club, Vietnam’s Foreign Ministry spokesman Le Dung said in July 2006.
The WTO General Council approved Viet Nam’s membership on 7 November 2006 and in January 2007 the country officially joined the trading club. In 2007, actual foreign direct investment disbursement rose to more than $8 billion, $4 billion higher than earlier government expectation. Vietnam’s gross domestic product expanded 8.5 percent to a value of around $70 billion.
Trade between Vietnam and the United States is booming, increasing from $1.2 billion in 2000 to $12.5 billion in 2007, in which U.S. exports to Vietnam jumped 73 percent to $1.9 billion, while Vietnam’s exports to the United States, the country’s largest export market, rose 24 percent to $10.63 billion.
From 1990 to 2005, as a sign of opening its economy, Vietnam, which was a net food importer, nearly doubled its agricultural production, becoming a rice export country that now stands only after Thailand and India.
Vietnam has quickly reduced the number of its poor families to 14.87 percent at the end of 2007, from 37 percent in 1998 and 70 percent in the mid-1980s. The country has projected to reduce the rate to 10 percent by 2010.
But with a rising inflow of foreign investment and pressure to maintain an economy growth of around 8 percent, the government stepped up its investment rate and Vietnam increased imports mainly of machinery and technology in 2007. With a robust credit growth of 54 percent in 2007, meaning a huge volume of cash in the economy, the country started facing a double-digit inflation each month since November 2007. The annual inflation in May 2008 already hit 25 percent.
As the country moves toward a more market-oriented economy, the Vietnamese government which maintains a tight control over major sectors through large state-owned enterprises and the banking system, started the equitisation process with aim to diversify ownership in sectors not directly related to national security.
The implementation has been slow even with two stock exchanges being in place to help companies raise funds using market instruments instead of relying on policy lending.
In July 2000 Vietnam opened its first stock exchange in Ho Chi Minh City, and in March 2005, another market in Hanoi. As of January 2008 the two markets had a combined capitalisation of $28 billion with nearly 250 listed companies. Most of them are former state-owned enterprises (SOEs) that have conducted partial privatisation. This year and in 2009 the government has projected to conduct initial public offerings (IPOs) of major SOEs. one of the largest state-run banks, Vietcombank sold its shares to the public in December 2007.
In 1832 a special envoy of the U.S. President Andrew Jackson sailed to Japan and also visited countries in East Asia, including Vietnam, for negotiations on trade and other matters. The envoy, Edmund Roberts, had been to Phu Yen in central Vietnam and told the governor the U.S. government wanted to establish trade relations with Vietnam.
Four years later Roberts returned to Vietnam to negotiate a trade treaty with the Minh Mang dynasty. However he was sick and the USS Peacock sailed away. The envoy then died in Macao.
As such, the fir0st trade contact was not established between the two countries which went to a war that ended in 1975, then lived another two decades with unhealed wounds, including a trade embargo against Vietnam that was lifted by U.S. President Bill Clinton in February, 1994. That year two-way trade was $220 million.
The Bilateral Trade Agreement (BTA) coming into force in December 2001 laid a milestone for Vietnam-U.S. trade relation.
“When the BTA came into force on December 10, 2001, the United States immediately extended Normal Trade Relations/Most Favored Nation status (NTR/MFN) to Vietnam, reducing its average tariff rates on Vietnamese imports from around 40 percent to around 4 percent. Literally overnight this move effectively opened up the largest and most receptive market in the world to Vietnamese exports.”, the Support for Trade Acceleration (STAR) project funded by Vietnamese agencies and the U.S. AID said in a report in 2007. Exports from the United States to Vietnam jumped six times to $1.9 billion in 2007 from $394 million in 2001 while exports from Vietnam to the U.S. market enjoyed a 10-fold increase from 2000 to $10.6 billion in 2007, or around 20 percent of the country’s total exports.
