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Champing At The Bit In Vietnam


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CHAMPING AT THE BIT IN VIETNAM

Something is in undersupply at IBM's new Hanoi office: Big Blue's own gear. J. William Howell, the company's representative, has just one IBM computer: a ThinkPad PC he shares with his wife and deputy representative, Linden. Bringing in more requires jumping through U.S. bureaucratic hoops. Since Washington's embargo of Vietnam prevents the Howells from selling computers, the two spend most of their time visiting local officials, hoping that they will become customers some day. Quips Linden Howell: "We feel like we're sitting at the back of the runway with our engines on and the passengers yelling at us to take off."

That runway has quickly gotten crowded. For the first time since the fall of Saigon, Corporate America is on the ground in Vietnam. Besides IBM, in recent weeks General Electric, BankAmerica, and Caterpillar have opened offices in Hanoi. Philip Morris Cos., Citibank, and a slew of others are hoping to set up shop soon. As the U.S. presence increases, so does the pressure to break the logjam (table). This month, the U.S. dropped its opposition to international loans to Vietnam. Washington is also sending a high-level diplomatic team to Hanoi in mid-July to pave the way for normalization of relations. All this is building to what U.S. corporations hope will be the grand finale in September, when President Clinton is likely to let the embargo expire.

Backers of normalization got a big lift on July 2. That's when Clinton gave the green light to the International Monetary Fund and the World Bank to renew lending to Vietnam as soon as it makes good on $140 million in old debts. Now, supporters are awaiting Clinton's next move. An executive of one big U.S. multinational eager to get into the market argues it would be "absolutely stupid" for Clinton not to end the embargo, since the U.S. provides 18% of IMF and World Bank funds.

For Vietnam, the new IMF support is vital. By yearend, as much as $1 billion from international agencies could start flowing into Vietnam's treasury--allowing critical highway and seaport projects to begin. That in turn will enable Vietnam to start lining up billions in manufacturing investment from European, Japanese, and other Asian companies. Such funds have been impeded by the country's dilapidated infrastructure and a lack of commercial bank credit.

MISSED OPPORTUNITIES. U.S. companies fear Clinton will get cold feet. Many expected the U.S. to allow multilateral aid in April. That opportunity was scuttled after a Russian document surfaced that seemed to prove that Hanoi held U.S. prisoners of war long after the Vietnam War's end. However, U.S. investigators say Vietnam is cooperating fully in efforts to resolve the cases of more than 2,000 GIs listed as missing in action. On July 15, Winston Lord, U.S. Assistant Secretary of State for Asian affairs, was scheduled to arrive with a 20-person diplomatic mission to help pave the way for diplomatic relations.

Embargo supporters are gearing up as well. On the same day as Lord's arrival in Vietnam, Ross Perot was scheduled to hold a press conference with MIA family members, discussing purported evidence that GIs were left behind after the war. A leading critic of Hanoi, Senator Bob C. Smith (R-N.H.), arrived there on July 7 to investigate locations of old "live sighting" reports of MIAs. Such pressures are bound to increase.

But sources say Clinton is being won over by arguments from U.S. companies. In oil, for example, Vietnam had long reserved leases on some of its most promising offshore oil fields for American companies such as Mobil Corp. and Chevron Corp. But this year, the choicest sites went to consortiums from Australia, France, and Japan. "We had to allow the other countries in because we could see no prospect for the embargo to be lifted," says Nguyen Xuan Phong, Vietnam's director for U.S. affairs.

"PRESEASON." Opportunities in huge public-works projects are also starting to slip away. Among the big projects up for World Bank funding is a $2 billion, 1,700-mile highway from Vietnam's border with China south to the Mekong Delta. Caterpillar Inc., working through its new office in Hanoi, would like to supply equipment for the project. But it could lose out to Japanese and South Korean suppliers if it has to wait too long. "This puts companies like us in a difficult situation," says Donald E. McDonald, Caterpillar's managing director for Asia.

For Clinton, Vietnam could bolster his newly launched Asia economic strategy (page 51). Once the embargo ends, Vietnam will need U.S. banks, aircraft, and power plants. Other companies that will do well include consumer-product giants Colgate Palmolive Co. and Procter & Gamble Co., which already have brand names that are well known in Vietnam. "Other countries have the jump on the U.S.," says Eugene Matthews, a Hanoi-based consultant to U.S. companies. "But it's still the preseason."

Another factor in America's favor is that Vietnam still attaches a high strategic importance to a big U.S. role in the economy. Not only does Vietnam see America's market, technology, and capital as critical to its development but it now even sees Uncle Sam as a geopolitical counterbalance to Japan and the growing military might of neighboring China. "Where politics is a factor in awarding a contract, U.S. companies will be favored," Phong maintains. Even so, he says, "Vietnam can't wait too long for U.S. companies." Vietnam soon will have the fuel it needs for economic takeoff. The question is whether Clinton has the political will to let Corporate America ride along.THE U.S. WARMS

TO VIETNAM

--Over the last month, IBM, GE, Caterpillar, and BankAmerica have opened

offices in Vietnam

--On July 2, President Clinton approved a renewal of lending to Vietnam by

the International Monetary Fund

--In mid-July, a 20-person delegation led by Winston Lord, an Assistant

Secretary of State, was scheduled to visit Vietnam to help pave the way for a

resumption of diplomatic relations

--In September, most experts expect Clinton to allow the embargo on U.S.

trade with Vietnam to expire

Pete Engardio in Hanoi


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