COLUMN ONE : Staking a Claim in Vietnam : A hardy, young band of American entrepreneurs is camping out in Hanoi. They’re betting the U.S. will lift its trade embargo soon, giving them an inside track to one of Asia’s blossoming markets.

HANOI —  The American flag is flying again over Vietnam. Only this time, it’s not fluttering over a military base, but instead is being waved enticingly by American business.

A homemade Stars and Stripes now flaps next to the yellow star of Communist Vietnam at the offices of VATICO, an American business consulting firm here, causing a commotion in the Hanoi neighborhood where it opened its doors last month.

“I have held for years that Vietnam will be the fastest growth opportunity in Asia,” said James Rockwell, an Oregon businessman who moved here with his fiancee seven months ago to found the company. “I don’t have any of the skeletons of the Vietnam War in my closet, and I don’t want anyone putting those skeletons in my closet.”

Rockwell is one of a small band of mostly young American businessmen who are camping out in Vietnam, hoping to win a piece of the market when the United States finally lifts the trade and economic embargo in place against the country since 1975. Many of the entrepreneurs predict that, despite the backwardness caused by the Indochina war in the 1960s and 1970s, Vietnam will join the ranks of Asia’s “dragons” as a booming, export-based economy.

But President Clinton has said he won’t be lifting the embargo any time soon because of lingering concerns about American servicemen still listed as missing in action in the Vietnam conflict, the only issue remaining as a roadblock to normalization of ties.

That doesn’t seem to have dampened the enthusiasm for doing business.

“The firms I work with don’t care about the embargo,” said Eugene A. Matthews, who heads Ashta International Inc., another business consulting firm. “They know it’s going to end soon--either tomorrow or a couple of months from now. They want to be ready when that happens.”

Matthews, 35, a Harvard Law School graduate, first came to Vietnam in February, 1989, long before the country was featured on the cover of major American business publications like Fortune. Matthews moved here from a job in Japan in 1990, officially to learn Vietnamese, but also making important business contacts along the way.

He has spent the last three years living at the Spartan guest house belonging to the Vietnamese Ministry of Education, working and living in a single room. He gets around by bicycle and pedicab, a bicycle-propelled taxi known in this former French colony as a cyclo.

“I focused on Vietnam a couple of years ago and decided that this is a place to make a lot of money,” Matthews recalled. “If it was easy, a lot of people could have done it.”

Another early arrival was Michael Cole, manager of the Vietnam Investment Review, an Australian-funded joint-venture newspaper devoted to business matters. A Vietnamese speaker, Cole worked for a U.S. government program processing Vietnamese applications to emigrate to America before winding up in Hanoi.

“The reason I’m here is I’m in an excellent market position,” Cole said bluntly. “I’m not getting rich, but this is a frontier area, and I’ve staked out a good claim.”

But because of the embargo, Cole must be careful about appearing to earn money from the Vietnamese, which is still against the law. So the newspaper gives him a salary in Thailand and pays his rent directly in Vietnam. It even buys his groceries.

Since Hanoi until recently lacked even basic hotels, most American businessmen live in peeling “guest houses,” concrete blocks more reminiscent of Moscow in the 1950s than Southeast Asia. There’s no McDonald’s in Vietnam or any supermarkets.

Life for American businessmen here became distinctly easier last Dec. 14, when President George Bush, taking note of progress on questions related to the search for servicemen missing in action during the Vietnam conflict, relaxed the embargo significantly. Now, American firms can sign leases and open representative offices in Vietnam and hire local staff. They can also negotiate and sign contracts with Vietnamese companies, agreements that will take force when the embargo is lifted.

So far, only two major American companies have taken the plunge. San Francisco-based Bank of America received permission from the Clinton Administration and the Vietnamese government to open a representative office in Hanoi. While a celebration was held in April, the office, in fact, has not yet opened its doors.

The other American company to set up an operation here is General Electric Co. GE hired Andre Sauvageot, a former Green Beret more recently seen as the official translator on American government missions to Hanoi, to head up their Vietnamese operations.

Sauvageot, who works from his bedroom at a guest house belonging to the Vietnamese army, said he is under orders from his headquarters not to talk publicly about GE plans in Vietnam.

But the company makes jet aircraft engines and power plant equipment, both of which will be in great demand when the embargo is lifted. It also manufactures high-tech medical equipment that now can be sold legally to Vietnam; under provisions of the embargo, the transfer of medical supplies, as a humanitarian matter, is allowed.

Only a few weeks ago, Sauvageot reverted briefly to his old job, acting as the official interpreter for retired Army Gen. John W. Vessey Jr.

An American presidential envoy on POW matters, Vessey visited Vietnam to discuss the latest crisis in relations--a purported Russian translation of a 1972 Vietnamese document that claimed to indicate that Vietnam had lied about the number of American prisoners being held by Hanoi.

Sauvageot entered the talks with Vessey bearing a clipboard with GE’s logo prominently displayed, prompting one Vietnamese official to ask jokingly, “Which general is Andre working for--Vessey or Electric?”

