US embassy cable - 02HOCHIMINHCITY785

UNCLAS SECTION 01 OF 02 HO CHI MINH CITY 000785 
 
SIPDIS 
 
DEPARTMENT ALSO FOR USTR 
DEPTTREAS FOR OASIA 
USDOC FOR 4431/MAC/AP/OKSA/HPPHO 
USDA FOR FAS/FAA 
 
SENSITIVE 
 
                       UNCLASSIFIED 
 
PAGE 02        HO CHI  00785  01 OF 02  010759Z 
E.O. 12958: N/A 
TAGS: EFIS, EAGR, ETRD, ECON, VM 
SUBJECT: THE FREE MARKET PHENOMENON OF ONE VIETNAMESE 
TRA AND BASA ("CATFISH") FARMER 
 
 
1.   (U) SUMMARY:  FOR ONE VIETNAMESE FARMER IN THE 
MEKONG DELTA, PRODUCTION OF "TRA" AND "BASA" -- THE 
FISH FORMERLY KNOWN AS "CATFISH" -- IS A STUNNING 
EXAMPLE OF THE SUCCESS OF PRIVATE ENTERPRISE AND THE 
UNFETTERED APPLICATION OF FREE MARKET PRINCIPLES. 
FIERCE COMPETITION AND SELF-TAUGHT MARKET SAVVY SEEM TO 
BE CREATING A NEW BREED OF FARMER.  END SUMMARY. 
 
NGUYEN VAN THO, "THE CATFISH KING" 
-------------------------------------- 
 
2. (U) ON JULY 18, AMBASSADOR BURGHARDT AND AN 
EMBASSY/CONSULATE GENERAL TEAM (DPO, ECONOFF, FSN 
POL/ECON ASSISTANT, AND INTERPRETER) VISITED A 
FINGERLING FARM AND FLOATING CAGE OWNED BY NGUYEN VAN 
THO, KNOWN LOCALLY AS THE "KING OF CATFISH.",  HE IS 
THE BIGGEST PRIVATE "TRA" AND "BASA" PRODUCER IN AN 
GIANG PROVINCE.  TRAINED BY HIS FATHER AND A VIETNAMESE 
PH.D. FISHERIES ADVISOR, THO WAS A POOR FARMER WITH NO 
FORMAL EDUCATION WHO TOOK A CHANCE ON THE GROWING TRA 
AND BASA MARKET. 
 
3. (U) THO LITERALLY BUILT HIS BUSINESS FROM THE GROUND 
UP.  IN 1995, THO BEGAN BUYING LAND FROM NEIGHBORS, 
PAYING APPROXIMATELY VND 200 MILLION (USD 1300) PER 
HECTARE.  TO FINANCE THESE PURCHASES, THO OBTAINED 
                       UNCLASSIFIED 
 
PAGE 03        HO CHI  00785  01 OF 02  010759Z 
LOANS FROM FRIENDS AND VIETNAMESE PRIVATE BANKS.  HE 
SAID STATE-OWNED BANKS WERE RELUCTANT TO LEND MONEY TO 
PRIVATE BUSINESSMEN, AND THE GOVERNMENT GAVE HIM NO 
LOANS OR SUBSIDIES.  WHEN HE HAD ACQUIRED 14 HECTARES, 
THO INVESTED VND 400 MILLION (USD 2670) TO DEVELOP 80 
PONDS ON THE LAND.  THO PLANS TO DEVELOP ANOTHER 20 
HECTARES IF AMERICAN CONSUMERS CONTINUE TO SNAP UP HIS 
FISH.  IN ADDITION, THO ANCHORS 40 FLOATING CAGES IN 
THE RIVER, EACH WEIGHING 25 TO 50 METRIC TONS. 
 
A FORTUNE IN FISH 
----------------- 
 
4. (U) THO'S HOMEGROWN FISH BUSINESS TURNS OVER 
APPROXIMATELY VND 24 BILLION (USD 1,600,000), WITH A 
NET PROFIT OF VND 4 BILLION (USD 267,000) ANNUALLY.  HE 
OPERATES FAIRLY CLOSE TO HIS BOTTOM LINE, HOWEVER.  IF 
THE PRICE REMAINS AT VND 12,000 (USD 0.80) PER 
KILOGRAM, THO MAKES A PROFIT.  BUT HE LOSES MONEY IF 
THE PRICE DECLINES BY AS LITTLE AS USD 0.05, TO VND 
9,000 (USD 0.75) PER KILOGRAM.  THO SELLS HIS FISH TO 
THE HIGHEST BIDDER, USUALLY FISH PROCESSING FACTORIES 
LINING THE RIVER WHO RECEIVE THE LIVE FISH DIRECTLY 
FROM A TRANSPORT SHIP.  AFTER THE FISH IS PROCESSED AND 
FROZEN, IT IS EXPORTED TO THE UNITED STATES' EAST 
COAST, WHERE THO'S TRA FILLET SELLS FOR USD 1.71- 
1.75/POUND (USD 3.76-3.85/KILOGRAM).  BASA SELLS FOR 
USD 2.00-2.03/POUND (USD 4.40-4.47/KILOGRAM). 
 
