US embassy cable - 04HANOI2487

UNCLAS SECTION 01 OF 02 HANOI 002487 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EAP/BCLTV 
STATE PASS USTR FOR EBRYAN 
TREASURY FOR IA/Asia Office 
USDOC FOR 4431/MAC/AP/OPB/VLC/HPPHO 
 
E.O. 12958: N/A 
TAGS: ETRD, VM, ASEAN 
SUBJECT: VIETNAM: AMBASSADOR'S FAREWELL CALL ON MPI MINISTER 
 
SENSITIVE BUT UNCLASSIFIED PROTECT ACCORDINGLY 
 
1. (SBU) SUMMARY:  On September 3 the Ambassador, 
accompanied by Econ/C, paid a farewell call on Minister of 
Planning and Investment Vo Hong Phuc.  The Minister 
expressed his appreciation for the Ambassador's 
contributions to US-Vietnam relations.  The Ambassador 
raised a number of concerns.  Phuc said that he hoped to 
make a deal on the bilateral assistance framework soon. 
Phuc said that MPI and the GVN were considering the auto 
tariff issue and that he was giving instructions for a 
solution on the McCullagh coffee joint venture.  On the 
Danao villa issue, MPI, MOF and OOG have agreed on an 
appropriate solution (i.e. expenses for repair to the villas 
would be added to the joint venture investment) and will 
soon be working with the parties directly. On Tricore, Phuc 
said he would discuss the situation with the Ministry of 
Transport, but did not directly reply to the Ambassador's 
letter calling for a meeting of various concerned parties. 
END SUMMARY. 
 
2.  (SBU) On September 3 the Ambassador, accompanied by 
Econ/C, paid a farewell call on Minister of Planning and 
Investment Vo Hong Phuc.  The Minister began by noting that 
he regretted the Ambassador's imminent departure and 
expressing appreciation for the Ambassador's help in 
developing relations between MPI and the USG and the U.S. 
and Vietnam. 
 
2.  (SBU) The Ambassador responded by thanking the Minister 
for his close cooperation with the Embassy, and especially 
during his trip to Washington and New York the previous 
fall.  That trip had been productive and given the two of 
them a chance to get to know one another better, the 
Ambassador said.  He noted that the US-Vietnam commercial 
relationship had made great progress in the past three years 
and provided a solid base for improvements in other areas of 
the relationship.  Even US investment to Vietnam has risen 
according to new data.  Preliminary results of a joint study 
by MPI and Star show that US-related investment is higher 
than previously estimated.  More important they show a rise 
in implemented investment by US related firms in 2003 thus 
demonstrating the contribution of trips like Phuc and Deputy 
Prime Minister Vu Khoan to the US as well as those by the US- 
ASEAN Business Council to Hanoi.  The word is out that 
Vietnam is creating the right conditions for quality 
investment.  There is more to be done, but Vietnam is on the 
right track, the Ambassador said. 
 
3.  (SBU) Phuc commented that both the US and Vietnam had 
been promoting the bilateral relationship over the past year 
and that relations had developed significantly.  US 
investment had risen significantly, especially if one 
included US-related firms that invested through Singapore 
subsidiaries in the total.   In 2004 many events gave hope 
for even more US investment, in particular, the US-ASEAN 
business council which recognized Vietnam's potential during 
its visit in the summer.  Other major business groups were 
interested in investing in Vietnam, he remarked.  Vietnam is 
very interested in the US as a source not only of capital 
but also of technology.  He was glad Boeing was considering 
investing in Vietnam and that US insurance firms were also 
interested in investing here, he noted.  He said that the 
GVN appreciated the Ambassador's efforts and contributions 
such as setting up the high level visit to the US by the 
DPM, the Minister himself and others.  Phuc noted that his 
trip had been impressive and had given him a chance to 
understand better US firms.  Phuc went on to say that his 
trip had helped increase mutual understanding between the 
two countries as well as between him and the Ambassador.  It 
had been one of his favorite trips abroad, the Minister 
observed. 
 
4.  (SBU) Commenting that he would be leaving some 
unresolved issues to his successor, the Ambassador 
enumerated them for Phuc.  They are the auto tariff/tax 
issue, the Danao investment in Dalat (where the latest news 
is that MPI is going with MOF to try to resolve the issue), 
Tricore (the Hanoi third ring road project which the 
Ambassador had written to the Minister about the previous 
month and suggested a meeting among MPI, the Ministry of 
Transport, Tricore and the Office of the Government to 
resolve the issue), and the McCullagh joint venture coffee 
firm.  The Ambassador expressed his appreciation to the 
Minister for his attention and efforts to resolve these 
issues and said he would leave them to his successor and the 
Minister to resolve. 
5.  (SBU) The Ambassador went on to encourage the Minister 
to reach an agreement on the bilateral assistance framework 
where the sole outstanding issue is taxation of items used 
by NGOs on contract to the USG.  The USG has sent a proposed 
compromise to the GVN and is awaiting a reply.  Now would be 
an opportune time to make a deal since US assistance from 
USAID is likely to reach USD20 million and it will be hard 
to work without an agreement which we have with most other 
countries, he stressed. 
 
6.  (SBU) The Minister replied that his government 
appreciated the assistance especially on HIV/AIDs programs. 
He agreed that completing a bilateral agreement would 
provide a solid legal basis for assistance.  Noting that 
taxation was the sole outstanding issue, he said he hoped to 
reach an agreement soon since the GVN has such agreements 
with many other countries. 
 
7.  (SBU) On autos, Phuc said that many investors had 
commented that the tariff and tax would limit the sale and 
production of cars and the development of the industry.  MPI 
and the GVN are considering the issue.  On the McCullagh 
coffee joint venture, Phuc said he was giving instructions 
for a solution.  On the Danao villa issue, MPI and the 
Ministry of Finance and the Office of the Government had 
agreed on an appropriate solution that would be in both 
sides' interest.  The GVN entities would soon be working 
with the parties directly.  Asked to explain the solution, 
Phuc said that expenses for repair to the villas would be 
added to the joint venture investment.  Since the villas are 
the center of the dispute where MPI is trying to focus the 
solution that he expected would be fair to both parties, 
Phuc said. The Ambassador said that if the investor 
concerned received a fair settlement the investor would 
probably invest more.  Phuc called the construction of the 
ring road an urgent matter.  He said that he had asked MPI 
to get the US firm involved in another project in lieu of 
the ring road.  He noted that the US firm wanted to 
construct the entire project but that many areas included in 
the original proposal included city streets or bridges.  If 
these were included in the BOT, it would be difficult to 
collect tolls.  The Minister did not reply to the 
Ambassador's proposal to discuss the issue among the parties 
concerned, but said he would talk to Ministry of Transport. 
The Ambassador said that he could not speak for Tricore, but 
that it sounded as though the firm stood to lose a lot of 
the money they had invested in the feasibility study.  There 
needs to be more discussion of this proposal he added.  The 
Ambassador said he would brief his successor on these and 
other issues such as the Vinasat satellite procurement, 
Boeing and the Son La power project.  The Minister said that 
the Ambassador had left a good impression and good memories. 
BOARDMAN