US embassy cable - 00HANOI1298

VIETNAM'S QUANG NINH PROVINCE: COAL, ECOTOURISM, AND CHINA?

Identifier: 00HANOI1298
Wikileaks: View 00HANOI1298 at Wikileaks.org
Origin: Embassy Hanoi
Created: 2000-06-13 10:21:00
Classification: UNCLASSIFIED
Tags: ECON EMIN ENRG EIND ELAB SENV VM
Redacted: This cable was not redacted by Wikileaks.
This record is a partial extract of the original cable. The full text of the original cable is not available.


 2000HANOI01298 - UNCLASSIFIED
 
 
 
                           UNCLASSIFIED     PTQ4878

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FM AMEMBASSY HANOI
TO SECSTATE WASHDC 0114
DOE WASHDC
USDOC WASHDC
INFO ASEAN COLLECTIVE
AMEMBASSY BEIJING 
AMCONSUL GUANGZHOU 
AMCONSUL HONG KONG 
AMCONSUL HO CHI MINH CITY 
UNCLAS SECTION 01 OF 03 HANOI 001298 
 
SIPDIS 
 
STATE FOR EAP/BCLTV, EB/ESC, OES/E 
USDOC ALSO FOR 4431/MAC/AP/OKSA/VLC/HPPHO 
USDOE FOR IA 
BANGKOK FOR REO JIM MARTIN 
                       UNCLASSIFIED 
 
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E.O. 12958: N/A 
TAGS: ECON, EMIN, ENRG, EIND, ELAB, SENV, VM 
SUBJECT: VIETNAM'S QUANG NINH PROVINCE: COAL, ECOTOURISM, AND CHINA? 
 
------- 
SUMMARY 
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1. NORTHEASTERN VIETNAM'S QUANG NINH PROVINCE IS 
BLESSED WITH TWO NATURAL ENDOWMENTS: ABUNDANT HIGH- 
QUALITY COAL AND STRIKING SCENERY.  IT CONTAINS MORE 
THAN NINETY PERCENT OF VIETNAM'S COAL RESERVES AND 
MINES TEN MILLION TONS A YEAR.  LIKE MANY OTHER 
VIETNAMESE STATE-OWNED SECTORS, HOWEVER, THE COAL 
INDUSTRY IS BURDENED WITH EXCESS LABOR AND PRODUCTION 
CAPACITY GREATLY EXCEEDS DOMESTIC AND FOREIGN DEMAND. 
WORKING CONDITIONS MAY HAVE IMPROVED IN RECENT YEARS 
BUT REMAIN DIFFICULT.  INCONGRUOUSLY, THE PROVINCE'S 
COAL TERMINAL IS LOCATED AT HALONG BAY, VIETNAM'S 
PREMIER TOURIST ATTRACTION. 
 
2. HALONG BAY, DESIGNATED A `WORLD HERITAGE SITE' BY 
UNESCO, ATTRACTS INCREASING NUMBERS OF VIETNAMESE AND 
FOREIGN TOURISTS EVERY YEAR.  PROVINCIAL OFFICIALS 
HAVE ADOPTED A STRATEGY OF PROMOTING AND DEVELOPING 
TOURISM AS THE SECOND PILLAR OF QUANG NINH'S ECONOMY. 
EVENTUALLY QUANG NINH PLANS TO RELOCATE ITS COAL PORT 
FURTHER TO THE NORTH, AWAY FROM THE ENVIRONMENTALLY 
SENSITIVE TOURIST AREAS.  OFFICIAL AND PUBLIC 
AWARENESS OF THE NEED TO PROTECT THE ENVIRONMENT MAY 
                       UNCLASSIFIED 
 
PAGE 03        HANOI  01298  01 OF 03  131022Z 
BE GROWING AS WORKERS SEE THE IMPACT OF POLLUTION ON 
THEIR DAILY LIVES.  SOME EXPERTS HAVE WARNED, 
HOWEVER, THAT DAMAGE TO THE HALONG BAY ENVIRONMENT 
ALREADY IS EXTENSIVE AND IS CONTINUING. 
 
