NGHE AN: DEVELOPING, BUT A LONG WAY TO GO

UNCLAS SECTION 01 OF 03 HANOI 002028 SIPDIS STATE FOR EAP/BCLTV USDOC FOR 1431/MAC/AP/HPPHO E.O. 12958: N/A TAGS: ETRD ECON PGOV PHUM VM SUBJECT: NGHE AN: DEVELOPING, BUT A LONG WAY TO GO UNCLASSIFIED PAGE 02 HANOI 02028 01 OF 03 160853Z REF: 01 HANOI 3262 ¶1. (U) SUMMARY. NGHE AN PROVINCIAL OFFICIALS ARE HOPEFUL THAT A STRATEGIC LOCATION AND IMPROVING (THOUGH STILL WEAK) INFRASTRUCTURE WILL IMPROVE DEVELOPMENT AND THE PROVINCE'S ROLE AS AN OUTLET TO THE SEA FOR LAOS AND NORTHEASTERN THAILAND. THE GVN IS MOVING AHEAD WITH PLANS FOR A NEW NATIONAL BORDER CROSSING WITH LAOS, BUT THE ROAD TO THE BORDER, WHILE IMPROVING, IS POOR. SEPTELS WILL REPORT ON NARCOTICS AND TERRORISM ISSUES. END SUMMARY. ¶2. (U) POLOFF AND POL FSN VISITED NGHE AN PROVINCE AUGUST 13-15. VINH, THE PROVINCIAL CAPITAL, HAS ABOUT 200,000 PEOPLE AND IS LOCATED ABOUT 300 KILOMETERS DOWN NATIONAL HIGHWAY 1 FROM HANOI. IN A GENERAL DESCRIPTION OF THE PROVINCE, NGUYEN SY CUONG, VICE CHIEF OF STAFF FOR FOREIGN AFFAIRS, NGHE AN PEOPLE'S COMMITTEE, SAID THAT NGHE AN, WITH ABOUT 16,500 SQUARE KILOMETERS, IS VIETNAM'S THIRD LARGEST PROVINCE AND SHARES A LONG BORDER WITH LAOS TO THE WEST. THERE IS ONE INTERNATIONAL BORDER CROSSING, LOCATED AT NAM CAN, ABOUT 280 MOSTLY BUMPY KILOMETERS UP HIGHWAY 7 FROM VINH (REFTEL). A NEW NATIONAL BORDER CROSSING IS UNDER CONSTRUCTION AT THANH THUY, LOCATED ABOUT 90 KILOMETERS UP HIGHWAY 46 FROM VINH. (NOTE: THE NEW BORDER CROSSING DOES NOT YET APPEAR ON EMBASSY HANOI ADMINISTRATIVE MAPS, BUT IS INCLUDED IN PROVINCIAL MINISTRY OF PLANNING AND INVESTMENT (MPI) DOCUMENTS. END NOTE.) NGHE AN HAS A PORT AT CUA LO, ABOUT 15 KILOMETERS NORTHEAST OF VINH. NATIONAL HIGHWAY 1 AND THE MAIN NORTH-SOUTH RAILWAY LINE BOTH TRAVERSE THE PROVINCE. IN ADDITION, THERE IS ALSO AN AIRPORT AT VINH WITH REGULAR FLIGHTS TO HANOI AND HO CHI MINH CITY. CUONG UNCLASSIFIED PAGE 03 HANOI 02028 01 OF 03 160853Z SAID THAT NGHE AN'S LOCATION, ABOUT HALFWAY BETWEEN HANOI AND HUE, IS A PLUS, AS WELL AS HAVING THE MAJOR ROAD, RAIL, AND AIR LINKS, "THESE ALL MAKE NGHE AN AN ATTRACTIVE PROVINCE FOR FOREIGN INVESTMENT, CUONG CLAIMED." ¶3. (U) NGHE AN HAS A POPULATION OF APPROXIMATELY THREE MILLION, MAKING IT THE THIRD MOST POPULOUS PROVINCE IN THE COUNTRY. HILLS