WASHINGTON, D.C., June 13 -- Mr. Jemal-ud-din Kassum, Vice President of the International Finance Corporation (IFC), will lead a delegation of IFC executives to Viet Nam from 21 to 25 June 1995 at the invitation of the Government of Viet Nam. The main purpose of the visit is to consult with government and industry leaders on initiatives to encourage foreign investment and private sector development and to discuss IFC's ongoing activities in Viet Nam. During their visit, the IFC delegation will meet senior members of the Vietnamese Government, including key cabinet ministers, bankers and business representatives. IFC's Board has just approved a new investment in Viet Nam's infrastructure sector. This is the first private sector port project in the country and involves the construction of a US$10 million deep water port on the Thi Vai river, 70 km from Ho Chi Minh City, with an annual capacity of 600,000 tons. IFC will provide US$3 million of its own funds and syndicate an additional US$2 million. To date IFC h
as made two investments in Viet Nam: US$26 million in loans for the expansion of the Hotel Metropole in Hanoi and US$14.5 million in loans for the Foremost dairy processing facility in southern Viet Nam. In addition, IFC has been advising the Government and providing technical assistance to establish securities markets and a leasing industry. Commenting on his visit, Mr. Kassum said, "Viet Nam is poised on the threshold of significant growth and has excellent prospects for more private sector investment. We believe that IFC can play a major role in mobilizing foreign direct investment from the Asian and international business community and we will seek the views of Government officials and business representatives on how to best pursue these activities." Accompanying Mr. Kassum will be Mr. Harold Rosen, Acting Director, Asia Department and Divisional Manager, Southeast Asia at IFC; Mr. Rashad Kaldany, Manager of IFC's Asian Capital Markets division; and Mr. Darius Lilaoonwala, Chief of IFC's Regional Mission
in Bangkok. IFC is a member of the World Bank Group and is the largest multilateral source of equity and loan financing for private sector projects in developing countries. (30) Note to Editors: a Backgrounder on IFC's activities in Viet Nam is attached. BACKGROUNDER ON IFC'S ACTIVITIES IN VIET NAM Overview: During 1994-95, IFC actively engaged in both investment and advisory work in Viet Nam. IFC approved its first two investments, appraised potential investments in a number of other projects, and continued advisory work on the development of Viet Nam's capital markets and foreign investment framework. Approvals: IFC approved two investments in Viet Nam in FY 1994-95. Approved in June 1994, the first project is the US$35 million expansion of the Hotel Metropole in Hanoi, which aims to relieve the shortage of rooms for international business travellers and tourists. IFC will provide US$8.5 million of its own funds and syndicate an additional US$17.5 million to commercial banks. This investment represents the
first medium-term, limited-recourse financing executed in the country. As such, it is a milestone transaction which demonstrates that the private sector in Viet Nam can attract funding on its own, without relying on Government guarantees. IFC's second investment in Viet Nam was approved in February 1995. This is a dairy processing facility in the southern part of the country -- the Foremost Dairy -- which will provide hygienic, international-quality dairy products for sale domestically. Out of a total project cost of US$29.0 million, IFC will provide US$8 million of its own funds and syndicate an additional US$6.5 million to commercial banks. Potential Investments: IFC is actively considering a number of other investments in Viet Nam and has devoted substantial resources to the cement sector where it is currently appraising two large projects. These are joint ventures, one of which would be located in the north and the other in the south. With capital costs in the range of US$250-350 million for each project,
these are two of the largest industrial ventures being undertaken by private investors in Viet Nam. Other sectors under consideration include agribusiness (flour milling and sugar refining), capital markets (leasing, banking and insurance), infrastructure (ports and power generation), oil and gas exploration, petrochemicals, general manufacturing and tourism. Page 2 Advisory Services: In its advisory capacity, IFC is supporting the Government's efforts to establish private capital markets. IFC is continuing its work of the last several years to advise on the legal and institutional requirements for establishing securities markets and a leasing industry. IFC's affiliate, the Foreign Investment Advisory Service (FIAS), is also assisting Viet Nam in the development of the policy, regulatory and institutional framework for attracting foreign investment. FIAS was recently asked to evaluate investor interest in Build-Operate-Transfer (BOT) infrastructure projects and expects to convene a high-level roundtable meet
ing on BOTs between government officials and private sector executives later this year. IFC's Role in Viet Nam: In addition to its investment and advisory activities, IFC is making other contributions to the development of Viet Nam's private sector. One major role is to facilitate joint ventures between foreign sponsors and Vietnamese sponsors (usually state-owned companies). IFC has helped to structure joint ventures so that they are equitable to both foreign and local sponsors. IFC's involvement often provides considerable comfort to project sponsors as well as lenders. IFC is also drawing on its experience in other countries undergoing a transition to the marketplace (e.g., China and Russia) in order to better understand Viet Nam's current position and to assist the private sector in navigating the Vietnamese business environment.
