US embassy cable - 01HOCHIMINHCITY1181

UNCLAS SECTION 01 OF 02 HO CHI MINH CITY 001181 
 
SIPDIS 
 
DEPARTMENT FOR EAP/BCLTV 
 
E.O. 12958: N/A 
TAGS: BEXP, BTIO, ECON, ECIN, PREL, PGOV, PTER, VM 
SUBJECT: CG'S INITIAL MEETING WITH CHAIRMAN OF HCMC PEOPLE'S COMMITTEE 
 
 
1.  SUMMARY.  ON OCTOBER 15, CG EMI YAMAUCHI MET WITH 
LE THANH HAI, CHAIRMAN OF THE PEOPLE'S COMMITTEE (PC) 
OF HO CHI MINH CITY (HCMC), ACCOMPANIED BY POLOFF AND 
CONOFF.  HAI EXTENDED A WARM WELCOME TO THE CG AND 
EXPRESSED HIS HOPE THAT SHE WOULD BE BOTH COMFORTABLE 
AND BUSY IN HCMC.  HE SAID THE BTA WILL RESULT IN 
VIETNAMESE COMPANIES PREPARING THEIR GOODS FOR EXPORT, 
AND INTEGRATING WITH U.S. AND GLOBAL MARKETS.  HE SAID 
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HE WOULD LIKE TO INCREASE FOREIGN DIRECT INVESTMENT 
(FDI) IN VIETNAM, AND HOPED THAT THE OVERSEAS PRIVATE 
INVESTMENT CORPORATION (OPIC) WILL HELP TO ATTRACT 
POTENTIAL INVESTORS TO HCMC.  HE WAS HOPEFUL THAT THE 
USG AND OTHER COUNTRIES COULD ARRIVE AT A PEACEFUL 
SETTLEMENT IN AFGHANISTAN.  END SUMMARY. 
 
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"I HOPE YOU WILL BE EXTREMELY BUSY DURING YOUR TENURE, 
BECAUSE THAT WILL BE A GOOD SIGN." 
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2. HAI WELCOMED CG TO HCMC, AND STATED OVER THE NEXT 
THREE YEARS HE HOPED TO CONTINUE TO BROADEN THE GOOD 
WORKING RELATIONSHIP THAT WAS ESTABLISHED WITH CG'S 
PREDECESSOR.  CG EXPRESSED HER DESIRE TO CONTINUE AND 
STRENGTHEN THEIR RELATIONSHIP ON ALL FRONTS, NOT ONLY 
THOSE RELATED TO TRADE.  SHE OFFERED TO ASSIST HAI WITH 
EMERGING PROGRAMS OR INITIATIVES, ESPECIALLY THOSE IN 
THE AREAS OF CULTURE AND EDUCATION.  HE AGREED THESE 
WERE IMPORTANT AREAS TO SEEK COOPERATION, AS WELL AS 
THE FIELD OF INFORMATION TECHNOLOGY. 
 
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"WE WANT TO INTEGRATE INTO THE U.S. AND GLOBAL MARKETS 
 AS SOON AS POSSIBLE." 
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3.  LE STATED THE APPROVAL OF THE U.S.-VIETNAM 
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BILATERAL TRADE AGREEMENT BY THE U.S. SENATE 
DEMONSTRATES GREAT GROWTH AND POTENTIAL FOR THE U.S.- 
VIETNAM RELATIONSHIP.  HE NOW SEES CHALLENGES FOR 
VIETNAMESE ENTREPRENEURS, WHO NEED TO PREPARE THEIR 
PRODUCTS FOR EXPORT, AND FOREIGN ENTREPRENEURS, WHO 
NEED TO TRUST IN INVESTMENT OPPORTUNITIES IN VIETNAM. 
 
