US embassy cable - 02HANOI3098

VIETNAM: NATIONAL TRADE ESTIMATES REPORT 2003

Identifier: 02HANOI3098
Wikileaks: View 02HANOI3098 at Wikileaks.org
Origin: Embassy Hanoi
Created: 2002-12-30 09:34:00
Classification: UNCLASSIFIED
Tags: ECPS AORC VM FINREF BTA IPROP
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.

300934Z Dec 02

                           UNCLASSIFIED     PTQ3670

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FM AMEMBASSY HANOI
TO SECSTATE WASHDC IMMEDIATE 8489
INFO AMCONSUL HO CHI MINH CITY 
ASEAN COLLECTIVE
UNCLAS SECTION 01 OF 08 HANOI 003098 
 
SIPDIS 
 
STATE PASS USTR/GLORIA BLUE 
STATE FOR EB/MTA/MST 
 
E.O. 12958: N/A 
TAGS: ECPS, AORC, VM, FINREF, BTA, IPROP 
SUBJECT: VIETNAM:  NATIONAL TRADE ESTIMATES REPORT 2003 
 
REF: (A) STATE 235887 
 
1.  THE FOLLOWING IS THE TEXT OF THE DRAFT 2003 NATIONAL 
TRADE ESTIMATE REPORT FOR VIETNAM. 
 
2.  BEGIN TEXT OF REPORT: 
                       UNCLASSIFIED 
 
PAGE 02        HANOI  03098  01 OF 08  301021Z 
 
VIETNAM 
 
TRADE SUMMARY 
 
THE LANDMARK US-VIETNAM BILATERAL TRADE AGREEMENT THAT SEEKS 
TO NORMALIZE TRADE RELATIONS BETWEEN THE TWO COUNTRIES CAME 
INTO EFFECT ON DECEMBER 10, 2001, AND VIETNAM BEGAN 
RECEIVING NTR TREATMENT.  AS A RESULT OF THE LOWERING OF 
TARIFFS FROM AN AVERAGE OF 40 PERCENT TO AN AVERAGE OF 3 
PERCENT, VIETNAMESE EXPORTS TO THE U.S. HAVE INCREASED 
RAPIDLY OVER THE LAST YEAR. 
 
IN THE FIRST NINE MONTHS OF 2002, THE US TRADE DEFICIT WITH 
VIETNAM WAS USD 1.2 BILLION, AN INCREASE OF USD 796 MILLION 
FROM THE US TRADE DEFICIT IN THE FIRST NINE MONTHS OF 2001. 
THE EXPORTS OF US GOODS TO VIETNAM WERE $343 MILLION IN THE 
FIRST NINE MONTHS OF 2002, AN INCREASE OF $80 MILLION (30 
PERCENT) FROM THE LEVEL OF US EXPORTS TO VIETNAM DURING THE 
SAME PERIOD IN 2001.  VIETNAM WAS THE UNITED STATES' 68TH 
LARGEST EXPORT MARKET IN 2002.  US IMPORTS FROM VIETNAM WERE 
$1.57 BILLION IN THE FIRST NINE MONTHS OF 2002, AN INCREASE 
OF $835 MILLION (113 PERCENT) FROM THE LEVEL OF IMPORTS IN 
2001. 
 
ACCORDING TO GOVERNMENT OF VIETNAM (GVN) FIGURES, THE STOCK 
OF US FOREIGN DIRECT INVESTMENT (FDI) IN VIETNAM THROUGH MAY 
2002 AMOUNTED TO APPROXIMATELY USD 500 MILLION.  HOWEVER, 
THAT FIGURE UNDERESTIMATES THE TRUE AMOUNT, AS SIGNIFICANT 
ADDITIONAL US INVESTMENT IS COUNTED AS INVESTMENT FROM THIRD 
COUNTRIES IN CASES WHERE THE INVESTMENT INVOLVES A THIRD- 
                       UNCLASSIFIED 
 
PAGE 03        HANOI  03098  01 OF 08  301021Z 
COUNTRY SUBSIDIARY OF A US COMPANY.  US FDI IN VIETNAM IS 
CONCENTRATED LARGELY IN THE OIL AND GAS SECTOR. 
 
IMPORT POLICIES 
 
TARIFFS 
 
VIETNAM'S TARIFF SCHEDULE WAS RATIONALIZED IN 1992 AND 
SIMPLIFIED IN 1999, FOLLOWING VIETNAM'S ACCESSION TO THE 
ASEAN FREE TRADE AREA (AFTA).  CURRENTLY, THERE ARE THREE 
SETS OF TARIFF RATES:  MFN RATES THAT APPLY TO ABOUT 75 
PERCENT OF TOTAL IMPORTS, INCLUDING US IMPORTS; COMMON 
EFFECTIVE PREFERENTIAL TARIFF  (CEPT) RATES THAT APPLY TO 
IMPORTS FROM ASEAN COUNTRIES; AND GENERAL TARIFF RATES (50% 
HIGHER THAN MFN) THAT APPLY TO ALL OTHER COUNTRIES 
(INCLUDING MEXICO, ARGENTINA AND BRAZIL).  THE AVERAGE (UN- 
WEIGHTED) MFN TARIFF RATE HAS INCREASED IN RECENT YEARS AS 
VIETNAM MOVES TO CONVERT QUANTITATIVE RESTRICTIONS TO 
TARIFFS; IN 2002 IT STOOD AT 15.7 PERCENT.  HOWEVER, THE 
NUMBER OF TARIFF LINES AND THE MAXIMUM TARIFF RATE HAVE 
DECREASED.  UNDER THE TERMS OF THE US-VIETNAM BILATERAL 
TRADE AGREEMENT, VIETNAM IS OBLIGATED SIGNIFICANTLY TO 
REDUCE TARIFFS BY AN AVERAGE OF ABOUT ONE-THIRD TO ONE-HALF 
ON A BROAD RANGE OF US IMPORTS OVER A PERIOD OF THREE YEARS. 
THE AVERAGE (UNWEIGHTED) CEPT RATE WAS 10.7% IN 2002 AND IS 
EXPECTED TO DECLINE TO THREE PERCENT BY 2006. 
 
BEYOND FORMAL TARIFFS, VIETNAM APPLIES "PRICE DIFFERENTIAL 
SURCHARGES" ON SOME PRODUCTS, ALTHOUGH THERE IS NO FIXED 
LIST OF GOODS SUBJECT TO THESE SURCHARGES.  IN PRINCIPLE, 
THESE SURCHARGES ARE APPLIED TO BOTH IMPORT AND EXPORT 
                       UNCLASSIFIED 
 
PAGE 04        HANOI  03098  01 OF 08  301021Z 
PRODUCTS WHERE THERE EXISTS A MAJOR DIFFERENTIAL BETWEEN THE 
DOMESTIC AND WORLD PRICES AS A RESULT OF INTERNATIONAL 
FLUCTUATIONS.  IMPORT SURCHARGES RANGE FROM FOUR TO 40 
PERCENT AND ARE IMPOSED MAINLY ON "SENSITIVE" PRODUCTS SUCH 
AS GLASSWARE, CONSTRUCTION GLASS, PAPER, STEEL, CERAMIC 
PRODUCTS AND ALCOHOLIC GOODS. 
 
NON-TARIFF BARRIERS 
 
NON-TARIFF BARRIERS WERE INTRODUCED IN VIETNAM WHEN THE 
COUNTRY SHIFTED FROM CMEA TO MARKET TRADE IN THE LATE 1980S 
AND EARLY 1990S AND QUICKLY BECAME A KEY COMPONENT OF 
VIETNAM'S TRADE POLICY.  IN THE PAST FEW YEARS, VIETNAM HAS 
MADE SIGNIFICANT PROGRESS IN REDUCING THE USE OF NTBS AND, 
UNDER THE TERMS OF THE BTA, VIETNAM AGREED TO ELIMINATE ALL 
NON-TARIFF BARRIERS, INCLUDING IMPORT AND EXPORT 
RESTRICTIONS, QUOTAS, LICENSING REQUIREMENTS, AND CONTROLS 
FOR ALL PRODUCT AND SERVICE CATEGORIES OVER A PERIOD OF 
THREE TO SEVEN YEARS, DEPENDING ON THE PRODUCT. 
 
