Investment News: Money Morning » Vietnam http://www.moneymorning.com Investment News Provider Sat, 21 Nov 2009 18:52:59 +0000 http://wordpress.org/?v=2.8.4 en hourly 1 Global Memory Chip Leader SanDisk the Latest Heavyweight to Pursue Vietnam’s Promise http://www.moneymorning.com/2007/12/12/global-memory-chip-leader-sandisk-the-latest-heavyweight-to-pursue-vietnams-promise/ http://www.moneymorning.com/2007/12/12/global-memory-chip-leader-sandisk-the-latest-heavyweight-to-pursue-vietnams-promise/#comments Wed, 12 Dec 2007 20:22:55 +0000 admin http://www.moneymorning.com/2007/12/12/global-memory-chip-leader-sandisk-the-latest-heavyweight-to-pursue-vietnams-promise/ By William Patalon III
Executive Editor     
Money Morning/The Money Map Report

SanDisk Corp. (SNDK), the world’s No. 1 maker of memory-chips for data storage, is the latest global leader to focus on the Vietnam market, and this week announced plans to start selling its Sansa music player, USB flash drives and mobile phone cards to consumers in the fast-growing Asian country.

SanDisk has teamed up with FPT Corp., a leading Vietnamese distributor of IT and wireless phone products, and Ingram Micro Inc. (IM), the world’s largest wholesale distributor of technology products. Those two companies will distribute SanDisk products in Vietnam.

Gavin Wu, the managing director of SanDisk’s Asia-Pacific business unit, said the current economic growth rate and the expanding infrastructure base make Vietnam an ideal market for SanDisk’s products.

In a nation of 87 million people, SanDisk said there are 23 million wireless phone subscribers and another 17.8 million Internet subscribers – each of which is viewed as a potential customer, according to the company. Underscoring the country’s high-tech potential is Vietnam’s online gaming industry, which is projected to generate $50 million in revenue this year, and $83 million in 2010, the state-run China news agency Xinhua reported recently.

SanDisk will launch a Vietnam marketing campaign later this month, the company’s Wu said.

Back in October, SanDisk reported third-quarter results that beat estimates as it boosted sales outside the United States and sold more chips to mobile-phone makers. By moving into the Vietnam market, SanDisk is clearly trying to sustain that strong rate of profit growth.

Vietnam joined the World Trade Organization (WTO) in January, and is one of the world’s fastest-growing economies. Its Gross Domestic Product (GDP) growth has exceeded 7% in each of the past four years. The Vietnam economy actually grew 8.16% in the first nine months of 2007, its best economic performance in 10 years, that country’s General Statistic Office announced in early October. And now the government is expecting that nation’s economy to advance at an 8.5% for the full year.

Indeed, Vietnam’s growth rate has exceeded that of Thailand, Malaysia, Taiwan, South Korea, and even India.

Deregulation and privatization programs, rising exports [helped along by the white-hot global commodities boom], and rapidly increasing foreign direct investment, have helped fuel the nation’s broad-based and fast-paced economic expansion. Vietnam is attractive to foreign firms because of its inexpensive labor costs and a work force that’s well educated, despite its youth.

Vietnam has become a lightning rod of investment for both global information-technology players and the so-called “global titans” in recent years. As a result, foreign investment jumped by 49% to a record $10.2 billion last year. By the middle portion of this year, investments in projects financed by foreign firms had already eclipsed the $8 billion mark, as major corporate players position themselves for a major push into Vietnam’s growing market. For example:

  • The Boeing Co. (BA) recently completed deals to sell 12 of its new Boeing 787 Dreamliner jetliners to both Vietnam Airlines and to a new Vietnamese leasing company as that Asian country’s flagship air carrier moves to end its airliner shortage. Based on published list prices – which are typically subject to deep discounts – the deal is worth $1.9 billion. Vietnam has 46 aircraft, but wants to almost double that to 86 by 2015.
  • Last year, chip-giant Intel Corp. (INTC) said it would expand a chip testing-and-packaging plant in Vietnam into a $1 billion venture – triple the size of the original outlay.
  • Korean steelmaking giant Posco (PKX) plans to invest $1.13 billion in new steel plants.
  • Earlier this year, Taiwan electronics giant Hon Hai Precision Industry Co. Ltd. announced plans to invest $5 billion Vietnam over the next five years. Hon Hai Precision assembles the Mac Mini, the iPod and the iPhone for Apple Inc. (AAPL), PCs for Hewlett-Packard Co. (HPQ), motherboards for Intel, and mobile phones for Nokia Corp. (NOK). Video-game consoles are a $10 billion global market, and Hon Hai is a major player there, too, actually assembling all three of the major gaming systems that are currently slugging it out in the consumer markets around the world: The Microsoft Corp. (MSFT) Xbox 360, the Sony Corp. (SNE) Playstation 3, and the popular but tough-to-find Nintendo Co. Ltd. (NTDOY) Wii. Hon Hai’s market power actually drove Flextronics International Inc., (FLEX) into a deal to buy rival Solectron Corp. (SLR) for $3.6 billion. Flextronics wants the manufacturing and marketing muscle needed to keep pace with its other foreign rivals – particularly Hon Hai.
  • Nike Inc. (NKE) is responsible for more than 130,000 Vietnamese jobs.

That interest from major companies worldwide will only continue – and with good reason, experts say. Consider these statistics, which underscore the allure posed by the Vietnam market:

  • More than half its population is under 25 years old.
  • At 2%, Vietnam’s unemployment rate is among the world’s lowest, trailing only Azerbaijan, Cuba, Iceland, Andorra and Liechtenstein.
  • Its labor and production costs are roughly one-third that of China’s, making Vietnam a worthy contestant in the contest for new production sites.
  • Its economy was able to shrug off the 1997 "Asian Contagion" financial crisis and averaged 5.5% growth for each of the next two years – while other nations in the region saw their own economies contract.
  • And it is now a member of the WTO.

This is no surprise to those who follow Vietnam’s growth. Many analysts predict Vietnam will be the country that emerges after the current wave of emerging economies mature and their growth rates slow down. A big factor in Vietnam’s favor is that its economy is growing soundly, instead of at rates that border on out of control

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]]> http://www.moneymorning.com/2007/12/12/global-memory-chip-leader-sandisk-the-latest-heavyweight-to-pursue-vietnams-promise/feed/ 0 Boeing and Vietnam have the Billion Dollar Deal http://www.moneymorning.com/2007/11/26/boeing-and-vietnam-have-the-billion-dollar-deal/ http://www.moneymorning.com/2007/11/26/boeing-and-vietnam-have-the-billion-dollar-deal/#comments Mon, 26 Nov 2007 12:46:15 +0000 admin http://www.moneymorning.com/2007/11/26/boeing-and-vietnam-have-the-billion-dollar-deal/ By William Patalon III
Managing Editor
Money Morning/The Money Map Report

The Boeing Co. (BA) has completed deals to sell 12 of its new Dreamliner jetliners to both Vietnam Airlines and to a new Vietnamese leasing company as that Asian country’s flagship air carrier moves to end its airliner shortage. Based on published list prices – which are typically subject to deep discounts – the deal is worth $1.9 billion.

The deal underscores yet another reason Money Morning’s investment gurus favor Boeing’s stock: The aerospace company has a strategy for all of Asia, which includes such promising markets as Vietnam and China. Indeed, Boeing recently estimated that there’s a market for $340 billion in commercial aircraft in China over the next two decades.

Vietnam is just as promising – just on a smaller scale.

With an economy that’s growing at 8% annually, Vietnam has seen air travel escalate at an exponential rate. And that’s put the country under pressure to boost its aerial jetliner fleet to keep up with tourism and trade. Vietnam has 46 aircraft, but wants to almost double that to 86 by 2015.