AND MOUNTAINS COVER ABOUT 80 PERCENT OF THE PROVINCE. ON THE ARABLE AREAS, FARMERS GROW MAINLY RICE, CORN, SWEET POTATOES, AND PEANUTS. IN HIGHER ELEVATIONS, COFFEE, TEA, RUBBER TREES, AND PINEAPPLE ARE CULTIVATED. IMPORTANT INDUSTRIES INCLUDE CEMENT (THREE FACTORIES), TEXTILES, AND SEA PRODUCTS. THE PER CAPITA INCOME IS ABOUT USD 300 PER YEAR, ABOUT 25 PERCENT UNDER THE NATIONAL AVERAGE OF ABOUT USD 400 PER YEAR. CUONG SAID THE GDP GROWTH RATE IS "STRONG," AT ABOUT NINE PERCENT THE LAST TWO YEARS, BUT A MAJOR PRIORITY OF PROVINCIAL AUTHORITIES IS TO "SEE THIS REFLECTED IN THE PER CAPITA INCOME." -------------- NEW BORDER CROSSING - BRING YOUR LAND CRUISER -------------- ¶4. (U) CUONG SAID THAT WORK IS ONGOING FOR A NEW "NATIONAL BORDER CROSSING" AT THANH THUY, ABOUT 90 KILOMETERS UP HIGHWAY 46 FROM VINH. HE SAID PROVINCIAL AUTHORITIES HOPE THE NEW BORDER CROSSING WILL IMPROVE TRADE FROM LAOS AND NORTHEAST THAILAND, SINCE IT IS MUCH CLOSER TO THE CUA LO PORT THAN THE INTERNATIONAL BORDER CROSSING AT NAM CAN (REFTEL). ACCORDING TO CUONG, THE GVN PLANS TO EVENTUALLY MAKE THIS AN INTERNATIONAL BORDER CROSSING AND ESTABLISH A UNCLASSIFIED PAGE 04 HANOI 02028 01 OF 03 160853Z "SPECIAL BORDER ECONOMIC ZONE IN THE AREA," TO INCLUDE BUSINESSES, A CUSTOMS OFFICE, BANKS, AND OTHER ACTIVITIES. HE PREDICTED THIS WOULD BE POSSIBLE "WITHIN A COUPLE YEARS." CUONG SAID THESE DEVELOPMENTS ARE IMPORTANT FOR VIETNAM'S "REGIONAL INTEGRATION." CURRENTLY, MORE CROSS BORDER TRAFFIC "IS PROBABLY" COMING THROUGH HA TINH PROVINCE, LOCATED JUST SOUTH OF NGHE AN, BECAUSE THERE IS ALSO A PORT, AN ESTABLISHED BORDER CROSSING, AND A "RELATIVELY GOOD ROAD." (HIGHWAY 8). ¶5. (U) EMBOFFS' TRIP TO THE PROPOSED BORDER CROSSING PROVED AN AMBITIOUS TASK. HIGHWAY 46 IS ONLY PAVED ABOUT HALF THE DISTANCE. THE FIRST 25 KILOMETERS FROM VINH ARE UNDERGOING IMPROVEMENT AND IT APPEARS THAT SECTION WILL BE RELATIVELY GOOD WITHIN SIX MONTHS TO A YEAR. AFTER PASSING THROUGH THE SMALL TOWN OF DUNG, ABOUT 40 KILOMETERS FROM VINH, THE ROAD IS UNPAVED AND GRADUALLY BECOMES QUITE BUMPY AND RUTTED. IN ADDITION, THERE ARE NUMEROUS TURNS TO GET TO THANH THUY, NONE OF WHICH IS SIGNPOSTED. EVEN AN EXPERIENCED EMBASSY DRIVER HAD TO STOP SEVERAL TIMES TO CONFIRM DIRECTIONS. THE TRIP ALSO INCLUDED FORDING A STREAM WHERE