IMPORT PROHIBITIONS:  VIETNAM CURRENTLY PROHIBITS THE 
COMMERCIAL IMPORTATION OF THE FOLLOWING PRODUCTS:  ARMS AND 
AMMUNITION, EXPLOSIVE MATERIALS (NOT INCLUDING INDUSTRIAL 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ3671 
 
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O 300934Z DEC 02 
FM AMEMBASSY HANOI 
TO SECSTATE WASHDC IMMEDIATE 8490 
INFO AMCONSUL HO CHI MINH CITY 
ASEAN COLLECTIVE 
 
UNCLAS SECTION 02 OF 08 HANOI 003098 
 
SIPDIS 
 
STATE PASS USTR/GLORIA BLUE 
STATE FOR EB/MTA/MST 
 
 
EXPLOSIVES), MILITARY TECHNICAL EQUIPMENT AND FACILITIES, 
NARCOTICS, TOXIC CHEMICALS, "DEPRAVED AND REACTIONARY" 
CULTURAL PRODUCTS, FIRECRACKERS, SOME CHILDREN'S TOYS, 
CIGARETTES, SECOND-HAND CONSUMER GOODS, RIGHT-HAND DRIVE 
MOTOR VEHICLES, USED MOTOR VEHICLES AND PARTS, USED INTERNAL 
COMBUSTION ENGINES OF LESS THAN 30 HORSEPOWER, ASBESTOS 
                       UNCLASSIFIED 
 
PAGE 02        HANOI  03098  02 OF 08  301021Z 
MATERIALS UNDER THE AMPHIBOLE GROUP, VARIOUS ENCRYPTION 
DEVICES, AND ENCRYPTION SOFTWARE. 
 
QUANTITATIVE RESTRICTIONS AND NON-AUTOMATIC LICENSING: 
VIETNAM HAS BEEN PHASING OUT THE USE OF QUANTITATIVE 
RESTRICTIONS ON IMPORTS.  BY JANUARY 2003, ALL QUANTITATIVE 
RESTRICTIONS ON IMPORTS WILL BE ABOLISHED WITH THE EXCEPTION 
OF SUGAR (TO BE KEPT UNTIL 2005) AND PETROLEUM PRODUCTS. 
QUANTITATIVE LIMITATIONS ON EXPORTS IN MOST SECTORS HAVE 
BEEN ELIMINATED AS WELL, WITH THE EXCEPTION OF TEXTILES, 
GARMENTS, AND A LIST OF SENSITIVE ITEMS. 
 
SPECIAL AUTHORITY REGULATION:  PREVIOUSLY, IMPORTERS 
REQUIRED APPROVAL FROM THE RELEVANT MINISTRY(IES) TO IMPORT 
MANY GOODS.  THIS SYSTEM WAS CHANGED IN 2001.  NOW, SEVEN 
MINISTRIES AND AGENCIES ARE RESPONSIBLE FOR OVERSEEING A 
SYSTEM OF MINIMUM QUALITY/PERFORMANCE STANDARDS FOR ANIMAL 
AND PLANT PROTECTION, HEALTH SAFETY, LOCAL NETWORK 
COMPATIBILITY (IN THE CASE OF TELECOMMUNICATION), MONEY 
SECURITY, AND CULTURAL SENSITIVITY.  GOODS THAT MEET THE 
MINIMUM STANDARDS CAN BE IMPORTED UPON DEMAND AND IN 
UNLIMITED QUANTITY AND VALUE. 
 
FOREIGN EXCHANGE SYSTEM:  IN 1998, THE STATE BANK OF VIETNAM 
(SBV) ISSUED A FOREIGN EXCHANGE SURRENDER REQUIREMENT FOR 
ALL EXPORTERS, INCLUDING FOREIGN INVESTED ENTERPRISES 
(FIES). A SERIES OF REDUCTIONS DECREASED THIS REQUIREMENT 
FROM 80 PERCENT OF FOREIGN EXCHANGE BALANCES TO 30 PERCENT 
AS OF MAY 2002.  ACCORDING TO VIETNAM'S COMMITMENTS UNDER 
ITS MARCH 2001 POVERTY REDUCTION GROWTH FACILITY (PRGF) WITH 
THE IMF, THE SURRENDER REQUIREMENT WILL BE ELIMINATED 
                       UNCLASSIFIED 
 
PAGE 03        HANOI  03098  02 OF 08  301021Z 
COMPLETELY BY THE END OF 2003. 
 
MAY 2000 AMENDMENTS TO THE LAW ON FOREIGN DIRECT INVESTMENT 
ALLOWED FDI ENTERPRISES TO PURCHASE FOREIGN CURRENCY AT 
AUTHORIZED BANKS TO FINANCE CURRENT AND CAPITAL TRANSACTIONS 
AND OTHER PERMITTED TRANSACTIONS.  VIETNAM ALSO COMMITTED 
UNDER THE IMF PROGRAM TO REMOVE THE REMAINING EXCHANGE 
RESTRICTIONS ON CURRENT INTERNATIONAL TRANSFERS AND PAYMENTS 
BY THE END OF 2002.  CONTROLS ON CURRENT ACCOUNT 
TRANSACTIONS HAVE BEEN LIBERALIZED.  A 1998 DECREE ALLOWED 
BOTH RESIDENTS AND NON-RESIDENTS TO OPEN AND MAINTAIN 
FOREIGN EXCHANGE ACCOUNTS WITH AUTHORIZED BANKS IN VIETNAM. 
A 2001 CIRCULAR PERMITTED FOREIGN INVESTORS TO TRANSFER 
ABROAD PROFITS AND OTHER LEGAL INCOME UPON PRESENTATION OF 
RELEVANT DOCUMENTS TO THE AUTHORIZED BANKS. 
 
CUSTOMS:  VIETNAM IS PHASING OUT MINIMUM IMPORT PRICES IN 
ITS CUSTOMS VALUATION SYSTEM.  THE NUMBER OF COMMODITY 
GROUPS SUBJECT TO A MINIMUM VALUE WAS REDUCED FROM 34 IN 
1997 TO SEVEN IN 2000.  THESE INCLUDE:  BEVERAGES OF ALL 
KINDS; TIRES, RUBBER INNER TUBES AND MUD-RESISTANT FRONTS 
USED FOR CARS, MOTORCYCLES AND BICYCLES; FLOOR TILES AND 
SANITARY WARES; CONSTRUCTION GLASS AND VACUUM FLASKS; 
ENGINES; ELECTRIC FANS; MOTORCYCLES; AND, UNPROCESSED 
TOBACCO. 
 
UNDER THE TERMS OF THE BTA, VIETNAM AGREED THAT NO 
ADMINISTRATIVE FEE OR CHARGE IMPOSED BY CUSTOMS AUTHORITIES 
IN CONNECTION WITH IMPORTING OR EXPORTING ANY GOOD WILL 
EXCEED THE ACTUAL COST OF THE SERVICE PROVIDED BY CUSTOMS. 
VIETNAM ALSO AGREED BY DECEMBER 2003 TO ADOPT A SYSTEM OF 
                       UNCLASSIFIED 
 
PAGE 04        HANOI  03098  02 OF 08  301021Z 
CUSTOMS VALUATION OF IMPORTS THAT COMPLIES WITH THE 
STANDARDS ESTABLISHED IN THE WTO AGREEMENT ON CUSTOMS 
VALUATION. 
 
TRADING RIGHTS:  UNDER THE TERMS OF THE BTA, THREE YEARS 
AFTER ENTRY-INTO-FORCE OF THE BTA, ENTERPRISES WITH CAPITAL 
DIRECTLY INVESTED BY US NATIONALS AND COMPANIES IN 
PRODUCTION AND MANUFACTURING WILL BE ABLE TO ENGAGE IN 
TRADING ACTIVITIES IN MOST PRODUCTS AND WILL BE ABLE TO 
ENTER INTO JOINT VENTURES WITH VIETNAMESE PARTNERS TO ENGAGE 
IN TRADING ACTIVITIES IN ALL PRODUCTS, AS LONG AS THE US 
PARTNER HOLDS NO MORE THAN A 49 PERCENT SHARE IN THE 
VENTURE.  SEVEN YEARS AFTER ENTRY-INTO-FORCE OF THE BTA, US 
COMPANIES WILL BE ABLE TO ESTABLISH WHOLLY OWNED TRADING 
COMPANIES IN VIETNAM.  THE RIGHT TO TRADE IN CERTAIN GOODS 
IS SUBJECT TO A PHASE IN PERIOD. 
 
