The Vietnam expansion begins.

From international shipping companies to the environmental services industry, U.S. companies are hurrying to establish themselves in Vietnam now that the government has lifted restrictions on doing business there.

For example, MCI has signed an agreement with 19 other international telecommunications carriers for ownership capacity in the first undersea fiber optic cable system linking Vietnam, Thailand, and Hong Kong. MCI's ownership in the new cable, TVH, is the largest among the participating U.S. carriers. Meanwhile, AT&T has reached agreement with other telecommunications providers in Southeast Asia to participate in the construction of the first undersea fiber optic cable system linking Vietnam, Thailand and Hong Kong.

MCI currently provides service to Vietnam through digital satellite facilities. When the TVH facility comes on line in December of 1995, it will provide 7,560 basic circuits on two fiber optic pairs operating at 560 MBPS.

MCI will utilize the facility to provide voice and private line services to customers in the region. MCI will use the Thailand-Vietnam-Hong Kong cable as an extension of the TPC-5 and APCN cable networks, which are due to be on line in 1995 and 1997 respectively. These systems link the U.S. mainland with the Pacific Rim and Southeast Asia.

"This new cable system will significantly increase the capacity and the quality of service to and from Vietnam," said Seth Blumenfeld, president of MCI International. "As the demand for communications services in the Pacific increases, the signing of the Construction and Maintenance Agreement marks the beginning of a new era in communications for the Vietnam marketplace."

Among the telecommunications providers signing on as co-owners of TVH are the Vietnam Posts and Telecommunications (VNPT), the Communications Authority of Thailand (CAT), Hong Kong Telecom International Limited (HKTI), MCI International, Kokusai Denshin Denwa (KDD), International Telecom Japan (ITJ), International Digital Communications, Inc. (IDC Japan) and TeleGlobe Canada. The 20 international carriers represent 12 countries throughout the world.

AT&T SYSTEM

AT&T's 3,400 kilometer system will link cable-landing stations in Sri Racha, Thailand, Vung Tau, Vietnam and Hong Kong's Deepwater Bay. The Thailand-Vietnam-Hong Kong cable system will consist of two fiber optic pairs operating at 560 million bits of information per second. This is enough capacity to provide the equivalent of 80,000 simultaneous phone conversations.

"With this system connectivity to and from Vietnam will dramatically improve", said Alexander C. Stark, Jr., senior vice president of AT&T's International Operations Division. "Currently consumers and business customers can only call to and from Vietnam via satellite. When service is activated on the system in December 1995, not only the call completion rate will go up, customers will also discern a vast improvement in quality."

From the landing point in Vung Tau, Vietnam, the cable will connect to Ho Chi Minh City and from there via an existing terrestrial fiber optic cable to the country's capital Hanoi.

Undersea fiber optic systems were introduced in the Pacific basin in 1989, and the planned Thailand-Vietnam-Hong Kong System represents the 23rd fiber optic system now slated for that area through the middle of this decade. On average, about 13,000 kilometers (7,800 miles) of submarine cables are being constructed in the Pacific region every year to meet growing customer demands for a wide variety of communications services.

Today, undersea digital technology already directly connects over 20 countries in the Western Pacific, North America and Europe. Additional systems planned worldwide will nearly double that number by the middle of the decade.

EXPRESS SERVICES

In April, Airborne Express and Federal Express both announced services to Vietnam. Customers shipping to and from Vietnam will have full access to Airborne's FOCUS communications system (Freight On-Line Control and Update System), which provides worldwide, on-line, real-time computer tracking and tracing. This service is invaluable to importers and exporters who need to know where their shipments are at any given time for duty and insurance purposes.

"We've been prepared to make Vietnam a part of our extensive Far East distribution network for a long time," noted Jack Cella, Airborne's executive vice president for international. "Along with inbound and outbound service, our customers will be able to track shipments from FOCUS terminals anywhere in the world. Customers in Ho Chi Minh City will have the same instantaneous access to information as those in New York and other locations."

Initial shipments are expected to contain mostly documents, correspondence, product samples and manufactured goods. "Many of our manufacturing customers are already looking to expand into Vietnam," added Cella. "However, most of our initial service will come from customers in Europe and Asia."

Estimated delivery time for shipments bound for Vietnam from the United States or Europe is three to four days. Airborne's Vietnamese service partner for express deliveries will be Ho Chi Minh City Post Intelcommunications. Saigon Air and Ocean Co., Ltd. will handle heavy air freight and ocean services in Ho Chi Minh City and Hanoi, and is also on-line with Airborne locations worldwide.

Federal Express will provide service to Vietnam with initial service at Ho Chi Minh City, Hanoi and Da-Nang. The service was made possible when the U.S. government lifted the embargo that prohibited U.S. companies from operating in Vietnam.

