US embassy cable - 02HANOI2028

UNCLAS SECTION 01 OF 03 HANOI 002028 
 
SIPDIS 
 
STATE FOR EAP/BCLTV 
USDOC FOR 1431/MAC/AP/HPPHO 
 
E.O. 12958:  N/A 
TAGS: ETRD, ECON, PGOV, PHUM, VM 
SUBJECT:  NGHE AN:  DEVELOPING, BUT A LONG WAY TO GO 
 
 
                       UNCLASSIFIED 
 
PAGE 02        HANOI  02028  01 OF 03  160853Z 
REF:  01 HANOI 3262 
 
1.  (U)  SUMMARY.  NGHE AN PROVINCIAL OFFICIALS ARE HOPEFUL 
THAT A STRATEGIC LOCATION AND IMPROVING (THOUGH STILL WEAK) 
INFRASTRUCTURE WILL IMPROVE DEVELOPMENT AND THE PROVINCE'S 
ROLE AS AN OUTLET TO THE SEA FOR LAOS AND NORTHEASTERN 
THAILAND.  THE GVN IS MOVING AHEAD WITH PLANS FOR A NEW 
NATIONAL BORDER CROSSING WITH LAOS, BUT THE ROAD TO THE 
BORDER, WHILE IMPROVING, IS POOR.  SEPTELS WILL REPORT ON 
NARCOTICS AND TERRORISM ISSUES.  END SUMMARY. 
 
2.  (U)  POLOFF AND POL FSN VISITED NGHE AN PROVINCE AUGUST 
13-15.  VINH, THE PROVINCIAL CAPITAL, HAS ABOUT 200,000 
PEOPLE AND IS LOCATED ABOUT 300 KILOMETERS DOWN NATIONAL 
HIGHWAY 1 FROM HANOI.  IN A GENERAL DESCRIPTION OF THE 
PROVINCE, NGUYEN SY CUONG, VICE CHIEF OF STAFF FOR FOREIGN 
AFFAIRS, NGHE AN PEOPLE'S COMMITTEE, SAID THAT NGHE AN, WITH 
ABOUT 16,500 SQUARE KILOMETERS, IS VIETNAM'S THIRD LARGEST 
PROVINCE AND SHARES A LONG BORDER WITH LAOS TO THE WEST. 
THERE IS ONE INTERNATIONAL BORDER CROSSING, LOCATED AT NAM 
CAN, ABOUT 280 MOSTLY BUMPY KILOMETERS UP HIGHWAY 7 FROM 
VINH (REFTEL).  A NEW NATIONAL BORDER CROSSING IS UNDER 
CONSTRUCTION AT THANH THUY, LOCATED ABOUT 90 KILOMETERS UP 
HIGHWAY 46 FROM VINH. (NOTE:  THE NEW BORDER CROSSING DOES 
NOT YET APPEAR ON EMBASSY HANOI ADMINISTRATIVE MAPS, BUT IS 
INCLUDED IN PROVINCIAL MINISTRY OF PLANNING AND INVESTMENT 
(MPI) DOCUMENTS.  END NOTE.)  NGHE AN HAS A PORT AT CUA LO, 
ABOUT 15 KILOMETERS NORTHEAST OF VINH.  NATIONAL HIGHWAY 1 
AND THE MAIN NORTH-SOUTH RAILWAY LINE BOTH TRAVERSE THE 
PROVINCE.  IN ADDITION, THERE IS ALSO AN AIRPORT AT VINH 
WITH REGULAR FLIGHTS TO HANOI AND HO CHI MINH CITY.  CUONG 
                       UNCLASSIFIED 
 
PAGE 03        HANOI  02028  01 OF 03  160853Z 
SAID THAT NGHE AN'S LOCATION, ABOUT HALFWAY BETWEEN HANOI 
AND HUE, IS A PLUS, AS WELL AS HAVING THE MAJOR ROAD, RAIL, 
AND AIR LINKS,  "THESE ALL MAKE NGHE AN AN ATTRACTIVE 
PROVINCE FOR FOREIGN INVESTMENT, CUONG CLAIMED." 
 
