"Vu Khoan, the newly appointed deputy prime minister, will have his work cut out to contain the negative message his government's action is sending to Japanese and other foreign investors."
Japan is Vietnam's third largest foreign investor, as well as its biggest aid donor and trading partner. Last year, bilateral trade totalled US$4.72 billion.
"The dispute is ill-timed coming as Vietnam and Japan negotiate a bilateral investment agreement that would place Japanese businesses on the same footing as local ones," added Thayer, a long-time Vietnam watcher.
The three companies have expressed disappointment at the government's reluctance to reach a compromise, particularly after Khoan met industry representatives in Japan at the beginning of the month to discuss the crisis.
Whether a delegation sent from the trio's headquarters in Japan, together with representatives from the Japan Automobile May 11, 1996 pledge to the US Association (JAMA) and the ministry of economy, trade and industry can make any headway in the dispute remains to be seen.
The 10-member team arrived in the capital on Wednesday.
But whatever the outcome, the saga has already left a bitter taste in the mouths of the three manufacturers.
"It is very unreasonable. We find their thinking 20 years behind China. It is very difficult to understand where they are coming from," said one executive, who requested anonymity.
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