3. QUANG NINH'S OTHER ECONOMIC ASSET MAY BE CHINA, 
ITS GIANT NEIGHBOR TO THE NORTH.  THE PROVINCE HAS 
ACTIVELY COURTED CHINESE TRADERS, INVESTORS, AND 
TOURISTS SINCE THE BORDER WAS RE-OPENED TEN YEARS 
AGO.  THERE IS A VISA WAIVER PROGRAM FOR SHORT-TERM 
VISITORS AND THE ROAD FROM THE BORDER TO HALONG CITY 
HAS BEEN IMPROVED.  THERE ALSO IS CONSIDERABLE 
SMUGGLING ACROSS THE BORDER, WHICH ONE OFFICIAL 
DESCRIBED AS 'NORMAL FOR VIETNAMESE'.  END SUMMARY. 
 
4. DURING A RECENT VISIT TO QUANG NINH PROVINCE IN 
NORTHEASTERN VIETNAM, ECONOFFS DISCUSSED ECONOMIC 
DEVELOPMENT WITH PROVINCIAL PEOPLE'S COMMITTEE VICE 
CHAIRMAN NGUYEN VAN MIEN AND OTHER PROVINCIAL 
OFFICIALS, AS WELL AS REPRESENTATIVES OF VINACOAL, 
VIETNAM'S STATE-OWNED COAL PRODUCTION AND EXPORT 
MONOPOLY.  DUE TO ITS LOCATION ALONG THE CHINESE 
BORDER AND THE GULF OF TONKIN, AND TO ITS RELATIVELY 
DEVELOPED AND OUTWARD-ORIENTED ECONOMY, THE PROVINCE 
IS MORE ACCUSTOMED TO RELATIONS WITH FOREIGNERS THAN 
MOST NON-URBAN AREAS OF VIETNAM.  IT ALSO BOASTS A 
POPULATION OF 1.4 MILLION AND THE ONLY DEEP-WATER 
PORT IN NORTHERN VIETNAM. 
 
------------ 
COAL IS KING 
                       UNCLASSIFIED 
 
PAGE 04        HANOI  01298  01 OF 03  131022Z 
------------ 
5. FOR DECADES COAL HAS BEEN THE ECONOMIC LIFEBLOOD 
OF QUANG NINH, WHICH CONTAINS MORE THAN NINETY 
PERCENT OF VIETNAM'S COAL RESERVES.   WITH AT LEAST 
3.6 BILLION TONS OF HIGH QUALITY ANTHRACITE COAL 
STILL IN THE GROUND, AND ANNUAL PRODUCTION OF TEN 
MILLION TONS, THE PROVINCE EXPECTS THIS SITUATION TO 
CONTINUE INDEFINITELY.  QUANG NINH CURRENTLY EXPORTS 
3.5-3.8 MILLION TONS OF ITS COAL EVERY YEAR. 
VINACOAL REPRESENTATIVES CLAIMED THEIR PRODUCTION 
CAPACITY WAS 16-18 MILLION TONS PER YEAR BUT LIMITED 
INTERNATIONAL DEMAND FORCES THEM TO REDUCE OUTPUT. 
 
6. ACCORDING TO DIRECTOR NGO KHAC HOA OF VINACOAL'S 
QUANG NINH SUBSIDIARY, COAL FROM THE LOCAL OPEN-PIT 
MINES IS OF HIGH QUALITY, YIELDING 7-8,000 
KILOCALORIES PER KILOGRAM WITH 0.5 PERCENT SULFUR, 4- 
8 PERCENT MOISTURE, AND 6-8 PERCENT VOLATILE MATTER. 
THE MINES USE EQUIPMENT IMPORTED FROM JAPAN, GERMANY, 
AND THE U.S. (CATERPILLAR).  ONE MINE VISITED BY 
EMBOFFS EMPLOYS 4,500 PEOPLE, MORE THAN HALF OF WHOM 
ARE MANUAL LABORERS.  DIRECTOR HOA SAID A MINE OF 
SIMILAR SIZE IN THE U.S. WOULD EMPLOY JUST 300-500 
PEOPLE, BUT IN VIETNAM MINES WERE MUCH LESS 
MECHANIZED.  HE ADDED IT WAS IMPORTANT TO CREATE AS 
MANY JOBS AS POSSIBLE. 
 
