The proposed brewery, in the Binh Duong province in southern Vietnam, is expected to be operational by 2007, with an initial capacity of 500,000 hectolitres and ability to expand production to around 1 million hectolitres.

The Vietnamese Ministry of Industry estimates the domestic beer market to have grown from 13 million hectolitres in 2003 to 15 million in 2005.

"We are delighted to have reached agreement with Vinamilk to enter the high growth Vietnamese beer market," Andre Parker, SABMiller’s Africa & Asia managing director, said in a statement.

"Vinamilk has an extensive distribution network, which will give us access to more than 20,000 outlets in southern Vietnam which retail beer," he added.

Vinamilk is to start trading on Vietnam’s stock market next week, and its initial market value of $421m compares with the capitalisation of the entire market of $484m.