It said in 2001, before the BTA, 78 percent of all Vietnamese exports to the United States were primary goods, mainly shrimp and petroleum products. By 2003, after just two years of BTA implementation, manufactured exports were 72 percent of total exports to the United States leveling off later at about 74 to 75 percent.
The United State, Vietnam’s third largest trade partner and also the country’s biggest export market, buys garments and textiles, footwear, furniture, fish and shrimp and coffee among other agricultural products.
Total U.S. exports almost tripled in the first two years following the BTA, and then declined over the subsequent years. This was the result of a major purchase of U.S. aircraft (Boeing 777s) by Vietnam just after the BTA came into force. Stripping out transport equipment, U.S. exports have grown at a relatively steady and solid 20 percent a year. U.S. exports to Vietnam consist mainly of transportation, machinery, and other manufactured products, as well as cotton, food and other primary products. They are essential for Vietnam as the country moves its agriculture-based economy to industrialisation and modernisation.
One of the largest commercial deals between Vietnam and the United States would be those for Boeing aircrafts placed by national carrier Vietnam Airlines.
In 2001 Boeing signed its first contract to sell Vietnam Airlines four Boeing 777-200ER aircrafts valued at $680 million. In June 2005 Vietnam Airlines signed another contract in Washington to buy four Boeing 787-8 Dreamliners valued at $500 million. The aircrafts are scheduled for delivery in 2009 and 2010.
Both countries have taken initiative to promote trade. The U.S.-Vietnam Trade Council is a nonprofit membership organisation founded in 1989 that has played major role in building the normalisation of relations and improving the bilateral trade and investment environment. The USVTC has played a key role in the negotiation and implementation of the BTA and Vietnam’s accession to the WTO and continues to work closely with Vietnam on next steps in Vietnam’s economic integration and development.
The Vietnamese government established the Vietnam Trade Promotion Agency in July 2000 which opened an office in New York to look after the growing trade ties between the two countries and their businesses.
In September 27, 2001 – USAID launched the Support for Trade Acceleration (STAR-Vietnam) project to support Vietnam for BTA implementation.
In March 2007 Vietnam and the United States started negotiations over the Trade and Investment Framework Agreement (TIFA) when Deputy Prime Minister and Foreign Minister Pham Gia Khiem visited Washington. In June, Ambassador Karan Bhatia and Deputy Industry and Trade Minister Nguyen Cam Tu signed the TIFA which will create a platform on which to further expand and deepen bilateral trade and investment ties.
“After the country gained its membership in the WTO in January 2007, the Vietnamese government will continue to implement far-reaching economic, regulatory and administrative changes that will provide an increasingly favourable environment for American businesses to enter and expand in the market”, the U.S. Department of Commerce said in a report in March 2008.
The U.S. Department of Commerce said American exporters will find tremendous opportunities in power generation projects, Telecoms and broadcasting equipment. U.S. companies have won respect in Vietnam for supplying sophisticated equipment, advanced technologies and professional services in the oil and gas sector.
Potential would also lie with the supply of IT hardware products; provision of architectural, engineering and construction services, and construction management services for airports and terminals in the aviation sector; sales of environmental equipment and technology; medical equipment as well as food products.
In 2008, two-way trade is forecast to rise 12 percent to more than $14 billion, from $12.5 billion in 2007, of which exports from Vietnam to the U.S. market are expected to maintain growth of between 23-25 percent with key items including textiles, furniture, footwear, crude oil, steel and electric products, Vietnamese trade officials said.
In January 2008, Vietnam Airlines and Vietnam Aircraft Leasing Co placed orders with Boeing for a total of 12 Boeing 787-8s with a list value of approximately US$ 2 billion. The first airplane is slated to be delivered in 2009.
In the telecoms sector, Vietnam Posts and Telecommunications group has contracted Lockheed Martin Corporation to design, build and launch a telecom satellite in a deal worth around $200 million. The satellite was launched in April 2008.
