US embassy cable - 02HANOI2297

UNCLAS SECTION 01 OF 02 HANOI 002297 
 
SIPDIS 
 
STATE FOR EAP/BCLTV 
 
USDOC FOR 1431/MAC/AP/HPPHO 
 
E.O. 12958:  N/A 
TAGS: ETRD, ECON, VM 
SUBJECT:  PHU QUOC ISLAND - BULLISH ON DEVELOPMENT BUT. . . 
 
REF:  A.  HANOI 2200  B.  HANOI 2232 
 
                       UNCLASSIFIED 
 
PAGE 02        HANOI  02297  01 OF 02  231018Z 
 
1.  (U)  SUMMARY.  PHU QUOC ISLAND DISTRICT OFFICIALS ARE 
OPTIMISTIC ABOUT DEVELOPMENT BEYOND AGRICULTURE AND FISHING, 
ITS TRADITIONAL ECONOMIC MAINSTAYS.  THEY HOPE THAT ITS 
TROPICAL ISLAND SETTING AND IMPROVING (THOUGH STILL WEAK) 
INFRASTRUCTURE WILL ENCOURAGE DEVELOPMENT, ATTRACT FOREIGN 
INVESTMENT, AND BRING IN MORE DOMESTIC AND FOREIGN TOURISTS. 
THE POTENTIAL FOR TOURISM IS REAL BUT WILL PROBABLY NEED 
VASTLY MORE RESOURCES THAN NOW AVAILABLE.  END SUMMARY. 
 
2.  (U)  POLOFF AND POL FSN VISITED PHU QUOC ISLAND ON 
SEPTEMBER 4.  (REFTELS REPORTED ON COUNTERTERRORISM 
DISCUSSIONS AND NARCOTICS ISSUES, RESPECTIVELY).  THE ISLAND 
IS LOCATED OFF THE SOUTHWEST COAST OF VIETNAM, 40 KILOMETERS 
WEST OF THE VIETNAMESE MAINLAND AND ABOUT 15 KILOMETERS 
SOUTH OF CAMBODIA.  IT IS ADMINISTERED AS A DISTRICT OF KIEN 
GIANG PROVINCE.  THERE ARE GOOD BEACHES AROUND MOST OF THE 
ISLAND, ESPECIALLY ON THE WEST AND SOUTHEAST SIDES.  UNLIKE 
THE DELTA MAINLAND, MUCH OF THE ISLAND IS HILLY AND HEAVILY 
FORESTED. 
 
3.  (U)  ACCORDING TO NGO RANG DONG, VICE CHAIRMAN OF THE 
DISTRICT PEOPLE'S COMMITTEE, THE ISLAND CONSISTS OF ABOUT 
600 SQUARE KILOMETERS AND HAS A POPULATION OF ABOUT 80,000, 
97 PERCENT OF WHOM ARE ETHNIC KINH.  THE MAIN TOWN, DUONG 
DONG, IS LOCATED ON THE WEST SIDE OF THE ISLAND, WITH A 
POPULATION OF ABOUT 30,000.  DONG NOTED THAT AGRICULTURE "IS 
MORE DIFFICULT THAN ON THE MAINLAND" DUE TO THE POOR QUALITY 
OF SOIL AND THE LACK OF FLAT LAND.  FISHING HAS 
TRADITIONALLY BEEN MORE IMPORTANT;  PHU QUOC IS ALSO FAMOUS 
IN VIETNAM FOR ITS HIGH QUALITY FISH SAUCE AS WELL AS BLACK 
                       UNCLASSIFIED 
 
PAGE 03        HANOI  02297  01 OF 02  231018Z 
PEPPERS. 
 
----------------------------- 
GETTING THERE IS HALF THE FUN 
----------------------------- 
 
4.  (U)  THE ISLAND IS REACHED EITHER VIA FLIGHTS FROM HO 
CHI MINH CITY (ONE HOUR) OR THE PROVINCIAL CAPITAL OF RACH 
GIA (ABOUT 25 MINUTES), OR VIA A DAILY FERRY FROM RACH GIA 
(ABOUT SEVEN HOURS).  ONE FOREIGN TOURIST DESCRIBED THE 
FERRY TRIP SIMPLY AS "HELLISH" BUT CHEAP AT USD FOUR. 
DONG CLAIMED THAT THE PROVINCE IS NOW IMPLEMENTING A PLAN 
FOR A HIGH-SPEED FERRY THAT WILL REDUCE TRAVEL TIME IN HALF, 
BUT WAS UNABLE TO SAY WHEN THE NEW FERRY SERVICE MIGHT 
ACTUALLY BEGIN.  ONCE ON LAND, THE ROAD SYSTEM IS QUITE 
BASIC; ONLY ABOUT 27 KILOMETERS OF THE 60 KILOMETERS OF ROAD 
ARE PAVED, DONG ADMITTED.  HE NONETHELESS ASSURED POLOFFS 
THAT "IF YOU COME BACK IN FIVE YEARS, IT WILL LOOK 
COMPLETELY DIFFERENT." 
 