 
7. IN 1999 PRODUCTION EXCEEDED DEMAND AND THE 
PROVINCE ACCUMULATED HUGE STOCKPILES OF UNSOLD COAL. 
THE AVERAGE WORK WEEK WAS REDUCED FROM 26-30 DAYS PER 
MONTH TO 18-22 DAYS, WITH PAY RATES ALLEGEDLY 
UNCHANGED AT ABOUT 900,000 VIETNAMESE DONG (USD 64) 
PER MONTH.  (NOTE: BY VIETNAMESE STANDARDS THIS WOULD 
BE A GOOD SALARY.  PRESS REPORTS FROM 1999, HOWEVER, 
INDICATE WORKER SALARIES WERE CUT TO AS LITTLE AS 
300,000 DONG PER MONTH DURING THE CUTBACKS, AND A 
LARGE NUMBER OF WORKERS WERE TEMPORARILY RELEASED. 
END NOTE.) 
 
8. ALSO IN 1999, THE COAL COMPANY INSTITUTED A LIFE 
INSURANCE PLAN FOR THE WORKERS, ALTHOUGH OFFICIALS 
CLAIMED THERE WERE `VERY FEW' ACCIDENTS.  ACCORDING 
TO STATISTICS FROM THE MINISTRY OF LABOR, INVALIDS, 
AND SOCIAL AFFAIRS, HOWEVER, FROM 1995 TO 1999 THERE 
WERE 112 DEATHS AND 514 INJURIES NATIONWIDE IN 
VIETNAM'S COALMINES, MOST PRESUMABLY IN QUANG NINH. 
IN JANUARY 1999 A METHANE EXPLOSION IN QUANG NINH 
KILLED 19 WORKERS AND INJURED 12.  NEVERTHELESS, 
DIRECTOR HOA SAID THE STANDARD OF LIVING FOR WORKERS 
NOW WAS MUCH BETTER THAN TEN YEARS AGO. 
 
                       UNCLASSIFIED 
 
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9. COAL FROM THE QUANG NINH MINES IS TRANSPORTED VIA 
CONVEYOR BELTS AND TRUCKS TO THE NEARBY COAL PORT, 
OWNED AND OPERATED BY ANOTHER VINACOAL SUBSIDIARY. 
THE PORT, BUILT IN 1924 BY THE FRENCH COLONISTS, CAN 
HANDLE 10,000 TONS AND TEN SHIPS PER DAY.  COMPANY 
REPRESENTATIVES CLAIMED THE TERMINAL, AT THE END OF A 
40 KILOMETER PASSAGEWAY THROUGH THE ISLANDS OF HALONG 
BAY, COULD ACCOMMODATE SHIPS UP TO 65,000 TONS. 
LARGE SHIPS, HOWEVER, COULD ONLY BE PARTIALLY LOADED 
AT DOCKSIDE BEFORE HAVING TO MOVE TO DEEPER WATER TO 
COMPLETE THE LOADING BY BARGE. 
 
10. ASIDE FROM COAL AND CONSTRUCTION MATERIALS, THE 
QUANG NINH GOVERNMENT HOPES TO DEVELOP SEVEN 
INDUSTRIAL ZONES FOR LIGHT, NON-POLLUTING INDUSTRIES 
SUCH AS FOOD PROCESSING.  IT ALSO WANTS TO EXPAND ITS 
PORT FACILITIES AND THE SMALL SHIPBUILDING SECTOR AND 
TO IMPROVE THE TRANSPORTATION AND ENERGY 
INFRASTRUCTURE.  THE PROVINCE ACTIVELY SEEKS FOREIGN 
INVESTMENT, WHICH ALREADY TOTALS NEARLY USD 900 
MILLION IN 35 PROJECTS.  MOST OF THE FOREIGN 
INVESTORS ARE FROM SOUTHEAST ASIA, JAPAN, SOUTH 
KOREA, AND TAIWAN. 
 
