Identifier
Created
Classification
Origin
05HOCHIMINHCITY528
2005-05-20 12:38:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Consulate Ho Chi Minh City
Cable title:  

DEPUTY SECRETARY MEETS WITH HCMC ENTREPRENEURS

Tags:  ETRD ECON EINV BEXP PREL VM WTO IPROP BTA 
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UNCLAS SECTION 01 OF 03 HO CHI MINH CITY 000528 

SIPDIS

SENSITIVE

DEPARTMENT PLEASE PASS USTR, ELENA BRYAN
STATE FOR EAP/BCLTV AND EB/TPP/ABT/BTT
USDOC FOR 4430/MAC/ASIA/OPB/VLC/HPPHO
TREASURY FOR OASIA

E.O. 12958: N/A
TAGS: ETRD ECON EINV BEXP PREL VM WTO IPROP BTA
SUBJECT: DEPUTY SECRETARY MEETS WITH HCMC ENTREPRENEURS

UNCLAS SECTION 01 OF 03 HO CHI MINH CITY 000528

SIPDIS

SENSITIVE

DEPARTMENT PLEASE PASS USTR, ELENA BRYAN
STATE FOR EAP/BCLTV AND EB/TPP/ABT/BTT
USDOC FOR 4430/MAC/ASIA/OPB/VLC/HPPHO
TREASURY FOR OASIA

E.O. 12958: N/A
TAGS: ETRD ECON EINV BEXP PREL VM WTO IPROP BTA
SUBJECT: DEPUTY SECRETARY MEETS WITH HCMC ENTREPRENEURS


1. (SBU) SUMMARY. During a roundtable discussion with HCMC
entrepreneurs and government representatives, the Deputy Secretary
discussed the current state of Vietnam's economy and future
prospects, including accession to the World Trade Organization
(WTO). HCMC business representatives voiced concern over textile
quotas, anti-dumping suits, and other difficulties entering the
U.S. market. Representatives also noted the positive impact of
the U.S.-Vietnam Bilateral Trade Agreement (BTA) on business
growth and were hopeful that WTO membership would continue this
trend. END SUMMARY.

CONCERNS OVER TEXTILE QUOTAS AND ANTI-DUMPING CASES
-------------- --------------


2. (SBU) In a wide-ranging discussion with the Deputy Secretary,
members of Ho Chi Minh City's business elite began by voicing
concerns with textile quotas, seafood anti-dumping cases and
prospects for other anti-dumping cases in the future. In the case
of textiles, Vietnam's garment industry has undergone dramatic
growth, currently employing over two million people, reported the
chairman of the Vietnam Textile and Apparel Association (VITAS).
However, the industry is hampered by quotas and must still compete
with quota-free China. According to VITAS, even U.S. buyers have
advocated raising quota levels or eliminating quotas altogether
because Vietnam can supply quality products at competitive prices.


3. (SBU) The Vice Chairman of the Vietnam Association of Seafood
Exporters and Producers (VASEP) related how U.S. importers and
distributors had worked closely with Vietnamese producers to build
a market for Vietnamese seafood. However, anti-dumping lawsuits
are hampering exports. In addition, Vietnamese exporters must now
pay bonds to ensure payment of anti-dumping duties. The review
process for anti-dumping cases can take two to three years,
causing further losses that could virtually close the U.S. market

to Vietnamese exporters. VASEP is frustrated because U.S.
importers and distributors do not believe that Vietnam dumped
shrimp on the U.S. market. Since the seafood industry in Vietnam
employs more than three million people, with shrimp production
comprising the largest segment of this industry, the stakes are
high.


4. (SBU) The growing furniture industry also brings worries of
future anti-dumping cases from the United States, noted the
director of Savimex, a top wood processing company. According to
Savimex, duties resulting from the U.S. anti-dumping case against
Chinese wooden furniture have provided opportunities for
Vietnamese producers. Savimex stated it wants to continue to
increase exports, but fears such increases could trigger an anti-
dumping lawsuit. The company questioned whether a specific level
of exports would automatically trigger such a lawsuit.

OPTIMISM ON INFORMATION TECHNOLOGY AND SMALL BUSINESS
-------------- --------------


5. (SBU) Despite their concerns over trade disputes, roundtable
participants were optimistic about the continued potential of
Vietnam's economy. U.S.-owned IDG Ventures Vietnam has
experienced great success with venture capital in the information
technology (IT) sector in China and wants to replicate that
success in Vietnam. IDG has found the level of skill and
entrepreneurship in Vietnam impressive, and the company sees
tremendous opportunities in the IT sector to attract U.S.
investors. IDG's investments include software, IT infrastructure,
and early stage e-commerce. Though IDG is bullish on Vietnam's
IT sector future, predicting there will eventually be a Vietnamese
Amazon and eBay, the company admits it does not have a clear exit
strategy for its venture capital investments.


