Vietnam Frustrates Its Foreign Investors

ERIC ELLIS

03/13/1996

Market-Leninism, as practised in Vietnam, has some frustrations for Australian investors and now foreign advertisers have become a financial target from a government which claims to be rooting out "social evils". ERIC ELLIS in Hanoi continues his series of reports.

IN April 1975, an Associated Press photographer on the roof of Saigon's Caravelle Hotel snapped a picture that still travels the world, the frenzied helicopter evacuation of the US Embassy as the North Vietnamese Army overran the city.

Today, in a nice twist of the times, that picture would no longer be possible - the view across town is partly blocked by a modern skyscraper built by Australia's Transfield Holdings.
And, in yet another twist of the times, the picture soon could be taken again for on the site of the Caravelle, a Hong Kong developer is adding a tower to dwarf the run-down old billet preferred by journalists.

Australian diplomats recently moved back for the first time in two decades, teary-eyed for the old seventh floor of the Caravelle but, this time, neighbours with multi-nationals paying some of the world's most expensive rents in the high-tech Landmark Centre. Australian interests in south Vietnam truly have changed.

"Namstalgia" has a commercial bent for Adelaide engineer Robert Caprile, who ignores the lengthening list of Australian companies (BHP, P&O, Westralian Sands, Consolidated Press) getting more than a little disillusioned about Vietnam's market-Leninism.

Just 12 years old when the communists "liberated" Saigon, Caprile is the point man for the Detco group, the Australian and now Vietnam agent for the Detroit Diesel group, before 1975 the preferred engine supplier to the US military and its South Vietnamese client.

South Vietnam still creaks under rusting US-built infrastructure but that's a potential bonanza for Caprile, who reckons he can smell a Detroit motor from a thousand paces. "I was driving out in the (Mekong) Delta the other day and I saw three dredgers. I said to myself, 'I bet they're ours', and two of them were."

His problem is Vietnam's famous resilience, the same determination that saw off French, American and, more recently, the Chinese and Russian aggressors.

Many of the engines Caprile sees in power stations and industry may only be just working, but working they are, patched together with improvised parts from Vietnam's former partners in the old Soviet bloc.

Caprile's problem is that Vietnamese wage levels are so low, it's cheaper to fix an engine to work for another 2,000 hours use, instead of the 200,000 hours Detco could guarantee.

But with inflation running at about 15 per cent and wages rising fast, particularly in boom-town Saigon, Caprile reckons it's a matter of time before the authorities see the economies of scale in fixing a motor Western-style.

"Part of it is a lack of money and part of it is an education process," he said.

"BEER STREET" in downtown Ho Chi Minh City, the former Saigon, is a good place to observe the confusion which prevails in top echelons of Vietnam's ruling Communist Party.

All along the street, trading companies representing Heineken, Tiger, Marlboro, Johnnie Walker, Pepsi and Coca-Cola have re-furbished the dilapidated stalls in club colours at no cost, as long as they display the brand logo prominently.

But since mid-January, a change has come over the street. On two out of three stalls, roughly-daubed paint or a taped-over newspaper has blocked out the brand name, in keeping with a Hanoi directive to wage war on "social evils" and Western advertising apparently is in the current party demonology.

And yet, picking their way between what are possibly the world's most aggressive prostitutes openly touting for business and local police on the prowl for trouble, or a backhander, are teams of heavily made-up Vietnamese teenaged "courtesy girls" in red mini-skirts (for Johnnie Walker) or blue leotards (for Tiger beer) happily handing out free product samples.

Three months ahead of a crucial party congress, where the next stage of reform will be keenly debated, a hard-line backlash is sending mixed signals on whether Vietnam is a reliable place in which to do business.

With some Coca-Cola and Pepsi hoardings now sporting Vietnamese-style accents over the wordage, one interpretation is that party troglodytes fear the doi moi reforms are too much, too soon, and that Vietnam is careering out of control.

The phenomenon of advertising arrived with the influx of foreign goods. Ho Chi Minh City and, rapidly playing catch-up, Hanoi, have become Billboardvilles and the advertising "industry" has grown at a rate of 200 per cent each year since 1991-92.

Billings now are estimated to be anything from $US200 to $US500 million and it is foreign companies which are getting the business, largely because Vietnamese communism didn't recognise advertising and, thus, had no law about it.

But $US500 million is a lot of money and party officials eyed it greedily. A law has suddenly been enacted which forces advertisers to book space through state-owned agencies.

Now this gets even more bizarre.

The authorities claim they fear the Vietnamese language will suffer if English brand names are emblazoned around the country. They have directed that advertising should be changed to Vietnamese, specifying that English is the problem. But Heineken Beer can get away untouched because it is a Dutch word, Samsung because it's Korean.

"This does not mean we are discouraging foreign investment," says Mr Vu Tien Phuc, director of the Saigon office of the Ministry of Planning and Investment, which approves foreign investment.

And yet, through all this, one of the popular programs of Vietnam Television is the old Australian soap opera, Return to Eden, dubbed and provided free of charge by the Seven Network. No "social evils" in Vaucluse apparently.