3.  (U)  NGHE AN HAS A POPULATION OF APPROXIMATELY THREE 
MILLION, MAKING IT THE THIRD MOST POPULOUS PROVINCE IN THE 
COUNTRY.  HILLS AND MOUNTAINS COVER ABOUT 80 PERCENT OF THE 
PROVINCE.  ON THE ARABLE AREAS, FARMERS GROW MAINLY RICE, 
CORN, SWEET POTATOES, AND PEANUTS.  IN HIGHER ELEVATIONS, 
COFFEE, TEA, RUBBER TREES, AND PINEAPPLE ARE CULTIVATED. 
IMPORTANT INDUSTRIES INCLUDE CEMENT (THREE FACTORIES), 
TEXTILES, AND SEA PRODUCTS.  THE PER CAPITA INCOME IS ABOUT 
USD 300 PER YEAR, ABOUT 25 PERCENT UNDER THE NATIONAL 
AVERAGE OF ABOUT USD 400 PER YEAR.  CUONG SAID THE GDP 
GROWTH RATE IS "STRONG," AT ABOUT NINE PERCENT THE LAST TWO 
YEARS, BUT A MAJOR PRIORITY OF PROVINCIAL AUTHORITIES IS TO 
"SEE THIS REFLECTED IN THE PER CAPITA INCOME." 
 
--------------------------------------------- 
NEW BORDER CROSSING - BRING YOUR LAND CRUISER 
--------------------------------------------- 
 
4.  (U)  CUONG SAID THAT WORK IS ONGOING FOR A NEW "NATIONAL 
BORDER CROSSING" AT THANH THUY, ABOUT 90 KILOMETERS UP 
HIGHWAY 46 FROM VINH.  HE SAID PROVINCIAL AUTHORITIES HOPE 
THE NEW BORDER CROSSING WILL IMPROVE TRADE FROM LAOS AND 
NORTHEAST THAILAND, SINCE IT IS MUCH CLOSER TO THE CUA LO 
PORT THAN THE INTERNATIONAL BORDER CROSSING AT NAM CAN 
(REFTEL).  ACCORDING TO CUONG, THE GVN PLANS TO EVENTUALLY 
MAKE THIS AN INTERNATIONAL BORDER CROSSING AND ESTABLISH A 
                       UNCLASSIFIED 
 
PAGE 04        HANOI  02028  01 OF 03  160853Z 
"SPECIAL BORDER ECONOMIC ZONE IN THE AREA," TO INCLUDE 
BUSINESSES, A CUSTOMS OFFICE, BANKS, AND OTHER ACTIVITIES. 
HE PREDICTED THIS WOULD BE POSSIBLE "WITHIN A COUPLE YEARS." 
CUONG SAID THESE DEVELOPMENTS ARE IMPORTANT FOR VIETNAM'S 
"REGIONAL INTEGRATION."  CURRENTLY, MORE CROSS BORDER 
TRAFFIC "IS PROBABLY" COMING THROUGH HA TINH PROVINCE, 
LOCATED JUST SOUTH OF NGHE AN, BECAUSE THERE IS ALSO A PORT, 
AN ESTABLISHED BORDER CROSSING, AND A "RELATIVELY GOOD 
ROAD." (HIGHWAY 8). 
 
5.  (U)  EMBOFFS' TRIP TO THE PROPOSED BORDER CROSSING 
PROVED AN AMBITIOUS TASK.  HIGHWAY 46 IS ONLY PAVED ABOUT 
HALF THE DISTANCE.  THE FIRST 25 KILOMETERS FROM VINH ARE 
UNDERGOING IMPROVEMENT AND IT APPEARS THAT SECTION WILL BE 
RELATIVELY GOOD WITHIN SIX MONTHS TO A YEAR.  AFTER PASSING 
THROUGH THE SMALL TOWN OF DUNG, ABOUT 40 KILOMETERS FROM 
VINH, THE ROAD IS UNPAVED AND GRADUALLY BECOMES QUITE BUMPY 
AND RUTTED.  IN ADDITION, THERE ARE NUMEROUS TURNS TO GET TO 
THANH THUY, NONE OF WHICH IS SIGNPOSTED.  EVEN AN 
EXPERIENCED EMBASSY DRIVER HAD TO STOP SEVERAL TIMES TO 
CONFIRM DIRECTIONS.  THE TRIP ALSO INCLUDED FORDING A STREAM 
WHERE THERE WAS NO BRIDGE.  A LOCAL PERSON ENCOUNTERED ON 
THE BANK SAID THE STREAM EXISTS ONLY DURING THE RAINY SEASON 
AND IT IS "NOT USUALLY A PROBLEM TO CROSS, UNLESS THERE HAS 
BEEN VERY HEAVY RAIN." 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ9132 
 
