VIETRADE HCMC CLAIMS SEPTEMBER 11 EVENTS HURT VIETNAM EXPORTS, WORRIES ABOUT VN COMPANIES IN US MARKET

UNCLAS SECTION 01 OF 02 HO CHI MINH CITY 001221 SIPDIS USDOC FOR 3132/OIO/EAP/KELLEHER USDOC FOR 1431/MAC/AP/HPPHO E.O. 12958: N/A TAGS: ECON ETRD VN BTA SUBJECT: VIETRADE HCMC CLAIMS SEPTEMBER 11 EVENTS HURT VIETNAM EXPORTS, WORRIES ABOUT VN COMPANIES IN US MARKET SUMMARY -------------- UNCLASSIFIED PAGE 02 HO CHI 01221 01 OF 02 290950Z ¶1. IN AN OCTOBER 26 MEETING, VIETRADE HCMC DIRECTOR CITES DAMAGE FROM THE EVENTS OF SEPTEMBER 11 TO VIETNAM'S EXPORTS, NOTING THAT EXPORT GROWTH IS ESTIMATED AT 7% THIS YEAR, A DRAMATIC FALL FROM LAST YEAR'S 30% INCREASE. ALTHOUGH LAUDING PASSAGE OF THE BTA, HE STATED THAT VIETNAMESE COMPANIES NEED MUCH MORE INFORMATION IF THEY WERE TO EXPAND INTO THE U.S. MARKET. END SUMMARY EXPORTS HURT BY OSAMA BIN LADEN -------------- ¶2. IN A MEETING WITH DPO AND ECONOFF, MR. VO TA LUONG, THE DIRECTOR OF THE VIETNAM TRADE PROMOTION AGENCY FOR SOUTHERN VIETNAM, STATED THAT THE EVENTS OF SEPTEMBER 11 HAD AN INDIRECT BUT DAMAGING IMPACT ON VIETNAM'S EXPORTS. HE STATED THAT ALTHOUGH VIETNAM EXPORTED RELATIVELY LITTLE TO THE U.S., SHIPMENTS TO OTHER MAJOR MARKETS HAD BEEN AFFECTED. HE NOTED THAT NATIONAL EXPORT GROWTH, WHICH HAD BEEN TARGETED AT 16% FOR THE YEAR, HAD, UNTIL A FEW WEEKS AGO, BEEN ESTIMATED AT 10%. NOW IT IS EXPECTED TO BE A MERE 7%. THIS COMPARES TO LAST YEAR'S GROWTH RATE OF 30%. ALTHOUGH SOME OF THIS DROP CAN BE ATTRIBUTED TO THE OVERALL SLOWDOWN IN THE WORLD ECONOMY, HE STATED THAT THE EVENTS OF SEPTEMBER 11, AND INCREASED SECURITY WORRIES WORLDWIDE, HAD CLEARLY MADE LIFE MORE DIFFICULT FOR VIETNAMESE EXPORTERS IN THE SOUTH. ¶3. MR. LUONG'S VIEW CORRESPONDS TO COMMENTS FROM OTHER OFFICIALS AND BUSINESS PEOPLE IN HCMC WHO NOTE THAT THE NUMBER OF TRAVELERS, TRADE MISSIONS, AND NEW BUSINESS UNCLASSIFIED PAGE 03 HO CHI 01221 01 OF 02 290950Z INITIATIVES IN THE HCMC AREA HAVE FALLEN NOTICEABLY OVER THE PAST FEW WEEKS. ALTHOUGH VIETNAM IS CURRENTLY TRUMPETING ITS RATING FROM THE POLITICAL AND ECONOMIC RISK CONSULTANCY AS THE SAFEST PLACE TO DO BUSINESS IN ASIA (BASED ON A SURVEY CONDUCTED IN THE WAKE OF THE TERRORIST ACTS),THE EVENTS OF SEPTEMBER 11 HAVE CLEARLY HAD A NEGATIVE IMPACT HERE, AND LOCAL OFFICIALS AND BUSINESS PEOPLE KNOW IT. VIETRADE PROMOTES EXPORT AND INVESTMENT -------------- ¶4. THE VIETNAM TRADE PROMOTION AGENCY (VIETRADE) IS ONLY ABOUT A YEAR AND A HALF OLD. THE HO CHI MINH CITY OFFICE HAS A STAFF OF 10 PEOPLE AND IS RESPONSIBLE FOR MOST OF THE SOUTHERN REGION OF VIETNAM. PART OF THE MINISTRY OF TRADE, IT IS RESPONSIBLE FOR STATE MANAGEMENT, COORDINATION, AND IMPLEMENTATION OF TRADE AND TRADE-RELATED INVESTMENT PROMOTION ACTIVITIES IN VIETNAM. VIETRADE ORGANIZES SEMINARS, TRADE MISSIONS, AND ALL ASPECTS OF TRADE PROMOTION. UNLIKE BUSINESS ORGANIZATIONS THAT FINANCE THROUGH FEE-BASED SERVICES OR MEMBERSHIP DUES, VIETRADE IS FUNDED BY THE NATIONAL BUDGET AND CAN DRAW UPON ITS BUDGET TO COVER THE COSTS OF SOME OF ITS EVENTS OR SUBSIDIZE PARTICIPATION OF VIETNAMESE COMPANIES. ¶5. ITS WORK IS SIMILAR TO THE MYRIAD OF OTHER ORGANIZATIONS THAT ARE SET UP IN