4.  PRIOR TO RATIFICATION OF THE BTA, LOCAL GOVERNMENTS 
ORGANIZED A DIALOGUE AMONG VIETNAMESE COMPANIES TO 
EXCHANGE IDEAS ABOUT INTEGRATING INTO U.S. MARKETS. 
ACCORDING TO HAI, ONE ISSUE THAT SURFACED IS THAT MANY 
VIETNAMESE COMPANIES MUST IMPROVE THE QUALITY OF THEIR 
PRODUCTS IN ORDER TO COMPETE IN REGIONAL AND GLOBAL 
EXPORT MARKETS.  HAI SAID THE HCMC TARGET FOR EXPORT 
GROWTH FOR 2001 WAS 20 PERCENT; ALTHOUGH IN THE FIRST 
SIX MONTHS IT REACHED 14 PERCENT, HAI SAID IT WILL BE 
DIFFICULT TO ATTAIN THE BALANCE OF 6 PERCENT IN THE 
CURRENT GLOBAL ECONOMIC ENVIRONMENT. 
 
5.  HAI SAID THE PC INTENDS TO INCREASE ITS SUPPORT FOR 
AMERICAN CHAMBER OF COMMERCE IN VIETNAM EFFORTS TO 
EDUCATE U.S. COMPANIES ABOUT OPPORTUNITIES FOR TRADE 
WITH VIETNAM.  HE SAID AMERICAN INVESTMENT WOULD SPUR 
GROWTH IN HCMC, AND HE SAID HE PLANNED TO MAKE HCMC A 
MORE ATTRACTIVE DESTINATION FOR FDI.  HE WOULD LIKE 
OPIC TO PLAY A GREATER ROLE IN FACILITATING INVESTMENT 
IN VIETNAM.  DURING THE FIRST 9 MONTHS OF 2001, HCMC 
ATTRACTED A TOTAL OF USD$700 MILLION IN FDI.  THIS WAS 
THREE TIMES HIGHER THAN INVESTMENT OVER THE SAME PERIOD 
LAST YEAR, BUT STILL FALLS SHORT OF TARGETS.  HAI SAID 
HE PARTICULARLY WOULD LIKE TO DEVELOP FDI IN THE FIELD 
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OF HIGH-TECH INDUSTRIES IN HCMC, WHICH HAS THE LARGEST 
INFORMATION TECHNOLOGY MARKET IN VIETNAM. 
 
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"HO CHI MINH CITY IS VIETNAM'S GATEWAY TO THE WORLD. 
EVERYTHING IN THE WORLD ECONOMY WILL AFFECT VIETNAM, 
BUT IT WILL AFFECT US FIRST." 
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6.  CG TOLD HAI THAT WHILE THE PC HAS HIGH EXPECTATIONS 
FOR GROWTH IN HCMC FOLLOWING PASSAGE OF THE BTA, SHE 
WOULD ENCOURAGE THE COMMITTEE TO TEMPER ENTHUSIASM WITH 
REALISM.  LE RESPONDED THAT THE NATIONAL GOVERNMENT 
ALSO ATTACHES GREAT IMPORTANCE TO HCMC'S GROWTH RATE, 
BECAUSE A ONE PERCENT INCREASE IN GDP IN HCMC 
TRANSLATES TO GROWTH OF 0.3 PERCENT IN GDP FOR THE 
ENTIRE COUNTRY.  HCMC PROVIDES THE GREATEST SHARE OF 
THE GDP IN VIETNAM, AND WAS DISPROPORTIONATELY AFFECTED 
BY THE ASIAN FINANCIAL CRISIS FROM 1997-1999.  ALTHOUGH 
THE CITY'S ECONOMY PICKED UP AGAIN IN 2000, HAI SAID HE 
ANTICIPATES A SLOWDOWN DURING THE THIRD QUARTER OF 2001 
DUE TO THE GLOBAL ECONOMIC CLIMATE. 
 