Four of the Boeing B787-8 Dreamliner jetliners planes would go to the state-run carrier and eight to Vietnam Aircraft Leasing Joint Stock Company, of which Vietnam Airlines is one of five founding shareholders, officials said.

Vietnam Airlines also has a 2005 contract with the U.S. company for delivery of four 787-8s in 2009 and 2010.

"You can see the fleet today and guess for the future but as an airline business our response to the market is we will operate the most modern and the most efficient fleet," Pham Ngoc Minh, deputy director general of Vietnam Airlines, said at a news conference. Minh is also chairman of the leasing company, which said it would receive the first aircraft in 2016.

The carrier signed draft agreements in late September and early October with Boeing and Europe’s Airbus SAS, a unit of EADS NV, for passenger jets. Vietnam Airlines split $5.5 billion in aircraft orders between Boeing and Airbus in agreements that analysts said owe as much to political considerations as commercial ones.

The Vietnamese government has said it wants Vietnam Airlines to finalize the agreement with Airbus to buy 10 Airbus A350-900XWB passenger jets and 20 single-aisle A321 jets before Dec. 21.

The United States is Vietnam’s largest export market. But Vietnam also has been seeking broad international support for its bid to gain a two-year seat on the United Nations Security Council in 2008 and 2009. Since it began emerging from isolation after its 1986 shift toward market-oriented policies, the country has sought to avoid dependence on any one power or alliance.

"It must be political," said Paul Nisbet, a well-known aerospace-industry analyst and partner in the market-research firm of JSA Research Inc. "Buying both the 787 and A350 doesn’t make an awful lot of sense, certainly not economically, as it’s going to cost them a lot to set up logistics support and training for two very different planes."

Vietnam Airlines didn’t specify the reasons for ordering planes from both manufacturers, saying the company was comfortable with its decision. Airlines – especially smaller ones like Vietnam’s state-run carrier – usually choose one manufacturer for each class of plane, realizing major sums on both spare parts and pilot and maintenance training.

"We don’t see it as that difficult to handle," spokesman Trinh Ngoc Thanh said.

The provisional Boeing contract is worth $1.8 billion at list price and comes on top of the existing order for four 787 Dreamliners. The carrier’s preliminary order for 10 300-seat A350s and 20 single-aisle A321s gives the Airbus deal a total value of $3.7 billion at list prices.

Boeing the ‘Global Titan’

We also like Boeing because – like such other favorites as Yum! Brands Inc. (YUM), PepsiCo. Inc. (PEP), The Coca-Cola Co. (KO), and even McDonald’s Corp. (MCD) – it is a so-called "Global Titan: a company that’s not solely dependent on the U.S. market for sales. Boeing has a -huge overseas sales presence, which gives it diversification, but more importantly lets it benefit from the huge growth taking place in such key Asian markets as China and Vietnam.

Boeing and Airbus are now competing to sell their latest jetliners to Vietnam; even Bombardier of Canada is angling for a piece of this super-fast-growing market. This communist-ruled nation with a population of 84 million is experiencing red-hot economic growth of 8% a year, which means that there’s an emerging middle class of consumers with the time, money and desire to travel by air.

The state-owned and operated Vietnam airlines is going to be privatized, meaning there will be a need to upgrade its flying fleet of nearly 50 airplanes. And, as Bach Quoc Thang, a Vietnam Airlines general manager says, the carrier wants to position itself as "one of the leading regional carriers … Singapore Airlines and Cathay Pacific are the examples we want to follow."

According to CNNMoney.com, the airline is also looking to transform its subsidiary Vietnam Air Service Co. into a low-cost carrier that can take on Pacific Airlines, which is part owned by the highly regarded Qantas of Australia, as well as Malaysia’s Air Asia, which is a partnership with shipbuilder Vinashin.

The bottom line: Vietnam Airlines’ emergence means billions of dollars in possible additional sales for the manufacturers able to land the contracts.