THERE WAS NO BRIDGE. A LOCAL PERSON ENCOUNTERED ON THE BANK SAID THE STREAM EXISTS ONLY DURING THE RAINY SEASON AND IT IS "NOT USUALLY A PROBLEM TO CROSS, UNLESS THERE HAS BEEN VERY HEAVY RAIN." UNCLASSIFIED UNCLASSIFIED PTQ9132 PAGE 01 HANOI 02028 02 OF 03 160854Z ACTION EAP-00 INFO LOG-00 NP-00 AID-00 ACQ-00 CEA-01 CIAE-00 CTME-00 ITCE-00 DOTE-00 SRPP-00 DS-00 EB-00 EXME-00 E-00 FAAE-00 FBIE-00 UTED-00 VC-00 FRB-00 H-01 TEDE-00 INR-00 IO-00 ITC-01 L-00 VCE-00 AC-01 DCP-01 NSAE-00 NSCE-00 OES-01 OIC-02 OMB-01 OPIC-01 PA-00 PER-00 PM-00 PRS-00 ACE-00 P-00 SP-00 SSO-00 STR-00 TEST-00 TRSE-00 USIE-00 EPAE-00 PMB-00 DSCC-00 PRM-00 DRL-02 G-00 NFAT-00 SAS-00 /012W -------------- DA0C18 160854Z /38 P 160845Z AUG 02 FM AMEMBASSY HANOI TO SECSTATE WASHDC PRIORITY 7299 INFO AMCONSUL HO CHI MINH CITY ASEAN COLLECTIVE USCINCPAC HONOLULU HI//FPA// SECDEF WASHDC//ISA/ABLAGG// USDOC WASHDC UNCLAS SECTION 02 OF 03 HANOI 002028 SIPDIS STATE FOR EAP/BCLTV USDOC FOR 1431/MAC/AP/HPPHO UNCLASSIFIED PAGE 02 HANOI 02028 02 OF 03 160854Z ¶6. (U) EMBOFFS MANAGED TO GET TO WITHIN EIGHT KILOMETERS OF THE NEW BORDER CROSSING, WHICH IS ACTUALLY ABOUT 17 KILOMETERS BEYOND THE VILLAGE OF THANH THUY. HOWEVER, FURTHER PROGRESS WAS IMPOSSIBLE, WITH THE ROAD BLOCKED DUE TO ONGOING CONSTRUCTION OVER A GULLY. A LOCAL WOMAN BRINGING VEGETABLES TO CONSTRUCTION WORKERS ON HER MOTORBIKE, EXPLAINED THAT THE BORDER ROAD HAD BEEN CLOSED FOR "ABOUT ONE WEEK." SHE SAID SHE HEARD IT WOULD BE OPEN IN ABOUT ONE MONTH. PRIOR TO THE CONSTRUCTION, LAO AND VIETNAMESE CROSSED BACK AND FORTH "REGULARLY." WITH A TRAVEL PERMIT, IT IS ALSO POSSIBLE TO STAY OVERNIGHT. SHE HAD HEARD AN OCCASIONAL FOREIGNER CROSSED, BUT SUSPECTED THESE WERE PROBABLY PEOPLE WORKING FOR AID ORGANIZATIONS OR THE UNITED NATIONS-NOT TOURISTS. THE VENDOR SAID SHE HOPED THE NEW BORDER CROSSING AND ROAD IMPROVEMENT WOULD INCREASE CROSS BORDER TRADE, BUT NOTED, "WE ARE POOR ON THIS SIDE AND THE LAO ARE EVEN POORER ON THE OTHER SIDE." -------------- TRADE DEVELOPMENT: SLOW, BUT WE'RE LEARNING -------------- ¶7. (U) CUONG AND DOAN NAM, VICE DIRECTOR OF THE PROVINCIAL MPI, SAID SEPARATELY THAT THEY ARE OPTIMISTIC REGARDING IMPROVED TRADE AND INVESTMENT WITH THE U.S. IN THE WAKE OF THE U.S.