Back To Hanoi, With Briefcases

American Telephone & Telegraph Co. may bill itself as "the right choice," but until now, Americans trying to dial Vietnam directly have had no choice at all. The U.S. government severed communications links 17 years ago, forcing American callers to pay as much as $8 a minute to black-market telephone operators. But on Apr. 13, the Bush Administration allowed AT&T to resume service, and three days later, the communications giant signed an accord with Hanoi. With revenues that could hit $20 million in the first year, AT&T officials couldn't be happier.

They're not the only ones cheering. The lifting of the telecommunications ban is widely viewed by U.S. multinationals as a sign that their time will come soon. As Vietnam steps up its cooperation in accounting for 2,273 missing American GIs, Washington is finally opening the door to U.S. companies long locked out of one of Asia's most promising markets. "Washington is saying: `If you want to get into Vietnam, come and apply,' " says an Asia-based banker. Following AT&T, Sprint Corp. announced plans for a direct-dial service. And companies from United Airlines Inc. to Westinghouse Electric Corp. are gearing up.

FIVE-POINT PLAN. While the embargo may not be officially lifted until after the U.S. elections, BUSINESS WEEK has learned that the U.S. will soon take further steps to ease restrictions. Possible moves include allowing companies to set up offices in Vietnam, do feasibility studies, and sign preliminary contracts--as long as Hanoi makes good on its MIA pledges. Drug companies may be the first to benefit if the U.S. removes a ban on medical supplies. "What we'll see is a gradual opening for U.S. investment in banking, insurance, and oil exploration," says Senator Frank Murkowski (R-Alaska).

The ice was broken in early March, when Assistant Secretary of State for East Asian & Pacific Affairs Richard H. Solomon went to Hanoi with a five-point program to accelerate investigations of missing U.S. soldiers. To his surprise, Vietnamese Foreign Minister Nguyen Manh Cam agreed to the plan, which would give the U.S. greater access to Vietnamese military archives and speed up investigations of live sightings of GIs. "The suspicions of the past are being disspelled, and that's laying the base for further cooperation," says a State Dept. official. In a ground-breaking move, the State Dept. decided on Apr. 22 to allow the Vietnam Veterans of America Foundation to open an office in Hanoi. And more could follow if a Senate delegation headed by John F. Kerry (D-Mass.) that is now in Indochina comes home with an upbeat report.

As foreign companies move in, Vietnam is jumping with capitalist spirit. "Ho Chi Minh City formerly Saigon looks more hustle-bustle than St. Louis," says Eugene Matthews, president of ASHTA International Inc., an investment and consulting firm, and the only U.S. businessman living in Vietnam. U.S. airliners cannot provide regular service to Vietnam, but that didn't stop United Airlines Chairman Steven M. Wolf from flying to Hanoi in April to meet with transportation officials. Ron Allen, chairman of Delta Air Lines Inc., also visited Vietnam, and the company has even invited Vietnamese aviation officials to its Atlanta headquarters. But Northwest Airlines Inc. is ahead of everybody. For several years, it has been the only U.S. carrier authorized to fly Cambodian refugees from Ho Chi Minh City to Bangkok. Northwest hopes this will enable it to be the first U.S. airline to win a route when the embargo is lifted.

CHAMPING AT THE BIT. Westinghouse is taking soundings for potential sales of electric power plants and its Thermo King refrigerated trucks. Executives from Mobil, Exxon, and Chevron have been shuttling in and out, hoping to be able to drill in big offshore reserves they discovered toward the end of the Vietnam war. Sources say accountant Ernst & Young has managed to open an office in Hanoi while working as an adviser to the Vietnamese government, helping to draft tax and investment policy. Ernst & Young declined to comment. In May, the American Chamber of Commerce in Hong Kong will send its second delegation to Vietnam in five months.

A literate population of 70 million who are familiar with many American brand names makes Vietnam an enticing market for U.S. companies. Coke, Pepsi, Kodak film, Zest soap, Colgate toothpaste, and Juicy Fruit gum are smuggled into the country. Many Vietnamese used these goods during the war, and now receive them in parcels from relatives in the U.S. But foreign rivals, unencumbered by a trade ban, have a head start, and even the Japanese Foreign Ministry is weighing "whether to resume assistance," says spokesman Masamichi Hanabusa.

For the U.S., progress hinges on continued cooperation from the Vietnamese. If Hanoi backtracks on the MIA issue, the process could stall. But for now, momentum is building in the other direction, to the delight of U.S. businesses.

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