6. (SBU) According to the Young Business Entrepreneurs
Association, ninety percent of businesses in Vietnam are small to
medium enterprises (SME). The GVN's policy to open Vietnamese
markets under the BTA has been good for SMEs. Vietnamese
publishing company Phuong Nam Corporation echoed praise for GVN
policy changes. Just ten years ago, the state had a monopoly on
sales of cultural products, including books, music, and films.
The GVN has since allowed private businesses to sell cultural
products. Phuong Nam has encountered difficulties with U.S.
rights-holders in obtaining licensing for U.S. cultural products
and feels U.S. businesses do not have enough interest in the
Vietnamese market. Despite this problem, Phuong Nam has entered
into a U.S. joint-venture to establish a chain of movie theaters
in Vietnam to screen U.S. films.


7. (SBU) Acknowledging U.S. priorities with regard to intellectual
property rights (IPR),the Vice Chairman of the HCMC People's
Committee voiced a need for continued IPR training and made a
request for continued assistance through the USAID-funded Support
for Trade AcceleRation (STAR) Project. The Vice Chairman also
stressed the need for training in market research.

INTERNATIONAL TRADE A TWO-WAY STREET
--------------


8. (SBU) The Deputy Secretary said that Vietnam has accomplished a
great deal in a very short period of time. He pointed out that as
Vietnam succeeds on a global level, success will place Vietnam in
competition with others, including the United States. The very
rapid growth of Vietnamese sales into the U.S. had given rise to
dumping complaints. These are adjudicated in a fair and
transparent manner. The Deputy Secretary cautioned that even when
Vietnam becomes a WTO member, anti-dumping cases will still be
possible. Additionally, Vietnam's current designation as a non-
market economy puts it at a disadvantage in any trade dispute.
WTO membership is key to the future; as Vietnam works through the
changes it must undertake, these will substantiate the case for
market economy status.


9. (SBU) The Deputy Secretary also noted that international trade
needs to be a two-way street and that perception of fair trade is
important. While Vietnamese exports to the U.S. are growing
significantly, U.S. exports to Vietnam are growing more
conservatively. In the United States, this trade imbalance
creates the perception of fewer jobs for Americans and fewer
opportunities for American companies. Vietnam needs to open its
markets for U.S. companies so they believe they have opportunities
equal to those of Vietnamese exporters. It is equally important
for Vietnam to apply the standards of a market economy as soon as
possible. This includes reducing SOEs, encouraging more market-
determined pricing, and diversifying both its export products and
its export markets.

COMMENT
--------------


10. (SBU) The roundtable illustrated two often-recurring themes:
the broad potential for economic growth in Vietnam and an
occasional lack of sophistication about the realities of operating
in global markets. Vietnam's entrepreneurs are clearly keen to
expand their businesses and participate more fully in the world
economy. They sometimes struggle, however, to fully comprehend or
accept realities like textile quotas and anti-dumping rules and
procedures. Across the board, roundtable participants -- from
small businesses to large former SOEs -- expressed eagerness to
join the WTO, though perhaps under the mistaken impression that
WTO membership will immunize them from market disruptions.


11. (U) List of Participants:

U.S. Side
--------------

The Deputy Secretary
Consul General Winnick
Ambassador Huhtala
Ambassador Wilson
Deputy Press Spokesman Ereli
Chris Castro, D
Christine Davies, D
Lisa Martilotta, D
Melinda J. Sofen, Public Affairs
Tulinabo S. Mushingi, Executive Secretariat
Deputy Principal Officer Kenneth Chern
HCMC Senior EconOff Heather Variava
HCMC EconOff Valerie Bilgri Holm (notetaker)
HCMC EconOff Marc Porter (notetaker)
HCMC Pol/Econ Specialist Pham Thanh Nhan

Vietnamese Side
--------------

Dr. Nguyen Thien Nhan, First Vice-Chairman, HCMC People's
Committee
Dr. Luong Van Ly, Deputy Director, HCMC Department of Planning and
Investment
Mr. Truong Tr?ng Nghia, Vice President, HCMC Investment and Trade
Promotion Council
Ms. Nguyen Th? Mai Thanh, General Director, REE Corporation -
Developer of e.town
Mr. Le Quoc An, Chairman, Vietnam Textile and Apparel Association
and Vietnam National Textile and Garment Corporation
Mr. Nguyen Van K?ch, Vice Chairman, Vietnam Association of Seafood
Exporters and Producers (VASEP),and Director, Cafatex Corporation
Ms. Le Th? Phuong Thuy, Vice President, Young Business
Entrepreneurs Association, and Director, Toan My Company Ltd.
Mr. Tran Mong Hung, Chairman, Asia Commercial Bank
Ms. Phan Th? Le, Director General, Phuong Nam Cultural Corporation
Mr. Hang Vay Chi, President, Viet Huong Joint Stock Group
Mr. Do Huu Tr?ng, Director, Savimex Joint Stock Company
Mr. Henry Nguyen, Managing General Partner, IDG Ventures
Mr. Walter Blocker, Vice Chairman, American Chamber of Commerce,
and Managing Director, Gannon Vietnam Ltd.


12. (U) This cable was cleared by the office of the Deputy
Secretary.

SIPDIS


WINNICK