PAGE 01        HANOI  02028  02 OF 03  160854Z 
ACTION EAP-00 
 
INFO  LOG-00   NP-00    AID-00   ACQ-00   CEA-01   CIAE-00  CTME-00 
      ITCE-00  DOTE-00  SRPP-00  DS-00    EB-00    EXME-00  E-00 
      FAAE-00  FBIE-00  UTED-00  VC-00    FRB-00   H-01     TEDE-00 
      INR-00   IO-00    ITC-01   L-00     VCE-00   AC-01    DCP-01 
      NSAE-00  NSCE-00  OES-01   OIC-02   OMB-01   OPIC-01  PA-00 
      PER-00   PM-00    PRS-00   ACE-00   P-00     SP-00    SSO-00 
      STR-00   TEST-00  TRSE-00  USIE-00  EPAE-00  PMB-00   DSCC-00 
      PRM-00   DRL-02   G-00     NFAT-00  SAS-00     /012W 
                  ------------------DA0C18  160854Z /38 
P 160845Z AUG 02 
FM AMEMBASSY HANOI 
TO SECSTATE WASHDC PRIORITY 7299 
INFO AMCONSUL HO CHI MINH CITY 
ASEAN COLLECTIVE 
USCINCPAC HONOLULU HI//FPA// 
SECDEF WASHDC//ISA/ABLAGG// 
USDOC WASHDC 
 
UNCLAS SECTION 02 OF 03 HANOI 002028 
 
SIPDIS 
 
STATE FOR EAP/BCLTV 
USDOC FOR 1431/MAC/AP/HPPHO 
 
                       UNCLASSIFIED 
 
PAGE 02        HANOI  02028  02 OF 03  160854Z 
6.  (U)  EMBOFFS MANAGED TO GET TO WITHIN EIGHT KILOMETERS 
OF THE NEW BORDER CROSSING, WHICH IS ACTUALLY ABOUT 17 
KILOMETERS BEYOND THE VILLAGE OF THANH THUY.  HOWEVER, 
FURTHER PROGRESS WAS IMPOSSIBLE, WITH THE ROAD BLOCKED DUE 
TO ONGOING CONSTRUCTION OVER A GULLY.  A LOCAL WOMAN 
BRINGING VEGETABLES TO CONSTRUCTION WORKERS ON HER 
MOTORBIKE, EXPLAINED THAT THE BORDER ROAD HAD BEEN CLOSED 
FOR "ABOUT ONE WEEK."  SHE SAID SHE HEARD IT WOULD BE OPEN 
IN ABOUT ONE MONTH.  PRIOR TO THE CONSTRUCTION, LAO AND 
VIETNAMESE CROSSED BACK AND FORTH "REGULARLY."  WITH A 
TRAVEL PERMIT, IT IS ALSO POSSIBLE TO STAY OVERNIGHT.  SHE 
HAD HEARD AN OCCASIONAL FOREIGNER CROSSED, BUT SUSPECTED 
THESE WERE PROBABLY PEOPLE WORKING FOR AID ORGANIZATIONS OR 
THE UNITED NATIONS-NOT TOURISTS.  THE VENDOR SAID SHE HOPED 
THE NEW BORDER CROSSING AND ROAD IMPROVEMENT WOULD INCREASE 
CROSS BORDER TRADE, BUT NOTED, "WE ARE POOR ON THIS SIDE AND 
THE LAO ARE EVEN POORER ON THE OTHER SIDE." 
 
