VIETNAM: MPI CONFRONTS MPT ON INDEPENDENT

UNCLAS HANOI 003098

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E.O. 12958: N/A
TAGS: ECPS ETRD EINV VM WTO
SUBJECT: VIETNAM: MPI CONFRONTS MPT ON INDEPENDENT
REGULATION

SENSITIVE


1. SUMMARY: A seminar to present the results of a telephone
user survey became a venue for a government think tank and
others including a local law firm to criticize the Ministry
of Posts and Telematics (MPT) for its failure to regulate
the telecom sector effectively. MPT had declined to
participate in the survey, but then complained of the
methodology used. The seminar shows quite clearly that MPT
may use the right phrases in conversation, but has much more
to do to liberalize the telecom sector and is not yet
convinced of the need for an independent regulator. END
SUMMARY.


2. (U) Central Institute for Economic Management (CIEM),the
Ministry of Planning and Investment's (MPI) think tank, and
the Vietnam Competitiveness Initiative (VNCI),a USAID
project, co-sponsored a seminar to present the findings of a
survey on competition in Vietnam's telecom sector on
November 10. Local law firm Vietbid conducted the USAID
funded survey using the WTO Telecom Reference Paper and the
GATS Annex on Telecommunications as a baseline. Vietnam has
committed to the WTO Telecom Reference Paper as part of the
BTA.


3. (U) Noting many improvements in the area of competition,
Vietbid's Mr. Nguyen Thanh Ha concluded that limited
competition exists and Vietnam's model to manage incumbent
dominance is consistent with standard practice. However, he
took the Ministry of Posts and Telematics (MPT) to task for
its weak performance as an independent regulator by pointing
to several cases where decisions or inaction by MPT had
disadvantaged competitors. Ha also described the widespread
perception that MPT and VNPT are in collusion given staff
rotations between them and the shared use of facilities.
Many of Vietbid's findings were based on press items and
discussions with VNPT's competitors because MPT repeatedly
refused to meet with the research team, he commented. CIEM
President Dr. Dinh Van An and MPI advisor Dr. Le Dang Doanh
both stressed that MPT could not function as an independent
regulator and called for the establishment of such an
entity.


4. (SBU) Other GVN officials also expressed concern about
the current telecom regime. An official from the Ministry
of Finance's Department of Tax Policy stated that he thought
the assessment of improved competition in the telecom sector
was too rosy. A Ministry of Trade official in the
Competition Administration Department shared this view.
This official observed privately that the recently passed
competition law had "many shortcomings." MOT had opted to
let the law pass with these flaws and try to amend it later,
he said. He added that MPT had successfully blocked strong
provisions on telecom competition. He opined that MPT is so
powerful that they "can make the Competition Administration
Department disappear."


5. (U) MPT's response to this criticism was fairly limited.
MPT officials from the Department of Planning and Finance
objected to the methodology, but did not rebut questions
about independent regulation. Mr. Tran Minh Tien, President
of the National Institute of Posts and Telematics Strategy,
an MPT-related think tank, who had been listed on the agenda
to comment on the survey, did not attend.


6. (SBU) COMMENT: To our knowledge, this was the first
seminar on the competitiveness of Vietnam's telecom sector.
It is worth noting that only MPI spoke officially. The
others GVN agencies said they were expressing personal
views. While the telecom user survey had some flaws, MPT's
attempt to stymie the survey and other aspects of the
research and then question the validity of parts of the
survey seemed to add weight to some of the findings. MPT
may be able to stall reform efforts. This could signal a
new effort by MPI and MOT to improve the investment climate
for telecoms. The seminar shows quite clearly that MPT may
use the right phrases -- at least in conversations with U.S.
government visitors -- but has much more to do to liberalize
the telecom sector and is not yet convinced of the need for
an independent regulator. We will follow up with the
presenters and several attendees to gauge their sense of the
findings on MPT's ability to regulate telecommunications
effectively.
MARINE