STANDARDS, TESTING, LABELING, AND CERTIFICATION 
 
VIETNAMESE LAW REQUIRES ALL IMPORTS TO HAVE A LABEL WITH 
CONTENTS AND INSTRUCTION FOR USE IN VIETNAMESE.  THE LABELS 
CAN BE PLACED ON THE GOODS AFTER THEY HAVE BEEN IMPORTED. 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ3672 
 
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O 300934Z DEC 02 
FM AMEMBASSY HANOI 
TO SECSTATE WASHDC IMMEDIATE 8491 
INFO AMCONSUL HO CHI MINH CITY 
ASEAN COLLECTIVE 
 
UNCLAS SECTION 03 OF 08 HANOI 003098 
 
SIPDIS 
 
STATE PASS USTR/GLORIA BLUE 
STATE FOR EB/MTA/MST 
 
 
THE MINISTRY OF SCIENCE AND TECHNOLOGY PUBLISHES A LIST OF 
IMPORTS AND EXPORTS REQUIRING STATE QUALITY CONTROL.  THE 
ITEMS ARE LISTED WITH THEIR HS NUMBERS AND ARE GROUPED UNDER 
FUNCTIONAL AGENCIES INCLUDING MINISTRY OF PUBLIC HEALTH, 
MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENT, MINISTRY OF 
INDUSTRY, MINISTRY OF FISHERIES, AND MINISTRY OF SCIENCE AND 
                       UNCLASSIFIED 
 
PAGE 02        HANOI  03098  03 OF 08  301021Z 
TECHNOLOGY. SOME ITEMS ARE SUBJECT TO NATIONAL STANDARDS; 
SOME ARE SUBJECT TO REGULATIONS OF THE FUNCTIONING AGENCIES; 
AND SOME ARE SUBJECT TO BOTH.  OTHER ITEMS ARE SUBJECT TO 
GOCT (STANDARD SYSTEM UNDER THE SOVIET UNION THAT APPLIES 
ONLY TO EXPLOSIVES AND EXPLOSIVE ACCESSORIES).  EXPORTERS 
AND IMPORTERS MUST HAVE PERMITS FROM THE FUNCTIONING 
AGENCIES OR A RECEIPT SHOWING AN INSPECTION IS IN PROCESS 
FOR THE CONTROLLED ITEMS AT THE TIME THEY GO THROUGH 
CUSTOMS. 
 
GOVERNMENT PROCUREMENT 
 
GOVERNMENT PROCUREMENT PRACTICES CAN BE CHARACTERIZED AS A 
MULTI-LAYERED DECISION-MAKING PROCESS, WHICH OFTEN LACKS 
TRANSPARENCY AND EFFICIENCY.  ALTHOUGH THE MINISTRY OF 
FINANCE ALLOCATES FUNDS, VARIOUS DEPARTMENTS WITHIN THE 
MINISTRY OR AGENCY INVOLVED DETERMINE GOVERNMENT PROCUREMENT 
NEEDS.  COMPETITION FOR GOVERNMENT PROCUREMENTS MAY TAKE ANY 
OF SEVERAL FORMS:  SOLE SOURCE DIRECT NEGOTIATION, LIMITED 
TENDER, OPEN TENDER, APPOINTED TENDER, OR SPECIAL PURCHASE. 
CURRENTLY, MINISTRIES AND AGENCIES HAVE DIFFERENT RULES ON 
MINIMUM VALUES FOR THE PURCHASE OF MATERIAL OR EQUIPMENT, 
WHICH MUST BE SUBJECT TO COMPETITIVE BIDDING.  HIGH VALUE OR 
IMPORTANT CONTRACTS SUCH AS INFRASTRUCTURE, (EXCEPT WORLD 
BANK, ASIAN DEVELOPMENT BANK, UNDP, OR BILATERAL OFFICIAL 
DEVELOPMENT ASSISTANCE PROJECTS) REQUIRE BID EVALUATION AND 
SELECTION AND ARE AWARDED BY THE PRIME MINISTER'S OFFICE OR 
OTHER COMPETENT BODY.  NO CONSOLIDATED OR REGULAR OFFICIAL 
LISTING OF GOVERNMENT TENDERS EXISTS; HOWEVER, SOME 
SOLICITATIONS ARE ANNOUNCED IN THE BOTH VIETNAMESE AND 
ENGLISH LANGUAGE NEWSPAPERS. 
                       UNCLASSIFIED 
 
PAGE 03        HANOI  03098  03 OF 08  301021Z 
 
EXPORT SUBSIDIES 
 
EXPORT CREDIT IS VERY LIMITED IN VIETNAM.  THE EXPORT 
PROMOTION FUND MANAGED BY THE MINISTRY OF FINANCE PROVIDES 
SMALL LOANS TO VIETNAM'S EXPORTERS FOR INVESTMENT, BUT NOT 
WORKING CAPITAL.   THE FUND ALSO PROVIDES VERY SMALL 
INCENTIVE AWARDS FOR EXPORTERS IN ALL SECTORS WHO MEET A 
CERTAIN LEVEL OF EXPORT VALUE. 
 
INTELLECTUAL PROPERTY RIGHTS (IPR) PROTECTION 
 
VIETNAM IS A MEMBER OF THE WORLD INTELLECTUAL PROPERTY 
ORGANIZATION (WIPO) AND IS A SIGNATORY TO THE PARIS 
CONVENTION FOR INDUSTRIAL PROPERTY.  IT HAS ACCEDED TO THE 
PATENT COOPERATION TREATY AND THE MADRID AGREEMENT.  WHILE 
NOT YET A PARTY TO THE BERNE CONVENTION, VIETNAM AGREED 
UNDER THE 1997 US-VIETNAM BILATERAL COPYRIGHT AGREEMENT TO 
PROVIDE US COPYRIGHTS PROTECTION ON A NATIONAL TREATMENT 
BASIS IN ACCORDANCE WITH THE TERMS OF THAT CONVENTION. 
UNDER THE TERMS OF THE BTA, VIETNAM IS OBLIGATED BY DECEMBER 
2003 TO MAKE ITS SYSTEM FOR PROTECTING IPR, INCLUDING 
ENFORCEMENT, CONSISTENT WITH THE WTO TRIPS AGREEMENT. 
CONSIDERABLE PROGRESS HAS BEEN MADE OVER THE PAST FEW YEARS 
IN ESTABLISHING THE LEGAL FRAMEWORK FOR IPR PROTECTION, WITH 
NEW REGULATIONS EXPANDING LEGAL PROTECTION TO AREAS 
PREVIOUSLY NOT COVERED, SUCH AS BUSINESS SECRETS AND NEW 
PLANT VARIETIES.  HOWEVER, THAT PROCESS IS NOT YET COMPLETE. 
IN ADDITION, ENFORCEMENT OF IP PROTECTION REMAINS EXTREMELY 
WEAK.   THE BTA REQUIRES THE GOVERNMENT OF VIETNAM TO 
PROVIDE EXPEDITIOUS REMEDIES TO PREVENT AND DETER 
                       UNCLASSIFIED 
 
PAGE 04        HANOI  03098  03 OF 08  301021Z 
INFRINGEMENT OF IP RIGHTS, INCLUDING PARTICULAR JUDICIAL AND 
ADMINISTRATIVE PROCEDURES, PROMPT AND EFFECTIVE PROVISIONAL 
MEASURES SECURED BY SUFFICIENT EVIDENCE, AND CRIMINAL 
PROCEDURES AND PENALTIES FOR WILLFUL TRADEMARK 
COUNTERFEITING OR INFRINGEMENT OF COPYRIGHTS OR NEIGHBORING 
RIGHTS ON A COMMERCIAL SCALE. 
 
