KIEN GIANG PROVINCE: PRACTICALLY PERFECT, IF NOT FOR THE

UNCLAS SECTION 01 OF 02 HO CHI MINH CITY 001142

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DEPT FOR BCLTV


E. O. 12958: N/A
TAGS: SOCI ECON PHUM PGOV PREL KIRF VM
SUBJECT: KIEN GIANG PROVINCE: PRACTICALLY PERFECT, IF NOT FOR THE
POVERTY

REF: HCMC 00713


1. (SBU) SUMMARY. The southern Mekong Delta province of Kien
Giang faces significant challenges in attracting foreign
investment and reducing poverty. Despite impressive recent
economic growth, mostly due to rice farmers converting to more
profitable shrimp farming, the province is still underdeveloped,
lacking infrastructure and educational and health care facilities.
Most plans for economic diversification center around tourism
development of the island of Phu Quoc and attracting both foreign
direct investment and foreign development assistance. During a
recent visit to the provincial capital Rac Gia, DPO and Poloff met
with Kien Giang People's Committee Vice Chairman Van Ha Phong,
representatives of the Provincial Committees for Ethnic Minority
and Religious Affairs, the Department of Planning and Investment
(DPI),and the Department of Labor, Invalids, and Social Affairs
(DOLISA). END SUMMARY.


2. (U) Kien Giang encompasses a 6000 square kilometer area in the
southwest corner of Vietnam. It includes 105 small and large
islands, the largest of which is Phu Quoc, and shares both a land
and sea border with Cambodia. Kien Giang's 1.6 million people
include a substantial ethnic Khmer population, as well as Chinese,
Cham, and over 20 other minority groups. Kien Giang's primarily
agricultural economy has seen GDP growth rates of 9-12% over the
past four years, including a record 13.25% in 2002.

3 (SBU) While Kien Giang has enjoyed recent rapid growth, largely
by converting rice land to shrimp farming, its economy is limited
to a few sectors. Other than agriculture and seafood, its only
industry is mining limestone. The DPI could only name four FDI
projects in the province, all Taiwanese, and only one worth over
USD$1 million. Vice Chairman Phong reported that although local
businesses were aware of the Bilateral Trade Agreement with the
U.S., he had not seen any noticeable impact on the province. He
claimed that Kien Giang's 2003 exports total only USD$150 million
to date and are primarily to neighboring countries. It is not
clear, however, if any of the province's agriculture and
aquaculture production is exported indirectly via other provinces.

4 (SBU) Kien Giang's major push to develop and diversify its
economy is the development of Phu Quoc Island as a regional
tourist center. The central GVN, working with provincial
officials, has developed a master plan for eco-tourism, scheduled
for release in the near future. They have already solicited bids
from 60 companies, including three American firms, to participate
in Phu Quoc development. An airport upgrade has begun in order to
allow direct flights from Bangkok and Singapore. According to the
plans, by the end of 2003, the Phu Quoc airport will be able to
accommodate Fokker regional jets, and by 2005 it will support an
Airbus A320. Plans also call for Phu Quoc's two ports to be
upgraded to accommodate cruise ships and for a casino to be built
on the island. While a Malaysian company has expressed interest
in this project, the provincial DPI chairman was so impressed by
his recent visit to Las Vegas that he plans to solicit an American
casino company to partner with them.


5. (SBU) Plans of casinos and cruise ships and rapid economic
growth mask other indicators of poverty. According to local
officials only 60% of communes have electricity and reasonably
clean (i.e. passed through some initial treatment) water.
Although 97% of children in the province ages 6-10 years attend
school, educational facilities are typically modest, with 1200
classrooms still covered by thatched roofs. The GVN has issued
bonds to help provincial authorities pay for classroom renovation,
expected to be completed by 2005.


6. (SBU) Several NGOs and foreign aid agencies are active in the
province, including Australian, French, and Swiss NGOs, Danida,
and USAID. Most projects focus on clean water, rural roads,
environmental issues, and health care. The Swiss Red Cross has
also sponsored a project to build homes for the poor, building 750
at a cost of USD$1200 per house. Provincial authorities
contributed 15% to this project and also launched a separate
project to build another 2500 homes at a cost of about USD$130 per
house. Provincial authorities are seeking additional development
assistance for more water, roads, and health care projects.


7. (SBU) The Provincial Committee for Religious Affairs claimed
that the province faced no contentious religious issues. Eight
Protestant churches affiliated with the official GVN-recognized
Southern Evangelical Church of Vietnam are legally registered,
while there are no other groups planning to register churches,
according to the provincial committee. Officials claim that no
house churches operate in Kien Giang. They said only the Hoa Hao
practice at home, and this group has been legally registered since

2001. Kien Giang operates a Buddhist high school, and the
province includes 74 Khmer Buddhist pagodas serving the large
minority population.

8. (SBU) Despite the province's long border with Cambodia, Vice
Chairman Phong claimed they had no major border problems. He
mentioned occasional fishing disputes, but did not discuss piracy
(reftel). He claimed that Kien Giang was not used for trafficking
in persons or drugs because it is too far from the major cities,
so the cost is too high. DOLISA reported, however, that the
province had over 1000 drug users (like many other official
numbers about "social evils," it is likely a significant
underestimate) and an active HIV/AIDS prevention committee.


9. (SBU) Post had received some reports from Vietnamese-Americans
that the local government had unjustly seized land from their
relatives in Kien Giang. DPO raised these reports with provincial
People's Committee Vice Chairman Phong, who claimed he was unaware
of any such incidents. He added, however, that the GVN has a
consistent policy on land expropriation for community development
throughout the country. Referring to heavy damage during the
Vietnam war, he noted that to reduce poverty in Kien Giang, the
government had expropriated land for quite a large number of
infrastructure, school, and hospital projects. He claimed that
all such projects had some limited problems, with 5-15% of those
affected complaining -- usually over the price the government
paid. He said the process was fair, with prices for expropriated
land set by an evaluation board composed of both local residents
and authorities.


10. (SBU) COMMENT: Kien Giang officials were friendly and seemed
genuinely happy to welcome official American visitors. As is
typical with our provincial trips, local officials were eager to
attract American investment and open to U.S. development
assistance. With daily flights to Ho Chi Minh City and a colorful
fishing fleet, Rac Gia offers some of the bustle and charm missing
from other more isolated provincial capitals in the Mekong Delta.
Besides the Phu Quoc tourism projects, however, officials had few
real ideas for developing and diversifying the economy. They were
cautious about providing specifics on investing in Phu Quoc until
Hanoi has approved their development plan. It is not clear how
much longer Kien Giang can count on dramatic growth from new
shrimp farms. At DPI, at least, the leadership appears to be
hoping that a big gamble on casinos will pay off.
YAMAUCHI