HCMC DEPT. OF TRADE LOVES BTA, BUT WHAT IS IT EXACTLY?

UNCLAS SECTION 01 OF 02 HO CHI MINH CITY 001302

SIPDIS

E.O. 12958: N/A
TAGS: EAID ECON ETRD VM SOE BTA
SUBJECT: HCMC DEPT. OF TRADE LOVES BTA, BUT WHAT IS IT EXACTLY?


SUMMARY
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1. THE DIRECTOR OF THE HO CHI MINH CITY (HCMC) TRADE
DEPT. TOLD CG YAMAUCHI IN A NOVEMBER 13 COURTESY CALL
THAT HCMC HAS HIGH HOPES FOR THE BILATERAL TRADE
AGREEMENT (BTA),BUT IS LOOKING FOR A WAY TO BETTER
UNDERSTAND THE TREATY AND HOW TO IMPLEMENT IT. SHE
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SAID SHE WANTED TO WORK WITH THE CONSULATE AND AMCHAM
TO SHARE INFORMATION ABOUT THE BTA WITH LOCAL BUSINESS,
SO THEY WOULD BE ABLE TO TAKE ADVANTAGE OF THE BTA.
EVEN THOUGH HER DEPARTMENT CONTROLS A NUMBER OF STATE-
OWNED ENTERPRISES (SOES),THE DIRECTOR CLAIMED THAT THE
PRIVATE SECTOR WAS VITAL TO THE LOCAL ECONOMY AND WOULD
GENERATE MUCH OF THE EXPORT GROWTH TO BE REALIZED
THROUGH THE BTA. EQUITIZATION OF SOES WOULD CONTINUE,
BUT IT IS A SLOW PROCESS. END SUMMARY.

BTA A HIT IN HCMC, BUT DO WE UNDERSTAND IT?
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2. CG YAMAUCHI, ACCOMPANIED BY ECONOFF, PAID A
NOVEMBER 13 COURTESY CALL ON MS. PHAM THI KIM HONG,
DIRECTOR OF THE HO CHI MINH CITY DEPARTMENT OF TRADE.
IN THIS MEETING MS. HONG ADDED HER VOICE TO THE CHORUS
OF LOCAL BUSINESSPEOPLE AND GOVERNMENT OFFICIALS WHO
SEE THE BILATERAL TRADE AGREEMENT AS A NEW STARTING
POINT FOR VIETNAM - U.S. RELATIONS AND AN EXTRAORDINARY
OPPORTUNITY FOR LOCAL BUSINESS. THIS WAS PARTICULARLY
IMPORTANT, SHE SAID, TO HCMC, WHICH GENERATES ROUGHLY
40% OF VIETNAM'S EXPORT TURNOVER. LIKE MANY, HOWEVER,
SHE EXPRESSED CONCERN THAT THE TREATY WAS COMPLEX AND
ITS DETAILS LARGELY UNKNOWN TO THE GROUPS OF PEOPLE
HERE - BOTH IN GOVERNMENT AND IN BUSINESS - WHO MUST
IMPLEMENT AND MONITOR ITS PROVISIONS. SHE URGED THE CG
TO ESTABLISH STRONG LINES OF COMMUNICATION AND
COOPERATION WITH LOCAL AUTHORITIES AND BUSINESS GROUPS
TO SEE THAT BTA IMPLEMENTATION IS A SUCCESS.


3. THE DIRECTOR STRESSED THAT THE DEPARTMENT OF TRADE
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WAS WORKING HARD TO PROVIDE INFORMATION AND ASSISTANCE
TO BUSINESSES IN HCMC REGARDING BOTH DOMESTIC AND
INTERNATIONAL TRADE. THE BTA WAS A PARTICULAR
CHALLENGE, BECAUSE OF THE LACK OF DIGESTIBLE, PRACTICAL
INFORMATION, BUT IT HAS GENERATED AN ENORMOUS AMOUNT OF
INTEREST. THE TRADE DEPARTMENT RECENTLY HELD A SEMINAR
ON THE BTA THAT WAS VASTLY OVERSUBSCRIBED BY
BUSINESSPEOPLE EAGER TO UNDERSTAND ITS PROVISIONS. NOT
ONLY WAS THE BTA DIFFICULT TO UNDERSTAND, DIRECTOR HONG
SAID, BUT SINCE MOST VIETNAMESE BUSINESSES DO NOT YET
HAVE EXPERIENCE IN THE U.S. MARKET, THEY WOULD HAVE TO
RELY ON MIDDLEMEN TO GET THEIR PRODUCT TO EXPORT.
BUSINESSES WANTED TO FIND WAYS TO WORK MORE DIRECTLY
WITH U.S. CUSTOMERS.