-VIETNAM BILATERAL TRADE AGREEMENT (BTA). NAM SAID THAT THERE HAS NOT BEEN "A SIGNIFICANT" INCREASE IN INTEREST FROM US INVESTORS, BUT HE EXPECTS IT WILL COME "IN TIME." ONE MAJOR BENEFIT HAS BEEN THE OPPORTUNITY FOR VIETNAMESE OFFICIALS AND BUSINESS PEOPLE TO TRAVEL TO THE U.S. TO LEARN MORE ABOUT THE MARKETS THERE. IN ADDITION, SEMINARS UNCLASSIFIED PAGE 03 HANOI 02028 02 OF 03 160854Z ORGANIZED BY GVN OFFICIALS HAVE HELPED THE LOCAL BUSINESS COMMUNITY BETTER UNDERSTAND THE BTA AND WHAT NEEDS TO BE DONE TO COMPETE IN THE US MARKET. CUONG OF THE PEOPLE'S COMMITTEE SAID THAT MANY VIETNAMESE BUSINESS PEOPLE DO NOT YET UNDERSTAND HOW TO DO BUSINESS WITH THE U.S., BUT IN THE LONG RUN, THE BTA "WILL BENEFIT EVERYBODY." CUONG SAID BASED ON FACTORS SUCH AS THE NGHE AN'S "CENTRAL LOCATION," THE RAILWAY, HIGHWAY 1, THE AIRPORT AT VINH, AND THE PORT, HE IS OPTIMISTIC. -------------- LACK OF INFRASTRUCTURE INLAND -------------- ¶8. (U) THE MPI'S NAM SAID THAT WHILE CONDITIONS ARE GENERALLY IMPROVING IN NGHE AN, DEVELOPMENT IS STILL HINDERED BY A LACK OF INFRASTRUCTURE. SPECIFICALLY, HE NOTED THAT COMMUNICATIONS ARE POOR, WITH "SOME RURAL AREAS" HAVING NO PHONE SERVICE AND NO INFRASTRUCTURE FOR MOBILE TELEPHONES. IN ADDITION, THE INLAND ROAD SYSTEM IS "NOT WELL DEVELOPED." CUONG SAID SEPARATELY, "YOU HAVE SEEN HIGHWAY 7 (REFTEL),SO YOU KNOW THE PROBLEMS WE FACE AS AN OUTLET TO THE SEA FOR OUR NEIGHBORS." CUONG ALSO MENTIONED THE NEED TO UPGRADE INDUSTRIAL TECHNOLOGY. HE CITED ONE SHOE FACTORY JOINT VENTURE WITH GERMANY THAT WAS FORCED TO CLOSE LAST YEAR BECAUSE GERMANY "DID NOT SEEM INTERESTED" IN PROVIDING UP-TO-DATE TECHNOLOGY. AS A RESULT, CUONG SAID THE FACTORY COULD NOT MEET QUALITY STANDARDS FOR EXPORT. -------------- PORT PLAYS A ROLE UNCLASSIFIED PAGE 04 HANOI 02028 02 OF 03 160854Z -------------- ¶9. (U) LE DINH NHAM, VICE GENERAL MANAGER OF THE NGHE TINH PORT, LOCATED AT CUA LO (ABOUT 15 KILOMETERS NORTHEAST OF VINH) SAID THAT HIS ROLE IS TO "HELP THE PROVINCE DEVELOP." THE PORT, WHILE NOT NEARLY AS LARGE AS DANANG'S, CAN HANDLE SHIPS UP TO 10,000 TONS AND CURRENTLY HAS 550 METERS OF BERTHS. MOST SHIPS COMING INTO PORT ARE FROM INDIA, MALAYSIA, ROK, PHILIPPINES, JAPAN, AND "STILL A FEW" FROM RUSSIA. THE PORT HANDLES BOTH DOMESTIC AND INTERNATIONAL CARGO AND IS FULLY STAFFED WITH CUSTOMS, HEALTH, AND POLICE