VIETNAM: AMBASSADOR'S CALL ON THE MINISTER OF

UNCLAS SECTION 01 OF 02 HANOI 000308

SIPDIS

STATE FOR EAP/BCLTV

E.O. 12958: N/A
TAGS: EIND ETRD EINV SOCI VM SOE
SUBJECT: VIETNAM: AMBASSADOR'S CALL ON THE MINISTER OF
CONSTRUCTION


1. SUMMARY. On February 3, the Ambassador paid an
introductory call on Minister of Construction Nguyen Hong
Quan. Minister Quan explained the role and functions of the
Ministry of Construction (MOC),and he described MOC's
vision for foreign involvement in the construction sector.
The Ambassador raised U.S. investors' concerns over the
difficulties of acquiring land use rights, and he advocated
on behalf of Black & Veatch, a U.S. consultant seeking a
contract for an Asian Development Bank (ADB) wastewater
project. They also discussed MOC's efforts to improve
access for disabled persons in Vietnam. END SUMMARY.

MOC Function and Responsibilities
--------------


2. On February 3, the Ambassador paid an introductory call
on Minister of Construction Nguyen Hong Quan. The Minister
described MOC's primary responsibility as insuring that
quality and management of construction projects in Vietnam
meet the highest possible standards. He asserted that MOC
did so by issuing building codes and standards that apply to
construction management, architectural design and planning,
housing management, urban infrastructure development, and
production of building materials. Quan added that MOC's
mandate from the GVN directs it to focus on oversight in the
interest of public safety, and in this capacity MOC does not
interfere in the business affairs of Vietnam's construction
companies, both private and state-owned. Noting that State-
owned Enterprises (SOE) dominate many sectors of Vietnam's
economy, Quan emphasized that MOC supports equitization
(privatization) of Vietnam's construction SOEs. Near the
close of the meeting and in response to some issues raised
by the Ambassador, Quan articulated three critical areas on
which MOC was focusing on improving its capacity and would
welcome increased cooperation with the United States: urban
planning, low-income housing and access for the disabled.

Foreign Investment In Vietnam's Construction Sector
-------------- --------------


3. The Ambassador encouraged the Minister to consider the
high quality of American technology and management expertise
when making purchasing decisions adding that increased U.S.
investment in Vietnam would also mean greater job creation.
Quan expressed an interest in increasing interaction between
Vietnamese and U.S. firms mainly as a means of transferring
knowledge of how to better manage large construction
projects. For this reason, Quan added, MOC encourages
foreign participation on large construction projects, but he
did not confirm whether this was an official policy as Post
understands it to be. However, Quan stated repeatedly that
Vietnam's construction sector is open to foreign investment
without any limitations so long as these companies are
properly licensed, abide by all regulations and follow the
tendering process. While MOC welcomes foreign involvement
in large-scale projects, Quan is of the opinion that
consultant fees from many U.S. firms are too high. The
Ambassador responded that he considers American firms'
services to be of the highest quality and that they are
competitively priced.

Acquisition Of Land Use Rights
--------------


4. The Ambassador raised the concerns voiced by some U.S.
firms over the difficulty of acquiring land use rights for
approved projects in the areas designated by the GVN for
their business development. Quite often this process is
time-consuming and the price paid to tenants is much higher
than the prices quoted by the GVN. The Ambassador noted
that a national policy that clearly defines the process
seems to be lacking. Quan argued that the process is not
too complicated and recommended that foreign investors
locate their operations in designated industrial zones in
order to minimize problems with individual tenants.

Black and Veatch and The ADB Wastewater Drainage Project
-------------- --------------


5. The Ambassador advocated on behalf of Black & Veatch
(BV),a U.S. consulting firm competing for an Asian
Development Bank wastewater drainage project in central
Vietnam. According to the Minister, wastewater treatment is
a focus area for which MOC is trying to improve standards.
Quan said that he is aware of BV's interest in the project
and welcomes its proposal. He also stressed that BV needs
to insure that it participates in the tendering process.
Comment: Quan's comment about the tendering process was
somewhat strange since BV has been operating in Vietnam for
quite sometime and has experience with ADB and other donor
and GVN projects. Representatives of the company met with
Quan following the Ambassador's call. End Comment.

MOC'S Role In Assisting People With Disabilities
-------------- ---


6. In response to the Ambassador's queries about MOC's
efforts to improve access for Vietnam's disabled citizens,
Quan noted that this was another area where MOC is trying to
improve standards and promote the use of designs and
construction techniques that accommodate disabled persons.
The Ambassador drew attention to the high percentage of
Vietnam's population living with disabilities and touted the
economic and social benefits of improving access to
transportation and buildings in general. Quan said he was
appreciative of the U.S. Government's support to Vietnam in
this area over the past 10 years, and he would welcome
cooperation on this issue. The U.S. Government has
successfully brought together relevant government agencies,
businesses, and non-governmental organizations to find
solutions, explained the Ambassador. He added that the
Embassy was willing to help the GVN to seek solutions to
this issue here in Vietnam.


7. (SBU) Comment: The Minister did not appear well-prepared
for this meeting, and he even acted impatient at times. His
comments about MOC's degree of separation from state
construction firms rang hollow, especially as he head on an
elegant suit that probably cost USD 600 or more. Minister
Quan is a member of the Central Committee of the Communist
Party of Vietnam. In closing, Quan readily accepted the
Ambassador's offer to try to arrange additional meetings
during trips to the United States by MOC officials,
particularly with urban planners or public housing
authorities. End Comment.

MARINE