A senior agriculture official in Daklak province said on Wednesday preparation for the project was under way. Vietnam currently has very little cocoa planted.

"The project has not been finalised yet but our idea is to later hand it over to a local company," the official said by telephone. He said the project would probably be approved by the government later this year.

Farmers have 138,253 hectares (345,632 acres) of coffee planted in Daklak's rich soil, accounting for more than 60 per cent of Vietnam's coffee output.

"During French Times cocoa was planted together with coffee in some farms. This means the land is probably suitable," said a coffee trader in Daklak.

France colonised Vietnam for around 100 years until 1954.

The Daklak agriculture official said cocoa plantations were easier to maintain than coffee and could help the environment.

"Cocoa trees have ecological value because their roots can hold water," he said. Drought hit Daklak earlier this year, damaging some coffee crops before breaking at the end of May.

The agricultural official said Daklak would plant 20,000 hectares (50,000 acres) of the planned total with the rest sown in nearby central highland provinces that also grow coffee. Estimated investment per hectare would be $1,500.

He also said Vietnam would be keen for any assistance from multilateral organisations to help the project.

The Lao Dong (Labour) newspaper reported last week that the project would begin in October and last until 2003. Cocoa seeds would be imported from Malaysia, it said.

A researcher from US confectionery company Mars Inc said in Panama City in April that the firm saw opportunities to start cocoa production in Vietnam and large-scale newly planted cocoa could be in place by 2000.

Officials in Daklak made no reference to Mars Inc.