US embassy cable - 05HOCHIMINHCITY894

UNCLAS SECTION 01 OF 03 HO CHI MINH CITY 000894 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: PGOV, ECON, KIRF, PREL, SOCI, KHIV, SNAR, PHUM, VM 
SUBJECT: AMBASSADOR'S ECONOMIC AND POLITICAL ENGAGEMENT IN 
VIETNAM'S CENTRAL COAST 
 
REF:  A: HCMC 586; B: HCMC 623 
 
1.  (SBU) Summary:  During a mid-August visit to Vietnam's 
central coastal provinces of Thua Thien Hue, Quang Nam and 
Danang, the Ambassador told provincial leaders that 
continued reform and privatization were essential for strong 
economic growth.  The Ambassador also focused on MIA issues 
and local implementation of Vietnam's new legal framework on 
religion.  Responding to local government and media 
questions on Agent Orange, the Ambassador emphasized the 
need to avoid polemics and propaganda and focus on concrete 
scientific research.  While all provinces said they are 
committed to economic reform, Hue clearly lags behind Quang 
Nam and Danang.  End Summary. 
 
2. (SBU) The Ambassador traveled to the provinces of Thua 
Thien Hue, Quang Nam and Danang August 11-13 to explore 
economic, social and religious freedom issues in Vietnam's 
central coastal region.  He gave press interviews in Quang 
Nam and Hue and participated in a Danang repatriation 
ceremony for the recovered remains of five MIAs.  The 
Ambassador's meeting in Hue with Thich Thien Hanh, a senior 
monk of the Unified Buddhist Church of Vietnam, is reported 
septel. 
 
Quang Nam Province's Social and Economic Development 
--------------------------------------------- -------- 
 
3. (SBU) The Ambassador called on Quang Nam Province 
People's Committee Chairman Nguyen Xuan Phuc on August 12. 
Turning first to economic development, the Ambassador noted 
that a USAID-funded study, the Vietnam Provincial 
Competitiveness Index, rated Quang Nam's provincial 
government highly, a testament to the province's pro- 
business and pro-development ethic.  In this regard, the 
Ambassador told Phuc that he was going to tour a 100 percent 
foreign-owned, USD 30 million tourist resort under 
development in Quang Nam.  While Quang Nam's progress has 
been good, the Ambassador cautioned that it must not rest on 
its laurels.  The province must continue to promote the 
private sector and to accelerate the privatization of state- 
owned-enterprises (SOEs) in Quang Nam.  The Ambassador 
observed that the SOES have a plethora of negative effects 
on the economy.  For example, not only do SOEs borrow at 
concessional rates, they crowd out the private sector and 
use capital inefficiently.  The Ambassador also noted that 
the province must continue to develop its road 
infrastructure, which is becoming a serious bottleneck to 
rapid economic growth. 
 
4. (SBU) Chairman Phuc said that Quang Nam's strategy is to 
develop its tourism and industrial sectors simultaneously. 
The province boasts good airport and seaport access, two 
UNESCO World Heritage sites (Hoi An and My Son), and miles 
of beaches.  Quang Nam also has the Chu Lai Economic Zone, 
which the GVN plans to develop as part of a new industrial 
hub for central Vietnam.  (Note:  the GVN plans to build its 
first oil refinery in Dung Quat, immediately to the south of 
Chu Lai, in neighboring Quang Ngai province.  End Note.)  In 
recent years, Quang Nam has had economic growth of 11-12% 
annually, among the highest rates in Vietnam.  Phuc noted 
that the province also has attracted 50 foreign direct 
investment projects. 
 
5. (SBU) The Ambassador said that while Quang Nam has made 
good progress recently, it still has a lower GDP and a 
higher percentage of the population below the poverty line 
than the national average.  A disproportionate number of 
these persons are ethnic minorities living in more remote, 
rural areas.  The Chairman acknowledged that as a whole, 
ethnic minorities are poor, but contended that conditions 
have improved in recent years. 
 
6. (SBU) The Chairman asked the Ambassador for his 
assistance in promoting investment from the Vietnamese 
community in the United States.  The Ambassador pledged his 
good offices in this effort.  He told Phuc that in his 
interactions with the Vietnamese community in the United 
States, the older generation still harbors animosity from 
the war, but the youth are more open to returning and 
working to develop the country. 
 
7.  (SBU) Phuc stated that the local government respects 
religious freedom.  He said that 12 percent of the people in 
Quang Nam have declared that they follow a recognized 
religion.  He added that there are 60 churches and places of 
worship in the province.  The Ambassador replied that he had 
not seen evidence of serious religious freedom problems in 
Quang Nam and encouraged the provincial chairman to continue 
to implement positively and consistently the new legal 
framework on religion. 
 
HIV/AIDS in Quang Nam 
--------------------- 
 
8. (SBU) The Ambassador briefed the Chairman on the U.S. 
commitment to assist Vietnam in its war against HIV/AIDS. 
The chairman thanked the Ambassador for the USG partnership 
on this matter and emphasized that, while AIDS in Quang Nam 
is low compared to other provinces, it is a concern 
nonetheless.  Phuc stated that the province is opening drug 
rehabilitation centers and vigorously enforcing the central 
government's strong penalties for drug traffickers. The 
Ambassador agreed that drug trafficking must be prosecuted, 
but added that users should be treated as victims, not 
criminals.  The government focus needs to be on prevention, 
care and treatment.  The Ambassador also stated that Vietnam 
must do more to remove the stigma of HIV, which even extends 
to children of HIV-positive parents. 
 