-------------------------------------------- 
TRADE DEVELOPMENT:  SLOW, BUT WE'RE LEARNING 
-------------------------------------------- 
 
7.  (U)  CUONG AND DOAN NAM, VICE DIRECTOR OF THE PROVINCIAL 
MPI, SAID SEPARATELY THAT THEY ARE OPTIMISTIC REGARDING 
IMPROVED TRADE AND INVESTMENT WITH THE U.S. IN THE WAKE OF 
THE U.S.-VIETNAM BILATERAL TRADE AGREEMENT (BTA).  NAM SAID 
THAT THERE HAS NOT BEEN "A SIGNIFICANT" INCREASE IN INTEREST 
FROM US INVESTORS, BUT HE EXPECTS IT WILL COME "IN TIME." 
ONE MAJOR BENEFIT HAS BEEN THE OPPORTUNITY FOR VIETNAMESE 
OFFICIALS AND BUSINESS PEOPLE TO TRAVEL TO THE U.S. TO LEARN 
MORE ABOUT THE MARKETS THERE.  IN ADDITION, SEMINARS 
                       UNCLASSIFIED 
 
PAGE 03        HANOI  02028  02 OF 03  160854Z 
ORGANIZED BY GVN OFFICIALS HAVE HELPED THE LOCAL BUSINESS 
COMMUNITY BETTER UNDERSTAND THE BTA AND WHAT NEEDS TO BE 
DONE TO COMPETE IN THE US MARKET.  CUONG OF THE PEOPLE'S 
COMMITTEE SAID THAT MANY VIETNAMESE BUSINESS PEOPLE DO NOT 
YET UNDERSTAND HOW TO DO BUSINESS WITH THE U.S., BUT IN THE 
LONG RUN, THE BTA "WILL BENEFIT EVERYBODY."  CUONG SAID 
BASED ON FACTORS SUCH AS THE NGHE AN'S "CENTRAL LOCATION," 
THE RAILWAY, HIGHWAY 1, THE AIRPORT AT VINH, AND THE PORT, 
HE IS OPTIMISTIC. 
 
----------------------------- 
LACK OF INFRASTRUCTURE INLAND 
----------------------------- 
 
8.  (U)  THE MPI'S NAM SAID THAT WHILE CONDITIONS ARE 
GENERALLY IMPROVING IN NGHE AN, DEVELOPMENT IS STILL 
HINDERED BY A LACK OF INFRASTRUCTURE.  SPECIFICALLY, HE 
NOTED THAT COMMUNICATIONS ARE POOR, WITH "SOME RURAL AREAS" 
HAVING NO PHONE SERVICE AND NO INFRASTRUCTURE FOR MOBILE 
TELEPHONES.  IN ADDITION, THE INLAND ROAD SYSTEM IS "NOT 
WELL DEVELOPED."  CUONG SAID SEPARATELY, "YOU HAVE SEEN 
HIGHWAY 7 (REFTEL), SO YOU KNOW THE PROBLEMS WE FACE AS AN 
OUTLET TO THE SEA FOR OUR NEIGHBORS."  CUONG ALSO MENTIONED 
THE NEED TO UPGRADE INDUSTRIAL TECHNOLOGY.  HE CITED ONE 
SHOE FACTORY JOINT VENTURE WITH GERMANY THAT WAS FORCED TO 
CLOSE LAST YEAR BECAUSE GERMANY "DID NOT SEEM INTERESTED" IN 
PROVIDING UP-TO-DATE TECHNOLOGY.  AS A RESULT, CUONG SAID 
THE FACTORY COULD NOT MEET QUALITY STANDARDS FOR EXPORT. 
 