Many other American corporations, fearing they may miss the boat, have appointed senior executives to be in charge of their Vietnamese business from their bases in nearby Hong Kong or Bangkok. Pepsico Inc. signed an agreement last month with a bottling company based in Ho Chi Minh City, formerly Saigon, to begin marketing Pepsi as soon as the embargo is lifted.

Vietnam’s State Committee for Coordination and Investment reported that foreign firms, led by Taiwanese and Hong Kong companies, have invested $5.2 billion in the country since free-market economic reforms were adopted in 1986.

Many of the companies are manufacturers attracted by Vietnam’s disciplined work force, which is relatively well-educated by Southeast Asian standards.

Despite the withdrawal of an estimated $1 billion a year in economic aid from the former Soviet Union, Vietnam’s economy has boomed in the last five years, especially in the private sector. Vietnam has managed to become the world’s third-largest exporter of rice after the United States and Thailand, and last year the country posted its first trade surplus.

With a population of 67.7 million, Vietnam is seen by many American firms as a vast, untapped market, though the $200 annual per capita income suggests that it will be many years before the country can afford many luxuries.

A study by Ogilvy & Mather, the giant American advertising agency, found that after nearly two decades of isolation, Vietnamese still are fond of many American brands. Zest is still the most popular soap in the country, two decades after U.S. troops departed; it is now imported from Thailand. Coca-Cola, smuggled in from Singapore, is in virtually every restaurant.

“I think the survey reflected a residual brand awareness from before 1975,” said John Englehart, Ogilvy & Mather’s general manager in Bangkok. “There is a sustained perception that American equals quality and reliability.”

Further, business consultants, such as Rockwell, believe that American companies could have the inside track in projects for roads, ports and telecommunications in Vietnam because they helped build those in most of southern Vietnam decades ago. “Bechtel probably has the architectural plans for Cam Ranh Bay port moldering away in its files somewhere,” he said.

Clinton appeared to reject those arguments, however, saying it is more important for him to ensure that Vietnam is doing all it can to help in the search for missing POW-MIAs than to help promote American business. But he did not give any hint when he might relax the embargo or what more is expected of Vietnam.

Paradoxically, Clinton had been widely expected to relax the embargo last month but apparently was persuaded to delay that action by the controversy over the Russian document about prisoners.

Since Clinton publicly opposed the war in Vietnam, Vietnamese officials had counted on him to be the President to lift the embargo quickly. But they apparently did not reckon on the domestic political pressures on Clinton caused by the uproar over POWs and such other issues as gays in the American military.

And despite the lucrative prospects in Vietnam, some businessmen cannot afford to wait indefinitely for the embargo to end. Matthews predicted that half of the American companies now in Hanoi will be gone in two years.

Greig Craft, 42, head of a company called American Services Inc., said that if Clinton renews the embargo in September, when it legally expires, he would have to think seriously about moving on.

“If the embargo is not lifted in September, I think Americans can write off Vietnam for the next 15 to 20 years,” Craft said, pointing to the business inroads already being made by Hong Kong, Taiwanese and Japanese companies. (European and Australian firms such as Britain’s Standard Chartered Bank and OTC Australia, a telecommunications firm, are also getting increasingly involved.)

Craft came to Vietnam to help a private foundation deliver humanitarian aid. In 1991, when the embargo was relaxed to allow American companies to conduct feasibility studies, he set up his organization and now lists “a major West Coast” oil company and a telecommunications firm as his clients. He still works out of a hotel room, with his teen-age daughter, Tracy, serving as a secretary.

Craft noted that many major American companies are still shy about announcing plans to do business in Vietnam, apparently fearing political repercussions from customers.

Craft, Matthews and others said that, while they now must derive the bulk of their earnings from consulting, they hope eventually to become investors themselves in the deals they helped broker.

Steven Reid is a young MBA-graduate who heads Vietnam Investment & Trade Associates, based in a tattered old French hotel in Ho Chi Minh City. Reid has been consulting for American garment companies in Vietnam and hopes to participate in some projects himself.

“People are realizing that Vietnam is not a business utopia,” said Reid, who has been in the country almost a year. “There’s lots of potential out there, but it will take five years to get rolling--after they lift the embargo.”

Reid and his colleagues in Ho Chi Minh City are so confident of the future that they have banded together to form the Saigon American Club to cater to an expanded American business community. Reid now reckons that the number of American businessmen in Ho Chi Minh City is fewer than 20; and of those, only about half are there legally.

One American with an unusual approach to beating the embargo is Steven Bruny, 27, a business school graduate who came here last November from Fresno hoping to become an investor in Vietnam’s agricultural business. But for now, he is living on his savings and working as a volunteer for the Vietnamese government’s State Committee for Cooperation and Investment. Although he is unpaid, Bruny has a priceless view on how business is conducted inside Vietnam’s primary funnel for foreign investment.

“I saw a tremendous potential in Vietnam,” Bruny recalled. “But I had to convince my parents that I wasn’t crazy.”