But as trade grows strongly, several disputes have emerged against Vietnamese products such as catfish, shrimp and textiles.
In 2004 Vietnam’s shrimp exports to the U.S. market also fell victim of anti-dumping tax there and the country’s sales of the two products to the United States fell 24 percent from 2003 when it reported the export revenues grew 19 percent from the previous year, according to Vietnam’s fisheries industry figures.
In 2005 and 2006 the anti-dumping tax was reduced for several Vietnamese exporters and the taxing on shrimp also stabilised, resulting in an export value rise of 5 percent. In 2007 the market had a slight recovery and Vietnamese seafood exports to the U.S. market accelerated to 8 percent.
After Vietnam joined the WTO in January 2007 the U.S. Department of Commerce started monitoring apparel imports from Vietnam and the process is expected to continue for the duration of the George W. Bush administration.
Ford Motor Company announced on April, 2008 that it was adding $10 million to expand its operation, bringing the company’s total investment in Vietnam to $112 million. The additional investment by Ford Motor, which arrived in Vietnam to establish a joint venture for assembling cars in 1995, is relatively small in comparison with the total pledges by all U.S. companies in Vietnam of $7 billion at the end of March 2008, but it shows a commitment and the expansion strategy by one of the largest U.S. investors in Vietnam.
Between 1995 and 2004 the investment How from U.S. companies into Vietnam was not significant but those companies which had arrived had reported their success.
In March 1998, Vietnam and the United States signed the Overseas Private Investment Corporation (OPIC) Bilateral Agreement after President Bill Clinton signed for Vietnam the Jackson-Vanik waiver, a law restricting U.S. companies from trading with countries designated as limiting the freedom to emigrate. OPIC is a U.S. government agency that assists American firms expand their markets through promoting overseas investment and reducing associated risks. It finances projects by direct loans and loan guarantees that provide medium and long-term funding to ventures involving significant equity and/or management participation by U.S. businesses.
In 2000 OPIC said it would provide a $200 million special line of credit for Vietnam to support U.S. investors seeking financing for potential projects in Vietnam. It also supports four privately managed equity funds that are eligible to invest up to $640 million in projects in the country.
Since 2005 more U.S. companies as well as subsidiaries of U.S. firms which are established in a third country have been investing in Vietnam, raising the overall U.S.-related investment in the country and diversifying the sectors that get the foreign investment.
As of March 31, 2008 the United States ranks the seventh largest foreign investor in Vietnam among 82 countries and territories, the Ministry of Planning and Investment said. More than 1,000 U.S. operational businesses have pledged $7 billion in nearly 400 projects while if U.S. investment via a third country is included, their total value rises to $9 billion.
In November 2007, U.S. Secretary of Commerce Carlos Gutierrez arrived with 22 American companies.
In May 2008, 23 U.S. corporations came to Vietnam in a visit arranged by the US-ASEAN Business Council (USABC). Executives from companies such as GE, AES, Boeing, Chevron and ConocoPhilips came to seek business opportunities in various fields including agriculture, infrastructure, energy, transport, aviation, finance, pharmaceuticals, express courier services, human resources and IT.
USABC’s Chairman Matthew Daley and Stuart De an, Chairman of USABC’s US-Vietnam Business Committee and Chairman of General Electric in Southeast Asia, said they believe that the United States will become the number-one investor in Vietnam in two years as many U.S. groups have been paying attention to the country.
Back in the 1990s among the first U.S. companies arriving in Vietnam were Ford Motor and Coca Cola. The latter returned in February 1994 and formed its first joint venture with a Vietnamese firm in August 1995.
In February 1995 before the U.S. president announced the normalisation of the relation between the two countries, U.S. giant firm Cargill opened a Vietnam representative office and in October that year it launched a wholly owned Vietnam subsidiary. The unit has since been one of the country’s most successful companies in the agricultural sector.
In January 1996 Microsoft opened its resident representative office in Hanoi to study the market, conduct promotion activities, build Microsoft Corporation’s investment cooperation projects and promote the implementation of contracts in the software area.
