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Asia's latest tiger economy

HO CHI MINH CITY, Vietnam - The news has dominated the weekend newspapers here: an American company announcing what's thought to be the single largest foreign investment ever made in Vietnam. Intel is to invest a billion dollars in a new microprocessor plant, to be operational by the end of 2009, and expected to employ around 4,000 Vietnamese.

I witnessed the signing of the deal in the ornate ballroom of Ho Chi Minh City's town hall, where senior executives from Intel were clinking champagne glasses with Vietnam's communist prime minister and other top party officials. A string quartet played popular classics in the corner as waiters in starched white shirts served snacks. From time to time you had to pinch yourself as a reminder of where you were, as the two sides heaped lavish praise on each other.

The plant will be built in an area outside the city that's been christened Saigon High Tech Park. None of the assembled officials seemed to mind that the park had adopted the old pre-war name for the city. After all, that's how many people here still refer to it.

On my way to the reception I'd stopped to browse at the mostly counterfeit guidebooks being sold by an elderly lady near the city hall. Had she anything on Ho Chi Minh City, my cameraman Andrew asked. She flashed what remained of her teeth in disdain. She could help us with Saigon, but not that other place.

Among those present in the hall was Thieu Phuong Nam, Intel's area sales manager, who, as a 14-year-old in 1975 had been on one of the last helicopters out of Saigon before the city fell. He still remembers in vivid detail climbing to the roof of the U.S. embassy with his father, a teacher, and his mother, who had been working for the Americans.

He'd returned to Vietnam in 2000, Intel offering him a job. Had it been a difficult decision to make?
"It was a no-brainer," he told me. "This place is changing so fast, there's so much energy." He posed for a team photograph with the local Intel staff, most of whom – in common with two-thirds of Vietnamese – were born after the war ended, and for whom it is largely history. They joked and laughed like a triumphant sports team.

Another Intel employee told me how visiting colleagues from the U.S. frequently asked him for directions to the war museum.

"I have to tell them I don't know much about it, since I've never been," he said. He's not really interested.

Surveys of global opinion frequently name the Vietnamese as being among the most optimistic, forward-looking people on the planet. And there were moments during that reception that you could see why.

For many years Vietnam's leaders seemed to dither about reform. It was three steps forward and two back, complained business people, who preferred to build their factories in booming China. That's changing fast. Vietnam now has world's fastest growing economy after China. Labor costs in China are rising – by some estimates they are now twice those of Vietnam, and the pragmatic communists in Hanoi have embraced economic reform – to the point of holding up dynamic Ho Ch Minh City as a model, and swallowing hard as the the old name returns to common usage. That would have been unheard of a few years ago.

Overseas Vietnamese are returning in droves, some like Thieu as executives in Western corporations; others as investors.

The U.S. ambassador to Vietnam, Michael Marine, was in Ho Chi Minh City for Intel's announcement, and talked about the country's "obvious potential" as a destination for high-tech investment.

As he spoke, Mr. Marine had another reason for relief, as a high profile "terrorism" case, involving three Americans of Vietnamese origin had been defused. The three had been arrested early last year allegedly entering Vietnam with radio equipment which they were supposedly going to use to call for the overthrow of the
Hanoi government. The whole thing had a slightly surreal feel to it, and when the three were charged with "terrorism" it seemed like the old communist reflexes were
alive and well.

The verdict was scheduled for last Friday in the City's Peoples Court, the men possibly facing life imprisonment, just days after Vietnam gained membership into the
World Trade Organization, and just ahead of the APEC summit that will bring President Bush here next weekend. The timing looked dreadful.

They were eventually sentenced to 15 months, backdated, which means they'll be released in early December. A clearly relieved Ambassador Marine told me: "I think it's in all our interests that they are quickly put on a flight out of here."

Nobody, it seems, wanted the arrests and trial to upset the party, and the growing relationship between U.S. investors and Asia's latest tiger economy.