----------------- 
PORT PLAYS A ROLE 
                       UNCLASSIFIED 
 
PAGE 04        HANOI  02028  02 OF 03  160854Z 
----------------- 
 
9.  (U)  LE DINH NHAM, VICE GENERAL MANAGER OF THE NGHE TINH 
PORT, LOCATED AT CUA LO (ABOUT 15 KILOMETERS NORTHEAST OF 
VINH) SAID THAT HIS ROLE IS TO "HELP THE PROVINCE DEVELOP." 
THE PORT, WHILE NOT NEARLY AS LARGE AS DANANG'S, CAN HANDLE 
SHIPS UP TO 10,000 TONS AND CURRENTLY HAS 550 METERS OF 
BERTHS.  MOST SHIPS COMING INTO PORT ARE FROM INDIA, 
MALAYSIA, ROK, PHILIPPINES, JAPAN, AND "STILL A FEW" FROM 
RUSSIA.  THE PORT HANDLES BOTH DOMESTIC AND INTERNATIONAL 
CARGO AND IS FULLY STAFFED WITH CUSTOMS, HEALTH, AND POLICE 
OFFICES.  APPROXIMATELY 800,000 TONS OF CARGO PASSED THROUGH 
THE PORT IN 2001.  NHAM ESTIMATED ABOUT 15 PERCENT CAME FROM 
LAOS, MOSTLY PROCESSED FORESTRY PRODUCTS GOING OUT AND 
MANUFACTURED GOODS GOING IN.  HE PREDICTED THAT THE AMOUNT 
TO/FROM LAOS "MAY DECLINE" BECAUSE HE HEARD THE GVN HAS AN 
AGREEMENT WITH THE LAO GOVERNMENT TO ENCOURAGE USING VUNG 
ANG PORT IN HA TINH PROVINCE, IMMEDIATELY TO THE SOUTH, AND 
PLANS TO BUILD A NEW ROAD PARALLEL TO HIGHWAY 8.  (NOTE: 
ACCORDING TO THE MINISTRY OF FOREIGN AFFAIRS, VIETNAM AND 
LAOS OFFICIALS REACHED A "VERBAL AGREEMENT" ON USING VUNG 
ANG PORT AT THE 24TH SESSION OF THE VIETNAM-LAOS 
INTERGOVERNMENTAL COMMITTEE ON ECONOMIC, CULTURAL, 
SCIENTIFIC, AND TECHNICAL COOPERATION, HELD IN JANUARY 2001. 
END NOTE.)   ON THE OTHER HAND, BUSINESS AT NGHE TIN MAY 
PICK UP, ESPECIALLY WITH THE NEW BORDER CROSSING AND 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ9133 
 
PAGE 01        HANOI  02028  03 OF 03  160854Z 
ACTION EAP-00 
 
INFO  LOG-00   NP-00    AID-00   ACQ-00   CEA-01   CIAE-00  CTME-00 
      ITCE-00  DOTE-00  SRPP-00  DS-00    EB-00    EXME-00  E-00 
      FAAE-00  FBIE-00  UTED-00  VC-00    FRB-00   H-01     TEDE-00 
      INR-00   IO-00    ITC-01   L-00     VCE-00   AC-01    DCP-01 
      NSAE-00  NSCE-00  OES-01   OIC-02   OMB-01   OPIC-01  PA-00 
      PER-00   PM-00    PRS-00   ACE-00   P-00     SP-00    SSO-00 
      STR-00   TEST-00  TRSE-00  USIE-00  EPAE-00  PMB-00   DSCC-00 
      PRM-00   DRL-02   G-00     NFAT-00  SAS-00     /012W 
                  ------------------DA0C1D  160854Z /38 
P 160845Z AUG 02 
FM AMEMBASSY HANOI 
TO SECSTATE WASHDC PRIORITY 7300 
INFO AMCONSUL HO CHI MINH CITY 
ASEAN COLLECTIVE 
USCINCPAC HONOLULU HI//FPA// 
SECDEF WASHDC//ISA/ABLAGG// 
USDOC WASHDC 
 
UNCLAS SECTION 03 OF 03 HANOI 002028 
 
SIPDIS 
 
STATE FOR EAP/BCLTV 
USDOC FOR 1431/MAC/AP/HPPHO 
                       UNCLASSIFIED 
 
PAGE 02        HANOI  02028  03 OF 03  160854Z 
IMPROVEMENTS TO HIGHWAY 46. 
 
------- 
COMMENT 
------- 
 
10.  (U)  IT WAS NOT SURPRISING TO HEAR OPTIMISM FROM THE 
PEOPLE'S COMMITTEE AND THE MPI, BUT PROVINCIAL OFFICIALS 
APPEARED RELATIVELY REALISTIC IN THEIR ASSESSMENTS.  WHILE 
THE TRANSPORTATION FACILITIES IN AND OUT OF THE PROVINCIAL 
CAPITAL ARE A PLUS, THINGS GO DOWNHILL FAST AS ONE MOVES 
INLAND TOWARDS THE LAO BORDER.  BASED ON TWO EMBASSY TRIPS 
TO NGHE AN OVER THE PAST 9 MONTHS, IT SEEMS CLEAR THAT 
GENERAL DEVELOPMENT, AS WELL AS PROGRESS IN BECOMING MORE 
PROMINENT AS AN OUTLET TO SEA FOR ITS NEIGHBORS, IS STILL A 
WORK IN PROGRESS.  PORTER 
 
                       UNCLASSIFIED