Investment growth by U.S. companies jumped to an average 27 percent a year during 2002 and 2004, from 3 percent during the previous six years ending 2001.
But in the first quarter of 2008, the United States was the largest foreign investor in Vietnam, with the largest value of pledges in eight projects worth a total $1.31 billion, the Foreign Investment Agency said in a report.
Vietnam enjoyed an economic growth of 8.48 percent in 2007, one of the world’s fastest, and has projected a growth of 7.5 percent to 8 percent per year for the 2006-2010 period. To realise this target, the government says it would need an estimated investment of $30 billion from foreign sources. Besides, it has been quickly grapping high technologies and foreign expertise from developed countries as it wants to shift its agriculture-based economy to the one driven by industry, investment officials have said.
In 2006 Intel Corporation, the world’s largest chip maker, announced an investment of more than $1 billion to build a plant for producing chips in HCMC. The major high-technology project is viewed by Vietnamese officials as a factor to contribute to creating an impetus for other American investors to invest in Vietnam.
“I believe Vietnam holds great promise for investors. Up to 80 percent of the potential market of 85 million is composed of the tech savvy young people who can take part in processing-manufacturing activities,” Rick Howarth, General Manager of Intel Products Vietnam said.
Adam Sitkoff, Executive Director of Amcham Hanoi urged Vietnam to accelerate new infrastructure development, increase intellectual property rights protection and enforcement, wipe out corruption and further more, to ensure a greater legal certainty.
“Investors need to know that the contracts they sign will hold up under the law and that disputes will get settled in a fair way,” Mr. Sitkoff said.
As a member of the WTO since January 2007, Vietnam is committed to providing larger market access for exports of U.S. goods and services and boosting transparency in regulatory trade practices, enhancing economic freedoms and providing a more level playing field between domestic and foreign companies.
In June 2007 Vietnam signed with the United States the Trade and Investment Framework Agreement (TIFA) and last December and March 2008 officials from the two countries met to discuss ways to boost trade and investment ties.
The United States is expected to be Vietnam’s largest trade and investment partner with two-way trade value reaching $15 billion to $18 billion by 2010.
In late 1992 U.S. President George Bush (senior) allowed U.S. companies to open representative offices in Vietnam and to sign contracts once the U.S. trade embargo is lifted.
In 1993, Paris Club creditors provided Vietnam a debt rescheduling. Vietnam signed a bilateral implementing agreement with the United States in 1997, resumed making scheduled payments, and was in good financial standing when Congress created the Vietnam Education Foundation, which will refund to the Foundation’s programmes about 40 percent of Vietnam’s total debt payments to USAID and USDA. Following the presidential permission, a number of U.S. firms took the chance and opened offices in Vietnam in 1993, including General Electric and Citigroup, which is now one of three U.S. banks that have branches in the country. The other two are Far East National Bank and JP Morgan Chase while American Express, Visa International and Wachovia have representative offices.
Since early 1998 U.S. Ex-Im Bank has been open to consider short-term and medium-term export financing for purchases by Vietnam’s public sector. The independent U.S. government agency that helps finance the sale of U.S. exports primarily to emerging markets signed two important framework agreements with Vietnam in December 1999 to facilitate the use of its programmes in the Southeast Asian country. In 2003 and 2004, the U.S. bank financed Vietnam Airlines to buy four Boeing 777-200ER aircraft. In November 2006 it agreed to provide financial support worth $410 million to help Vietnam Airlines buy four Boeing 787 Dream Liners.
Vietnam’s Prime Minister Nguyen Tan Dung has asked Ex-Im Bank to further help Vietnam Airlines purchase Boeing aircraft and also assist other Vietnamese companies which have. demand to buy machinery and technologies from U.S. companies. Ex-Im Bank has said it would open branches in Vietnam to support import and export activities of Vietnamese businesses.