-------------------- 
COUNTING ON TOURISM 
-------------------- 
 
5.  (U)  TRAN QUOC KHANH, CHIEF OF THE DISTRICT INDUSTRIAL 
AND TRADE AFFAIRS OFFICE, NOTED THAT TOURISM IS GROWING 
STEADILY.  WHILE HE WAS UNABLE TO PROVIDE PRECISE FIGURES, 
KHANH ESTIMATED THAT TOURISM IS GROWING AT "FIVE TO 10 
PERCENT" PER YEAR.  HE CITED THE ISSUANCE OF GOVERNMENT 
DECREE 97 IN AUGUST 2000 AS A KEY MILESTONE, CREATING IN 
DUONG DONG TOWN AND THE SURROUNDING AREA AN "OPEN ECONOMIC 
                       UNCLASSIFIED 
 
PAGE 04        HANOI  02297  01 OF 02  231018Z 
ZONE."  (NOTE: KIEN GIANG PROVINCIAL PEOPLE'S COMMITTEE 
OFFICIALS TOLD AMBASSADOR IN JULY 2002 THAT THE PROVINCE WAS 
STILL AWAITING CENTRAL GOVERNMENT APPROVAL FOR PARTS OF THE 
PROJECT, WHICH THEY NOTED WOULD EVENTUALLY ALSO INCLUDE A 
RESIDENTIAL AREA, "CLEAN" COMMERCIAL ACTIVITIES SUCH AS 
INSURANCE AND BANKING, AN AIRPORT, AND A DEEP-WATER PORT. 
END NOTE)  SINCE THEN, THE NUMBER OF HOTELS HAS INCREASED 
FROM FOUR TO NINE (THERE ARE NOW ABOUT 200 HOTEL ROOMS ON 
THE ISLAND); NUMEROUS NEW RESTAURANTS HAVE ALSO OPENED. 
KHANH PREDICTED THAT WITHIN THE NEXT FIVE YEARS "AT LEAST" 
FIVE MORE HOTELS WILL BE BUILT. 
 
6.  (U)  TOURISTS ARE NOW ABOUT EVENLY SPLIT BETWEEN FOREIGN 
AND DOMESTIC, DEPENDING ON THE SEASON, ACCORDING TO KHANH. 
DURING SUMMER AND FALL, THERE ARE RELATIVELY MORE VIETNAMESE 
TOURISTS, MOST COMING IN ORGANIZED GROUPS OR THROUGH 
SPONSORING ORGANIZATIONS (WORK UNITS, WOMEN'S ASSOCIATIONS, 
ETC.).  FOREIGN TOURISTS TEND TO ARRIVE DURING THE WINTER 
MONTHS.  THE ASSISTANT MANAGER OF PHU QUOC'S SOLE THREE STAR 
HOTEL SEPARATELY CLAIMED TO HAVE HAD "ABOUT 80 PERCENT 
OCCUPANCY" OVER THE PAST THREE MONTHS, WITH INCREASING 
NUMBERS OF ORGANIZED JAPANESE GROUPS, AS WELL AS FRENCH AND 
GERMAN TOURISTS. 
 
7.  (U)   KHANH ADMITTED THAT "IT IS NOT ENOUGH" JUST TO 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ8924 
 
PAGE 01        HANOI  02297  02 OF 02  231018Z 
ACTION EAP-00 
 
INFO  LOG-00   AID-00   CEA-01   CIAE-00  CTME-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 
      L-00     VCE-00   AC-01    NSAE-00  NSCE-00  OES-01   OMB-01 
      OPIC-01  ACE-00   SP-00    SSO-00   SS-00    STR-00   TEST-00 
      TRSE-00  USIE-00  EPAE-00  DRL-02   G-00     NFAT-00  SAS-00 
        /009W 
                  ------------------EB4DCE  231018Z /38 
P 231005Z SEP 02 
FM AMEMBASSY HANOI 
TO SECSTATE WASHDC PRIORITY 7605 
INFO AMCONSUL HO CHI MINH CITY 
AMEMBASSY PHNOM PENH 
USCINCPAC HONOLULU HI//FPA// 
USDOC WASHDC 
 
