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Australian company involved in successful barter trade with Vietnam

COMPERE: Australian exporters can use barter trade - the exchange of goods and services - instead of cash payments, as a way of cracking difficult and sometimes impoverished Asian markets. That's the view of the director of the Perth based company, Independent Seafoods, Martin Smee. Mr Smee is today addressing an international conference in Bangkok, examining how to profit from trade and investment opportunities in Vietnam. He says that while the expanding post war Vietnamese economy has enormous potential, Hanoi lacks the cash for imports for development.

MARTIN SMEE: Well, Independent Seafoods started in Vietnam back in 1984 when we were simply a trader in seafood products, and this year we have established our own office in Vietnam with three expatriate staff and four Vietnamese and we have become a fairly substantial counter barter trade operator up there.

ALLAN KNIGHT: Well, how does the barter system work?

MARTIN SMEE: The barter system for us, works on the basis of buying out a seafood product - frozen fish fillets - on a barter arrangement and then selling back in the capital equipment that Vietnam needs to increase the product quality and quantity of fish product that it can produce.

ALLAN KNIGHT: So in that way, you get round Vietnam's cash shortages?

MARTIN SMEE: Well, we have by that method, managed to ease our commitment in terms of the bank's involvement with the buying and selling process, although it's by no means a non risk activity on either side.

ALLAN KNIGHT: What are the risks?

MARTIN SMEE: Well, the risks for us obviously relate to supply of product consistency and quality, and obviously being able to buy the product at a competitive price from the Vietnamese, and from their side, obviously they're sitting there with product going out and are waiting for product to arrive, so both sides are always careful of the fact that they don't get too far out of balance, in terms of one having a higher credit than the other on the barter account.

ALLAN KNIGHT: Now there are other countries in Asia that have got currency problems - I am thinking specifically of China and perhaps even the Philippines. Could this sort of system be applied there?

MARTIN SMEE: Yes, barter counter trade can be applied in those situations. It's not an easy thing to establish because you have to focus onto a product area that you have an expertise in, in terms of marketing the end product, and you have to make sure that the product that you are buying is of world standard. Now that is a very major hurdle to overcome. So in Independent Seafoods' case for example, we employ a series of technicians to go into the actual processing plants and run training programs on fish processing etc, so that we can assure ourselves the quality is grade A.

ALLAN KNIGHT: So what's the potential for further trade with Vietnam?

MARTIN SMEE: Well, trade with Vietnam is increasing very rapidly. The country, particularly in the southern sector where the major agricultural base is, is experiencing a very rapid economic growth and we believe that the potential is quite high for the Australian contribution to that, to increase from the current level of about 22 million maybe to as much as 30 or 40 million within the next couple of years.

COMPERE: The director of Independent Seafoods, Martin Smee, speaking from Bangkok, to Allan Knight.