-------------------- 
TOURISM: THE FUTURE? 
-------------------- 
11. FAMOUS FOR ITS 3,000 LIMESTONE KARST ISLANDS 
JUTTING FROM CLEAR BLUE WATERS, QUANG NINH'S 1,500 
SQUARE KILOMETER HALONG BAY IN THE GULF OF TONKIN WAS 
DESIGNATED 1N 1994 AS A `WORLD HERITAGE SITE' BY 
                       UNCLASSIFIED 
 
PAGE 04        HANOI  01298  02 OF 03  131023Z 
UNESCO.  EVERY YEAR IT ATTRACTS INCREASING NUMBERS OF 
VIETNAMESE AND FOREIGN TOURISTS; IN 1999 THE TOTAL 
REACHED ONE MILLION.  IN APRIL 1999 THE VIETNAMESE 
MINISTRY OF PLANNING AND INVESTMENT AND THE WORLD 
BANK HOSTED A CONFERENCE ON `SUSTAINABLE DEVELOPMENT' 
AT HALONG BAY TO CONSIDER OPTIONS FOR THE FUTURE 
ECONOMIC DEVELOPMENT OF THE REGION.  AT THAT TIME A 
NUMBER OF FOREIGN PARTICIPANTS WARNED OF A POSSIBLE 
CONFLICT BETWEEN ECOTOURISM AND COAL MINING. 
 
12. SINCE THE CONFERENCE PROVINCIAL OFFICIALS HAVE 
ADOPTED A STRATEGY OF PROMOTING AND DEVELOPING 
TOURISM AS THE SECOND PILLAR OF QUANG NINH'S ECONOMY. 
ALTHOUGH THEY DO NOT APPEAR TO SEE THE GRIT AND GRIME 
OF COALMINES AND PORT TERMINALS AS SERIOUS THREATS TO 
THE TOURISM SECTOR, THEY RECOGNIZE THE NEED TO 
IMPROVE SERVICES FOR VISITORS AND ALSO TO EDUCATE THE 
POPULATION ON THE IMPORTANCE OF ENVIRONMENTAL 
PROTECTION.  WITH ASSISTANCE FROM THE UNITED NATIONS 
AND THE GOVERNMENT OF JAPAN, QUANG NINH IS DEVELOPING 
ENVIRONMENT POLICIES, IMPROVING WASTEWATER TREATMENT, 
PROTECTING MANGROVE FORESTS, AND CONDUCTING RESEARCH 
ON A VARIETY OF ENVIRONMENTAL ISSUES. 
 
13. IN THE LONGER TERM QUANG NINH PLANS TO RELOCATE 
ITS COAL PORT FURTHER TO THE NORTH, AWAY FROM THE 
TOURIST AREAS OF HALONG BAY.  CAI LAN PORT IN HALONG 
CITY WILL BE USED ONLY FOR LESS-POLLUTING CONTAINER 
CARGO, AND CONSTRUCTION OF A NEW BRIDGE WILL 
ELIMINATE THE NEED FOR THE AGED AND POLLUTING FERRIES 
ACROSS THE HARBOR ENTRANCE. 
 
14. AT THE COALMINES, MANAGERS CLAIMED VIETNAMESE LAW 
REQUIRED THEM TO REPLACE TOPSOIL AND REPLANT 
VEGETATION AT DEPLETED OPEN-PIT MINES.  THEY SAID 
PUBLIC AWARENESS OF THE NEED TO PROTECT THE 
ENVIRONMENT WAS GROWING, AS WORKERS COULD SEE THE 
IMPACT OF POLLUTION ON THEIR DAILY LIVES.  DIRECTOR 
HOA SAID VINACOAL WAS WORKING TO REDUCE DUST AND 
WATER POLLUTION AND IMPROVE TREATMENT OF WASTEWATER. 
ONE PERCENT OF COAL REVENUE IS EARMARKED FOR 
REFORESTATION PROGRAMS. 
 
