DEPUTY SECRETARY OF COMMERCE SAMPSON MEETING WITH

UNCLAS SECTION 01 OF 02 HANOI 003067

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STATE PASS USTR ELENA BRYAN
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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

SENSITIVE. Do not post on the Internet.


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.

COMMERCIAL ADVOCACY
--------------


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.

MARINE