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Getting Back to Business in Vietnam : Trade: There are rewards for investing in the Asian nation. But U.S. restrictions on deals, the bureaucracy and the lack of basic services make many think twice about doing so.


HO CHI MINH CITY — Imagine trying to do business in a foreign country with no fax or international telephone service. A place with no court system to settle commercial disputes. Forget about traveler's checks and credit cards; cash only is the coin of this realm.

Imagine running an office or factory where electricity is supplied only three full days a week. You are prohibited from using IBM computers or Xerox copiers because of a U.S. trade embargo. You can't hire your local staff directly but must take what the government gives you. And you are forced to pay exorbitant wages simply because you're a foreigner--shelling out, for instance, a monthly salary for secretaries that is three times the average annual income.

Then ask yourself: Do you really want to do business in Vietnam?

This was the bleak business climate that greeted the first wave of foreigners who began returning to Vietnam after the socialist regime opened itself to the world in 1987. And, while things have gradually improved, Vietnam is still no entrepreneurial Eden.

"It's very well to talk about how wonderful the opportunities are, but when you get in there and think, you don't want to put too much money in," said Christopher Bruton, director for Thailand and Indochina for Dataconsult Ltd. in Bangkok. "There's too much risk."

Patrick Imbardelli, the irrepressible general manager of the first foreign hotel in Vietnam, begs to differ--although, it must be noted, his Saigon Floating Hotel can be towed to kinder ports should the going get too tough in Vietnam.

"Hell, if it was easy to do business here, everyone would be doing business here," Imbardelli said. "The rewards go to those who take the risk."

Americans, strapped with a bitter history of war and a continuing trade embargo, are not investing in Vietnam. But the nation's economic liberalization and promising resources drew 6,000 foreigners, half from Japan.

So far, however, there has been relatively little hard cash invested. Of the $1.3 billion in foreign projects approved by Vietnam, $800 million has been actually invested. And two-thirds of that is in oil exploration, which involves highly self-contained drilling operations that can be shut down and towed away. That means only $300 million has actually been invested in Vietnam's on-shore factories, hotels and other permanent projects.

One reason is a natural lag time between contract approvals and start-up operations. But many foreigners also say Vietnam needs to improve its roads, electricity, transportation, banking operations and other systems basic to a business climate before they will take the plunge. There are still enough negative stories----for example, the repeated delay of a hotel renovation project in Hanoi, the cost overruns and poor planning in a Swedish-financed paper mill--to warrant caution, most analysts say.

Once international lending is resumed, however, paving the way for major infrastructure improvements, many foreigners say they are bullish on Vietnam's future.

"They're the most tenacious people I've come across in the world. In the end they will win," said John Brinsden, Vietnam manager of Britain's Standard Chartered Bank. Brinsden has opened 11 new bank offices in India, Malaysia, Singapore, Indonesia, Hong Kong, Iran and the United States.

How have foreign companies fared in Vietnam? Here are three stories that illustrate the challenges--and frustrations--of doing business there:

Saigon Floating Hotel:

Patrick Imbardelli was the pioneer. Last year, EIE International of Japan purchased controlling interest in the Barrier Reef Holdings Ltd., which owns the Floating Hotel, and hired as management Imbardelli's Australian firm, Southern Pacific Hotels. The hotel was losing up to $8 million a year anchored in the Great Barrier Reef. So, sensing better opportunity, the group decided to hoist the 200-room hotel onto a barge atop a semi-submersible ship and headed for Ho Chi Minh City.

When he arrived in March, 1989, Imbardelli had one burning goal: to deliver the very same first-class service in Vietnam as the firm's other projects around the world.

It wasn't easy.

Take direct-dial international telephone service. For nine months, from June, 1989, to March, 1990, Imbardelli badgered authorities to allow it. They consistently refused. Although they cited technological problems, Imbardelli and others said they were also unwilling to surrender state control over telephone calls, which are monitored through central routing.

Imbardelli finally had to enlist the aid of Australia's public telecommunications firm, OTC. The firm used its leverage of multimillion-dollar investments in research and development and new satellite ground stations for Vietnam to extract government permission.

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