US embassy cable - 04HANOI3098

UNCLAS HANOI 003098 
 
SIPDIS 
 
STATE FOR EAP/BCLTV AND EB/CIP - HYDE 
STATE PASS TO USTR - MCHALE 
 
E.O. 12958:  N/A 
TAGS: ECPS, ETRD, EINV, VM, WTO 
SUBJECT:  VIETNAM:  MPI CONFRONTS MPT ON INDEPENDENT 
REGULATION 
 
SENSITIVE 
 
1. SUMMARY: A seminar to present the results of a telephone 
user survey became a venue for a government think tank and 
others including a local law firm to criticize the Ministry 
of Posts and Telematics (MPT) for its failure to regulate 
the telecom sector effectively.  MPT had declined to 
participate in the survey, but then complained of the 
methodology used.  The seminar shows quite clearly that MPT 
may use the right phrases in conversation, but has much more 
to do to liberalize the telecom sector and is not yet 
convinced of the need for an independent regulator. END 
SUMMARY. 
 
2. (U) Central Institute for Economic Management (CIEM), the 
Ministry of Planning and Investment's (MPI) think tank, and 
the Vietnam Competitiveness Initiative (VNCI), a USAID 
project, co-sponsored a seminar to present the findings of a 
survey on competition in Vietnam's telecom sector on 
November 10.  Local law firm Vietbid conducted the USAID 
funded survey using the WTO Telecom Reference Paper and the 
GATS Annex on Telecommunications as a baseline.  Vietnam has 
committed to the WTO Telecom Reference Paper as part of the 
BTA. 
 
3. (U) Noting many improvements in the area of competition, 
Vietbid's Mr. Nguyen Thanh Ha concluded that limited 
competition exists and Vietnam's model to manage incumbent 
dominance is consistent with standard practice.  However, he 
took the Ministry of Posts and Telematics (MPT) to task for 
its weak performance as an independent regulator by pointing 
to several cases where decisions or inaction by MPT had 
disadvantaged competitors.  Ha also described the widespread 
perception that MPT and VNPT are in collusion given staff 
rotations between them and the shared use of facilities. 
Many of Vietbid's findings were based on press items and 
discussions with VNPT's competitors because MPT repeatedly 
refused to meet with the research team, he commented.  CIEM 
President Dr. Dinh Van An and MPI advisor Dr. Le Dang Doanh 
both stressed that MPT could not function as an independent 
regulator and called for the establishment of such an 
entity. 
 
4. (SBU) Other GVN officials also expressed concern about 
the current telecom regime.  An official from the Ministry 
of Finance's Department of Tax Policy stated that he thought 
the assessment of improved competition in the telecom sector 
was too rosy.  A Ministry of Trade official in the 
Competition Administration Department shared this view. 
This official observed privately that the recently passed 
competition law had "many shortcomings."  MOT had opted to 
let the law pass with these flaws and try to amend it later, 
he said.  He added that MPT had successfully blocked strong 
provisions on telecom competition.  He opined that MPT is so 
powerful that they "can make the Competition Administration 
Department disappear." 
 
5. (U) MPT's response to this criticism was fairly limited. 
MPT officials from the Department of Planning and Finance 
objected to the methodology, but did not rebut questions 
about independent regulation.  Mr. Tran Minh Tien, President 
of the National Institute of Posts and Telematics Strategy, 
an MPT-related think tank, who had been listed on the agenda 
to comment on the survey, did not attend. 
 
6. (SBU) COMMENT:  To our knowledge, this was the first 
seminar on the competitiveness of Vietnam's telecom sector. 
It is worth noting that only MPI spoke officially.  The 
others GVN agencies said they were expressing personal 
views.  While the telecom user survey had some flaws, MPT's 
attempt to stymie the survey and other aspects of the 
research and then question the validity of parts of the 
survey seemed to add weight to some of the findings.  MPT 
may be able to stall reform efforts.  This could signal a 
new effort by MPI and MOT to improve the investment climate 
for telecoms.  The seminar shows quite clearly that MPT may 
use the right phrases -- at least in conversations with U.S. 
government visitors -- but has much more to do to liberalize 
the telecom sector and is not yet convinced of the need for 
an independent regulator.  We will follow up with the 
presenters and several attendees to gauge their sense of the 
findings on MPT's ability to regulate telecommunications 
effectively. 
MARINE