This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS SECTION 01 OF 02 HANOI 003067
STATE FOR EAP/MLS AND EB/TPP/BTA/ANA GOODMAN AND WICKMAN STATE PASS USTR ELENA BRYAN USDOC FOR 4431/MAC/AP/OPB/VLC/HPPHO USDOC FOR 4430/DBISBEE/JBENDER
E.O. 12958: N/A TAGS: ETRD VM WTRO WTO BTA SUBJECT: DEPUTY SECRETARY OF COMMERCE SAMPSON MEETING WITH MINISTER OF PLANNING AND INVESTMENT PHUC
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1. (SBU) Summary: Deputy Secretary of Commerce David A. Sampson met with Minister of Planning and Investment Vo Hong Phuc November 17 to discuss bilateral relations and matters of interest to U.S. business. The DepSec reasserted the United States' commitment to Vietnam's WTO accession on sound commercial principles, conveyed U.S. business concerns over the Draft Common Investment Law (CIL), and expressed concerns about telecommunications market access and increases in the Special Consumption Tax (SCT) in the automotive sector. Minister Phuc said that the U.S. business concerns over the CIL had been forwarded for consideration to the National Assembly. The DepSec also advocated on behalf of two U.S. companies, SSA Marine and Rohn Products International. End summary.
2. (SBU) Deputy Secretary of Commerce David A. Sampson met Minister of Planning and Investment Vo Hong Phuc November 17 to discuss bilateral relations and matters of concern to U.S. business. The Ambassador, Commercial Counselor and the Deputy Secretary's Chief of Staff accompanied him. The DepSec reasserted the United States' commitment to Vietnam's WTO accession on sound commercial principles, stressing that U.S. business must support the accession package, and that the U.S. Congress must grant Permanent Normal Trade Relations (PNTR) status before Vietnam can accede (in the eyes of the United States). It is critical that the WTO accession package and PNTR legislation be delivered to the U.S. Congress by next spring, the DepSec said, since next year is an election year and the U.S. Congress will have an abbreviated calendar with which to work.
U.S. CONCERN OVER THE DRAFT COMMON INVESTMENT LAW
3. (SBU) Sampson said that Prime Minister Phan Van Khai's visit to the United States was extremely well received, and that there is growing interest among the U.S. private sector in investment opportunities in Vietnam. However, U.S. business has expressed some concern over the Draft Common Investment Law (CIL), which, despite a number of positive provisions, may be a step back from reform. The Minister responded that in drafting the CIL, which applies to both foreign and domestic investors, the GVN had listened to U.S. business, especially AmCham. AmCham raised four issues, which the Ministry has submitted to the National Assembly for consideration and resolution. First, the law on dispute settlement will follow the requirements of the WTO, Vietnam's bilateral agreements with 64 countries, and the International Convention on Dispute Settlement. Second, feedback from the AmCham, AusCham, and EuroCham on the issue of investment guarantees was passed on to the National Assembly. Third, all foreign investors who want provisions on investment privileges are able to write them into business licenses. Fourth, the issue of government guarantees for large-scale projects is of great concern to the GVN because they involve infrastructure and power, though in principle the GVN could grant guarantees.
4. (SBU) The Minister also said that the three chambers had generated some confusion on foreign investment. The investment process is in accord with the BTA, he said. One license is given in two categories: registered and approved projects. The first category is for projects worth under 20 million USD, while the second is for projects over 20 million USD. Minister Phuc said he believes the process is "quite straightforward and liberal." He added that previously, a foreign investor was allowed to have only one investment project, as a limited corporation. Now, an investor may have more than one project, established to pursue different types of ventures.
INVESTMENT IN TELECOMMUNICATIONS AND THE AUTO INDUSTRY
5. (SBU) U.S. companies are very interested in investing in the telecommunications sector in Vietnam, but are concerned that BTA market access provisions have arrived slowly, the DepSec said. The Vice Minister responded that the telecommunications sector is also a concern to Vietnam, and that "we are strongly committed to the phase-ins specified in the BTA". He said that his Ministry had talked to the Ministry of Posts and Telematics (MPT) regarding this issue. (Note: MPI has recognized the importance of BTA implementation in the telecommunications sector much more readily than MPT, the market regulator and owner of VNPT, the monopoly carrier. End note.)
6. (SBU) The DepSec said that he would be visiting the Ford plant, which has been a positive investment in Vietnam. The United States is concerned about tariff changes and tax increases that the GVN is implementing in the automotive industry, and feels they may have an overall negative impact, he explained. Phuc agreed that Ford is a great success, but said that the need to develop Vietnam's infrastructure and traffic system requires continued revenue collection through the Special Consumption Tax. He said that the GVN is now proposing a policy to encourage consumer spending, but that the issue remains very controversial.
7. (SBU) The DepSec asked that the GVN look favorably on SSA Marine's proposal to provide marine terminal services and container berth operations at two ports in Vietnam, and Rohn Products International's bid to build a television tower project for Ho Chi Minh Television. The more U.S. business success stories there are in Vietnam, the more rapid the acceleration in investment will be, he pointed out. The Minister said that Vietnam will welcome SSA's proposal in a sector where the GVN is hoping to attract investment, since it cannot meet demand. He said that the DepSec should talk to Ho Chi Minh City authorities regarding the television tower, as it is a city-level issue.