As the country opens up its financial and banking sector, the government allows foreign investors to hold a maximum 30 percent of stake in a domestic bank, with the limit for non-bank foreign investor at 15 percent and a maximum 20 percent for a strategic investor.
Under the WTO commitments, Vietnam has already allowed foreign banks to open their, wholly foreign owned banks in the country as of April, 2007 and so far the government has granted initial approval for two non-U.S. banks.
State-run Agribank, Vietnam’s largest bank, along with the Bank for Investment and Development (BIDV) and Vietcombank have the most active correspondent relationships with U.S. banks, according to the U.S. Department of Commerce.
In June 2007, Agribank signed financial agreements with banks worth $1.55 billion, including a $700 million deal with Wachovia to reorganise financial balance, provide commercial support, trade services, settlement of hard currencies and training.
Vietcombank is the first to have conducted an initial public offering in December 2007 as part of the country’s major plan to partially privatise all the five lenders by 2010. Vietcombank now handles about a quarter of all export and import payments for Vietnamese firms.
“WTO membership has forced Vietnam to open its markets and heightened the urgency for state-owned enterprises and commercial banks to reform and to cope with increasing competitive pressures in a market economy. “Foreign investors are allowed to tap into those previously restricted sectors such as banking, insurance and telecommunications,” said Citi’s Son Nguyen. “Also, the difficult operating environment combined with Vietnam committing to a gradual liberalisation of its financial sectors may accellerate the acceptance of cross-border M&A to strengthen and support the domestic banking sector” Son said.
Playing the role of an advisor, U.S. investment bank Morgan Stanley has been working with BIDV, Vietnam’s second-largest lender, in its initial public offering while Vietinbank, the country’s fourth-largest bank, hired another U.S. bank, JP Morgan, for a similar job.
In January 2008 Morgan Stanley finalised a deal to buy 10% of shares in PetroVietnam Finance Co. (PVFC), a non-bank credit institution controlled by Vietnam Oil and Gas (PetroVietnam) group. In February 2008 Morgan Stanley won approval from Vietnam’s State Securities Commission to set up a joint venture in Vietnam with a Vietnamese brokerage. Gateway Securities. Stephen Roach, Chairman of Morgan Stanley Asia, said that the new platform will allow the company to serve local and international clients, and to contribute to the country’s economic growth and the development of Vietnam’s capital markets.
In the insurance market, Liberty Mutual Group would be the very lucky U.S. company that can benefit the most from Vietnam’s opening economy. Liberty officially received its license from the Vietnamese government to operate a wholly U.S.-owned non-life insurer in November 2006 when Vietnam hosted the Asia Pacific Economic Cooperation summit attended by U.S. President George W. Bush.
As Vietnam marked the first anniversary of its WTO membership, Liberty won an approval to expand its scope of operation by providing insurance service directly to Vietnamese state-owned enterprises and motor insurance including compulsory public liability.
Apart from Liberty Mutual, a number of U.S. insurance firms have been tapping Vietnam’s emerging market. ACE Life, a unit of the world’s leading ACE group which bought INA, landed in Vietnam as early as 1996 via INA office. In June 2005 ACE Life received its licence to operate in Vietnam during a visit to the United States by Prime Minister Phan Van Khai.
American Insurance Group (AIG), the world’s largest insurer, is the first 100 percent owned American non life insurer in Vietnam.
Although Vietnam’s insurance industry posted an impressive average annual growth rate of 35 percent between 2001 and 2005, premiums accounted for only 2 percent of GDP, much lower than the world average of 7.7 percent.
In September 2007 Vietnam Airlines signed a memorandum of understanding with Seattle-based Boeing Co in New York under which the Vietnamese firms ordered 12 Boeing 787-8 Dreamliners. Boeing has been a major partner of Vietnam Airlines since 1995. The signing was witnessed by Prime Minister Nguyen Tan Dung who was in the United States to attend a U.N. General Assembly meeting.