UNCLAS SECTION 02 OF 02 HANOI 002297 
 
SIPDIS 
 
STATE FOR EAP/BCLTV 
 
USDOC FOR 1431/MAC/AP/HPPHO 
 
 
BRING TOURISTS TO THE ISLAND -- IT IS ALSO IMPORTANT TO 
                       UNCLASSIFIED 
 
PAGE 02        HANOI  02297  02 OF 02  231018Z 
PROVIDE THEM WITH INTERESTING ACTIVITIES.  HE EXPRESSED A 
WISH THAT DISTRICT AUTHORITIES WILL TAKE ADVANTAGE OF THE 
"NATURAL BEAUTY" OF THE ISLAND AND ORGANIZE ECO TOURS AS 
WELL AS TOURS AROUND THE SEA AND THE FORESTS.  KHANH NOTED 
THAT THE PROVINCIAL PEOPLE'S COMMITTEE HAD SPECIFICALLY 
DIRECTED THE DISTRICT TO ENGAGE IN TOURISM THAT PROTECTS THE 
ENVIRONMENT. 
 
--------------------------- 
OPEN FOR BUSINESS - SORT OF 
--------------------------- 
 
8.  (U)  KHANH ALSO EXPRESSED A HOPE THAT INCREASED TOURISM 
COULD FORM THE BASIS FOR MORE FOREIGN DIRECT INVESTMENT.  HE 
ASKED THAT POLOFFS TAKE BACK TO THE US EMBASSY THE MESSAGE 
THAT PHU QUOC IS INTERESTED IN FOREIGN INVESTMENT, 
ESPECIALLY IN THE TOURISM AND INDUSTRY SECTORS.  IN THE 
TOURIST SECTOR, KHANH SUGGESTED A JOINT VENTURE WORLD-CLASS 
RESORT MIGHT BE FEASIBLE.  IN THE INDUSTRIAL SECTOR, KHANH 
SPECIFICALLY POINTED TOWARD SEAFOOD PROCESSING AS AN AREA 
WITH "GREAT POTENTIAL."  KHANH ADMITTED THAT, AS FAR AS HE 
KNOWS, THERE IS NO US FOREIGN DIRECT INVESTMENT AT THIS 
TIME.  HOWEVER, PHU QUOC AUTHORITIES "WOULD VERY MUCH 
WELCOME US INVESTMENT," HE DECLARED. 
 
9.  (U)  DESPITE KHANH'S APPARENT INTEREST IN ATTRACTING 
FOREIGN INVESTMENT, PHU QUOC HAS NOT YET ESTABLISHED AN 
INVESTMENT PROMOTION OFFICE, HE ADMITTED.  KHANH EXPRESSED A 
HOPE THAT THE PROVINCIAL AUTHORITIES WOULD ESTABLISH SUCH AN 
OFFICE SOON, BUT HE WAS UNABLE TO PREDICT WHEN.  INSTEAD, 
THE THREE STAR HOTEL, FOR A FEE OF USD 50, PROMISES TO 
                       UNCLASSIFIED 
 
PAGE 03        HANOI  02297  02 OF 02  231018Z 
ORGANIZE BUSINESS MEETINGS AND PROVIDE INFORMATION ON 
INVESTMENT OPPORTUNITIES.  KHANH SAID HE WAS AWARE OF THIS 
SERVICE, WHICH HE CHARACTERIZED AS THE HOTEL'S INITIATIVE 
AND NOT INVOLVING DISTRICT AUTHORITIES. 
 
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COMMENT 
------- 
 
10.  (U)  PHU QUOC ARGUABLY HAS THE NATURAL BEAUTY AND 
TROPICAL CLIMATE TO COMPETE FOR INTERNATIONAL TOURISTS WITH 
THAILAND'S PHUKET OR INDONESIA'S BALI.  HOWEVER, WITHOUT 
SIGNIFICANT COMMITMENT OF RESOURCES DEVOTED TO 
INFRASTRUCTURE DEVELOPMENT, AND EVEN MORE FAVORABLE 
INVESTMENT CONDITIONS THAN NOW EXIST, PHU QUOC'S TOURISM 
BOOM IS APT TO REMAIN LIMITED, AND ITS ECONOMIC PROSPECTS 
MODEST. 
BURGHARDT 
 
                       UNCLASSIFIED