Thua Thien Hue 
-------------- 
 
9. (SBU) During a visit to Thua Thien Hue Province on August 
13, the Ambassador met with Nguyen Xuan Ly, provincial 
People's Committee Chairman.   Chairman Ly said that the 
province has the attributes to become Vietnam's premier 
tourism and services-sector magnet: a low-cost, well 
educated workforce; a comprehensive university system; 
beaches, mountains and national parks; and some of Vietnam's 
most impressive cultural and historical heritage sites.  He 
emphasized that the province boasts the deepest natural 
harbor in Vietnam and has plans to expand it to accommodate 
80,000-ton ships.  He spoke of the cooperative relationship 
Hue has established with the state of Hawaii and expressed 
hoped that a similar partnership could be formed between Hue 
University and a U.S. university. 
 
10. (SBU) The Chairman acknowledged that the Provincial 
Competitiveness Index ranked Thua Thien Hue well below 
neighboring Danang and Quang Nam Provinces. He asserted that 
he and other provincial authorities recognize th need o 
prvatize state-owned enterprises.  He claimed that there 
are now four private banks in the province and that the 
Huong Giang Hotel is the only remaining state-owned hotel in 
Hue. 
 
11. (SBU) Chairman Ly told the Ambassador that Hue's family- 
oriented conservative culture and effective local government 
operation have kept the drug and HIV/AIDS problems in Thua 
Thien Hue to a minimum.   Turning to human rights and 
religious freedom, Ly asserted that the situation, not only 
in his province, but also throughout Vietnam, is "perfect." 
Under Vietnam's legal framework on religion, the province 
has guaranteed the people the right of religious freedom. 
Thua Thien Hue has religious schools, and has created 
favorable conditions for all religious activities.  For 
example, two religious festivities were underway in Hue 
city, and the province recently had helped Phu Cam Church to 
build two new stone pillars that had been destroyed before 
1975.  The Ambassador said that if the religious situation 
is this good, then the province could become a model for 
other provinces.  Unfortunately, there still are black marks 
in the picture of Vietnam's religion. For example, there are 
bans on the churches of ethnic people in the Central 
Highlands, as well as incidents involving the Hoa Hao in the 
provinces of the Mekong Delta. 
 
MIA Issues 
---------- 
 
12. (SBU) In his meetings with both provincial leaders, the 
Ambassador emphasized that the USG values highly Vietnam's 
cooperation on recovering the remains of American MIAs. 
This was the first issue President Bush raised with 
Vietnam's Prime Minister during their recent meeting in 
Washington.  The Ambassador said that, unfortunately, the 
recovery teams have been limited in the amount of time they 
are allotted to conduct searches.  The USG would like to 
expand the search times, and asked for the provinces' 
support in that process.  The Quang Nam Chairman pledged 
assistance for the next round of recovery missions, 
scheduled for early 2006.  On August 13, the Ambassador 
attended a repatriation ceremony in Danang at which five 
sets of remains and personal effects believed to be those of 
missing U.S. servicemen were returned with full military 
honors to the United States.  (The remains were sent to 
Honolulu where further tests will be conducted.) 
 
Agent Orange 
------------ 
 
13. (SBU) Local government officials and journalists raised 
their concerns over Agent Orange.  The Ambassador reiterated 
that while the USG has a heartfelt concern for all 
handicapped persons -- the U.S. has provided USD 35 million 
to Vietnam since 1991 to assist persons with disabilities -- 
more cooperative scientific research on the effects of Agent 
Orange must be done.  In this regard, he noted, it was 
positive that the two countries were able to work together 
to sponsor a workshop on cleanup techniques for dioxins and 
chemicals associated with Agent Orange in Hanoi from August 
16-18. 
 
Social and Development Projects 
------------------------------- 
14. (U) On August 12, the Ambassador visited a vocational 
training center for street children in Danang, funded by the 
DeMatteis Foundation, a U.S. NGO.  The center offers 
training in sewing, embroidery, computer use and machine- 
repair for street children and disadvantaged children in the 
Danang area.  (Note:  The Ambassador's Fund has provided a 
grant of USD 16,000 to the center.  End Note.)  The center 
has graduated more than 1,000 young people since 2001, and 
80 percent now have jobs, according to center officials. 
 
15. (SBU) Comment:  The Ambassador's visit highlighted why 
Quang Nam -- and to a lesser extent Danang -- have been able 
to promote economic growth, while Hue lags behind.  All the 
provinces talk a good game, but Quang Nam practices what it 
preaches; not so Hue.  A case in point is the Hue provincial 
chairman's claims that almost all hotels are no longer state 
owned.  While he may wish it to be so, all major hotels in 
the province are either state-run or co-owned by the state 
or the province, including the flagship hotel in which the 
Ambassador's delegation stayed.  Similarly, Hue's claims 
that the religious freedom environment is "perfect" is 
belied by Hue's restrictions on the activities of Protestant 
house churches, Catholic activists Father Nguyen Van Ly and 
the United Buddhist Church of Vietnam (reftels). 
 
WINNICK