Casualties Are Heavy In The New War Raging In Vietnam
Eric Ellis

04/03/1996
Australian Financial Review

Australian companies have been among the casualties in the business war raging in Vietnam. Eric Ellis in Hanoi reports from the battlefield.

THE conflict has been joined and the list of war dead and casualties grows. But these aren't ordinary soldiers, but rather the warriors in the war of the 1990s, the battle to take an exciting but difficult new market -Vietnam.

As many Australians are finding Vietnam is one of the toughest places in Asia to make a buck.
The list of casualties in this market starts with the the Big Australia and extends to P&O and Westralian Sands, all of whom had big projects with ambitious local partners.

BHP has so far dispersed as much as $US500 million in one of the biggest actual investments Vietnam has seen in developing the Big Bear oilfield off the south Vietnamese coast.

But the field has only 10-15 per cent the oil that BHP's geologists first reckoned and the group want to re-negotiate the contract.

Partner Petrovietnam, the State oil company, has publicly said "no way, a contract is a contract" and anecdotal sympathy among the foreign business community is with the Vietnamese.

As one American competitor to BHP said: "If you can't stand the heat, don't go into the kitchen." BHP is confident of re-negotiating better terms.

Sympathy is very much with Westralian Sands and its efforts to mine a mineral prospect in the centre of the country.

The Australians fell foul of the all-important "People's Committee", the communist party local hierarchy that have developed a penchant for enriching themselves through foreign investment.

Westralian stayed the course but negotiations dissolved into farce, amid claims and counter-claims of bad faith and the Australian group has left, giving it and Vietnam up as a bad joke.

Shipping group P&O Australia had big plans to develop Ho Chi Minh City Port (the former Saigon) but after a year of trying just simply couldn't see eye to eye with its local partner.

They both decided to part, this time amicably and the Australian-based group of the British giant is still in Vietnam sniffing around for deals.

All three have proposed big, ambitious deals but other Australians have gone the grass-roots way, with some success.

Billy Hong's Saigon Star Bus Company is Australia's most obvious presence in Ho Chi Minh City.

Mr Hong has 43 buses plying the streets of HCMC and the "highways" of southern Vietnam and the Mekong Delta and in 18 months Saigon Star become a popular part of Saigon life. "We don't have any chooks and pigs on our routes," said the Brisbane-based Billy Hong, 39.

"I came here in 1991 and the first thing that happened was that I got ripped off at the airport.

"I didn't see any cars, I didn't see any buses and I immediately thought here was a big, big opportunity for me in public transport."

With no experience in transport, Mr Hong drummed up a consortium of a mechanic, an accountant, a lawyer and himself to do ther deal with the local state-owned bus operator.

He now occupies a depot near Saigon Airport on a site that once ground to the sound of US Army tanks.

Mr Hong and partners have invested $US7.7 million for a 70 per cent stake in the JV. The Vietnamese contribution is $US3.3 million.

In April, he will take delivery of another 120 buses to run airport and tourist services, as well an intra-city routes right up to Hanoi and beyond.

A taxi service is being installed and Hong is waiting for state approval for self-drive hire cars a la Avis, Budget and Hertz.

Robert Caprile was just 12 when the northern communists "liberated" Saigon and he was too young and his native Adelaide too far way to remember anything of it.

Mr Caprile is the point man for the Detco group, the Australian and now Vietnam agent for the Detroit Diesel group, before 1975 the supplier to the US military and its South Vietnamese client.

South Vietnam's infrastructure still creaks under rusting US-built infrastructure but that's a potential bonanza for Mr Caprile, who reckons he can smell a Detroit motor from a thousand paces.

With sponsorship from the Australian Government, he is angling not only to sell new engines but to renovate the old ones until the Vietnamese are rich enough to buy new ones.

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

But with inflation running at about 15 per cent and wages rising fast, particularly in boomtown Saigon, Mr Caprile reckons it is only a matter of time before Vietnamese authorities will 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.