AMBASSADOR MEETS NEW HCMC LEADERSHIP: PEACE CORPS AND

UNCLAS SECTION 01 OF 02 HO CHI MINH CITY 000927

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV PREL ECON EFIN PHUM EAID VM
SUBJECT: AMBASSADOR MEETS NEW HCMC LEADERSHIP: PEACE CORPS AND
POST-WTO ECONOMIC DEVELOPMENT

REF: HANOI 2051

HO CHI MIN 00000927 001.2 OF 002



1. (SBU) On August 3, the Ambassador met with Ho Chi Minh City
(HCMC) Party Secretary and Politburo member Le Thanh Hai and
HCMC People's Committee Chairman Le Hoang Quan, both promoted to
their new positions after the April National Party Congress.
The Ambassador underscored the USG's support for Vietnam's
earliest possible entry into the WTO. He lauded the work of the
National Assembly in pushing legislation and reforms needed for
Vietnam's WTO transition. The Ambassador underscored that, by
creating a robust and transparent economic and legal
environment, Vietnam will position itself to attract increased
flows of foreign direct investment (FDI). As one of Vietnam's
key economic hubs, HCMC is at the frontline of this effort; for
example, its success in securing the USD 300 million Intel
investment paves the way for additional FDI in the high-tech
sector for the city and the country.


2. (SBU) The Ambassador stressed that effective rule of law was
critical to robust economic growth. Unfortunately, he has heard
concerns expressed by U.S. and foreign investors that the
sanctity of contracts in Vietnam sometimes is not respected.
This problem needs to be addressed to retain and attract foreign
investment. The Ambassador told Hai and Quan that rules should
be transparent and that all officials -- down to the lowest
level -- need to be trained on implementing Vietnam's post-WTO
legal framework so they can respond to new demands. In both
meetings, the Ambassador noted the challenges that HCMC faces in
dealing with a growing population, especially as migrants
comprise up to 35 percent of the city's population. He
commended HCMC for its work in supporting religious freedom and
added that it is important for Vietnam to continue to advance
this issue to be taken off the list of Countries of Particular
Concern.

PEACE CORPS
--------------


3. (SBU) In both meetings, the Ambassador highlighted the
concurrent visit of a Peace Corps delegation seeking to assess
the viability of opening a program in Vietnam (reftel). He
described the Peace Corps program for the HCMC leaders and
emphasized the benefits of having at least 15 volunteers in HCMC
-- three at each participating university. He stressed that a
pilot Peace Corps program in Hanoi and HCMC would be an
important symbol of progress in our bilateral relationship. The
Ambassador urged Quan to work with the Ministry of Education and
Training to learn more about the Peace Corp program and how it
fits with HCMC's development goals.


4. (SBU) Both Hai and Quan welcomed improved bilateral ties and
the upcoming visit of the President to Vietnam. Both Hai and
Quan were noncommittal on the Peace Corps proposal, saying that
they would follow Hanoi's lead. On economic development
matters, Secretary Hai asked the Ambassador if the United States
could adopt Japan's model and provide official development
assistance (ODA) to build infrastructure. Hai argued that
Vietnam needed ODA "to prepare to receive FDI." He said that
although HCMC has called for private investors, the
infrastructure projects are too big and private investors
"cannot afford to participate." He added that "the private
investment level is hard to grow." The Ambassador told Hai that
the United States does not provide Japanese-style ODA. He
emphasized that private sector investment for large-scale
projects was possible if the deal were structured properly.


5. (SBU) Quan, who succeeded Hai as People's Committee Chairman,
said he recognized that HCMC must learn from other countries
experiences and that, in a globally integrated economy, HCMC's
biggest challenge was to remain competitive. His focus was to
increase local government awareness of the post-WTO legal
framework, improve training for government officials, improve
general living standards and maintain social stability. He did
not offer any concrete proposals, however. Quan emphasized that
that "ensuring social stability" was key to attracting foreign
investors and to encourage overseas Vietnamese to return.
Touching on the Intel investment, he said that he would seek to
continue HCMC's expansion into new economic sectors and
transform HCMC into the national hub for highly skilled workers.



6. (SBU) Comment: There was nothing new in the remarks from the
HCMC leaders. Hai's focus on ODA as the resolution to HCMC's
infrastructure problems instead of looking to the marketplace,
in fact, was somewhat disappointing. Some HCMC Party and
business contacts continue to fret that Hai -- a consummate
political insider -- and Quan -- a Party man with little big
government experience -- do not have the skills to manage an
economy as large and complex as HCMC's. They rue the Party
decision to promote former HCMC Vice-Chairman Nguyen Thien Nhan
to Hanoi as Minister of Education and Training. Nhan, they say,

HO CHI MIN 00000927 002.2 OF 002


was the technocrat that kept the HCMC economy moving forward.
End Comment.
WINNICK