PATENT AND TRADEMARKS 
 
TRADEMARK REGISTRATION IN VIETNAM IS RELATIVELY 
STRAIGHTFORWARD, ALTHOUGH INFRINGEMENT IS WIDESPREAD AND 
ENFORCEMENT OF ADMINISTRATIVE ORDERS AND COURT DECISIONS 
FINDING IPR INFRINGEMENT REMAINS PROBLEMATIC.  VIETNAM'S 
LAWS OFFER SOME PROTECTION FOR FOREIGN PATENT HOLDERS, BUT 
THERE ARE INFRINGEMENTS.  THE NATIONAL OFFICE OF INDUSTRIAL 
PROPERTY (NOIP) UNDER THE MINISTRY OF SCIENCE AND TECHNOLOGY 
(MOST) ADMINISTERS VIETNAM'S PATENT AND TRADEMARK 
REGISTRATION SYSTEMS.  NOIP HAS MADE SIGNIFICANT PROGRESS IN 
RECENT YEARS TO BUILD ITS CAPACITY ADEQUATELY TO RECORD AND 
ADJUDICATE PATENT AND TRADEMARK CLAIMS, AND IS WORKING WITH 
A NUMBER OF FOREIGN PATENT AND TRADEMARK AGENCIES TO ENHANCE 
ITS SYSTEMS.  YET OBTAINING EXPEDITIOUS ADJUDICATION AND 
ADMINISTRATIVE ENFORCEMENT OF PATENT AND TRADEMARK 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ3674 
 
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ACTION CIP-00 
 
INFO  LOG-00   AGRE-00  AID-00   AMAD-00  CIAE-00  COME-00  SRPP-00 
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O 300934Z DEC 02 
FM AMEMBASSY HANOI 
TO SECSTATE WASHDC IMMEDIATE 8492 
INFO AMCONSUL HO CHI MINH CITY 
ASEAN COLLECTIVE 
 
UNCLAS SECTION 04 OF 08 HANOI 003098 
 
SIPDIS 
 
STATE PASS USTR/GLORIA BLUE 
STATE FOR EB/MTA/MST 
 
VIOLATIONS REMAINS DIFFICULT. 
 
COPYRIGHT 
 
VIETNAM'S COPYRIGHT OFFICE IS UNDER THE CONTROL AND 
SUPERVISION OF THE MINISTRY OF CULTURE AND INFORMATION. 
                       UNCLASSIFIED 
 
PAGE 02        HANOI  03098  04 OF 08  301022Z 
SIGNIFICANT PROGRESS HAS BEEN MADE IN PUTTING IN PLACE THE 
LAWS TO PROTECT COPYRIGHTS, INCLUDING THOSE BELONGING TO 
FOREIGNERS, BUT ENFORCEMENT IS ALMOST NON-EXISTENT, 
ESPECIALLY FOR CERTAIN CATEGORIES OF PRODUCTS, SUCH AS PC 
SOFTWARE, MUSIC AND VIDEO CDS, VCDS, AND DVDS.  INDUSTRY 
ESTIMATES OF PIRACY RATES FOR SOFTWARE, MUSIC, AND VIDEOS 
RUN AS HIGH AS 99 PERCENT.  LOCAL POLICE AUTHORITIES OFTEN 
ARE SLOW TO ACT ON ADMINISTRATIVE ORDERS FINING INFRINGEMENT 
AND COURT DECISIONS. 
 
SERVICES BARRIERS 
 
UNDER THE TERMS OF THE BTA, VIETNAM AGREED FOR THE FIRST 
TIME TO LIBERALIZE A BROAD ARRAY OF SERVICES SECTORS, 
INCLUDING TELECOMMUNICATIONS, ACCOUNTING, BANKING, AND 
DISTRIBUTION SERVICES, AND TO APPLY MFN TREATMENT TO US 
SERVICES SUPPLIERS IN ALL SECTORS AND FOR ALL MODES OF 
SUPPLY (WITH ITEMIZED EXCEPTIONS).  THE BTA ALSO 
INCORPORATED THE WTO AGREEMENTS ON TRADE IN SERVICES (GATS) 
(EXCEPT PARAGRAPHS 3 AND 4), ANNEX ON MOVEMENT OF NATURAL 
PERSONS, ANNEX ON TELECOMMUNICATIONS (EXCEPT PARAGRAPHS 6 
AND 7), AND THE TELECOMMUNICATIONS REFERENCE PAPER. 
VIETNAM'S COMMITMENTS TO LIBERALIZE MARKET ACCESS ON 
SERVICES ARE PHASED IN OVER SPECIFIED TIME PERIODS DEPENDING 
ON THE SECTOR.  THE COMMITMENTS BY SECTOR ARE AS FOLLOWS: 
 
ACCOUNTING, AUDITING, AND BOOK-KEEPING SERVICES:  FOR THE 
FIRST THREE YEARS UNDER THE BTA, LICENSES WILL BE GRANTED ON 
A CASE-BY-CASE BASIS.  THE COMPANY MUST EMPLOY AT LEAST FIVE 
PERSONS WITH VIETNAMESE CPAS WHO HAVE PRACTICED IN VIETNAM 
FOR MORE THAN ONE YEAR.  FOR THE FIRST TWO YEARS UNDER THE 
                       UNCLASSIFIED 
 
PAGE 03        HANOI  03098  04 OF 08  301022Z 
BTA, FIRMS WITH US EQUITY WILL ONLY BE ALLOWED TO SUPPLY 
SERVICES TO FOREIGN-INVESTED ENTERPRISES AND FOREIGN FUNDED 
PROJECTS IN VIETNAM.  BRANCHING IS NOT PERMITTED. 
 
TAXATION SERVICES:  FOR THE FIRST FIVE YEARS UNDER THE BTA, 
LICENSES WILL BE GRANTED ON A CASE-BY-CASE BASIS AND FIRMS 
WITH US EQUITY WILL ONLY BE ALLOWED TO SUPPLY SERVICES TO 
FOREIGN-INVESTED ENTERPRISES AND FOREIGN FUNDED PROJECTS IN 
VIETNAM.  BRANCHING IS NOT PERMITTED. 
 
ARCHITECTURAL, ENGINEERING, AND COMPUTER SERVICES:  FOR A 
PERIOD OF TWO YEARS FROM THE DATE OF ESTABLISHMENT AND 
OPERATION, US-OWNED COMPANIES MAY ONLY PROVIDE SERVICES TO 
ENTERPRISES WITH FOREIGN DIRECTLY-INVESTED CAPITAL IN 
VIETNAM.  US COMPANIES HAVE TO BE LEGALLY REGISTERED IN THE 
U.S.  BRANCHING IS NOT PERMITTED. 
 
US COMPANIES AND COMPANIES WITH US DIRECTLY-INVESTED CAPITAL 
ARE NOT PERMITTED TO CARRY OUT TOPOGRAPHIC, CONSTRUCTION 
GEOLOGICAL, METROLOGICAL, GEOLOGICAL, AND ENVIRONMENTAL 
INVESTIGATIONS; OR TECHNICAL INVESTIGATIONS FOR DESIGNING 
RURAL-URBAN CONSTRUCTION PLANS, UNLESS OTHERWISE AUTHORIZED 
BY THE GVN. 
 
LEGAL SERVICES:  UNDER THE TERMS OF THE BTA, 100 PERCENT 
EQUITY OWNERSHIP IN COMPANIES, JOINT VENTURES, AND BRANCHES 
ARE PERMITTED.  US LAWYERS MAY NOT APPEAR BEFORE VIETNAMESE 
COURTS.  HOWEVER, US FIRMS MAY ADVISE ON VIETNAMESE LAW IF 
THEY HIRE PERSONS WITH VIETNAMESE LAW DEGREES WHO SATISFY 
THE REQUIREMENTS APPLIED TO LIKE VIETNAMESE PRACTITIONERS. 
BRANCHES OF LAW FIRMS MAY RECEIVE A 5-YEAR RENEWABLE 
                       UNCLASSIFIED 
 
PAGE 04        HANOI  03098  04 OF 08  301022Z 
LICENSE. 
 