15. OTHER EXPERTS, HOWEVER, HAVE WARNED THAT DAMAGE 
TO THE HALONG BAY ENVIRONMENT ALREADY IS EXTENSIVE 
AND IS CONTINUING.  ONE REPORT INDICATES AS MUCH AS 
50 PERCENT OF THE CORAL REEFS OFF VIETNAM'S NORTHEAST 
COAST HAVE BEEN KILLED BY COAL DUST AND EFFLUENT. 
LOCAL RESIDENTS HARVEST CORAL ILLEGALLY FOR SALE TO 
TOURISTS.  ALSO, AS FISHERMEN HAVE DEPLETED INSHORE 
STOCKS THEY HAVE MOVED FURTHER OUT INTO THE BAY. 
 
                       UNCLASSIFIED 
 
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----- 
CHINA 
----- 
16. QUANG NINH'S OTHER ECONOMIC ASSET MAY BE ITS 
GIANT NEIGHBOR TO THE NORTH.  PRIMARILY THROUGH THE 
INTERNATIONAL CROSSING AT MONG CAI, A BOOMING BORDER 
TOWN IN THE NORTHEAST CORNER OF THE PROVINCE, QUANG 
NINH HAS ACTIVELY COURTED CHINESE TRADERS, INVESTORS, 
AND TOURISTS SINCE THE BORDER WAS RE-OPENED TEN YEARS 
AGO.  THERE IS A TWO-WAY VISA WAIVER PROGRAM FOR 
SHORT-TERM VISITORS TO EACH COUNTRY'S BORDER REGIONS. 
THE ROAD FROM THE BORDER TO HALONG CITY HAS BEEN 
IMPROVED AND BOAT SERVICE BETWEEN THE TWO TOWNS TAKES 
LESS THAN TWO HOURS. 
 
17. THE CHINA TRADE AND TOURISM BOOM HAS BROUGHT 
ANOTHER GROWTH INDUSTRY TO QUANG NINH: SMUGGLING, 
WHICH VICE CHAIRMAN MIEN DESCRIBES AS 'NORMAL FOR 
VIETNAMESE'.  IN FACT, HE SAID, MOST OF THE FLOW WAS 
NOT SMUGGLING, BUT RATHER SMALL-SCALE `FRAUDULENT 
TRADE' TO AVOID TAXES ON GOODS SUCH AS CHINESE 
MOTORBIKES AND COMPACT DISKS.  WHEN QUESTIONED, HE 
CONCEDED TRAFFICKING IN DRUGS AND WOMEN ALSO TOOK 
PLACE, BUT SAID HIS GOVERNMENT WAS CONSIDERING NEW 
LAWS, REGULATIONS, AND ENFORCEMENT MEASURES TO 
PREVENT IT. 
 
------- 
COMMENT 
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18. IF QUANG NINH CAN MINE THE POTENTIAL OF TOURISM 
                       UNCLASSIFIED 
 
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WHILE MAINTAINING ITS PRODUCTIVE COAL INDUSTRY, IT 
SHOULD BE ABLE TO BECOME ONE OF VIETNAM'S MORE 
DEVELOPED AND PROSPEROUS PROVINCES.  CLOSER TRADE 
LINKS WITH CHINA COULD FURTHER STIMULATE GROWTH.  THE 
PROVINCE RUNS THE RISK, HOWEVER, OF DESTROYING ITS 
NATURAL BEAUTY JUST IN TIME FOR THE EXHAUSTION OF ITS 
COAL RESERVES. 
 
PETERSON 
 
                       UNCLASSIFIED 
 
 


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