5. (U) IN ADDITION TO HIS "WHOLE FISH" OPERATION 
DESCRIBED ABOVE, THO PRODUCES 10 MILLION FISH 
                       UNCLASSIFIED 
 
PAGE 04        HO CHI  00785  01 OF 02  010759Z 
"FINGERLINGS" ANNUALLY, WHICH HE SELLS TO OTHER MEKONG 
DELTA FARMERS FOR VND 10 BILLION (USD 670,000), FOR A 
NET PROFIT OF VND 2 BILLION (USD 133,000).  THE 
FINGERLINGS SELL FROM VND 300-1200 (USD 0.02-0.08) EACH 
AT 30-85 DAYS OLD.  THUS ALTOGETHER, THO'S FISH 
BUSINESS NETS A PROFIT OF USD 400,000 PER YEAR.  THO 
HAS BEEN SO SUCCESSFUL THAT, IN ADDITION TO HIS 
IMMEDIATE FAMILY, THE BUSINESS NOW SUPPORTS THE 
FAMILIES OF 16 RELATIVES.  THO HIMSELF HAS BEEN ABLE TO 
SEND ALL FOUR OF HIS CHILDREN TO STUDY ABROAD. 
 
LOW TECH BUT HIGH PRODUCTION 
---------------------------- 
 
6. (U) THO AND HIS DAUGHTER, WHO STUDIED ENGLISH FOR 
SIX MONTHS IN AUSTRALIA, ESCORTED THE AMBASSADOR AND 
CONGEN TEAM THROUGH THE 14-HECTARE FINGERLING FARM, A 
SERIES OF EARTHEN PONDS LINKED BY WOODEN GANGPLANKS, 
WITH A LONG, OPEN SHED HOUSING THE RUDIMENTARY BREEDING 
EQUIPMENT.  ALTHOUGH THE FACILITIES ARE BASIC, THE 
PONDS ARE DRAINED AND CLEANED EVERY 15 DAYS AND PH 
TESTS ARE USED TO ENSURE WATER QUALITY.  THO EITHER 
SELLS THE FINGERLINGS OR TRANSFERS THEM TO HIS OWN 
CAGES.  THE FISH SPEND SEVEN TO TWELVE MONTHS IN A CAGE 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ7859 
 
PAGE 01        HO CHI  00785  02 OF 02  010759Z 
ACTION EAP-00 
 
INFO  LOG-00   AGRE-00  AID-00   CEA-01   CIAE-00  CTME-00  DINT-00 
      DODE-00  ITCE-00  DOTE-00  SRPP-00  EB-00    EXME-00  E-00 
      FAAE-00  FBIE-00  UTED-00  VC-00    FRB-00   H-01     TEDE-00 
      INR-00   ITC-01   JUSE-00  L-00     VCE-00   MOFM-05  MOF-01 
      AC-01    NSAE-00  NSCE-00  OES-01   OMB-01   OPIC-01  PER-00 
      ACE-00   SP-00    SSO-00   SS-00    STR-00   TEST-00  USIE-00 
      EPAE-00  DRL-02   G-00     NFAT-00  SAS-00     /015W 
                  ------------------D312CE  010759Z /38 
P 010645Z AUG 02 
FM AMCONSUL HO CHI MINH CITY 
TO SECSTATE WASHDC PRIORITY 6595 
INFO AMEMBASSY HANOI PRIORITY 
ASEAN COLLECTIVE 
USDOC WASHDC 
USDA FAS WASHDC 
DEPTTREAS WASHDC 
ASEAN COLLECTIVE 
 
UNCLAS SECTION 02 OF 02 HO CHI MINH CITY 000785 
 
SIPDIS 
 
DEPARTMENT ALSO FOR USTR 
DEPTTREAS FOR OASIA 
USDOC FOR 4431/MAC/AP/OKSA/HPPHO 
USDA FOR FAS/FAA 
 
SENSITIVE 
 
                       UNCLASSIFIED 
 
PAGE 02        HO CHI  00785  02 OF 02  010759Z 
 
 
(REACHING A WEIGHT OF 1-2 KILOGRAMS) BEFORE THEY ARE 
SOLD TO PROCESSORS. 
 