OFFICES. APPROXIMATELY 800,000 TONS OF CARGO PASSED THROUGH THE PORT IN 2001. NHAM ESTIMATED ABOUT 15 PERCENT CAME FROM LAOS, MOSTLY PROCESSED FORESTRY PRODUCTS GOING OUT AND MANUFACTURED GOODS GOING IN. HE PREDICTED THAT THE AMOUNT TO/FROM LAOS "MAY DECLINE" BECAUSE HE HEARD THE GVN HAS AN AGREEMENT WITH THE LAO GOVERNMENT TO ENCOURAGE USING VUNG ANG PORT IN HA TINH PROVINCE, IMMEDIATELY TO THE SOUTH, AND PLANS TO BUILD A NEW ROAD PARALLEL TO HIGHWAY 8. (NOTE: ACCORDING TO THE MINISTRY OF FOREIGN AFFAIRS, VIETNAM AND LAOS OFFICIALS REACHED A "VERBAL AGREEMENT" ON USING VUNG ANG PORT AT THE 24TH SESSION OF THE VIETNAM-LAOS INTERGOVERNMENTAL COMMITTEE ON ECONOMIC, CULTURAL, SCIENTIFIC, AND TECHNICAL COOPERATION, HELD IN JANUARY 2001. END NOTE.) ON THE OTHER HAND, BUSINESS AT NGHE TIN MAY PICK UP, ESPECIALLY WITH THE NEW BORDER CROSSING AND UNCLASSIFIED UNCLASSIFIED PTQ9133 PAGE 01 HANOI 02028 03 OF 03 160854Z ACTION EAP-00 INFO LOG-00 NP-00 AID-00 ACQ-00 CEA-01 CIAE-00 CTME-00 ITCE-00 DOTE-00 SRPP-00 DS-00 EB-00 EXME-00 E-00 FAAE-00 FBIE-00 UTED-00 VC-00 FRB-00 H-01 TEDE-00 INR-00 IO-00 ITC-01 L-00 VCE-00 AC-01 DCP-01 NSAE-00 NSCE-00 OES-01 OIC-02 OMB-01 OPIC-01 PA-00 PER-00 PM-00 PRS-00 ACE-00 P-00 SP-00 SSO-00 STR-00 TEST-00 TRSE-00 USIE-00 EPAE-00 PMB-00 DSCC-00 PRM-00 DRL-02 G-00 NFAT-00 SAS-00 /012W -------------- DA0C1D 160854Z /38 P 160845Z AUG 02 FM AMEMBASSY HANOI TO SECSTATE WASHDC PRIORITY 7300 INFO AMCONSUL HO CHI MINH CITY ASEAN COLLECTIVE USCINCPAC HONOLULU HI//FPA// SECDEF WASHDC//ISA/ABLAGG// USDOC WASHDC UNCLAS SECTION 03 OF 03 HANOI 002028 SIPDIS STATE FOR EAP/BCLTV USDOC FOR 1431/MAC/AP/HPPHO UNCLASSIFIED PAGE 02 HANOI 02028 03 OF 03 160854Z IMPROVEMENTS TO HIGHWAY 46. -------------- COMMENT -------------- ¶10. (U) IT WAS NOT SURPRISING TO HEAR OPTIMISM FROM THE PEOPLE'S COMMITTEE AND THE MPI, BUT PROVINCIAL OFFICIALS APPEARED RELATIVELY REALISTIC IN THEIR ASSESSMENTS. WHILE THE TRANSPORTATION FACILITIES IN AND OUT OF THE PROVINCIAL CAPITAL ARE A PLUS, THINGS GO DOWNHILL FAST AS ONE MOVES INLAND TOWARDS THE LAO BORDER. BASED ON TWO EMBASSY TRIPS TO NGHE AN OVER THE PAST 9 MONTHS, IT SEEMS CLEAR THAT GENERAL DEVELOPMENT, AS WELL AS PROGRESS IN BECOMING MORE PROMINENT AS AN OUTLET TO SEA FOR ITS NEIGHBORS, IS STILL A WORK IN PROGRESS. PORTER UNCLASSIFIED