The Boeing Buyback

Boeing, the world’s No. 1 producer of commercial airliners, said it will buy back as much as $7 billion of its common stock, the latest leg of a share-repurchase program under which the aerospace company has bought back $8 billion worth of its shares since the program was resumed in 2004.

Boeing also declared a regular quarterly dividend of 35 cents a share, payable Dec. 7 to shareholders of record as of Nov. 9.

"Our strong financial performance allows us to return value to our shareholders while continuing to invest in our growth and becoming more productive," Jim McNerney, the company’s chairman and chief executive officer, said when the new buyback plan was announced this week. "We are executing a balanced cash deployment strategy that’s serving Boeing and its shareholders well."

Boeing’s stock has climbed steadily since recovering from a slide following the 2001 terrorist attacks, which dealt a blow to its airline customers. Shares have quadrupled since early 2003, and more than doubled from pre-attack levels, the company said.

Boeing said its board of directors approved the new plan to buy back up to $7 billion of the company’s common stock. The company has repurchased approximately $8 billion of common stock since resuming its stock-buyback program in 2004. The Boeing board last authorized buybacks in August 2006, when it announced plans to repurchase $3 billion worth of shares. That buyback initiative is nearly complete, Boeing said.

The share repurchases will be made on the open market, or in privately negotiated transactions. And the company said the number of shares purchased, and the timing of any buybacks, will depend on corporate cash balances, business and economic conditions, and other factors, including investment opportunities.

Boeing is the No. 1 U.S. exporter, and is a stock that several of Money Morning’s contributors and advisory panelists have identified as one of the globally focused U.S.-based companies investors might want to research further [In fact, to see a copy of our special investing research report, "Investments for a Weak Dollar World," one of several of our research reports that list Boeing among the U.S.-based companies that will really benefit from the falling greenback, please click here. The report is free of charge].

The company recently said its profits soared 61% in the third quarter, its best showing in four years. The results smashed forecasts, but the company throttled back some of Wall Street’s exuberance by cutting its 2008 revenue estimates because of delays in launching its new Boeing 787 Dreamliner.

A month ago, Boeing said the hot-selling Dreamliner would be at least six months late as the company deals with incomplete work from suppliers, problems integrating the complex software that controls the airplane, and a crisis-level shortage of bolts. The airliner is considered crucial to Boeing’s future, and the company says it is still addressing "challenges" as it builds the first batch of 787s. Boeing is aiming for the first test flight in late March 2008, with the first delivery to be made in late November or December.

"The focus will be on the 787 and whatever may be said on the viability of their current schedule," Nisbet, the JSA Research Inc. analyst, told Reuters. "That will be the key."

Boeing said that its earnings from continuing operations for the third quarter were $1.43 per share, which easily beat the consensus Wall Street estimate of $1.24 per share, according to Reuters Estimates.

Revenue rose 12% to $16.5 billion, above the average analyst forecast of $16.05 billion.

Boeing raised its full-year profit forecast to a range of $5.05 per share to $5.15 per share, up from a previous forecast of $4.80 per share to $4.95 per share. This new forecast is right in line with Wall Street’s average estimate of $5.06 per share.

However, Boeing held steady on its 2008 profit forecast of $5.55 to $5.75 per share, below the consensus Wall Street estimate of $6.04 per share. The company also lowered its revenue forecast for account for the projected six-month delay in 787 Dreamliner production and slower growth in its defense unit.

Boeing said it now expects 2008 revenue of $67.5 billion to $68.5 billion, down from its previous estimate of $71 billion to $72 billion. Analysts had been forecasting revenue of $71.2 billion on average.

