CG'S INITIAL MEETING WITH CHAIRMAN OF HCMC PEOPLE'S COMMITTEE

UNCLAS SECTION 01 OF 02 HO CHI MINH CITY 001181

SIPDIS

DEPARTMENT FOR EAP/BCLTV

E.O. 12958: N/A
TAGS: BEXP BTIO ECON ECIN PREL PGOV PTER VM
SUBJECT: CG'S INITIAL MEETING WITH CHAIRMAN OF HCMC PEOPLE'S COMMITTEE



1. SUMMARY. ON OCTOBER 15, CG EMI YAMAUCHI MET WITH
LE THANH HAI, CHAIRMAN OF THE PEOPLE'S COMMITTEE (PC)
OF HO CHI MINH CITY (HCMC),ACCOMPANIED BY POLOFF AND
CONOFF. HAI EXTENDED A WARM WELCOME TO THE CG AND
EXPRESSED HIS HOPE THAT SHE WOULD BE BOTH COMFORTABLE
AND BUSY IN HCMC. HE SAID THE BTA WILL RESULT IN
VIETNAMESE COMPANIES PREPARING THEIR GOODS FOR EXPORT,
AND INTEGRATING WITH U.S. AND GLOBAL MARKETS. HE SAID
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HE WOULD LIKE TO INCREASE FOREIGN DIRECT INVESTMENT
(FDI) IN VIETNAM, AND HOPED THAT THE OVERSEAS PRIVATE
INVESTMENT CORPORATION (OPIC) WILL HELP TO ATTRACT
POTENTIAL INVESTORS TO HCMC. HE WAS HOPEFUL THAT THE
USG AND OTHER COUNTRIES COULD ARRIVE AT A PEACEFUL
SETTLEMENT IN AFGHANISTAN. END SUMMARY.

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"I HOPE YOU WILL BE EXTREMELY BUSY DURING YOUR TENURE,
BECAUSE THAT WILL BE A GOOD SIGN."
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2. HAI WELCOMED CG TO HCMC, AND STATED OVER THE NEXT
THREE YEARS HE HOPED TO CONTINUE TO BROADEN THE GOOD
WORKING RELATIONSHIP THAT WAS ESTABLISHED WITH CG'S
PREDECESSOR. CG EXPRESSED HER DESIRE TO CONTINUE AND
STRENGTHEN THEIR RELATIONSHIP ON ALL FRONTS, NOT ONLY
THOSE RELATED TO TRADE. SHE OFFERED TO ASSIST HAI WITH
EMERGING PROGRAMS OR INITIATIVES, ESPECIALLY THOSE IN
THE AREAS OF CULTURE AND EDUCATION. HE AGREED THESE
WERE IMPORTANT AREAS TO SEEK COOPERATION, AS WELL AS
THE FIELD OF INFORMATION TECHNOLOGY.

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"WE WANT TO INTEGRATE INTO THE U.S. AND GLOBAL MARKETS
AS SOON AS POSSIBLE."
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3. LE STATED THE APPROVAL OF THE U.S.-VIETNAM
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BILATERAL TRADE AGREEMENT BY THE U.S. SENATE
DEMONSTRATES GREAT GROWTH AND POTENTIAL FOR THE U.S.-
VIETNAM RELATIONSHIP. HE NOW SEES CHALLENGES FOR
VIETNAMESE ENTREPRENEURS, WHO NEED TO PREPARE THEIR
PRODUCTS FOR EXPORT, AND FOREIGN ENTREPRENEURS, WHO
NEED TO TRUST IN INVESTMENT OPPORTUNITIES IN VIETNAM.


4. PRIOR TO RATIFICATION OF THE BTA, LOCAL GOVERNMENTS
ORGANIZED A DIALOGUE AMONG VIETNAMESE COMPANIES TO
EXCHANGE IDEAS ABOUT INTEGRATING INTO U.S. MARKETS.
ACCORDING TO HAI, ONE ISSUE THAT SURFACED IS THAT MANY
VIETNAMESE COMPANIES MUST IMPROVE THE QUALITY OF THEIR
PRODUCTS IN ORDER TO COMPETE IN REGIONAL AND GLOBAL
EXPORT MARKETS. HAI SAID THE HCMC TARGET FOR EXPORT
GROWTH FOR 2001 WAS 20 PERCENT; ALTHOUGH IN THE FIRST
SIX MONTHS IT REACHED 14 PERCENT, HAI SAID IT WILL BE
DIFFICULT TO ATTAIN THE BALANCE OF 6 PERCENT IN THE
CURRENT GLOBAL ECONOMIC ENVIRONMENT.


5. HAI SAID THE PC INTENDS TO INCREASE ITS SUPPORT FOR
AMERICAN CHAMBER OF COMMERCE IN VIETNAM EFFORTS TO
EDUCATE U.S. COMPANIES ABOUT OPPORTUNITIES FOR TRADE
WITH VIETNAM. HE SAID AMERICAN INVESTMENT WOULD SPUR
GROWTH IN HCMC, AND HE SAID HE PLANNED TO MAKE HCMC A
MORE ATTRACTIVE DESTINATION FOR FDI. HE WOULD LIKE
OPIC TO PLAY A GREATER ROLE IN FACILITATING INVESTMENT
IN VIETNAM. DURING THE FIRST 9 MONTHS OF 2001, HCMC
ATTRACTED A TOTAL OF USD$700 MILLION IN FDI. THIS WAS
THREE TIMES HIGHER THAN INVESTMENT OVER THE SAME PERIOD
LAST YEAR, BUT STILL FALLS SHORT OF TARGETS. HAI SAID
HE PARTICULARLY WOULD LIKE TO DEVELOP FDI IN THE FIELD
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OF HIGH-TECH INDUSTRIES IN HCMC, WHICH HAS THE LARGEST
INFORMATION TECHNOLOGY MARKET IN VIETNAM.