7.  HAI SAID THAT HCMC'S SERVICES SECTOR OCCUPIES THE 
LARGEST PERCENTAGE OF THE TOTAL HCMC ECONOMY AND IS 
VULNERABLE.  WHILE THE PC'S AGENDA FOR DEVELOPMENT 
INCLUDES IMPROVEMENTS IN TRANSPORTATION INFRASTRUCTURE, 
INCLUDING SEA AND AIRPORTS, TELECOMMUNICATIONS, 
BANKING, AND FINANCE, HAI SAID HE ALSO WILL PAY MORE 
ATTENTION TO THE SERVICES SECTOR AND PREPARE SERVICE- 
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PAGE 02        HO CHI  01181  02 OF 02  170609Z 
ORIENTED COMPANIES FOR EXPORT. 
 
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"I BELIEVE THESE PROBLEMS CAN BE SETTLED IN PEACE AND 
COOPERATION, IN LINE WITH THE UN CHARTER, AND THINGS 
WILL SOON BE BACK TO NORMAL." 
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8.  CG ASKED HAI IF HE THOUGHT THE SEPTEMBER 11 ATTACKS 
ON THE U.S. HAD AFFECTED THE SERVICES SECTOR IN 
VIETNAM, AS IT HAD IN THE U.S.  LE WOULD NOT ATTRIBUTE 
THE CURRENT SLOWDOWN TO EXTERNAL EVENTS OTHER THAN THE 
GENERAL GLOBAL ECONOMIC CLIMATE OF LATE. 
 
9.  HAI ALSO EXPRESSED HIS PERSONAL CONCERN OVER THE 
USG'S RESORTING TO MILITARY ACTION TO RESOLVE ITS 
CURRENT ISSUES WITH THE TALIBAN.  HE HOPED THAT SOMEHOW 
A PEACEFUL RESOLUTION COULD BE FOUND, AND NOTED THAT 
THE VIETNAMESE PEOPLE "HAVE RECENTLY KNOWN THE MISERY 
OF WAR TOO WELL."  CG REMINDED HIM OF THE USG POSITION 
TO COMBAT ALL TERRORISTS, AND THAT LARGE NATIONS GRIEVE 
FOR THEIR LOSSES AS WELL.  AT THIS HAI EMPHATICALLY 
AGREED.  CG INFORMED HIM OF A PRESS REPORT CONCERNING 
THE RECENT ARREST IN THE U.S. OF VO VAN DUC FOR HIS 
INVOLVEMENT IN THE BOMBING OF THE VIETNAMESE EMBASSY IN 
BANGKOK IN JUNE.  HAI SAID THAT HE SHARES THE USG'S 
COMMITMENT TO STOP TERRORISM IN ANY FORM. 
 
10.  HAI CLOSED THE 45-MINUTE MEETING BY TELLING CG 
THAT THE CONSULATE STAFF WAS LIVING IN THE BEST CITY IN 
VIETNAM AND THAT THEIR SECURITY WAS ASSURED.  HE NOTED 
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THAT WHATEVER VIETNAM MAY LACK IN GOOD GOVERNANCE AND 
SOPHISTICATION, IT MAKES UP IN SECURITY. 
 
10.  COMMENT.  HAI ASSUMED THE POST OF PC CHAIRMAN ONLY 
THIS PAST MAY.  ALTHOUGH THAT MAKES HIM "MAYOR" OF 
HCMC, HIS POSITION IS MORE AKIN TO THAT OF GOVERNOR OF 
AN IMPORTANT PROVINCE, BECAUSE THE HCMC PC REPORTS 
DIRECTLY TO THE CENTRAL GOVERNMENT.  HIS POSITION 
WIELDS EVEN GREATER INFLUENCE NOW THAT THE HCMC PC HAS 
BEEN GIVEN MORE AUTONOMY TO GENERATE ITS OWN BUDGET. 
CG LOOKS FORWARD TO FUTURE MEETINGS WITH HAI AS HE 
PRESIDES OVER HCMC - VIETNAM'S ENGINE OF GROWTH.  END 
COMMENT. 
 
YAMAUCHI 
 
                       UNCLASSIFIED