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]]> http://www.moneymorning.com/2007/11/26/boeing-and-vietnam-have-the-billion-dollar-deal/feed/ 5 Vietnam Growing at Exceptional Rate… American Investors Looking for Good Entry Point  http://www.moneymorning.com/2007/10/26/vietnam-growing-at-exceptional-rate%e2%80%a6-american-investors-looking-for-good-entry-point%c2%a0/ http://www.moneymorning.com/2007/10/26/vietnam-growing-at-exceptional-rate%e2%80%a6-american-investors-looking-for-good-entry-point%c2%a0/#comments Thu, 25 Oct 2007 22:26:28 +0000 admin http://www.moneymorning.com/2007/10/26/vietnam-growing-at-exceptional-rate%e2%80%a6-american-investors-looking-for-good-entry-point%c2%a0/ Vietnam stocks have soared 25% since early August alone, underscoring the promise of that Asian nation. A special report jointly developed by U.K. affiliate MoneyWeek Magazine and our experts here at Money Morning explores the factors fueling Vietnam’s long-term potential.

Vietnamese stocks have rocketed over the past few weeks, gaining 25% since early August. The recent rush into emerging markets has boosted near-term investor sentiment, while the long-term story remains compelling. Vietnam has posted gross domestic product (GDP) growth of more 7% a year for four straight years, and should grow by about 8.5% this year.

This is no surprise to those who follow Vietnam’s growth. Many analysts predict Vietnam will be the country that emerges after the current wave of emerging economies mature and their growth rates slow down. A big factor in Vietnam’s favor is that its economy is growing soundly, instead of at rates that border on out of control.

Deregulation and privatization, along with booming commodities markets and steadily increasing foreign direct investment (FDI) have buttressed the nation’s economic growth. Higher real incomes are fueling consumption. Car ownership, for example, is now up to 5% of the population.

The boom is evident from the growth rates at Sacombank, Vietnam’s biggest private-sector bank, notes Christopher Wood of CLSA, a provider of brokerage and investment-banking services in the Asia-Pacific market. The brokerage firm expects loans and pre-tax profits to grow by 90% and 130% respectively this year. And Vietnam’s population of 85 million still only has six million bank accounts.

Property ownership is on a roll. And the privatization of major state-owned firms is becoming an important factor in the market’s recent upswing, Wood says. Between 20 and 30 banks – including the four major state-owned banks, telecom firms and some infrastructure companies – are expected to hit the market over the next three years.

All this activity should give Vietnam’s tiny stock market a big boost in value and raise the profile of this "truly exciting market," Wood and other experts say. The leading stocks, as a group, are trading at about 25 times earnings, but this multiple is matched by projected profit growth, making Vietnam appear reasonably valued on a "PEG ratio" (price/earnings to growth rate) basis, Wood says.

Unfortunately, in spite of this financial allure, U.S. investors will for now have to take a rain check on Vietnam, as the country doesn’t have many companies that have registered their shares with the U.S. Securities and Exchange Commission. Nor is a Vietnam exchange-traded fund (ETF) currently available in the U.S. market.

Indeed, until a direct profit pathway is paved, investors may have to take the road less traveled, tapping into the many big-name foreign players plunking down major money on Vietnam projects. Key among them:

  • U.S. chip giant Intel Corp. (INTC) committed $605 million for a test-and-assembly factory in February 2006, and has boosted its total Vietnam commitment to $1 billion.
  • Korean steelmaker POSCO Ltd. (PKX) plans to invest $1.13 billion in new steel plants.
  • Athletic-shoe innovator Nike Inc. (NKE) is responsible for more than 130,000 Vietnamese jobs.

In total, foreign investment in Vietnam jumped by 49% in 2006. And much more is expected, due to Vietnam’s brimming potential. Consider these alluring statistics:

  • More than half its population is under 25 years old.
  • At 2%, its unemployment rate is among the world’s lowest, trailing only Azerbaijan, Cuba, Iceland, Andorra and Liechtenstein.
  • Its labor and production costs are roughly one-third that of China’s, making Vietnam a worthy rival in the contest for new production sites.
  • It shrugged off the 1997 "Asian Contagion" financial crisis and averaged 5.5% growth for each of the next two years – while other nations in the region saw their own economies shrink.
  • And it became a member of the World Trade Organization late last year.