ADVERTISING SERVICES AND MARKET RESEARCH:  VIETNAM HAS NOT 
AGREED TO PROVIDE MARKET ACCESS FO ADVERTISING SERVICES FOR 
WINES AND CIGARETTES OR FOR THE CROSS-BORDER SUPPLY OF 
MARKET RESEARCH SRVICES.  US COMPANIES IN THESE SECTORS MAY 
ONLY STABLISH A COMMERCIAL PRESENCE THROUGH JOINT VENTUES 
OR BUSINESS COOPERATION CONTRACTS WITH VIETNAESE PARTNERS. 
US INVESTMENT IS LIMITED TO 49 PERCENT OF THE LEGAL CAPITAL 
FOR THE FIRST FIVE YEARS UNDER THE BILATERAL TRADE 
AGREEMENT, 51 PERCENT FOR YEARS SIX AND SEVEN, AND IS 
UNLIMITED AFTER THAT.  VIETNAM HAS NOT AGREED TO ENSURE 
NATIONAL TREATMENT FOR THE CROSS-BORDER SUPPLY OF MARKET 
RESEARCH SERVICES. 
 
MANAGEMENT CONSULTING:  US COMPANIES MAY ONLY ESTABLISH A 
COMMERCIAL PRESENCE THROUGH JOINT VENTURES OR BUSINESS 
COOPERATION CONTRACTS.  AFTER THE BILATERAL TRADE AGREEMENT 
HAS BEEN IN EFFECT FOR 5 YEARS, ENTERPRISES WITH 100 PERCENT 
US OWNERSHIP WILL BE PERMITTED. 
 
TELECOMMUNICATION SERVICES:  INITIALLY, THE PROVISION OF 
BASIC TELECOMMUNICATIONS SERVICES, VALUE-ADDED TELECOM 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ3676 
 
PAGE 01        HANOI  03098  05 OF 08  301022Z 
ACTION CIP-00 
 
INFO  LOG-00   AGRE-00  AID-00   AMAD-00  CIAE-00  COME-00  SRPP-00 
      EAP-00   EB-00    E-00     UTED-00  FCC-01   TEDE-00  INR-00 
      IO-00    LAB-01   L-00     MOFM-05  MOF-01   NSAE-00  OES-00 
      OIC-02   SSO-00   SS-00    STR-00   TEST-00  TRSE-00  USIE-00 
      DRL-02   G-00     SAS-00     /012W 
                  ------------------1E0114  301022Z /38 
O 300934Z DEC 02 
FM AMEMBASSY HANOI 
TO SECSTATE WASHDC IMMEDIATE 8493 
INFO AMCONSUL HO CHI MINH CITY 
ASEAN COLLECTIVE 
 
UNCLAS SECTION 05 OF 08 HANOI 003098 
 
SIPDIS 
 
STATE PASS USTR/GLORIA BLUE 
STATE FOR EB/MTA/MST 
 
 
SERVICES, AND VOICE TELEPHONE SERVICES ARE ONLY PERMITTED 
THROUGH BUSINESS CONTRACTS WITH VIETNAMESE GATEWAY 
OPERATORS.  TWO YEARS AFTER ENTRY-INTO-FORCE OF THE BTA 
(THREE YEARS IN THE CASE OF INTERNET SERVICES), US VALUE- 
ADDED TELECOM SERVICE PROVIDERS MAY ESTABLISH JOINT VENTURES 
WITH VIETNAMESE PARTNERS WITH UP TO 50 PERCENT EQUITY 
                       UNCLASSIFIED 
 
PAGE 02        HANOI  03098  05 OF 08  301022Z 
OWNERSHIP.  THESE JOINT VENTURES MAY NOT, HOWEVER, CONSTRUCT 
THEIR OWN LONG-DISTANCE AND INTERNATIONAL CIRCUITS.  FOUR 
YEARS AFTER ENTRY-INTO-FORCE OF THE BTA, US BASIC TELECOM 
SERVICE SUPPLIERS CAN ESTABLISH JOINT VENTURES WITH 
VIETNAMESE PARTNERS WITH UP TO 49 PERCENT US EQUITY 
OWNERSHIP.  THESE JOINT VENTURES MAY NOT, HOWEVER, CONSTRUCT 
THEIR OWN LONG-DISTANCE AND INTERNATIONAL CIRCUITS.  SIX 
YEARS AFTER ENTRY-INTO-FORCE OF THE AGREEMENT, US VOICE 
TELEPHONE SERVICE PROVIDERS MAY ESTABLISH JOINT VENTURES 
WITH VIETNAMESE PARTNERS WITH UP TO 49 PERCENT US EQUITY 
OWNERSHIP. 
 
AUDIO VISUAL SERVICES:  VIETNAM HAS NOT AGREED TO PROVIDE 
MARKET ACCESS OR NATIONAL TREATMENT FOR CROSS-BORDER SUPPLY 
OR CONSUMPTION ABROAD OF AUDIO VISUAL SERVICES.  US SERVICE 
SUPPLIERS MAY ESTABLISH A COMMERCIAL PRESENCE ONLY THROUGH A 
BUSINESS COOPERATION CONTRACT OR JOINT VENTURE WITH A 
VIETNAMESE PARTNER.  FOR THE FIRST FIVE YEARS AFTER ENTRY- 
INTO-FORCE OF THE AGREEMENT, US OWNERSHIP MAY NOT EXCEED 49 
PERCENT.  AFTER FIVE YEARS, US OWNERSHIP MAY NOT EXCEED 51 
PERCENT. 
 
CONSTRUCTION AND RELATED ENGINEERING SERVICES:  VIETNAM HAS 
NOT AGREED TO PROVIDE MARKET ACCESS OR NATIONAL TREATMENT 
FOR THE CROSS-BORDER SUPPLY OF CONSTRUCTION AND RELATED 
ENGINEERING SERVICES.  BRANCHES ARE NOT PERMITTED.  FOR THE 
FIRST THREE YEARS AFTER THEIR ESTABLISHMENT AND OPERATION, 
100 PERCENT US-OWNED ENTERPRISES MAY ONLY PROVIDE SERVICES 
TO ENTERPRISES WITH FOREIGN DIRECTLY-INVESTED CAPITAL IN 
VIETNAM.  US COMPANIES MUST BE LEGALLY REGISTERED FOR 
OPERATION IN THE U.S. 
                       UNCLASSIFIED 
 
PAGE 03        HANOI  03098  05 OF 08  301022Z 
 
DISTRIBUTION SERVICES:  VIETNAM DOES NOT PROVIDE MARKET 
ACCESS OR NATIONAL TREATMENT FOR THE CROSS-BORDER SUPPLY OF 
DISTRIBUTION SERVICES.  THREE YEARS AFTER ENTRY-INTO-FORCE 
OF THE BILATERAL TRADE AGREEMENT, US SERVICE PROVIDERS MAY 
ESTABLISH JOINT VENTURES WITH VIETNAMESE PARTNERS WITH UP TO 
49 PERCENT US EQUITY.  AFTER SIX YEARS, US OWNERSHIP IN 
JOINT VENTURES WILL BE UNLIMITED.  AFTER SEVEN YEARS, 
COMPANIES WITH 100 PERCENT EQUITY WILL BE ALLOWED.  ONE 
RETAIL OUTLET MAY BE ESTABLISHED AS OF RIGHT, WHILE 
ADDITIONAL OUTLETS WILL BE CONSIDERED ON A CASE-BY-CASE 
BASIS.  FOR SOME AGRICULTURAL AND INDUSTRIAL PRODUCTS, 
MARKET ACCESS IN THIS SECTOR IS SUBJECT TO ADDITIONAL 
LIMITATIONS, WHICH WILL BE PHASED OUT OVER A PERIOD OF THREE 
TO FIVE YEARS.  THERE ARE A LIMITED NUMBER OF PRODUCTS FOR 
WHICH VIETNAM DID NOT COMMIT TO ALLOW DISTRIBUTION SERVICES. 
 
