View from Tokyo: Japan set to pour into Vietnam: As the South-east Asian nation opens for business, the powerful corporate machines to the north are preparing to step in

WHEN Japan's Prime Minister, Tomiichi Murayama, visited Vietnam two weeks ago, it was not just a courtesy call on another Asian country. Mr Murayama, the first Japanese Prime Minister to visit Vietnam in 30 years, came to put an official stamp on an important change in Japanese policy towards the Indochinese state.

Vietnam is one of the last big countries in South-east Asia that is still up for grabs for foreign investment and development - Burma is the other, but its idiosyncratic exchange rate and repressive government still make business there somewhat esoteric.

Vietnam, by contrast, is unmistakably open for business: its turn away from socialism towards economic reforms in 1986 was given a long-awaited extra boost this February when the US dropped its trade embargo against its former enemy. The Vietnamese are hard- working, disciplined, quick to learn and, despite - or perhaps because of - 40 years of socialism, almost universally keen to make money.

Japan, which had restrained its corporations from moving in up to now for fear of antagonising the US, is getting ready to repeat in Vietnam what it has already done in the rest of South-east Asia - dominate the country's economy as it begins to expand at breakneck pace.

And just as it advanced through Thailand, Malaysia and Indonesia with little opposition from US or European companies, so too in Vietnam the competition Japan faces is still half-hearted.

The blueprint is almost unchanged from the thrust into other South-east Asian countries that began two decades ago. First, the trading companies got established, learning about the countries' markets and potential products. Then the Japanese government began offering soft loans and aid programmes for infrastructure development. Then a silent starter's gun sounded, and suddenly the big corporations moved in with huge investment before Western companies even knew what was happening. Today, for example, 85 per cent of the cars sold in Thailand are Japanese.

The first two stages of Japan's economic thrust into Vietnam are already under way: the trading companies all established offices in Vietnam in the late Eighties, and Japan has quickly become Vietnam's biggest aid donor.

At the beginning of this year Tokyo announced that it would give Hanoi pounds 326m in soft loans to build roads and other infrastructure projects. One of the first jobs to be done with the Japanese money is the upgrading of the road from Hanoi to the main port of Haiphong.

With nearly pounds 1bn in trade between the two countries, Japan is already Vietnam's main trading partner. One of its primary interests is oil: 70 per cent of Vietnam's oil is shipped to Japan, and Japanese oil companies are actively exploring for more oil on Vietnam's continental shelf. Mitsubishi recently hit a large deposit almost on its first try.

But direct investment from Japan has not really started yet. With a mere pounds 300m invested in 60 projects, Japan ranks seventh in Vietnam's overseas investors, way behind Taiwan, Hong Kong and even South Korea. But all the big corporations have their representative offices in place, and when roads, power supplies and investment legislation reaches a critical mass, Japan Inc will pour into Vietnam. Given Vietnam's determination to rapidly develop its economy, this will not be long in coming.

So when Mr Murayama said meekly: 'I would be happy if my visit here would help open the door for a new era of Japanese- Vietnamese relations,' he was not mouthing the customary pleasantry repeated by visiting heads of state from all over the world.

(Photographs omitted)