US embassy cable - 05HANOI308

UNCLAS SECTION 01 OF 02 HANOI 000308 
 
SIPDIS 
 
STATE FOR EAP/BCLTV 
 
E.O. 12958:  N/A 
TAGS: EIND, ETRD, EINV, SOCI, VM, SOE 
SUBJECT:  VIETNAM:  AMBASSADOR'S CALL ON THE MINISTER OF 
CONSTRUCTION 
 
1. SUMMARY.  On February 3, the Ambassador paid an 
introductory call on Minister of Construction Nguyen Hong 
Quan.  Minister Quan explained the role and functions of the 
Ministry of Construction (MOC), and he described MOC's 
vision for foreign involvement in the construction sector. 
The Ambassador raised U.S. investors' concerns over the 
difficulties of acquiring land use rights, and he advocated 
on behalf of Black & Veatch, a U.S. consultant seeking a 
contract for an Asian Development Bank (ADB) wastewater 
project.  They also discussed MOC's efforts to improve 
access for disabled persons in Vietnam.  END SUMMARY. 
 
MOC Function and Responsibilities 
--------------------------------- 
 
2. On February 3, the Ambassador paid an introductory call 
on Minister of Construction Nguyen Hong Quan.  The Minister 
described MOC's primary responsibility as insuring that 
quality and management of construction projects in Vietnam 
meet the highest possible standards.  He asserted that MOC 
did so by issuing building codes and standards that apply to 
construction management, architectural design and planning, 
housing management, urban infrastructure development, and 
production of building materials.  Quan added that MOC's 
mandate from the GVN directs it to focus on oversight in the 
interest of public safety, and in this capacity MOC does not 
interfere in the business affairs of Vietnam's construction 
companies, both private and state-owned.  Noting that State- 
owned Enterprises (SOE) dominate many sectors of Vietnam's 
economy, Quan emphasized that MOC supports equitization 
(privatization) of Vietnam's construction SOEs.  Near the 
close of the meeting and in response to some issues raised 
by the Ambassador, Quan articulated three critical areas on 
which MOC was focusing on improving its capacity and would 
welcome increased cooperation with the United States: urban 
planning, low-income housing and access for the disabled. 
 
Foreign Investment In Vietnam's Construction Sector 
--------------------------------------------- ------ 
 
3.  The Ambassador encouraged the Minister to consider the 
high quality of American technology and management expertise 
when making purchasing decisions adding that increased U.S. 
investment in Vietnam would also mean greater job creation. 
Quan expressed an interest in increasing interaction between 
Vietnamese and U.S. firms mainly as a means of transferring 
knowledge of how to better manage large construction 
projects.  For this reason, Quan added, MOC encourages 
foreign participation on large construction projects, but he 
did not confirm whether this was an official policy as Post 
understands it to be.  However, Quan stated repeatedly that 
Vietnam's construction sector is open to foreign investment 
without any limitations so long as these companies are 
properly licensed, abide by all regulations and follow the 
tendering process.  While MOC welcomes foreign involvement 
in large-scale projects, Quan is of the opinion that 
consultant fees from many U.S. firms are too high.  The 
Ambassador responded that he considers American firms' 
services to be of the highest quality and that they are 
competitively priced. 
 
Acquisition Of Land Use Rights 
------------------------------ 
 
4. The Ambassador raised the concerns voiced by some U.S. 
firms over the difficulty of acquiring land use rights for 
approved projects in the areas designated by the GVN for 
their business development.  Quite often this process is 
time-consuming and the price paid to tenants is much higher 
than the prices quoted by the GVN.  The Ambassador noted 
that a national policy that clearly defines the process 
seems to be lacking.  Quan argued that the process is not 
too complicated and recommended that foreign investors 
locate their operations in designated industrial zones in 
order to minimize problems with individual tenants. 
 
Black and Veatch and The ADB Wastewater Drainage Project 
--------------------------------------------- ----------- 
 
5. The Ambassador advocated on behalf of Black & Veatch 
(BV), a U.S. consulting firm competing for an Asian 
Development Bank wastewater drainage project in central 
Vietnam.  According to the Minister, wastewater treatment is 
a focus area for which MOC is trying to improve standards. 
Quan said that he is aware of BV's interest in the project 
and welcomes its proposal.  He also stressed that BV needs 
to insure that it participates in the tendering process. 
Comment:  Quan's comment about the tendering process was 
somewhat strange since BV has been operating in Vietnam for 
quite sometime and has experience with ADB and other donor 
and GVN projects.  Representatives of the company met with 
Quan following the Ambassador's call.  End Comment. 
 
MOC'S Role In Assisting People With Disabilities 
--------------------------------------------- --- 
 
6.  In response to the Ambassador's queries about MOC's 
efforts to improve access for Vietnam's disabled citizens, 
Quan noted that this was another area where MOC is trying to 
improve standards and promote the use of designs and 
construction techniques that accommodate disabled persons. 
The Ambassador drew attention to the high percentage of 
Vietnam's population living with disabilities and touted the 
economic and social benefits of improving access to 
transportation and buildings in general.  Quan said he was 
appreciative of the U.S. Government's support to Vietnam in 
this area over the past 10 years, and he would welcome 
cooperation on this issue.  The U.S. Government has 
successfully brought together relevant government agencies, 
businesses, and non-governmental organizations to find 
solutions, explained the Ambassador.  He added that the 
Embassy was willing to help the GVN to seek solutions to 
this issue here in Vietnam. 
 
7.  (SBU) Comment: The Minister did not appear well-prepared 
for this meeting, and he even acted impatient at times.  His 
comments about MOC's degree of separation from state 
construction firms rang hollow, especially as he head on an 
elegant suit that probably cost USD 600 or more.  Minister 
Quan is a member of the Central Committee of the Communist 
Party of Vietnam.  In closing, Quan readily accepted the 
Ambassador's offer to try to arrange additional meetings 
during trips to the United States by MOC officials, 
particularly with urban planners or public housing 
authorities. End Comment. 
 
MARINE