US embassy cable - 05HANOI3067

UNCLAS SECTION 01 OF 02 HANOI 003067 
 
SIPDIS 
 
STATE FOR EAP/MLS AND EB/TPP/BTA/ANA GOODMAN AND WICKMAN 
STATE PASS USTR ELENA BRYAN 
USDOC FOR 4431/MAC/AP/OPB/VLC/HPPHO 
USDOC FOR 4430/DBISBEE/JBENDER 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ETRD, VM, WTRO, WTO, BTA 
SUBJECT: DEPUTY SECRETARY OF COMMERCE SAMPSON MEETING WITH 
MINISTER OF PLANNING AND INVESTMENT PHUC 
 
SENSITIVE.  Do not post on the Internet. 
 
1. (SBU) Summary:  Deputy Secretary of Commerce David A. 
Sampson met with Minister of Planning and Investment Vo Hong 
Phuc November 17 to discuss bilateral relations and matters 
of interest to U.S. business. The DepSec reasserted the 
United States' commitment to Vietnam's WTO accession on 
sound commercial principles, conveyed U.S. business concerns 
over the Draft Common Investment Law (CIL), and expressed 
concerns about telecommunications market access and 
increases in the Special Consumption Tax (SCT) in the 
automotive sector.  Minister Phuc said that the U.S. 
business concerns over the CIL had been forwarded for 
consideration to the National Assembly.  The DepSec also 
advocated on behalf of two U.S. companies, SSA Marine and 
Rohn Products International.  End summary. 
 
2. (SBU) Deputy Secretary of Commerce David A. Sampson met 
Minister of Planning and Investment Vo Hong Phuc November 17 
to discuss bilateral relations and matters of concern to 
U.S. business.  The Ambassador, Commercial Counselor and the 
Deputy Secretary's Chief of Staff accompanied him.  The 
DepSec reasserted the United States' commitment to Vietnam's 
WTO accession on sound commercial principles, stressing that 
U.S. business must support the accession package, and that 
the U.S. Congress must grant Permanent Normal Trade 
Relations (PNTR) status before Vietnam can accede (in the 
eyes of the United States).  It is critical that the WTO 
accession package and PNTR legislation be delivered to the 
U.S. Congress by next spring, the DepSec said, since next 
year is an election year and the U.S. Congress will have an 
abbreviated calendar with which to work. 
 
U.S. CONCERN OVER THE DRAFT COMMON INVESTMENT LAW 
--------------------------------------------- ---- 
 
3. (SBU) Sampson said that Prime Minister Phan Van Khai's 
visit to the United States was extremely well received, and 
that there is growing interest among the U.S. private sector 
in investment opportunities in Vietnam.  However, U.S. 
business has expressed some concern over the Draft Common 
Investment Law (CIL), which, despite a number of positive 
provisions, may be a step back from reform.  The Minister 
responded that in drafting the CIL, which applies to both 
foreign and domestic investors, the GVN had listened to U.S. 
business, especially AmCham.  AmCham raised four issues, 
which the Ministry has submitted to the National Assembly 
for consideration and resolution.  First, the law on dispute 
settlement will follow the requirements of the WTO, 
Vietnam's bilateral agreements with 64 countries, and the 
International Convention on Dispute Settlement.  Second, 
feedback from the AmCham, AusCham, and EuroCham on the issue 
of investment guarantees was passed on to the National 
Assembly.  Third, all foreign investors who want provisions 
on investment privileges are able to write them into 
business licenses.  Fourth, the issue of government 
guarantees for large-scale projects is of great concern to 
the GVN because they involve infrastructure and power, 
though in principle the GVN could grant guarantees. 
 
4. (SBU) The Minister also said that the three chambers had 
generated some confusion on foreign investment.  The 
investment process is in accord with the BTA, he said.  One 
license is given in two categories: registered and approved 
projects.  The first category is for projects worth under 20 
million USD, while the second is for projects over 20 
million USD.  Minister Phuc said he believes the process is 
"quite straightforward and liberal."  He added that 
previously, a foreign investor was allowed to have only one 
investment project, as a limited corporation.  Now, an 
investor may have more than one project, established to 
pursue different types of ventures. 
 
INVESTMENT IN TELECOMMUNICATIONS AND THE AUTO INDUSTRY 
--------------------------------------------- --------- 
 
5. (SBU) U.S. companies are very interested in investing in 
the telecommunications sector in Vietnam, but are concerned 
that BTA market access provisions have arrived slowly, the 
DepSec said.  The Vice Minister responded that the 
telecommunications sector is also a concern to Vietnam, and 
that "we are strongly committed to the phase-ins specified 
in the BTA".  He said that his Ministry had talked to the 
Ministry of Posts and Telematics (MPT) regarding this issue. 
(Note: MPI has recognized the importance of BTA 
implementation in the telecommunications sector much more 
readily than MPT, the market regulator and owner of VNPT, 
the monopoly carrier. End note.) 
 
6. (SBU) The DepSec said that he would be visiting the Ford 
plant, which has been a positive investment in Vietnam.  The 
United States is concerned about tariff changes and tax 
increases that the GVN is implementing in the automotive 
industry, and feels they may have an overall negative 
impact, he explained.  Phuc agreed that Ford is a great 
success, but said that the need to develop Vietnam's 
infrastructure and traffic system requires continued revenue 
collection through the Special Consumption Tax.  He said 
that the GVN is now proposing a policy to encourage consumer 
spending, but that the issue remains very controversial. 
 
COMMERCIAL ADVOCACY 
------------------- 
 
7. (SBU) The DepSec asked that the GVN look favorably on SSA 
Marine's proposal to provide marine terminal services and 
container berth operations at two ports in Vietnam, and Rohn 
Products International's bid to build a television tower 
project for Ho Chi Minh Television.  The more U.S. business 
success stories there are in Vietnam, the more rapid the 
acceleration in investment will be, he pointed out.  The 
Minister said that Vietnam will welcome SSA's proposal in a 
sector where the GVN is hoping to attract investment, since 
it cannot meet demand.  He said that the DepSec should talk 
to Ho Chi Minh City authorities regarding the television 
tower, as it is a city-level issue. 
 
MARINE