4. MS. HONG SUGGESTED THAT HER DEPARTMENT WORK CLOSELY
WITH THE CONSULATE AND AMCHAM TO PROVIDE MORE
INFORMATION ABOUT THE BTA AND HOW TO TRANSLATE IT INTO
ACTION. SHE WANTED TO DISTILL THE TREATY INTO SIMPLER
LANGUAGE THAT LOCAL OFFICIALS AND BUSINESS PEOPLE COULD
UNDERSTAND. SHE POINTED TO AN UPCOMING SEAFOOD SEMINAR
THAT AMCHAM IS HOSTING LATER THIS MONTH AS AN IDEAL
EXAMPLE OF WHAT VIETNAMESE BUSINESSES ARE LOOKING FOR.
(NOTE: THE CONGEN WILL BE DELIVERING OPENING REMARKS
AT THIS SEMINAR.)


5. CG ASKED IF A SMALL WORKING GROUP COMPOSED OF THE
CONSULATE, THE DEPARTMENT OF TRADE, AND PERHAPS AMCHAM
WOULD BE HELPFUL IN DISCUSSING BTA ISSUES AT THE LOCAL
LEVEL, SHARING INFORMATION AND NEEDS. THE DIRECTOR
AGREED, AND SAID SHE WOULD DISCUSS THIS IDEA WITH HER
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STAFF.

THE PRIVATE SECTOR'S VITAL ROLE
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6. THE DIRECTOR STRESSED THAT EVEN THOUGH THERE WERE
MANY POWERFUL STATE-OWNED ENTERPRISES IN HCMC, SOME OF
WHICH WERE UNDER THE DIRECT CONTROL OF HER DEPARTMENT,
THE DEPARTMENT DID NOT DISCRIMINATE IN FAVOR OF THESE
SOES. IN MS. HONG'S VIEW, THE PRIVATE SECTOR WOULD
GENERATE MUCH OF THE GROWTH AS A RESULT OF BTA
IMPLEMENTATION. WHEN ECONOFF ASKED IF IT WERE CORRECT
THAT THE VAST MAJORITY OF EXPORTS FROM HCMC WERE IN
FACT FROM SOES, MS. HONG NOTED THAT ACCORDING TO
OFFICIAL STATISTICS THAT WAS INDEED CORRECT. HOWEVER,
SHE DOUBTED THEIR ACCURACY. IT WAS DIFFICULT TO
MEASURE THE TRUE VALUE OF PRIVATE SECTOR PRODUCTION AND
EXPORTS, SHE STATED. SHE ALSO NOTED THAT MANY SMALL
PRIVATE SECTOR BUSINESSES EXPORT VIA SOES WHICH MAY
DISTORT THE STATISTICS.


7. CURRENTLY THE U.S. MARKET ONLY TAKES ABOUT 17% OF
HCMC'S EXPORT TURNOVER. MS. HONG ANTICIPATES THAT WITH
THE BTA THIS SHARE WILL GROW DRAMATICALLY, MOSTLY WITH
EXPORTS FROM THE PRIVATE SECTOR. SHE HIGHLIGHTED
FOOTWARE, GARMENTS, AND SEAFOOD AS PARTICULARLY
IMPORTANT EXPORT PRODUCTS FOR THE REGION. SHE FURTHER
STATED THAT SINCE MANY MAJOR U.S. COMPANIES HAVE A
PRESENCE IN HCMC, IMPORTS FROM THE U.S. SHOULD ALSO
INCREASE DRAMATICALLY.

