US embassy cable - 05HANOI292

UNCLAS SECTION 01 OF 02 HANOI 000292 
 
SIPDIS 
 
STATE FOR EAP/BCLTV AND EB/TRA/OTP - BIRGITTA MATTINGLEY 
TRANSPORATION FOR DAVE MODESITT AND NHTSA AND MARAD 
SINGAPORE FOR FAA - HOWARD NESBITT 
BANGKOK FOR TSA - SHARON WALLOOPPILLAI 
 
E.O. 12958:  N/A 
TAGS: EAIR, ETRD, EINV, VM, WTO 
SUBJECT:  VIETNAM:  AMBASSADOR'S CALL ON THE MINISTER OF 
TRANSPORTATION 
 
REF:  A) 2004 HANOI 3092  B) HANOI 268 
 
1. SUMMARY.  On February 1, the Ambassador paid an 
introductory call on Minister of Transportation Dao Dinh 
Binh.  Minister Binh explained the timeline for legislative 
reforms designed to bring the Civil Aviation Administration 
of Vietnam (CAAV) up to international safety oversight 
standards.  The Ambassador and Minister Binh discussed 
opportunities for cooperation such as the maritime agreement 
and the U.S. Department of Energy's (DOE) Megaports 
Initiative.  The Ambassador advocated on behalf of U.S. 
firms SSA Marine and FMC Technologies, and raised concerns 
about the TRICORE contract to build Hanoi's Third Ring Road. 
Minister Binh agreed to solicit the Prime Minister's opinion 
on the possibility of arranging a high level meeting to 
resolve the TRICORE dispute.  Minister Binh sought the 
Ambassador's support in addressing Vietnam's high rate of 
traffic fatalities.  END SUMMARY. 
 
2.  On February 1, the Ambassador, accompanied by Econoff, 
paid an introductory call on Minister of Transportation Dao 
Dinh Binh. The Ministry of Transportation (MOTr) is 
responsible for transportation infrastructure construction, 
civil aviation, maritime and ports.  Within MOTr, CAAV is 
the lead agency for civil aviation negotiations.  MOTr, or a 
subordinate agency, will also lead the Maritime Agreement 
talks. 
 
Civil Aviation and Airport Development Projects 
--------------------------------------------- -- 
 
3. THE LAW ON CIVIL AVIATION.  Minister Binh does not 
anticipate any scheduling problems for the Law on Civil 
Aviation resulting from the National Assembly's (NA) heavy 
workload of other economic reform legislation.  MOTr plans 
to send the first draft to the Prime Minister in April 2005. 
The NA will provide the first round of feedback by November 
2005 with final ratification set for the May 2006 NA 
session.  The Ambassador encouraged Binh to focus on helping 
CAAV come into compliance with safety oversight standards 
set by the International Civil Aviation Organization (ICAO) 
to set the stage for Vietnam Airlines' flights to the United 
States.  He pledged the Embassy's support to help CAAV to 
the extent possible.  NOTE:  A copy of this draft law was 
provided by CAAV to a team of private consultants, funded by 
the Boeing Corporation, who are assisting CAAV in creating a 
road map for achieving and sustaining ICAO standards.  They 
will issue a report of their findings sometime in early 
February.  END NOTE. 
 
4. FMC TECHNOLOGY AWARD AT TAN SON NHAT AIRPORT.  The GVN 
has embarked on an ambitious strategy of growth within the 
aviation sector both in services and infrastructure (Ref A). 
The Ambassador commended the Minister on this impressive 
plan and promoted the interests of a number of U.S. firms in 
a variety of these projects such as the expansion of Vietnam 
Airlines' fleet and the airport projects at Danang, Tan Son 
Nhat and Long Thanh.  In particular, the Ambassador 
highlighted FMC Technology's (FMC) award from the Southern 
Airports Authority (SAA) to provide passenger-boarding 
equipment as part of the terminal expansion at HCMC's Tan 
Son Nhat airport.  Although the initial contract specified 
that FMC equipment would be used, the Japanese consortium 
that won the primary contractor award has tried to shift 
from FMC to a Japanese supplier, but SAA has rejected this 
move and is adhering to the original contract.  The 
Ambassador urged the Minister to support SAA's decision 
should the Japanese raise this issue with MOTr.  Agreeing to 
look into the issue, the Minister assured the Ambassador 
that MOTr supports honoring agreements into which the GVN 
has entered.  Binh noted that the Japanese have not 
approached MOTr on this issue to his knowledge. 
 
