MEKONG DELTA DEVELOPMENT- RIPE FOR BIOTECH AND CAPITAL

UNCLAS SECTION 01 OF 02 HO CHI MINH CITY 001295

SIPDIS

SENSITIVE

STATE PASS USTR FOR EBRYAN
USDOC FOR 4431/MAC/AP/OPB/VLC/HPPHO

E.O. 12958: N/A
TAGS: ECON PREL PGOV SOCI EINV EAID EAGR VM
SUBJECT: MEKONG DELTA DEVELOPMENT- RIPE FOR BIOTECH AND CAPITAL


1. (SBU) Summary: Vietnam's Mekong Delta provinces will have
difficulty meeting the GVN's goal of nearly doubling per capita
GDP by 2010 without substantial reform and investment. A recent
visit by the Consul General to two of the most prosperous Delta
provinces revealed neither advances in productivity in the
agriculture sector -- the bedrock of the region's economy -- nor
in industrial development that are needed to reach the GVN's
ambitious growth targets. While provincial leaders in the
Mekong acknowledge their shortcomings, they have not been able
to articulate how they will undertake the dramatic changes in
infrastructure, finance and technology, especially
biotechnology, necessary to sustain the region's high growth
rates. End Summary.


2. (SBU) The Consul General traveled to the Mekong Delta
December 6 - 8 to visit Can Tho and An Giang Provinces. He
visited the 13th annual Can Tho Agricultural Fair, toured the
Cuu Long Rice Research Institute and met with provincial
leaders. Growth rates in these provinces have reached or
surpassed 10 percent in recent years based on dramatic increases
in agricultural output and the development of aquaculture.
Without infrastructure upgrades and the introduction of
agricultural technology, however, Can Tho and other provinces
are unlikely to meet their aggressive growth targets. In the
case of Can Tho, Party Secretary Nguyen Tan Quyen reported that
the recently concluded provincial Party Congress had called for
an increase in provincial GDP from $720 to $1,200 by 2010.
Secretary Quyen stated his belief that clear and consistent

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polices, coupled with increased investment and access to
capital, are the keys to the province's development.

Infrastructure and Capital Equipment
--------------


3. (SBU) Quyen observed that infrastructure development is a
challenge for the province. Can Tho, the de facto capital of
the Delta region, has no working airport and no deepwater port
facilities, and can only be accessed by ferry. Although a
bridge is under construction and other infrastructure upgrades
are planned, the Delta's roads are often unpaved and narrow,
making transportation of goods time-consuming and costly.
Secretary Quyen suggested that the Consulate could assist the

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province in locating an American business partner to upgrade the
road system, but did not outline any immediate plans on the part
of the city or the region to develop its ailing road network
itself.


4. (SBU) Growth in the agricultural sector of the Mekong is
attributable to increases in the output of rice. Rice farmers in
the Mekong harvest up to three and a half crops per year and
more intensive cropping is not an option. However, efficiency
could be dramatically increased. Most rice produced is still
planted and harvested by hand, though plowing, threshing, drying
are increasingly by machine. The introduction of small-scale
machinery could lead to dramatic increases in productivity. On
display at the Can Tho Agricultural Fair were many examples of
affordable farming equipment, including a VINAPPRO mini rice
combine produced under license from Briggs and Stratton for
$3,000. While this cost is still too high for most Mekong Delta
rice farmers individually, provincial agricultural cooperatives
could easily acquire capital equipment for its members' use.
Comprised of an average of 200 families, agricultural
cooperatives are responsible for much of the irrigation
infrastructure maintenance in the Mekong Delta. Although both
the Chairman of the An Giang People's Committee and Can Tho
Party Secretary spoke about increased technology as an engine
for productivity growth, neither province has taken steps to
assist its rice farmers in obtaining much needed equipment.

Human Resources Development
--------------


5. (SBU) Chairman of An Giang People's Committee Nguyen Hoang
Viet, An Giang Part Secretary Le Phu Hoi, and Can Tho Party
Secretary Nguyen Tan Quyen all spoke at length about the need

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for human resources development in the region, though they did
not present any plans to achieve this goal. This apparent lack
of concrete planning was underscored during a visit to An Giang
University. Dr. Ho Thanh My Phuong, Director of the An Giang
University International Relations Department and former Ford
Foundation scholarship grantee, remarked that provincial support
for local universities was still inadequate. Dr. Phuong also
said employment prospects for university graduates in An Giang
did not match opportunities available to graduates in other
provinces in the region; she noted that annual salaries of many
An Giang graduates were still far below regional norms.

Biotechnology and the Cuu Long Rice Research Institute
-------------- --------------


6. (U) Biotechnology is another means of spurring economic
growth in the Mekong Delta, and the region has its own research
facility to promote agricultural development. The Cuu Long Rice
Research Institute (CLRRI) was founded in 1977 and is the
Delta's premier government institution specializing in rice
study. CLRRI pursues basic and applied research on rice and
other crops and on the Mekong Delta's agricultural systems in
order to determine strategies for increasing yield. CLRRI is
one of 19 research institutions and centers of the Ministry of
Agricultural and Rural Development (MARD). The institute also
has strong links with development organizations in Vietnam and
with the International Rice Research Institute of the
Consultative Group on International Agricultural Research. The
360-hectare campus contains seven operational laboratories
specializing in biotechnology, pathology, soil and grain
analysis, and microbiology, as well as 250 hectares for rice
seed production.


7. (SBU) In recent years, the CLRRI has become the primary
biotechnology research center in southern Vietnam, having
developed its own strains of transgenic BT cotton and soybeans
as well as Vitamin A and iron fortified "golden" rice.
According to Dr. Bui Chi Buu, CLRRI's rector, the introduction
of these crops to Mekong agriculture would have a positive
impact on both production levels and product quality. GM crops
could also benefit human health. The adoption of the
institute's bio-fortified rice could improve nutrition in
Vietnam dramatically, while the use of pest -resistant cotton
strains would reduce the use of pesticide as well as pesticide
pollution and pesticide poisoning deaths. Dr. Buu also reported
a fifty percent decrease in the flow of the Mekong River in the
last twenty years and sees biotechnology as the key to
preserving the region's agricultural production in the face of
increased up-stream damming of the Mekong. Dr. Nguyen Tri
Khiem, Dean of the Faculty of Economics and Business
Administration at An Giang University, reported corresponding
increases in river salinity, further highlighting the
environmental challenges to the Delta. The CLRRI is in the
process of developing drought resistant strains of many of its
crops in attempt to preserve crop viability.


8. (SBU) Despite the potential economic, health and
environmental benefits of biotech crops, Dr. Buu said
genetically modified crops are not being used in Vietnam. The
institute only was granted permission to begin field-testing its
crops in 2004. The Ministry of Environment and Natural
Resources is in the process of completing a risk assessment
study and will make a decision on the use of genetically
modified crops in late 2006 or 2007.


9. (SBU) Comment: While Delta leaders are unanimous in their
view that growth targets can be met only through investment,
innovation and reform, they did not spell out clear plans for
how they would transform their provinces' bureaucracies or
economies to meet a very ambitious 12 percent annual growth rate
target. As previously reported, political leadership in the
Delta has long been chosen more for strong "revolutionary"
credentials than for technical expertise and competent
management. It is telling that the Party chose to send HCMC
Party Secretary Triet -- whose credentials as an economic
reformer are unmatched -- to the recent Can Tho Party Congress.
There he emphasized the need to focus on human resources
development to achieve development goals, which many observers
agree is code for a generational shift in Mekong Delta
leadership. End Comment.
WINNICK