EDUCATIONAL SERVICES:  VIETNAM WILL NOT PROVIDE MARKET 
ACCESS OR NATIONAL TREATMENT FOR THE CROSS-BORDER SUPPLY OF 
EDUCATIONAL SERVICES.  FOR THE FIRST SEVEN YEARS AFTER ENTRY- 
INTO-FORCE OF THE BTA, US COMPANIES MAY ONLY ESTABLISH A 
COMMERCIAL PRESENCE THROUGH A JOINT VENTURE.  AFTER THAT, 
SCHOOLS WITH 100 PERCENT US-INVESTED CAPITAL MAY BE 
ESTABLISHED.  FOREIGN TEACHERS EMPLOYED BY EDUCATIONAL UNITS 
WITH US-INVESTED CAPITAL MUST HAVE FIVE YEARS TEACHING 
EXPERIENCE AND BE RECOGNIZED BY THE MINISTRY OF EDUCATION. 
 
INSURANCE SERVICES:  VIETNAM HAS AGREED TO ALLOW MARKET 
ACCESS FOR THE CROSS-BORDER SUPPLY OF INSURANCE SERVICES TO 
ENTERPRISES WITH FOREIGN INVESTED CAPITAL OR FOREIGNERS 
WORKING IN VIETNAM; REINVESTMENT SERVICES; INSURANCE 
                       UNCLASSIFIED 
 
PAGE 04        HANOI  03098  05 OF 08  301022Z 
SERVICES IN INTERNATIONAL TRANSPORTATION; INSURANCE 
BROKERING AND REINSURANCE BROKERING SERVICES; AND ADVISORY, 
CLAIM SETTLEMENT, AND RISK ASSESSMENT SERVICES.  THREE YEARS 
AFTER ENTRY-INTO-FORCE OF THE BTA, US COMPANIES CAN 
ESTABLISH JOINT VENTURES WITH VIETNAMESE PARTNERS WITH UP TO 
50 PERCENT US EQUITY PARTICIPATION.  AFTER FIVE YEARS, 100 
PERCENT US-INVESTED COMPANIES MAY BE ESTABLISHED. 
 
COMPANIES WITH US-INVESTED CAPITAL CANNOT PROVIDE MOTOR 
VEHICLE THIRD PARTY LIABILITY, INSURANCE IN CONSTRUCTION AND 
INSTALLATION, INSURANCE FOR OIL AND GAS PROJECTS, OR 
INSURANCE FOR PROJECTS AND CONSTRUCTION OF HIGH DANGER TO 
PUBLIC SECURITY AND ENVIRONMENT.   THREE YEARS AFTER ENTRY- 
INTO-FORCE OF THE BTA, THIS LIMITATION IS ELIMINATED FOR 
JOINT VENTURES.  AFTER SIX YEARS, THIS LIMITATION IS 
ELIMINATED FOR COMPANIES WITH 100 PERCENT US CAPITAL. 
 
FOR THE FIRST 5 YEARS AFTER ENTRY-INTO-FORCE OF THE BTA, ANY 
COMPANY WITH US CAPITAL MUST REINSURE THROUGH THE 
REINSURANCE COMPANY OF VIETNAM, WITH THE MINIMUM PROPORTION 
OF 20 PERCENT. 
 
BANKING:  VIETNAM HAS NOT AGREED TO PROVIDE MARKET ACCESS OR 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ3679 
 
PAGE 01        HANOI  03098  06 OF 08  301023Z 
ACTION CIP-00 
 
INFO  LOG-00   AGRE-00  AID-00   AMAD-00  CIAE-00  COME-00  SRPP-00 
      EAP-00   EB-00    E-00     UTED-00  FCC-01   TEDE-00  INR-00 
      IO-00    LAB-01   L-00     MOFM-05  MOF-01   NSAE-00  OES-00 
      OIC-02   SSO-00   SS-00    STR-00   TEST-00  TRSE-00  USIE-00 
      DRL-02   G-00     SAS-00     /012W 
                  ------------------1E011C  301023Z /38 
O 300934Z DEC 02 
FM AMEMBASSY HANOI 
TO SECSTATE WASHDC IMMEDIATE 8494 
INFO AMCONSUL HO CHI MINH CITY 
ASEAN COLLECTIVE 
 
UNCLAS SECTION 06 OF 08 HANOI 003098 
 
SIPDIS 
 
STATE PASS USTR/GLORIA BLUE 
STATE FOR EB/MTA/MST 
 
 
NATIONAL TREATMENT FOR THE CROSS-BORDER PROVISION OF BANKING 
SERVICES, EXCEPT FOR FINANCIAL INFORMATION SERVICES AND 
ADVISORY, INTERMEDIATION, AND OTHER AUXILIARY SERVICES.  US 
BANKS MAY ESTABLISH BRANCHES, JOINT VENTURES WITH VIETNAMESE 
BANKS, WHOLLY OWNED US FINANCIAL LEASING COMPANIES OR JOINT 
VENTURE FINANCIAL LEASING COMPANIES WITH VIETNAMESE 
                       UNCLASSIFIED 
 
PAGE 02        HANOI  03098  06 OF 08  301023Z 
PARTNERS. 
 
FOR THE FIRST THREE YEARS AFTER ENTRY-INTO-FORCE OF THE BTA, 
THE ONLY LEGAL FORM APART FROM BANKS AND LEASING COMPANIES 
IN WHICH US COMPANIES MAY PROVIDE FINANCIAL SERVICES IS 
THROUGH JOINT VENTURES WITH VIETNAMESE BANKS.  DURING THE 
FIRST NINE YEARS, US EQUITY IN JOINT VENTURE BANKS MUST BE 
BETWEEN 30 AND 49 PERCENT.  AFTER NINE YEARS, 100 PERCENT 
EQUITY PARTICIPATION IN SUBSIDIARY BANKS WILL BE ALLOWED. 
 
THE RIGHT OF US BANKS TO ACCEPT VIETNAMESE DONG DEPOSITS ON 
THE SAME BASIS AS DOMESTIC BANKS WILL BE PHASED IN OVER 
EIGHT YEARS FOR BUSINESS CLIENTELE AND TEN YEARS FOR RETAIL 
DEPOSITORS.  AFTER THIS, US BANK BRANCHES WILL BE ENTITLED 
TO FULL NATIONAL TREATMENT.  IN ADDITION, FINANCIAL 
INSTITUTIONS WITH US EQUITY CANNOT ISSUE CREDIT CARDS ON A 
NATIONAL TREATMENT BASIS UNTIL EIGHT YEARS AFTER ENTRY-INTO- 
FORCE OF THE BTA. 
 
VIETNAM RESERVED THE RIGHT TO LIMIT, ON A NATIONAL TREATMENT 
BASIS, EQUITY INVESTMENT BY US BANKS IN PRIVATIZED 
VIETNAMESE STATE-OWNED BANKS. 
 
US BANK BRANCHES, SUBSIDIARIES, OR US-VIETNAM JOINT VENTURES 
MUST OBTAIN A LICENSE TO ESTABLISH A COMMERCIAL PRESENCE IN 
VIETNAM.  A US PARENT BANK MUST PROVIDE MINIMUM CAPITAL OF 
USD 15 MILLION TO ESTABLISH A BRANCH.  ESTABLISHING A US- 
VIETNAM JOINT VENTURE BANK OR A US BANK SUBSIDIARY REQUIRES 
MINIMUM CAPITAL OF USD 10 MILLION. 
 
FOR THE FIRST THREE YEARS AFTER THE ENTRY-INTO-FORCE OF THE 
                       UNCLASSIFIED 
 
PAGE 03        HANOI  03098  06 OF 08  301023Z 
AGREEMENT, FINANCIAL INSTITUTIONS WITH 100 PERCENT US EQUITY 
OWNERSHIP MAY NOT TAKE AN INITIAL MORTGAGE INTEREST IN LAND 
USE RIGHTS.  AFTER THREE YEARS, THESE INSTITUTIONS WILL BE 
ALLOWED TO TAKE AN INITIAL MORTGAGE INTEREST IN LAND-USE 
RIGHTS HELD BY FOREIGN-INVESTED ENTERPRISES, AND MAY USE 
MORTGAGES OR LAND-USE RIGHTS FOR THE PURPOSE OF LIQUIDATION 
IN CASE OF DEFAULT. 
 