VIETNAM TO PROMOTE TRADE AND INVESTMENT FOR A PARTICULAR PROVINCE, CITY, INDUSTRIAL OR EXPORT ZONE, OR AMONG MEMBER COMPANIES. IT ALSO SERVES AS A GOVERNMENT-TO-GOVERNMENT CHANNEL UNCLASSIFIED PAGE 04 HO CHI 01221 01 OF 02 290950Z FOR FOREIGN GOVERNMENTS OR INTERNATIONAL ORGANIZATIONS TO WORK WITH THE GVN ON TRADE PROMOTION ACTIVITIES. FOR EXAMPLE, VIETRADE IS CURRENTLY WORKING WITH THE UNDP AND AN AGENCY OF THE SWISS GOVERNMENT ON A THREE- YEAR PROJECT ON DEVELOPING EXPORT MARKETS FOR SEAFOOD AND FOOTWEAR. IT HAS ALSO WORKED CLOSELY WITH THE ASEAN-JAPAN CENTER, WHICH IS A JAPAN-FUNDED ORGANIZATION TO ASSIST ASEAN NATIONS IN ENTERING THE JAPAN MARKET. ¶6. VIETRADE ALSO SERVES AS AN INFORMATION RESOURCE WHICH GATHERS TRADE INFORMATION FROM A VARIETY OF SOURCES OVERSEAS AND IN VIETNAM. LUONG NOTED TO CONOFFS THAT HE WOULD BE HAPPY TO FOLLOW UP DIRECTLY WITH ANY VIETNAMESE COMPANIES THAT CONOFFS ENCOUNTER WITH QUESTIONS ABOUT EXPORTING. HOW DO WE EXPORT TO THE U.S.? -------------- ¶7. LUONG STATED THAT WITH THE PASSAGE OF THE BTA THE VIETNAMESE BUSINESS COMMUNITY IS VERY INTERESTED IN INFORMATION AND ASSISTANCE ON HOW TO ENTER THE U.S. MARKET. HE NOTES THAT, IN PARTICULAR, SMALL COMPANIES DO NOT HAVE THE EXPERTISE OR RESOURCES TO PARTICIPATE IN WHAT HE CHARACTERIZED AS "DISTANT U.S. MARKETS." CAN THE USG HELP? UNCLASSIFIED PAGE 02 HO CHI 01221 02 OF 02 290950Z -------------- ¶8. HE ASKED IF THE USG WOULD BE ABLE TO PROVIDE ASSISTANCE TO VIETNAMESE COMPANIES SEEKING TO ENTER THE U.S. MARKET. DPO ADVISED THAT WHILE THE USG IS PLANNING TECHNICAL ASSISTANCE PROGRAMS FOR VIETNAM AND DIRECTLY ASSISTS U.S. EXPORTERS SEEKING TO DO BUSINESS WITH VIETNAM, THE GVN WOULD GENERALLY HAVE THE LEAD ROLE IN ASSISTING VIETNAMESE BUSINESSES HOPING TO EXPORT TO THE U.S. AT THE SAME TIME, WE RECOGNIZE THE IMPORTANCE OF LOCAL COMPANIES BENEFITING FROM THE BTA AND A CLOSER U.S.-VIETNAM TRADE RELATIONSHIP. IN THAT SPIRIT WE SHOULD TRY TO FIND CREATIVE WAYS TO SHARE INFORMATION, CONTACTS AND EXPERIENCE. DPO POINTED TO THE PAST EXAMPLE OF CONGEN AND VIETRADE ORGANIZING A U.S. CUSTOMS SEMINAR WHICH INCLUDED PARTICIPATION OF VIETNAMESE COMPANIES. BIO NOTE -------------- ¶9. MR. LUONG HAS WORKED FOR THE MINISTRY OF TRADE SINCE GRADUATING FROM UNIVERSITY IN MOSCOW IN 1980 WITH A DEGREE IN ENGLISH AND ECONOMICS. HE HAS SERVED IN HCMC SINCE 1992 AND HAS HELD A LEADERSHIP POSITION FOR THE PAST THREE YEARS. HE HAS HEADED UP THE HO CHI MINH CITY OFFICE OF VIETRADE SINCE IT WAS ESTABLISHED A YEAR AND A HALF AGO. HE CONCURRENTLY HOLDS THE TITLE OF DEPUTY DIRECTOR GENERAL OF THE HCMC OFFICE OF THE MINISTRY OF TRADE. MR. LUONG SPEAKS CONVERSATIONAL ENGLISH, AND EXCELLENT RUSSIAN. HE HAS NEVER TRAVELED TO THE U.S. UNCLASSIFIED PAGE 03 HO CHI 01221 02 OF 02 290950Z COMMENT -------------- ¶10. ALTHOUGH VIETRADE SEEMS FOCUSED ON MAJOR PROJECTS PARTNERING WITH FOREIGN FUNDERS, CONGEN WILL TRY TO FIND CREATIVE WAYS TO WORK WITH THE ORGANIZATION TO ENCOURAGE VIETNAMESE BUSINESS TO TAKE ADVANTAGE OF THE BTA. HIS CONCERNS ABOUT WHETHER OR NOT VIETNAMESE COMPANIES ARE READY TO COMPETE IN THE U.S. MARKET IS AN OFT HEARD REFRAIN HERE. YAMAUCHI UNCLASSIFIED