VIETNAMESE LEGISLATURE TACKLES IPR, CHIDES GOVERNMENT OVER

UNCLAS SECTION 01 OF 02 HANOI 000631

SENSITIVE
SIPDIS

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SINGAPORE FOR TREASURY
TREASURY FOR SCHUN
USTR FOR DBISBEE
USAID FOR DAA/ASIA MELLIS AND EAA DSHARMA

E.O. 12958: N/A
TAGS: ECON KIPR PGOV PHUM VM

SUBJECT: VIETNAMESE LEGISLATURE TACKLES IPR, CHIDES GOVERNMENT OVER
CHINESE MINING CONCESSIONS

REF: A) Hanoi 184 (Vietnam Should Remain On Special 301);
B) Hanoi 417 (Vietnam's Plans for Bauxite Exploitation);
C) 08 Hanoi 1298 (National Assembly Grills GVN on SOEs)

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(U) This cable is Sensitive But Unclassified. For official use
only, not for dissemination outside USG channels or posting on the
Internet.


1. (U) SUMMARY. Vietnam's National Assembly enacted substantial
reforms to its IPR regime in its first session of the year from May
to June, 2009, amending its IPR Law, Criminal Code and Cinema Law.
The reforms should provide greater market access for U.S. films and
penalized commercial-scale IPR violations, albeit for a limited
number of infringing acts. The Legislature also raised concerns
over Chinese workers, especially in the bauxite mining project in
the Central Highlands and criticized rice export quotas. It revised
tax laws, heeding criticism from foreign firms that current rules
could put Vietnam at a competitive disadvantage with its neighbors.
The National Assembly also removed several offences from the list of
crimes punishable by death, but maintained capital punishment for
drug trafficking. END SUMMARY.

IPR LAWS REFORMED
--------------


2. (U) The National Assembly revised several provisions of its
intellectual property rights (IPR) regime, including amendments to
the Criminal Code, the IPR Law, and the Cinematography Law which had
been the subject of many discussions with the USG at Trade and
Investment Framework Agreement talks and during Bilateral Trade
Agreement and WTO accession negotiations (REF A).


3. (U) The amendment to the Cinematography Law puts importing and
exporting movies under the Import/Export Law, effectively lifting
previous quotas on the number of imported foreign films. It also
allows local movie distribution and production companies to enter
joint ventures with foreign companies, with a cap on foreign equity
at 51%.


4. (U) The legislative changes criminalized IPR violations on a
commercial scale, but reduced the number of infringing acts to
copying works and distributing the copies. In the IPR Law, the
National Assembly reduced the number of triggers for starting an
enforcement action from four to three. The IPR law also extended
copyright protection to 75 years beyond the life of the artist for
works such as cinematography, photography, and applied art.

CHINESE WORKERS AND CHINESE MINING
--------------


5. (U) The National Assembly added its voice to those expressing
alarm over the Government of Vietnam's (GVN) concessions to foreign
mining firms in the Central Highlands (REF B). Although the
Assembly cited environmental dangers and an influx of illegal
workers, it was clear that the concerns related to having Chinese
companies construct and operate bauxite processing facilities in one
of Vietnam's most sensitive national security areas. Legislators
pointedly questioned Labor Minister Nguyen Thi Kim Ngan on
foreigners working illegally in Vietnam and asked her to crack down
on them.


6. (U) Deputies also demanded an explanation from Trade and Industry
Minister Nguyen Huy Hoang and Deputy Prime Minister Nguyen Sinh Hung
on why the GVN had not consulted the National Assembly before
signing contracts with a Chinese firm to construct the first bauxite
processing facility. They criticized the GVN for purposely
splitting up the larger, proposed $15 billion project into
concessions smaller than VND20 trillion ($1.2 billion),the
threshold level that would have required approval by the National
Assembly. The delegates even cited a Communist Party resolution
which stressed that the bauxite concessions lie in a significant and
sensitive area for national defense.

CRITICISM OVER RICE EXPORT POLICIES
--------------


7. (U) Legislators also took the GVN to task for its clumsy
management of rice exports. GVN policy is widely believed to have

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caused significant losses to farmers during the last two years
(Septel). Trade Minister Hoang said that the GVN would consider
reforming the Vietnam Food Association, which controls and licenses
rice exports. Deputies also called on the government for more
investment in rural areas and agriculture, and easier access for
farmers to existing economic stimulus programs.

RURAL OVERDEVELOPMENT
--------------


8. (U) The deputies also criticized the GVN for promoting
development, including golf courses, that allowed expropriation of
rural farm land. Planning and Investment Minister Vo Hong Phuc
admitted that the number of golf courses in operation and planned,
166 in total, was excessive, and vowed to tighten up standards.
Owners of expropriated land have held protests to criticize what
they consider unQir compensation.


9. (U) As part of the government's stimulus package to cope with the
global crisis, a proposal by the Ministry of Finance to exempt
taxpayers, local and foreign, from personal income tax for the first
six months of 2009, and for capital investment, capital transfer,
royalty and franchising for the whole year was approved at this
session of the National Assembly. The Assembly also declared
non-taxable many expatriate benefits that foreign chambers of
commerce had warned would place Vietnam at a disadvantage with its
competitors.

ADJUSTMENTS TO SOCIO-ECONOMIC TARGETS
--------------


10. (U) The National Assembly made several adjustments to 2009's
socio-economic targets adopted in the second National Assembly
session of 2008 (REF C). Those target adjustments included the GDP
growth rate, from 6.5% to 5%, the export revenue growth rate from
13% to 3%, and CPI from below 15% to below 10%. The budget deficit
was raised from 4.8% percent of GDP to less than 7.0% of GDP.

Number of Capital Crimes Reduced
--------------

11. (SBU) The National Assembly also removed several offences from
the list of crimes punishable by death, but maintained capital
punishment for drug trafficking. In addition to rape, deputies
voted to remove six other offences from the list: awarding of
bribes, counterfeiting of money and bonds, hijacking ships and
planes, destruction of weapons and military equipment, and
appropriation of property through swindling. The amendments were
controversial, with lively debate particularly about rape and drug
trafficking. A draft amendment presented to the deputies had
proposed removing eight crimes from the list, including drug
trafficking, but deputies rejected the move. The amendments to the
penal code take effect January 1 next year.
COMMENT: A SAFEHAVEN FOR OPEN DISSENT, NO TALK ON CORRUPTION
--------------


12. (SBU) Comment: The National Assembly was in a feisty and
confrontational mood again, a trend that has been in evidence over
the last two to three years. The legislators seem to relish the
opportunity to censure GVN figures openly (even calling the Labor
Minister "heartless" to her face) to widespread TV and newspaper
coverage. The media encourages considerable posturing, and the
legislators' rants against illegal (Chinese) labor and golf courses
seemed aimed for public consumption. Unlike in previous years, the
legislators did not call for SOE reforms or criticize corruption.

MICHALAK