Vietnam set to ink $1.48b foreign investment deal

Vietnam set to ink $1.48b foreign investment deal

HANOI (Agencies): Vietnam is set Friday to sign its largest
foreign investment deal ever, officials and executives confirmed
Thursday.

The US$1.48-billion deal, an integrated gas project between
the state's PetroVietnam and a consortium of foreign investors
led by British Petroleum (BP), would provide a much-needed lift
to sagging inflows that have recently plagued the communist
nation.

"The terms and conditions have been agreed," BP chief
representative Ian Sutherland told Deutsche Presse-Agentur DPA.

A signing for three contracts, including a $580 million gas
transport and processing contract as well as vital government
guarantees and undertakings, is set for Friday evening, a
PetroVietnam spokesman said.

The deal includes India's Oil & Natural Gas Corp. with 45
percent, BP with 26.67 percent, and Norway's Statoil with 13.33
percent.

PetroVietnam will take a 15 percent stake in the project,
which will exploit two reserves in the Nam Con Son offshore gas
field in Block 06.1 about 400 kilometers southwest of Vietnam's
coast, where BP discovered gas back in 1992.

Asked if BP was happy with the result of the nearly decade-
long negotiations, Sutherland said: "We would not initial if we
were not satisfied. The terms and conditions reflect a reasonable
and equitable deal for all parties involved."

Diplomats who had followed the project for years were
encouraged by the deal.

"This is the signal a lot of foreign investors have been
looking for," said Jane Owen, deputy head of mission at the
British Embassy.

Foreign direct investment (FDI) has dropped steadily since the
Asian financial debacle in 1997, with commitments plunging to
$1.57 billion in 1999 and a worrying $713.2 million through the
first 11 months of 2000, according to official figures.

But the FDI tally for 2000 is likely to double in December
alone, authorities have said, with $930 million to be committed
if three major licenses, including the BP gas transport deal, are
issued by year end.

British investors are particularly pleased, Owen said.

Vietnam's communist authorities assured foreign donors
Thursday that they understood swift action to boost investor
confidence was essential if they were to achieve their ambitious
goal of doubling gross domestic product (GDP) over the next
decade, AFP reported.

The government recognized that 2001 would be "critical" to the
success of the 10-year development plan to be adopted by a
congress of the ruling communist party in March, Planning and
Investment Minister Tran Xuan Gia told a key donors' review
meeting.

Gia said authorities were encouraged that growth had already
begun to recover from the regional financial crisis of 1997-8,
which had been compounded in Vietnam by serious floods in both of
the past two years.

Growth had rebounded to nearly 7 percent this year from 4.8
percent in 1999, its lowest level in the 1990s.

But the minister acknowledged that still higher growth was
needed if Vietnam was to avoid falling further behind its
neighbors.

Foreign investors have long complained that high power and
telecommunications costs here cancel out any competitive
advantage gained from Vietnam's huge pool of cheap labor.

On Wednesday, First Deputy Prime Minister Nguyen Tan Dzung
promised foreign investors Vietnam would move to follow China's
example by phasing out the two-tier pricing system long in force
for foreigners for everything from hotels to domestic transport.

Vietnam's state-owned railways have already moved to cut the
fare surcharge payable by foreigners from 100 percent to 50
percent.