The next step is for Vietnam to open its stock market to U.S. investors. And that may happen sooner than many experts expect.
Money Morning Associate Editor Mike Caggeso contributed to this report.

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]]> http://www.moneymorning.com/2007/10/26/vietnam-growing-at-exceptional-rate%e2%80%a6-american-investors-looking-for-good-entry-point%c2%a0/feed/ 0 Vietnam’s GNP Grows 8.16% After First Three Quarters of 2007 http://www.moneymorning.com/2007/10/09/vietnams-gnp-grows-816-after-first-three-quarters-of-2007/ http://www.moneymorning.com/2007/10/09/vietnams-gnp-grows-816-after-first-three-quarters-of-2007/#comments Tue, 09 Oct 2007 11:09:07 +0000 admin http://www.moneymorning.com/2007/10/09/vietnams-gnp-grows-816-after-first-three-quarters-of-2007/ By Mike Caggeso
Staff Writer

Vietnam’s economy has grown 8.16% in the first nine months of 2007, its best economic performance in 10 years, according to that country’s General Statistic Office.

At its current pace, it will hit its 2007 growth target of 8.2% to 8.5%, the China Post reported. Last year, its overall GNP growth was 8.2%

This isn’t a surprise to those who follow Vietnam’s growth. Many analysts predict Vietnam will be the country that emerges after the current wave of emerging markets subsides. Others can argue that growth phase has already begun.

In the past decade, the Vietnam economy has made fantastic strides. Its GDP growth has exceeded 7% in each of the past four years and the government has penciled in growth of 8.5% this year. Deregulation and privatization programs, buoyant exports (helped along by the commodities boom), and rapidly increasing foreign direct investment, have underpinned the nation’s vast economic expansion. As a result Vietnam’s growth rate has exceeded that of Thailand, Malaysia, Taiwan, South Korea, and even India.

Spurred on by Vietnam’s admission to the World Trade Organization, foreign investment jumped by 49% in 2006, with major international companies moving in.

Vietnam is host to several big-name electronics companies including Intel Corp. (INTC) and Hon Hai Precision Industry Co. Ltd, the world’s No. 1 contract-manufacturer of consumer-electronics products.

And Vietnam’s online game industry is expected to generate $50 million in revenue this year, and an $83 million in 2010.

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]]> http://www.moneymorning.com/2007/10/09/vietnams-gnp-grows-816-after-first-three-quarters-of-2007/feed/ 0 China’s Not The Only Red-Hot Economy In the East: Why Vietnam Is Asia’s Hidden Dragon http://www.moneymorning.com/2007/07/24/redhotvietnam/ http://www.moneymorning.com/2007/07/24/redhotvietnam/#comments Tue, 24 Jul 2007 05:00:30 +0000 admin http://www.moneymorning.com/2007/07/24/redhotvietnam/ By Jason Simpkins

In the past decade, the economy of Vietnam has made fantastic strides. Its GDP growth has exceeded 7% in each of the past four years and the government has penciled in growth of 8.5% this year. Deregulation and privatization programs, buoyant exports (helped along by the commodities boom), and rapidly increasing foreign direct investment, have underpinned the nation’s vast economic expansion. As a result Vietnam’s growth rate has exceeded that of Thailand, Malaysia, Taiwan, South Korea, and even India.

Spurred on by Vietnam’s admission to the World Trade Organization, foreign investment jumped by 49% in 2006, with major international companies moving in:

  • Intel, which committed $605 million to the building of a factory in the country back in February 2006, is ready to spend $1 billion on a semiconductor test and assembly plant.
  • Korea’s Posco plans to invest $1.13 billion in new steel plants, and
  • Nike is responsible for more than 130,000 Vietnamese jobs.

In fact, FDI commitments rose to $10.2 billion in 2006, well above its 2005 level of $6.2 billion. Disbursement of FDI projects, including contributions of the domestic partner, reached $4.1 billion in 2006, an increase of 24%. In the first four months of 2007, FDI commitments amounted to $3.5 billion, a 55% increase over the same period last year. More than $1.4 billion was disbursed the current period, accounting for a 27% year over year increase.

