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Greetings and Salutations from Vietnam

By John Dietz - Email Editor

Date : 06-Nov-2007

Dear Subscriber:

Cu Chi Tunnel

I am writing today from the city center of bustling Ho Chi Minh City or as the locals call it, Saigon. There are seven plus million people in Saigon and about the same number of motorbikes scurry about. The scene is akin to a massive termite mound, wherever you look and in any direction, motorbikes are moving about, carrying all sorts of things, in many cases against traffic in an organized chaos.

My purpose for being Vietnam is to attend the Asia Offshore Association Conference. The conference, held in Saigon for the first time, is seeing practitioners from around  globe. It’s seems everyone ahs someone, knows someone, or is dealing with someone who is doing business in South East Asia. The conferences goals are to shed light on the complex business and tax matters pertaining to this part of the world. The topics range from investing in Asian economies to direct investment in Vietnam, as well as double tax treaties and of host related topics.

Co Chi Tunnels	Halong Bay	Municipal Theatre
Central Post Office	Halong Bay	Saigon City Hall

Vietnam today is much different place from the classic 1975 photo of the last US helicopter leaving Saigon. We are a long way from Adrian Cronauer’s, Good Morning Vietnam. The demographics of this region are interesting. The population is estimated at over 80 million making it the 13th largest country in the world. The median age of Vietnamese is 26, as opposed to the latest US census of 35.3. Literacy is 91 percent. Vietnamese woman on average currently have 2.49 children. One little known fact is that Vietnam is net exporter of oil. Prices here are cheap.

Hanoi, the capital enjoys a pleasant rivalry to its southern city neighbor Saigon, which is, at the moment the center for trade and commerce. Both cities as of late have greatly improved their infrastructures.
 
Since 1994, with the lifting of the US trade embargo, foreign investment in Vietnam has been quite significant. The early days of investing were wrought with bureaucracy and legal battles. Those early angel investors did not fare so well. After a brief quite period, socialism has given way to capitalism. Between the industrious Vietnamese people, and the pressure to compete from the rest of South East Asia, the Vietnamese government has now relaxed national control and is giving way to foreign investment.
 
In 2006 Vietnam established a new Enterprise/Investment Law to give a level playing field for foreign investors. The law permits foreign investors to establish joint stock companies, LLC’s, and partnerships in much the same way that Vietnamese nationals do. As of July of 2007 South Korea, with it’s US 10.33 billion and Singapore a close second are the two biggest investors to the region. The business people interested in the region all site the natural resources and a solid labor force as their reason for investing in Vietnam. The fact is Vietnam; along with the rest of South East Asia are commerce driven groups.
 
Business is booming and there is need for just about everything you can imagine. For example, trying to rent office space is nuts. In downtown Saigon by the time you make a decision on your property of choice, someone else just beat you to the punch. Its sounds like Florida property speculation; but it is really a simple supply and demand problem. By the end of 2007, the total office space purported to be ready for lease in Saigon will be 158,932 square meters. If that has no meaning, consider that the IFC office tower in Hong Kong has 254,190 square meters. In other words you could fit the entire office property market of Saigon in one tall Hong Kong office tower and still have 38 percent of the building left to rent. 
 
The housing market is in a similar state of affairs. A recent Saigon developer with 500 units to pre-sale on one Saturday received 2000 orders and is was reported that he doubled the price of each unit. The more interesting part of the story is the Vietnamese have traditionally been savers as there is not much bank financing available. People actually show up at closings with garbage bags full of money on the back of their motorbike. Candidly, there is speculation is the market, but there truly is a real need for goods and services. 
 
Vietnam is great place to see and for some who want to get out in to the country side a back packers heaven. The people are warm and friendly. Vietnam’s future looks extremely bright and should be on your list of places to visit. This is an exciting time fort the Vietnamese people. If you choose to look into this region, do so with the usual caveats, get sound tax advice, do your homework, and above all, walk don’t run.

I will report next week from Hong Kong. Stay tuned for news and updates. ...

Until next time,

John

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ABOUT THIS EDITOR:

John Dietz is a strategic advisor at Trustmakers.com with a passion for client solutions that can encompass your business, your real estate, and your personal assets. Mr. Dietz serves to educate you on the latest in asset protection planning.

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