MARITIME AGREEMENT AND PORT INFRASTRUCTURE PROJECTS 
--------------------------------------------- ------ 
 
5. MARITIME AGREEMENT.  Minister Binh expressed a great deal 
of enthusiasm for the visit of the negotiating team from the 
Maritime Administration (MARAD) in March.  He is very 
hopeful that this agreement can be concluded before the 
Prime Minister's proposed visit to the United States. 
 
6. MEGAPORTS INITIATIVE.  The Ambassador introduced the U.S. 
Department of Energy's (DOE) Megaports initiative, noting 
the DOE team's desire to visit Vietnam in March.  According 
to Minister Binh, the GVN has not assigned a lead agency for 
coordinating this project, but if the Prime Minister 
designates MOTr it will work with DOE in a very close and 
cooperative manner. 
 
7. SSA MARINE AND CAI LAN PORT PROJECT.  The Ambassador 
advocated on behalf of SSA Marine, a U.S. firm interested in 
developing a port at Cai Lan, in northern Quang Ninh 
Province near Haiphong.  He informed the Minister of the 
firm's desire to visit in March and requested that MOTr 
staff receive them and listen to their proposal.  Binh 
welcomes the interest of U.S. investors in Vietnam's port 
facilities, and he noted that the NA's passage of the new 
Maritime Law scheduled for May 2005, "will open the door" 
for U.S. firms to invest in Vietnamese ports. 
TRANSPORTATION ISSUES 
--------------------- 
 
8. TRICORE AND THE THIRD HANOI RING ROAD.  Providing a brief 
readout on Tricore from his January 31 meeting with Deputy 
Prime Minister Dung (Ref B), the Ambassador stressed that 
the issue would not go away and should be addressed fairly. 
Furthermore, the Ambassador noted that this dispute might 
become a sticking point at some time during Vietnam's bid to 
join the WTO as well as a discouraging sign to potential 
investors.  Binh initially told the Ambassador that he had 
nothing to add to DPM Dung's (negative) response.  However, 
in response to the Ambassador's request to arrange a high- 
level meeting between MOTr, the Ministry of Planning and 
Investment and Tricore to try to resolve the dispute, Binh 
said that he would present the idea to the Prime Minister 
for decision.  Binh acknowledged that Vietnam needs to 
resolve investment disputes as they arise to maintain an 
attractive investment climate. 
 
9. TRAFFIC SAFETY.  Minister Binh made a heartfelt request 
for the Ambassador's support in his efforts to reduce 
Vietnam's high rate of traffic fatalities.  Voicing his 
support for former Ambassador Peterson's NGO-led, traffic 
safety initiative for Southeast Asia, the Ambassador pledged 
to redouble his and the Embassy's efforts to help promote 
traffic safety in Vietnam.  NOTE: In 2004, according to MOTr 
statistics, there were 17,532 accidents resulting in 12,096 
fatalities and 15,633 injuries.  Vietnam has less than 
15,000 miles of paved roadway.  As Minister Binh noted, far 
more Vietnamese died in 2004 as a result of traffic 
accidents than of HIV/AIDS.  END NOTE. 
 
10.  COMMENT.  Minister Binh was very well briefed on the 
issues that were discussed.  Several times during the 
meeting he reiterated that he welcomes U.S. investment in 
Vietnam's transportation sector as he realizes that 
increasing the amount of foreign investment to this sector 
is essential to support continued economic integration.  His 
frank responses and willingness to discuss Tricore with the 
Prime Minister may indicate a desire to clear up this 
dispute so that MOTr can continue to interest U.S. investors 
in upcoming Build-Operate-Transfer (BOT) infrastructure 
projects.  END COMMENT. 
 
MARINE