EQUTIZING SOES TAKES TIME
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8. CG INQUIRED ABOUT THE HCMC GOVERNMENT'S PLANS TO
EQUITIZE MOST OF THE COMPANIES COMPRISING SAIGON
TRADING CORPORATION, OR SATRA, WHICH IS AN SOE MANAGED
BY THE HCMC DEPARTMENT OF TRADE. SATRA CONSISTS OF 23
AFFILIATES, 3 JOINT STOCK COMPANIES, AND 3 JOINT
VENTURES, AND EMPLOYS ABOUT 19,000 PEOPLE. ACCORDING
TO RECENT PRESS REPORTS, THE CITY WILL EQUITIZE 17
AFFILIATES OVER THE NEXT FOUR YEARS. DIRECTOR HONG
INDICATED, HOWEVER, THAT ALTHOUGH EQUITIZATION WAS A
GOAL AND INCORPORATED INTO AN OVERALL PLAN, IN REALITY
IT WOULD NOT OCCUR QUICKLY. THIS WAS DUE TO SOME OF
THE AFFILIATES AND PROBLEMS WITH CERTAIN INDIVIDUALS
WORKING TO BLOCK THIS INITIATIVE. SHE DID POINT OUT IT
WAS A PRIORITY FOR THE DEPARTMENT, AND THAT IN THE PAST
IT HAD MANAGED 50-60 SOES, MANY OF WHICH HAD ALREADY
BEEN SPUN OFF. ALTHOUGH THE CITY WOULD STILL WANT TO
RETAIN CONTROL OF KEY SECTORS SUCH AS ELECTRICITY, IT
WAS COMMITTED TO EQUITIZING OTHER SOES UNDER ITS
CONTROL.


9. EVEN THOUGH THE DEPARTMENT STILL CONTROLS A NUMBER
OF SOES, DIRECTOR HONG STRESSED THAT THE TRADE
DEPARTMENT WAS WORKING TO ENCOURAGE THE PRIVATE SECTOR
TO PARTICIPATE IN ITS TRADE PROMOTION ACTIVITIES. SHE
NOTED THAT THE MAJORITY OF PARTICIPANTS IN LAST MONTH'S
HCMC EXPO WERE PRIVATE COMPANIES. IN ORDER FOR THE
CITY TO DEVELOP, THE PRIVATE SECTOR MUST PLAY A VITAL
ROLE, SHE SAID.

CONDOLENCES
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10. AT THE CLOSE OF THE MEETING, THE DIRECTOR STATED
THAT SHE WAS AWARE OF THE PLANE CRASH IN NEW YORK THAT
HAD HAPPENED THE DAY BEFORE. SHE EXTENDED HER
CONDOLENCES TO THE U.S. AND TO THE FAMILIES OF THE
VICTIMS. CG THANKED HER AND STATED THAT EVEN IN THIS
DIFFICULT PERIOD, THE U.S. WAS A RESILIENT NATION AND
THAT WE STILL WANTED TO WORK HARD WITH VIETNAM ON
BUILDING A STRONG RELATIONSHIP.

COMMENT
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11. MS. HONG IS A DYNAMIC INTERLOCUTOR AND THERE WAS
NO MISTAKING HER PLEAS FOR ASSISTANCE. SHE REALIZES
THAT THE BTA IS A REAL OPPORTUNITY FOR HCMC, BUT SHE
ALSO KNOWS THAT UNLESS LOCAL OFFICIALS AND BUSINESS
PEOPLE ARE ABLE TO UNDERSTAND THE TREATY'S PROVISIONS
AND ACT UPON THEM, THIS OPPORTUNITY WILL PASS THEM BY.


12. MS. HONG IS COMPLETING HER FOURTH YEAR AS THE
DIRECTOR OF THE HCMC DEPARTMENT OF TRADE, AND CLEARLY
DOES NOT WANT HCMC TO BE OUTSHONE AS VIETNAM'S PRE-
EMINENT COMMERCIAL ENGINE. SHE WANTS THE CONGEN AS AN
ALLY. OF THE SEVERAL COURTESY CALLS THE CG HAS MADE ON
LOCAL OFFICIALS, MS. HONG IS THE FIRST PERSON WHO HAS
SO EXPLICITLY STATED HER CONCERNS ABOUT HCMC'S ABILITY
TO MEET PEOPLE'S EXPECTATIONS OF THE BTA. POST WILL BE
LOOKING TO REGULARIZE COMMUNICATION WITH THE DEPARTMENT
OF TRADE ON BTA ISSUES AND ENSURE THEY ARE INCLUDED IN
ALL RELEVANT TRAINING PROGRAMS AND SEMINARS.

YAMAUCHI
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