Aviation is not the only area within Vietnam’s industrial sector in which U.S. companies have been investing. Overall investment figures show foreign direct investment (FDI) from the United States between 1988 and 2005 mainly focuses on industrial and construction sectors, totaling more than $1 billion in 210 projects or $3.3 billion if adding the investment coming from overseas U.S. subsidiaries, according to the STAR project.
As of 2007 Conoco Phillips alone invested more than $1 billion in Vietnam’s oil and gas sector, developing five offshore blocks and the Nam Con Son pipeline system. Chevron, which has invested $300 million in exploring oil and gas off Vietnam has found huge gas reserves after which it was planning an investment of more than $4 billion in a gas-fired power project apart from its two offshore blocks. It was working with the government, PetroVietnam and Vietnam Electricity groups on a detailed project.
GE, ExxonMobil, AES, Alcoa all have business interest in Vietnam’s industry sector.
American multinational groups and companies coming to Vietnam are not only a vivid manifestation of Vietnam-U.S. cooperation, but also can guarantee the quality of Vietnam’s investment climate for international investors, Vietnamese officials say.
U.S. companies working in Vietnam’s industrial sector such as Intel with its $1 billion investment in a chip building plant, Alcoa’s signing a memorandum of understanding to invest in a venture to run a major bauxite and alluminium complex in the Central Highlands and Ford’s investment in a car assembling plant.
At the end of May Vietnam had 186 industrial zones which have attracted nearly $31.5 billion worth of foreign investment.
Vietnam plans to attract more investment in agricultural and seafood product processing, pharmaceutical industry, chemicals manufacturing, construction material and the development of industrial zones.
In 2007 Vietnam for the first time exported $2.2 billion worth of mechanical products while its domestic production can meet only 35 percent the domestic demand, said Deputy Prime Minister Hoang Trung Hai in early June 2008. The Vietnamese-made proportion in a product accounts only for 57 percent while the average rate should be 90 percent. Deputy Prime Minister Hai said Vietnam wanted to invest in mechanical products where it can increase the value added part.
Vietnam’s industrial sector has been growing around 17 percent each year since 2005. Along with the construction sector they accounted for 41.61 percent of the country’s GDP in 2007, up from 41.56 percent in 2006.
The country has projected to become an industrialised economy by 2020.
After Vietnam joined the World Trade Organisation in January 2007, the country’s real estate market has gone through many changes, exposing its instability and unbalance in supply – demand. Meanwhile the demand for apartment for lease and small flats is very high while housing for low-income people has not been developed.
“With the growth of the economy, more expatriates enter Vietnam to live which has resulted in high occupancy rates of serviced apartments,” said CB Richard Ellis Vietnam Co, a subsidiary of Los Angeles-based CB Richard Ellis that was established in Vietnam in January 2003 to provide real estate services from transactions to financial services to management.
CB Richard Ellis Vietnam said its revenues in 2008 would rise 2.2 times the 2007 revenues which already doubled from 2006. The firm also increased staff by over 50% and is in the process of expanding into other markets, moving from simple project offices into full fledged licensed locations in Hai Phong, Da Nang, Nha Trang and Can Tho.
Cushman & Wakefield, the world’s biggest real estate services private firm, is going to open a representative office in Hanoi. “Vietnam is booming, and shows great potential in the long term. Given the infancy of the real estate market and the dynamic growth, we’re uniquely positioned to contribute to the country’s development in partnership with our clients”, Chairman John Cushman III said in March 2008.
The Vietnam-U.S. bilateral trade agreement and Vietnam’s WTO membership have helped create new conditions for cooperation in the construction sector. Vietnam’s construction industry has affirmed an open market and pledged equal treatment for all technical consultancy services, comprehensive technical consultancy services and construction services under the BTA, the Construction Ministry said.
Before dawn on April 19, 2008, Hanoi time, Vietnam’s first telecommunication satellite, Vinasat 1, was launched into the orbit, marking a step forward of the country’s telecoms industry.