Portfolio inflows witnessed a sharp increase in 2006 and 2007, attracted by the advancing stock market. As a result of strong economic inflows, foreign exchange reserves have built up rapidly, increasing from $8.6 billion at end of 2005 to $11.5 billion by end of 2006. Reserves are estimated to have risen by an additional $3 billion in the first quarter of 2007.

At the end of 2005, Vietnam’s stock market consisted of only 41 listed firms, with a market capitalization of less than a billion dollars or 1.2 percent of the country’s GDP. By the end of April 2007, this number had climbed to 193, of which 107 firms were listed on the Ho Chi Minh City Securities Trading Center (HOSTC) and 86 firms were listed in Hanoi (HASTC). A big jump occurred in December 2006 when nearly 100 firms joined the two securities trading centers. While its economy is booming, however, the country has no shortage of challenges to face as it strives to become a legitimate world power.

Human Rights Concerns Hinder American Involvement

Despite its newfound economic success, the country’s growth remains hampered by a disappointing human rights record. As it stands now, the Vietnamese government does not tolerate any challenge to its one-party communist rule. Opposition parties, independent media, labor unions, and unsanctioned religious organizations are strictly prohibited. According to the U.S. Department of State, Vietnam is a “country of particular concern,” due to its continued and severe violations.

While it insists that those who break the law are the only ones in danger of being jailed, at least eight pro-democracy activists have been arrested and/or sentenced in recent months, including two outspoken human rights lawyers and a dissident Catholic priest who was sentenced to eight years behind bars.

As Deputy Asia Director at Human Rights Watch, Sophie Richardson said in response to the arrests, “Vietnam has now taken its place on the world economic stage, but its human rights record lags far behind. The government’s ongoing criminalization of peaceful political dissent and violations of basic human rights threaten to undermine its economic achievements.”

Still, the country is determined to earn the respect of the international community. Last month, Nguyen Minh Triet became the first Vietnamese President to visit Washington since the Vietnam War. Leading a delegation of more than a hundred Vietnamese businessman, Triet made an appeal for more U.S. business investment in his flourishing economy.

“We really want the United States to increase its investment in terms of high technology in Vietnam,” he said before his visit, “and we want the United States to create favorable conditions for Vietnamese goods in the United States market.”

And well they should: Since the U.S. and Vietnam began a bilateral trade agreement in 2001, trade has been booming. It reached nearly $10 billion last year and the way foreign investment has been pouring in, the $10 billion mark will soon be a small dot in the darkest corner of the rearview mirror.

More progress was made last month when a Trade and Investment Framework Agreement, often a precursor to free trade negotiations, was signed, but Triet was also confronted about his government’s dubious domestic policies.

“I explained my strong belief that societies are enriched when people are allowed to express themselves freely or worship freely,” President Bush said in the Oval Office after a meeting with the Triet.

Triet corroborated the remark by saying the two leaders had a “direct and open exchange of views” on the issue, but that they agreed to disagree. Otherwise he reiterated his desire for the countries to put aside their differences and talk business. “Our approach is that we would increase our dialogue in order to have a better understanding of each other,” Triet said through an interpreter. “And we are also determined not to let those differences afflict our overall, larger interest.”

Triet has released two of the highly publicized political prisoners, but still has a long way to go before acquiring anymore U.S. confidence. And that confidence becomes increasingly crucial as China, Vietnam’s northern neighbor, picks up steam.


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The Struggle for Balance in the Far East

Triet was careful to balance his trip to the U.S. with a visit to China the month previous. “The two countries have a common target to build socialism,” he said in an interview. “Therefore we want to enhance cooperation in many areas with China. As you know, China is a nation that goes further than Vietnam, so Vietnam wants to learn from China’s lessons in development.”