ESTABLISHING A WHOLLY-OWNED SUBSIDIARY OF A US FINANCIAL 
LEASING COMPANY OR A JOINT VENTURE LEASING COMPANY REQUIRES 
THREE CONSECUTIVE PROFITABLE YEARS, AND USD 5 MILLION IN 
LEGAL CAPITAL. 
 
FOR THE FIRST THREE YEARS UNDER THE BTA, VIETNAM IS NOT 
OBLIGATED TO PROVIDE NATIONAL TREATMENT WITH RESPECT TO 
ACCESS TO CENTRAL BANK REDISCOUNTING, SWAP, AND FORWARD 
FACILITIES. 
 
NON-BANKING FINANCIAL SERVICES:  THE BTA ALLOWS 100 PERCENT 
US EQUITY IN FINANCIAL LEASING AND IN OTHER LEASING AFTER 3 
YEARS. 
 
SECURITIES-RELATED SERVICES:  VIETNAM HAS NOT AGREED TO 
PROVIDE MARKET ACCESS OR NATIONAL TREATMENT FOR THE CROSS- 
BORDER SUPPLY OF SECURITIES-RELATED SERVICES.  NON-BANK US 
SECURITIES SERVICE SUPPLIERS MAY ONLY ESTABLISH A COMMERCIAL 
PRESENCE IN VIETNAM IN THE FORM OF A REPRESENTATIVE OFFICE. 
 
HEALTH-RELATED SERVICES:  US OPERATORS MAY PROVIDE SERVICE 
THROUGH THE ESTABLISHMENT OF 100 PERCENT US-OWNED 
OPERATIONS, JOINT VENTURES WITH VIETNAMESE PARTNERS OR 
                       UNCLASSIFIED 
 
PAGE 04        HANOI  03098  06 OF 08  301023Z 
THROUGH BUSINESS COOPERATION CONTRACTS.  THE MINIMUM 
INVESTMENT CAPITAL IS USD 20 MILLION FOR A HOSPITAL, USD 2 
MILLION FOR A POLYCLINIC, AND USD 1 MILLION FOR A SPECIALTY 
UNIT. 
 
TOURISM AND TRAVEL-RELATED SERVICES:  US COMPANIES MAY 
ESTABLISH A COMMERCIAL PRESENCE TO PROVIDE HOTEL AND 
RESTAURANT SERVICES, IN CONJUNCTION WITH INVESTMENT FOR THE 
CONSTRUCTION OF A HOTEL, EITHER IN THE FORM OF BUSINESS 
COOPERATION CONTRACTS, JOINT VENTURES WITH VIETNAMESE 
PARTNERS, OR COMPANIES WITH 100 PERCENT US EQUITY 
INVESTMENT. 
 
THER ARE LIMITATIONS WITH RESPECT TO TRAVEL AGENCIES AND 
TOUR OPERATORS.  US COMPANIES SUPPLYING THESE SERVICES MAY 
ESTABLISH ACOMMERCIAL PRESENCE ONLY THROUGH A JOINT VENTURE 
WITH VIETNAMESE PARTNERS AND CAN INITIALLY ONLY COTRIBUTE 
49 PERCENT OF THE CAPITAL.  THREE YEARS FTER ENTRY-INTO 
FORCE O THE BTA, 51 PERCENT PARTICIPATION WILL BE ALLOWED 
AND ALL LIMITATIONS WILL BE ABOLISHED AFTER FIV YEARS. 
TOURIST GUIDES IN JOINT VENTURES MUST BE IETNAMESE 
CITIZENS.  SERVICE SUPPLYING COMPANIESWITH US-INVESTED 
CAPITAL MAY ONLY SUPPLY INBOUNDSERVICE. 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ3683 
 
PAGE 01        HANOI  03098  07 OF 08  301023Z 
ACTION CIP-00 
 
INFO  LOG-00   AGRE-00  AID-00   AMAD-00  CIAE-00  COME-00  SRPP-00 
      EAP-00   EB-00    E-00     UTED-00  FCC-01   TEDE-00  INR-00 
      IO-00    LAB-01   L-00     MOFM-05  MOF-01   NSAE-00  OES-00 
      OIC-02   SSO-00   SS-00    STR-00   TEST-00  TRSE-00  USIE-00 
      DRL-02   G-00     SAS-00     /012W 
                  ------------------1E012A  301023Z /38 
O 300934Z DEC 02 
FM AMEMBASSY HANOI 
TO SECSTATE WASHDC IMMEDIATE 8495 
INFO AMCONSUL HO CHI MINH CITY 
ASEAN COLLECTIVE 
 
UNCLAS SECTION 07 OF 08 HANOI 003098 
 
SIPDIS 
 
STATE PASS USTR/GLORIA BLUE 
STATE FOR EB/MTA/MST 
 
 
INVESTMENT BARRIERS 
 
AT PRESENT THE GOVERNMENT OF VIETNAM MAINTAINS AN EXTENSIVE 
INVESTMENT LICENSING PROCESS, WHICH IS CHARACTERIZED BY 
STRINGENT AND TIME CONSUMING REQUIREMENTS THAT ARE 
                       UNCLASSIFIED 
 
PAGE 02        HANOI  03098  07 OF 08  301023Z 
FREQUENTLY USED TO PROTECT DOMESTIC INTERESTS, LIMIT 
COMPETITION, AND ALLOCATE FOREIGN INVESTMENT RIGHTS AMONG 
VARIOUS COUNTRIES.  FOREIGN BUSINESSES ARE PERMITTED TO 
REMIT PROFITS, SHARED REVENUES FROM JOINT VENTURES, INCOMES 
FROM SERVICES AND TECHNOLOGY TRANSFERS, LEGALLY-OWNED 
CAPITAL, AND PROPERTIES IN HARD CURRENCY.  FOREIGNERS ARE 
ALSO ALLOWED TO REMIT ABROAD ROYALTIES AND FEES PAID FOR THE 
SUPPLY OF TECHNOLOGIES AND SERVICES, PRINCIPAL AND INTEREST 
ON LOANS OBTAINED FOR BUSINESS OPERATIONS, AND INVESTMENT 
CAPITAL AND OTHER MONEY AND ASSETS UNDER THEIR LEGITIMATE 
OWNERSHIP.  HOWEVER, THEIR ABILITY TO CONVERT DONG INTO HARD 
CURRENCY IS SUBJECT TO AVAILABILITY, CAUSING FOREIGN- 
INVESTED ENTERPRISES TO EXPERIENCE PROBLEMS IN SECURING HARD 
CURRENCY. 
 
THE US-VIETNAM BILATERAL TRADE AGREEMENT PROVIDES A BROAD 
RANGE OF BENEFITS TO US INVESTORS IN VIETNAM THAT SHOULD 
SIGNIFICANTLY ENHANCE THE INVESTMENT ENVIRONMENT FOR US 
FIRMS.  VIETNAMESE INVESTMENT OBLIGATIONS UNDER THE BTA 
INCLUDE:  PROVIDING NATIONAL AND MOST-FAVORED-NATION 
TREATMENT, EXCEPT WHERE EXPLICIT EXCEPTIONS HAVE BEEN MADE; 
GUARANTEEING ACCESS TO THIRD-PARTY INVESTOR-STATE DISPUTE 
SETTLEMENT; AND ENSURING TREATMENT OF EXPROPRIATION 
CONSISTENT WITH INTERNATIONAL STANDARDS.  IN ADDITION, 
VIETNAM IS OBLIGATED GRADUALLY TO DISCONTINUE APPLICATION OF 
ANY TRIMS OR PERFORMANCE REQUIREMENTS INCONSISTENT WITH THE 
WTO TRIMS AGREEMENT.  VIETNAM CURRENTLY DOES IMPOSE A NUMBER 
OF PERFORMANCE REQUIREMENTS WITH RESPECT TO THE 
ESTABLISHMENT OF AN INVESTMENT AND/OR THE RECEIPT OF A 
BENEFIT OR INCENTIVE.  THE BTA OBLIGATES VIETNAM TO PHASE 
OUT SEVERAL TRIMS-INCONSISTENT LOCAL CONTENT REQUIREMENTS 
                       UNCLASSIFIED 
 
PAGE 03        HANOI  03098  07 OF 08  301023Z 
WITHIN FIVE YEARS OR LESS OF THE BTA'S ENTRY-INTO-FORCE. 
VIETNAM IS ALSO OBLIGATED TO REFRAIN FROM IMPOSING 
REQUIREMENTS TO TRANSFER TECHNOLOGY AS A CONDITION FOR THE 
ESTABLISHMENT, EXPANSION, ACQUISITION, MANAGEMENT, CONDUCT, 
OR OPERATION OF AN INVESTMENT. 
 