Vietnam Posts and Telecommunications Group (VNPT), the country’s largest telecoms company, has hired U.S. firm, Lockheed Martin Corporation, to design, build and launch the satellite under a project worth more than $200 million. The Vietnamese group has also opened a branch in the United States to develop business plans for potential services related to telecoms and information technology in the U.S. market and neighbouring countries.
“Twenty six years have passed since the first Vietnam-U.S. telecoms negotiations started until the touchy moments of the launch of Vietnam’s first satellite, I am glad that the Vietnam-U.S. relationship has warmed up indeed and there the mutual trust was the criteria for Lockheed Martin and many other Vietnamese and American companies to find success,” said Mai Liem Truc, former Deputy Minister of Posts and Telecommunications.
But that is the story of the 21st century.
After the war ended in 1975, the U.S. administration imposed an embargo on trade and also conducted the high-tech embargo against Vietnam. The high-tech embargo banned the transfer of U.S. high-tech products to Vietnam, including those which has 10 percent produced by the United States. At the same time, telephone calls to Vietnam were banned.
In 1988 an AT&T executive arrived in Vietnam to discuss the telephone connection. After a long time of Vietnam’s lobby, the U.S. government lifted the telecom embargo in April 1992, two years before U.S. President announced a lifting of the trade embargo against Vietnam in 1994.
Under the Vietnam-U.S. bilateral trade agreement, Vietnam opened its telecoms sector to U.S. investors from December 2007, allowing ventures 49 percent owned by U.S. firms to provide basic telecoms services such as fixed telephone lines, inter-provincial and international calls.
Vietnam’s VNPT is part of a consortium to build an undersea cable system linking Southeast Asia to the United States. Joining the system, Vietnam will be able to build its first direct international cable link with the United States.
Along with AT&T, MCI, US Sprint, Motorola came to Vietnam since 1993, and has been supplying equipment in the telecoms area when embargo lifted. The company has also been working with Vietnam since 2003 on training several hundreds of software experts in both Hanoi and Ho Chi Minh City. The programme awarded scholarships for roughly 130 excellent IT students from Vietnam’s leading universities, recognised 40 software companies for their excellent software quality and business performance and provided great support to the Vietnam Ministry of Post and Telecommunications in the overall management of the software and digital content industries.
U.S. companies have been working with Vietnamese partners from supplying equipment to developing products; exploiting and developing telephone and Internet services, which resembles only part of Vietnam-U.S. cooperation in the fast-growing telecoms and IT sectors.
IBM, Cisco, Hewlett-Packard and Oracle have gained the market share and success in the country’s field of information technology. IBM has opened a global service centre in Mo Chi Minh City, Vietnam’s commercial centre, in February 2007.
The U.S. Commercial Service said in a report in March 2008 that Vietnam’s telecommunications industry is among the world’s fastest growing markets. In 2007, the Information and Communications Technology (ICT) sector growth rate was double that of the average in the Asia region and triple that of the world average. In 2007, the cell phone and Internet broadband subsectors experienced market growth of upwards of 200 percent.
It said the Vietnamese government has articulated its commitment to boosting the development of the ICT industry, particularly in telecommunications and Internet infrastructure development, software production, IT education promotion, and other forms of human capital development.
The Ministry of Information and Communications said as of December 2007, Vietnam has approximately 46.94 million telephone subscribers, or a density of 55.22 units/100 inhabitants.
In May 2007, Microsoft signed an agreement with Vietnam’s Posts and Telecommunications Ministry to strongly promote the development of the Information and Communications Technology (ICT) sector, under which the Vietnamese government will buy software’s copyrights for all of its computer networks. The government has projected the ICT’s revenues to rise to $10 billion in 2010.
Microsoft said it would assist Vietnam to effectively use applications which already have global usage; to build infrastructure for an e-government; to narrow the digital gap and expand production of local software companies.
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