"Vietnam holds incredible opportunity for U.S. companies, especially those in the oil and gas, construction and development, banking, hotel and textile industries, among others. We look forward to offering our international business expertise and worldwide route network to help companies get a foothold in this new market," said William J. Razzouk, executive vice president, Worldwide Customer Operations.

VIETNAM OUTLOOK

According to Roger Leeds, a partner in charge of the international privatization practice for KPMG Peat Marwick's Policy Economics Group, U.S. companies in the manufacturing and consumers goods sectors are expected to be the next big players to enter the investment scene in Vietnam. "There will be two kinds of foreign investment in Vietnam -- the multi-nationals and the middle-market companies," says Leeds. "They will be looking for joint ventures or new investments in such sectors as consumer products, construction materials, textiles, chemicals and petrochemical. All of these are likely to be growth sectors in need of foreign capital, technology transfer, market accessibility, and other resources that a foreign partner can bring."

Vietnamese Businesses in California Grow Rapidly

1982                 1,900 Vietnamese Businesses
1987                11,800 Vietnamese Businesses
1994                25,500 Vietnamese Businesses

Where They're Located

Bay Area                                   7,090
Orange County                              6,870
Los Angeles                                5,900
San Diego                                  1,850
Other                                      3,790

Vietnamese Businesses               Total 25,500

Source: Pacific Bell

He adds that economic conditions in Vietnam are very attractive for investment. The Vietnamese economy has been registering an annual growth of 7-8 percent, with single digit inflation. Combined with the high productivity of the Vietnamese labor force and the nation's political stability, "You have an attractive investment climate in relative terms," Leeds says. The main obstacle faced by U.S. companies is that they are arriving late in the game. Vietnam already had fairly liberal foreign investment laws on the books before the U.S. embargo was lifted, and non-U.S. investors, primarily from Hong Kong, Malaysia and Singapore, invested some $3 billion in Vietnam last year, a 45 percent increase over 1992. Leeds predicts a similar jump in investment for 1994.

The development of KPMG's Vietnam office will be one of the firm's top priorities this year. KPMG PEG won a contract from The World Bank late last year to provide technical assistance to the Vietnamese government's campaign to reform state enterprises. To execute the contract the group is in the process of setting up an office in Hanoi. Nearly a year ago, KPMG set up offices for accounting purposes in Hanoi and Ho Chi Minh City, under the supervision of the World Bank's offices in Singapore.

OIL EXPLORATION VENTURES

Houston-based Seagull Energy Corp. is joining an international joint venture group of exploration companies which holds the exploration rights over a one million-acre block in the South China Sea China Sea off the coast of Vietnam. Subject to consent of Vietnamese authorities, Seagull will acquire a 23 percent working interest in Block 22, approximately 175 miles off the Vietnamese coast, through a Production Sharing Agreement with Petro-Vietnam, the Vietnamese national oil company. Other group participants and their respective interests after the Seagull acquisition are KM Southeast Asia Limited, a unit of Kerr-McGee Corp., which holds a 35 percent working interest; Monument Resources (Overseas) Limited, a unit of Monument Oil & Gas plc, which will have a 22 percent working interest; and Cairn Energy PLC.

PACIFIC BELL CENTER

Here in California, Pacific Bell has launched a new effort to help Vietnamese people who own and operate their own businesses. The new Vietnamese Business Center, which will allow Vietnamese speaking entrepreneurs to conduct business in their own language.

It's an important step forward because the number of Vietnamese businesses in California, especially in Orange County and San Jose, is rapidly increasing. In 1982, there were less than 2,000 Vietnamese business in California. By 1987, the figure had increased to just under 12,000. Now, that has more than doubled and there are some 25,500 Vietnamese businesses in California. There are more than 7,000 in the Bay area, close to 7,000 in Orange County, nearly 6,000 in Los Angeles and San Diego has nearly 2,000.

"Vietnamese people have definitely established themselves," says Arlene Lum, Pacific Bell's marketing manager for the Ethnic Markets Group. "In many cases, they have finally saved up enough money to open their own businesses. They like taking more risks. Vietnamese people can be very innovative and they make good entrepreneurs."

Pacific Bell believes the growing number of Vietnamese businesses are rapidly becoming a more important factor in the economy. "We want to make sure we're providing them with the best possible service," said Lum. "We want to help ensure their success."

To meet that goal, Pacific Bell has placed Mai Nguyen in charge of the new Vietnamese Business Center. She has worked with Vietnamese residential customers for 6-years, and now she's excited about helping Vietnamese businesses.

"I want all the Vietnamese business people to know we are here to assist them in their telecommunications needs," says Mai. "We want to help them increase their business and be successful." In the past, Vietnamese speaking business people calling for service have either struggled with English speaking service reps, or they've talked with the Vietnamese reps who serve residential customers. Now, they will get personal service from Pacific Bell's specially trained Vietnamese business reps.