7. (SBU) FURTHER DOWN THE RIVER, THE AMBASSADOR BOARDED 
THO'S HOME, A HOUSEBOAT WITH A GIANT FISH CAGE 
UNDERNEATH.  VARIOUS FLOATING FISH PENS WERE ATTACHED 
TO THE SIDES, AND THE ENTIRE STRUCTURE WAS TIED 
TOGETHER BY ROPES AND ANCHORED TO THE RIVER BOTTOM. 
FEEDING THE FISH WAS SIMPLE.  WORKERS OPENED A TRAP 
DOOR IN THE CENTER OF THE HOUSE AND DUMPED A SACK OF 
FISHFOOD INTO THE WATER BELOW.  THE SUBSEQUENT FEEDING 
FRENZY SHOWED LARGE FISH ROILING IN THE MURKY WATER. 
THO SAID HE ONCE USED AMERICAN CARGILL FISHFOOD FOR 
FISH WEIGHING OVER 600 GRAMS, AS WELL AS PROCONCO AND 
UNI-PRESIDENT FEED.  BUT HE HAD STOPPED BUYING FROM 
CARGILL BECAUSE OF WHAT HE TERMED "QUALITY" CONCERNS 
AND A LACK OF RESPONSIVENESS TO HIS SUGGESTIONS. 
(NOTE:  POST WILL FOLLOW UP ON THIS WITH CARGILL, WHEN 
THEIR LOCAL EXECUTIVES RETURN FROM VACATION.) 
 
ROARING CAPITALISM IN THE PLACID DELTA 
-------------------------------------- 
 
8. (U) THO OWES HIS SUCCESS TO HIS INGENUITY, SMART 
INVESTMENT DECISIONS, AND SHEER CHUTZPAH.  HE ALSO 
BENEFITS FROM VIETNAM'S CHEAP LABOR, HUGE AMOUNTS OF 
                       UNCLASSIFIED 
 
PAGE 03        HO CHI  00785  02 OF 02  010759Z 
FREE, RELATIVELY CLEAN WATER, AND CREATIVE CONCEPTS, 
SUCH AS GIANT PORTABLE CAGES.  WHILE THE OTHER 5000 
FISH FARMERS IN AN GIANG PROVINCE ARE NOT AS SUCCESSFUL 
AS THO, TOGETHER THEY PRODUCE HALF OF VIETNAM'S ENTIRE 
TRA AND BASA HARVEST, ESTIMATED AT 120,000 METRIC TONS. 
FURTHERMORE, THE VAST MAJORITY OF THE FISH FARMS ARE 
PRIVATELY-OWNED BUSINESSES WITH FAMILY SAVINGS (OR 
DEBT) INVESTED.  ONLY ONE FULLY-OWNED STATE-OWNED 
ENTERPRISE (SOE) CONTINUES TO PRODUCE TRA AND BASA IN 
AN GIANG (IT ONLY HAS 40 CAGES), ALTHOUGH THO SAID THE 
STATE OWNS A SHARE OF ONE LARGE PRIVATIZED PRODUCER AND 
THE PROCESSING INDUSTRY ITSELF IS A MIX OF SOES AND 
PRIVATE BUSINESSES. 
 
9. (U) COMMENT: NGUYEN VAN THO CREATED A MILLION- 
DOLLAR BUSINESS, USING ONLY PRIVATE FUNDS AND ELBOW 
GREASE.  HIS FUTURE SUCCESS AND THAT OF OTHER PRIVATE 
ENTREPRENEURS WILL DEPEND ON THE GVN'S WILLINGNESS TO 
LET THEM OUTPERFORM THE SOES AND BECOME MAJOR MARKET 
FORCES IN THEIR OWN RIGHT.  THESE NEW ENTREPRENEURS 
WILL BE THE ONES WHO DEAL WITH THE FIERCE COMPETITION 
IN WORLD MARKETS.  ALTHOUGH THE ANTI-DUMPING CASE WAS 
ONLY DISCUSSED BRIEFLY, THO (AND OTHER SCRAPPY 
ENTREPRENEURS) MAY LEARN THE HARD WAY THAT BEING TOO 
SUCCESSFUL CAN TRIGGER UNEXPECTED REACTIONS -- AND 
LEAVE HIM WONDERING HOW HIS COMPETITIVE EDGE WORKED 
AGAINST HIM. 
YAMAUCHI 
 
                       UNCLASSIFIED