US embassy cable - 03HOCHIMINHCITY1142

UNCLAS SECTION 01 OF 02 HO CHI MINH CITY 001142 
 
SIPDIS 
 
SENSITIVE 
 
DEPT FOR BCLTV 
 
E. O. 12958: N/A 
TAGS: SOCI, ECON, PHUM, PGOV, PREL, KIRF, VM 
SUBJECT: KIEN GIANG PROVINCE: PRACTICALLY PERFECT, IF NOT FOR THE 
POVERTY 
 
REF:  HCMC 00713 
 
1.  (SBU) SUMMARY.  The southern Mekong Delta province of Kien 
Giang faces significant challenges in attracting foreign 
investment and reducing poverty.  Despite impressive recent 
economic growth, mostly due to rice farmers converting to more 
profitable shrimp farming, the province is still underdeveloped, 
lacking infrastructure and educational and health care facilities. 
Most plans for economic diversification center around tourism 
development of the island of Phu Quoc and attracting both foreign 
direct investment and foreign development assistance.  During a 
recent visit to the provincial capital Rac Gia, DPO and Poloff met 
with Kien Giang People's Committee Vice Chairman Van Ha Phong, 
representatives of the Provincial Committees for Ethnic Minority 
and Religious Affairs, the Department of Planning and Investment 
(DPI), and the Department of Labor, Invalids, and Social Affairs 
(DOLISA).  END SUMMARY. 
 
2.  (U) Kien Giang encompasses a 6000 square kilometer area in the 
southwest corner of Vietnam.  It includes 105 small and large 
islands, the largest of which is Phu Quoc, and shares both a land 
and sea border with Cambodia.  Kien Giang's 1.6 million people 
include a substantial ethnic Khmer population, as well as Chinese, 
Cham, and over 20 other minority groups.  Kien Giang's primarily 
agricultural economy has seen GDP growth rates of 9-12% over the 
past four years, including a record 13.25% in 2002. 
 
3  (SBU) While Kien Giang has enjoyed recent rapid growth, largely 
by converting rice land to shrimp farming, its economy is limited 
to a few sectors.  Other than agriculture and seafood, its only 
industry is mining limestone.  The DPI could only name four FDI 
projects in the province, all Taiwanese, and only one worth over 
USD$1 million.  Vice Chairman Phong reported that although local 
businesses were aware of the Bilateral Trade Agreement with the 
U.S., he had not seen any noticeable impact on the province.  He 
claimed that Kien Giang's 2003 exports total only USD$150 million 
to date and are primarily to neighboring countries.  It is not 
clear, however, if any of the province's agriculture and 
aquaculture production is exported indirectly via other provinces. 
 
4  (SBU) Kien Giang's major push to develop and diversify its 
economy is the development of Phu Quoc Island as a regional 
tourist center.  The central GVN, working with provincial 
officials, has developed a master plan for eco-tourism, scheduled 
for release in the near future.  They have already solicited bids 
from 60 companies, including three American firms, to participate 
in Phu Quoc development.  An airport upgrade has begun in order to 
allow direct flights from Bangkok and Singapore.  According to the 
plans, by the end of 2003, the Phu Quoc airport will be able to 
accommodate Fokker regional jets, and by 2005 it will support an 
Airbus A320.  Plans also call for Phu Quoc's two ports to be 
upgraded to accommodate cruise ships and for a casino to be built 
on the island.  While a Malaysian company has expressed interest 
in this project, the provincial DPI chairman was so impressed by 
his recent visit to Las Vegas that he plans to solicit an American 
casino company to partner with them. 
 
5.  (SBU) Plans of casinos and cruise ships and rapid economic 
growth mask other indicators of poverty.  According to local 
officials only 60% of communes have electricity and reasonably 
clean (i.e. passed through some initial treatment) water. 
Although 97% of children in the province ages 6-10 years attend 
school, educational facilities are typically modest, with 1200 
classrooms still covered by thatched roofs.  The GVN has issued 
bonds to help provincial authorities pay for classroom renovation, 
expected to be completed by 2005. 
 
6.  (SBU) Several NGOs and foreign aid agencies are active in the 
province, including Australian, French, and Swiss NGOs, Danida, 
and USAID.  Most projects focus on clean water, rural roads, 
environmental issues, and health care.  The Swiss Red Cross has 
also sponsored a project to build homes for the poor, building 750 
at a cost of USD$1200 per house.  Provincial authorities 
contributed 15% to this project and also launched a separate 
project to build another 2500 homes at a cost of about USD$130 per 
house.  Provincial authorities are seeking additional development 
assistance for more water, roads, and health care projects. 
 
7.  (SBU) The Provincial Committee for Religious Affairs claimed 
that the province faced no contentious religious issues.  Eight 
Protestant churches affiliated with the official GVN-recognized 
Southern Evangelical Church of Vietnam are legally registered, 
while there are no other groups planning to register churches, 
according to the provincial committee.  Officials claim that no 
house churches operate in Kien Giang.  They said only the Hoa Hao 
practice at home, and this group has been legally registered since 
2001.  Kien Giang operates a Buddhist high school, and the 
province includes 74 Khmer Buddhist pagodas serving the large 
minority population. 
8.  (SBU) Despite the province's long border with Cambodia, Vice 
Chairman Phong claimed they had no major border problems.  He 
mentioned occasional fishing disputes, but did not discuss piracy 
(reftel).  He claimed that Kien Giang was not used for trafficking 
in persons or drugs because it is too far from the major cities, 
so the cost is too high.  DOLISA reported, however, that the 
province had over 1000 drug users (like many other official 
numbers about "social evils," it is likely a significant 
underestimate) and an active HIV/AIDS prevention committee. 
 
9. (SBU) Post had received some reports from Vietnamese-Americans 
that the local government had unjustly seized land from their 
relatives in Kien Giang.  DPO raised these reports with provincial 
People's Committee Vice Chairman Phong, who claimed he was unaware 
of any such incidents.  He added, however, that the GVN has a 
consistent policy on land expropriation for community development 
throughout the country.  Referring to heavy damage during the 
Vietnam war, he noted that to reduce poverty in Kien Giang, the 
government had expropriated land for quite a large number of 
infrastructure, school, and hospital projects.  He claimed that 
all such projects had some limited problems, with 5-15% of those 
affected complaining -- usually over the price the government 
paid.  He said the process was fair, with prices for expropriated 
land set by an evaluation board composed of both local residents 
and authorities. 
 
10. (SBU) COMMENT: Kien Giang officials were friendly and seemed 
genuinely happy to welcome official American visitors.  As is 
typical with our provincial trips, local officials were eager to 
attract American investment and open to U.S. development 
assistance.  With daily flights to Ho Chi Minh City and a colorful 
fishing fleet, Rac Gia offers some of the bustle and charm missing 
from other more isolated provincial capitals in the Mekong Delta. 
Besides the Phu Quoc tourism projects, however, officials had few 
real ideas for developing and diversifying the economy.  They were 
cautious about providing specifics on investing in Phu Quoc until 
Hanoi has approved their development plan.  It is not clear how 
much longer Kien Giang can count on dramatic growth from new 
shrimp farms.  At DPI, at least, the leadership appears to be 
hoping that a big gamble on casinos will pay off. 
YAMAUCHI