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"HO CHI MINH CITY IS VIETNAM'S GATEWAY TO THE WORLD.
EVERYTHING IN THE WORLD ECONOMY WILL AFFECT VIETNAM,
BUT IT WILL AFFECT US FIRST."
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6. CG TOLD HAI THAT WHILE THE PC HAS HIGH EXPECTATIONS
FOR GROWTH IN HCMC FOLLOWING PASSAGE OF THE BTA, SHE
WOULD ENCOURAGE THE COMMITTEE TO TEMPER ENTHUSIASM WITH
REALISM. LE RESPONDED THAT THE NATIONAL GOVERNMENT
ALSO ATTACHES GREAT IMPORTANCE TO HCMC'S GROWTH RATE,
BECAUSE A ONE PERCENT INCREASE IN GDP IN HCMC
TRANSLATES TO GROWTH OF 0.3 PERCENT IN GDP FOR THE
ENTIRE COUNTRY. HCMC PROVIDES THE GREATEST SHARE OF
THE GDP IN VIETNAM, AND WAS DISPROPORTIONATELY AFFECTED
BY THE ASIAN FINANCIAL CRISIS FROM 1997-1999. ALTHOUGH
THE CITY'S ECONOMY PICKED UP AGAIN IN 2000, HAI SAID HE
ANTICIPATES A SLOWDOWN DURING THE THIRD QUARTER OF 2001
DUE TO THE GLOBAL ECONOMIC CLIMATE.


7. HAI SAID THAT HCMC'S SERVICES SECTOR OCCUPIES THE
LARGEST PERCENTAGE OF THE TOTAL HCMC ECONOMY AND IS
VULNERABLE. WHILE THE PC'S AGENDA FOR DEVELOPMENT
INCLUDES IMPROVEMENTS IN TRANSPORTATION INFRASTRUCTURE,
INCLUDING SEA AND AIRPORTS, TELECOMMUNICATIONS,
BANKING, AND FINANCE, HAI SAID HE ALSO WILL PAY MORE
ATTENTION TO THE SERVICES SECTOR AND PREPARE SERVICE-
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ORIENTED COMPANIES FOR EXPORT.

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"I BELIEVE THESE PROBLEMS CAN BE SETTLED IN PEACE AND
COOPERATION, IN LINE WITH THE UN CHARTER, AND THINGS
WILL SOON BE BACK TO NORMAL."
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8. CG ASKED HAI IF HE THOUGHT THE SEPTEMBER 11 ATTACKS
ON THE U.S. HAD AFFECTED THE SERVICES SECTOR IN
VIETNAM, AS IT HAD IN THE U.S. LE WOULD NOT ATTRIBUTE
THE CURRENT SLOWDOWN TO EXTERNAL EVENTS OTHER THAN THE
GENERAL GLOBAL ECONOMIC CLIMATE OF LATE.


9. HAI ALSO EXPRESSED HIS PERSONAL CONCERN OVER THE
USG'S RESORTING TO MILITARY ACTION TO RESOLVE ITS
CURRENT ISSUES WITH THE TALIBAN. HE HOPED THAT SOMEHOW
A PEACEFUL RESOLUTION COULD BE FOUND, AND NOTED THAT
THE VIETNAMESE PEOPLE "HAVE RECENTLY KNOWN THE MISERY
OF WAR TOO WELL." CG REMINDED HIM OF THE USG POSITION
TO COMBAT ALL TERRORISTS, AND THAT LARGE NATIONS GRIEVE
FOR THEIR LOSSES AS WELL. AT THIS HAI EMPHATICALLY
AGREED. CG INFORMED HIM OF A PRESS REPORT CONCERNING
THE RECENT ARREST IN THE U.S. OF VO VAN DUC FOR HIS
INVOLVEMENT IN THE BOMBING OF THE VIETNAMESE EMBASSY IN
BANGKOK IN JUNE. HAI SAID THAT HE SHARES THE USG'S
COMMITMENT TO STOP TERRORISM IN ANY FORM.


10. HAI CLOSED THE 45-MINUTE MEETING BY TELLING CG
THAT THE CONSULATE STAFF WAS LIVING IN THE BEST CITY IN
VIETNAM AND THAT THEIR SECURITY WAS ASSURED. HE NOTED
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THAT WHATEVER VIETNAM MAY LACK IN GOOD GOVERNANCE AND
SOPHISTICATION, IT MAKES UP IN SECURITY.


10. COMMENT. HAI ASSUMED THE POST OF PC CHAIRMAN ONLY
THIS PAST MAY. ALTHOUGH THAT MAKES HIM "MAYOR" OF
HCMC, HIS POSITION IS MORE AKIN TO THAT OF GOVERNOR OF
AN IMPORTANT PROVINCE, BECAUSE THE HCMC PC REPORTS
DIRECTLY TO THE CENTRAL GOVERNMENT. HIS POSITION
WIELDS EVEN GREATER INFLUENCE NOW THAT THE HCMC PC HAS
BEEN GIVEN MORE AUTONOMY TO GENERATE ITS OWN BUDGET.
CG LOOKS FORWARD TO FUTURE MEETINGS WITH HAI AS HE
PRESIDES OVER HCMC - VIETNAM'S ENGINE OF GROWTH. END
COMMENT.

YAMAUCHI

UNCLASSIFIED