However, China and the United States have been finding themselves at odds on an increasingly frequent and increasingly fierce basis. Tempers have flared over human rights violations similar to those alleged against Vietnam, as well as unfair trade practices, the “lessons” Nguyen Minh Triet seems eager to learn.

China is already the target of U.S. trade sanctions and chief economist at investment banking giant Morgan Stanley, Stephen Roach, has recently suggested that more sanctions could come this year. Roach has been summoned to Capitol Hill three times to discuss trade relations with China. A fact to which he has remarked, “This is very rare. It shows me that the American Congress is very serious about taking actions against China,” he said.

“The biggest issue facing the world economy that I can see is the trade protectionism that is building up between the United States and China,” Roach told China’s official news agency Xinhua.

In the latest round of tensions to be sparked between China and the United States, the two countries are exchanging blows over food and drug imports. China has just suspended meat imports from seven U.S. companies including Sanderson Farms, Intervision Foods, Triumph Foods, and Tyson Foods, the world’s largest meat processor.

This seems to be a direct response to recent bans on Chinese imports affected in the United States. A number of products either from China or containing Chinese ingredients were blocked or recalled including pet food, toothpaste, and seafood. China has raked congressional nerves with a rash of product safety/health concerns and an ever-increasing trade deficit accelerated by undervalued Chinese currency.

Congressional leaders and some economic experts contend that China’s currency, the Yuan, is drastically undervalued, and is being exploited by the Chinese government to an unfair trade advantage. China has amassed an estimated $1.2 trillion in foreign currency reserves, including $420 billion in U.S. Treasury bonds. Announcing a record-setting global trade surplus of $26.9 billion for the month of June re-ignited these allegations and further increased the likelihood of trade sanctions being imposed.

This kind of tension, along with the very real possibility that it will continue to mount, is going to have a tremendous influence on the politics and economy of Vietnam. If relations between the United States and China continue to suffer and conflict ensues Vietnam could find itself between a rock and a hard place. In one corner the world’s only remaining superpower and political and economic champion, and in the other an up-and-comer with a population of 1.3 billion and a red-hot economy.

In the future, it may be important for the U.S. to have an ally such as Vietnam in the East. Even if that ally is coveted more for its economic power than its military might. At the very least it would greatly benefit the U.S. to not have another enemy. A country able to keep China from dominating the continent, and help bring balance to the region will be absolutely crucial in the future considering the vast economic expansion China is currently undergoing.

Cause For Concern

Vietnam’s relationship with China has been an ongoing cycle of contention and cooperation. It has long struggled to emerge from China’s vast shadow, and has often been forced to appease rather than slay the dragon of the north. While close borders and a history of military and political conflict will continue to make it hard for the two countries to thoroughly cement their relationship, things seem to be on the upswing right now, as Vietnam looks for foreign investment.

When Nguyen Minh Triet met with China’s President Hu Jintao in May, they addressed previously unresolved border issues and took further steps to ensure future economic ties. Hu expressed appreciation for Vietnam’s support of his one-China policy and China’s reunification, and Triet responded by acknowledging relations with China as a priority for his nation.

The two leaders also discussed plans for “two corridors and one economic belt,” along their shared border, a length of approximately 800 miles. The corridors in question would be Kunming in China’s Yunnan Province to the Southwest, and Vietnam’s Hai Phong.

Bilateral trade between the nations surpassed $10 billion last year, a milestone not expected to have been reached until 2010. While the U.S. may be on its way to similar figures, China is still the frontrunner, and as America razzes Triet over his hard-line domestic policies, he and Hu Jintao have found a lot of other things to talk about.

A shared ideology and lack of a social conscience, in collusion with the economic ties being strengthened between the two nations, make China and Vietnam a very scary pair. So long as Vietnam is content to live in China’s cultural and financial shadow, the United States is going to find it hard to compete for favor. It needs to strike while the iron is hot and make serious economic inroads to the country if it hopes to curtail China’s power in the region. Maybe even if that means making an unlikely bedfellow of Nguyen Minh Triet.


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