ANTICOMPETITIVE PRACTICES 
 
VIETNAM MAINTAINS A POLICY OF BIAS IN FAVOR OF DOMESTIC- 
MARKET ORIENTED INDUSTRIES, PARTICULARLY THOSE DOMINATED BY 
STATE-OWNED ENTERPRISES.  ALTHOUGH LEGALLY ALL REGISTERED 
FIRMS, REGARDLESS OF OWNERSHIP, CAN ENGAGE IN FOREIGN TRADE, 
BARRIERS EXIST THAT DISCOURAGE TRADING BY NON-STATE 
ENTERPRISES.  FOR EXAMPLE, STRINGENT REGULATORY REQUIREMENTS 
DEMANDED BY MINISTRIES PREVENT PRIVATE FIRMS FROM EXPORTING 
RICE OR IMPORTING FERTILIZER.  ALSO, MONOPOLIES IN 
PRODUCTION RESULT IN MONOPOLIES IN TRADING, AS IN THE CASE 
OF COAL.  THE TARIFF STRUCTURE ALSO FAVORS DOMESTIC 
INDUSTRIES, PARTICULARLY THOSE DOMINATED BY STATE-OWNED 
ENTERPRISES.  MOST LOWER TARIFFS ARE ON ITEMS PREDOMINANTLY 
USED BY THOSE ENTERPRISES AS INPUTS. 
 
ELECTRONIC COMMERCE 
 
TO DATE, E-COMMERCE HAS NOT MADE MUCH PROGRESS IN VIETNAM. 
OBSTACLES TO ITS DEVELOPMENT INCLUDE: THE LOW NUMBER OF 
INTERNET SUBSCRIBERS IN-COUNTRY, OBTRUSIVE FIREWALLS, 
LIMITED BANDWIDTH AND OTHER PROBLEMS WITH THE INTERNET 
INFRASTRUCTURE, LIMITATIONS OF THE FINANCIAL SYSTEM 
(INCLUDING THE LOW NUMBER OF CREDIT CARDS IN USE), AND 
REGULATORY BARRIERS.  HOWEVER, RECENT DEVELOPMENTS TO 
                       UNCLASSIFIED 
 
PAGE 04        HANOI  03098  07 OF 08  301023Z 
FACILITATE THE GROWTH OF E-COMMERCE IN VIETNAM INCLUDE LEGAL 
ACCEPTANCE OF E-SIGNATURES AND IMPLEMENTATION OF THE 
ELECTRONIC INTER-BANK TRANSACTION SYSTEM. THE NUMBER OF 
ONLINE TRANSACTIONS HAS BEEN INCREASING. 
 
THE GOVERNMENT OF VIETNAM CONTINUES TO ATTEMPT TO KEEP CLOSE 
CONTROL ON ALL WEBSITES ESTABLISHED IN VIETNAM.  IN OCTOBER 
2002, THE GVN PASSED A NEW REGULATION ON THE ESTABLISHMENT 
AND MODIFICATION OF WEBSITES.  THE REGULATION REQUIRES 
DOMESTIC AND FOREIGN AGENCIES, ORGANIZATIONS, AND 
ENTERPRISES TO OBTAIN A LICENSE FROM THE MINISTRY OF CULTURE 
AND INFORMATION BEFORE ESTABLISHING NEW WEBSITES.  THE 
MINISTRY THEN HAS 30 DAYS TO MAKE A DECISION ON GRANTING THE 
LICENSE.  THE REGULATION ALSO REQUIRES DIPLOMATIC AND OTHER 
FOREIGN ENTITIES TO OBTAIN WRITTEN APPROVAL FROM THE 
MINISTRY OF FOREIGN AFFAIRS (MFA) BEFORE REQUESTING A 
LICENSE FROM MOCI.  THE GVN MAY ALSO REQUIRE ORGANIZATIONS 
TO REQUEST PERMISSION FROM MOCI BEFORE MAKING CHANGES TO THE 
CONTENT OF THEIR EXISTING WEBSITES BASED ON LICENSING 
REQUIREMENTS IN THE REGULATION. 
 
OTHER BARRIERS 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ3684 
 
PAGE 01        HANOI  03098  08 OF 08  301023Z 
ACTION CIP-00 
 
INFO  LOG-00   AGRE-00  AID-00   AMAD-00  CIAE-00  COME-00  SRPP-00 
      EAP-00   EB-00    E-00     UTED-00  FCC-01   TEDE-00  INR-00 
      IO-00    LAB-01   L-00     MOFM-05  MOF-01   NSAE-00  OES-00 
      OIC-02   SSO-00   SS-00    STR-00   TEST-00  TRSE-00  USIE-00 
      DRL-02   G-00     SAS-00     /012W 
                  ------------------1E0132  301023Z /38 
O 300934Z DEC 02 
FM AMEMBASSY HANOI 
TO SECSTATE WASHDC IMMEDIATE 8496 
INFO AMCONSUL HO CHI MINH CITY 
ASEAN COLLECTIVE 
 
UNCLAS SECTION 08 OF 08 HANOI 003098 
 
SIPDIS 
 
STATE PASS USTR/GLORIA BLUE 
STATE FOR EB/MTA/MST 
 
 
CORRUPTION 
 
US, OTHER FOREIGN, AND DOMESTIC FIRMS HAVE IDENTIFIED 
CORRUPTION IN VIETNAM IN ALL PHASES OF BUSINESS OPERATIONS 
AS AN OBSTACLE TO THEIR BUSINESS ACTIVITIES.  VIETNAM SCORED 
A 2.6 OUT OF A POSSIBLE HIGH SCORE OF 10 POINTS ON 
                       UNCLASSIFIED 
 
PAGE 02        HANOI  03098  08 OF 08  301023Z 
TRANSPARENCY INTERNATIONAL'S CORRUPTION PERCEPTION INDEX. 
IN LARGE PART DUE TO A LACK OF TRANSPARENCY, ACCOUNTABILITY, 
AND MEDIA FREEDOM, WIDESPREAD OFFICIAL CORRUPTION AND 
INEFFICIENT BUREAUCRACY REMAIN SERIOUS PROBLEMS THAT EVEN 
THE COMMUNIST PARTY OF VIETNAM AND THE GVN ADMIT THEY MUST 
ADDRES SQUARELY AND SOON.  COMPETITION AMONG GOVERNMENT 
AGENCIES FOR CONTROL OVER BUSINESS AND INVESTMENTS HAS 
CREATED A CONFUSION OF OVERLAPPING JURISDICTIONS AND 
BUREAUCRATIC PROCEDURES AND APPROVALS, WHICH IN TURN CREATE 
OPPORTUNITIES FOR CORRUPTION.  LOW PAY FOR GOVERNMENT 
OFFICIALS AND WOEFULLY INADEQUATE SYSTEMS FOR HOLDING 
OFFICIALS ACCOUNTABLE FOR THEIR ACTIONS COMPOUND THE 
PROBLEMS.  IMPLEMENTATION OF THE GVN'S PUBLIC ADMINISTRATION 
REFORM PROGRAM, DEVELOPED IN WITH THE ASSISTANCE OF THE 
WORLD BANK, AS WELL AS VIETNAM'S OBLIGATIONS UNDER THE 
TRANSPARENCY PROVISIONS OF THE BTA PROMISE SOME IMPROVEMENT 
IN THE SITUATION IN THE MEDIUM TO LONG TERM, BUT IT APPEARS 
UNLIKELY THERE WILL BE MUCH IMPROVEMENT IN THE NEAR TERM. 
BURGHARDT 
 
                       UNCLASSIFIED 

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