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Cablegate: Nghe An: Developing, but a Long Way to Go

This record is a partial extract of the original cable. The full text of the original cable is not available.

160845Z Aug 02

2002HANOI02028 - UNCLASSIFIED

UNCLASSIFIED PTQ9131

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FM AMEMBASSY HANOI
TO SECSTATE WASHDC PRIORITY 7298
INFO AMCONSUL HO CHI MINH CITY
ASEAN COLLECTIVE
USCINCPAC HONOLULU HI//FPA//
SECDEF WASHDC//ISA/ABLAGG//
USDOC WASHDC

UNCLAS SECTION 01 OF 03 HANOI 002028

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USDOC FOR 1431/MAC/AP/HPPHO

E.O. 12958: N/A
TAGS: ETRD ECON PGOV PHUM VM
SUBJECT: NGHE AN: DEVELOPING, BUT A LONG WAY TO GO


UNCLASSIFIED

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REF: 01 HANOI 3262

1. (U) SUMMARY. NGHE AN PROVINCIAL OFFICIALS ARE HOPEFUL
THAT A STRATEGIC LOCATION AND IMPROVING (THOUGH STILL WEAK)
INFRASTRUCTURE WILL IMPROVE DEVELOPMENT AND THE PROVINCE'S
ROLE AS AN OUTLET TO THE SEA FOR LAOS AND NORTHEASTERN
THAILAND. THE GVN IS MOVING AHEAD WITH PLANS FOR A NEW
NATIONAL BORDER CROSSING WITH LAOS, BUT THE ROAD TO THE
BORDER, WHILE IMPROVING, IS POOR. SEPTELS WILL REPORT ON
NARCOTICS AND TERRORISM ISSUES. END SUMMARY.

2. (U) POLOFF AND POL FSN VISITED NGHE AN PROVINCE AUGUST
13-15. VINH, THE PROVINCIAL CAPITAL, HAS ABOUT 200,000
PEOPLE AND IS LOCATED ABOUT 300 KILOMETERS DOWN NATIONAL
HIGHWAY 1 FROM HANOI. IN A GENERAL DESCRIPTION OF THE
PROVINCE, NGUYEN SY CUONG, VICE CHIEF OF STAFF FOR FOREIGN
AFFAIRS, NGHE AN PEOPLE'S COMMITTEE, SAID THAT NGHE AN, WITH
ABOUT 16,500 SQUARE KILOMETERS, IS VIETNAM'S THIRD LARGEST
PROVINCE AND SHARES A LONG BORDER WITH LAOS TO THE WEST.
THERE IS ONE INTERNATIONAL BORDER CROSSING, LOCATED AT NAM
CAN, ABOUT 280 MOSTLY BUMPY KILOMETERS UP HIGHWAY 7 FROM
VINH (REFTEL). A NEW NATIONAL BORDER CROSSING IS UNDER
CONSTRUCTION AT THANH THUY, LOCATED ABOUT 90 KILOMETERS UP
HIGHWAY 46 FROM VINH. (NOTE: THE NEW BORDER CROSSING DOES
NOT YET APPEAR ON EMBASSY HANOI ADMINISTRATIVE MAPS, BUT IS
INCLUDED IN PROVINCIAL MINISTRY OF PLANNING AND INVESTMENT
(MPI) DOCUMENTS. END NOTE.) NGHE AN HAS A PORT AT CUA LO,
ABOUT 15 KILOMETERS NORTHEAST OF VINH. NATIONAL HIGHWAY 1
AND THE MAIN NORTH-SOUTH RAILWAY LINE BOTH TRAVERSE THE
PROVINCE. IN ADDITION, THERE IS ALSO AN AIRPORT AT VINH
WITH REGULAR FLIGHTS TO HANOI AND HO CHI MINH CITY. CUONG
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PAGE 03 HANOI 02028 01 OF 03 160853Z
SAID THAT NGHE AN'S LOCATION, ABOUT HALFWAY BETWEEN HANOI
AND HUE, IS A PLUS, AS WELL AS HAVING THE MAJOR ROAD, RAIL,
AND AIR LINKS, "THESE ALL MAKE NGHE AN AN ATTRACTIVE
PROVINCE FOR FOREIGN INVESTMENT, CUONG CLAIMED."

3. (U) NGHE AN HAS A POPULATION OF APPROXIMATELY THREE
MILLION, MAKING IT THE THIRD MOST POPULOUS PROVINCE IN THE
COUNTRY. HILLS AND MOUNTAINS COVER ABOUT 80 PERCENT OF THE
PROVINCE. ON THE ARABLE AREAS, FARMERS GROW MAINLY RICE,
CORN, SWEET POTATOES, AND PEANUTS. IN HIGHER ELEVATIONS,
COFFEE, TEA, RUBBER TREES, AND PINEAPPLE ARE CULTIVATED.
IMPORTANT INDUSTRIES INCLUDE CEMENT (THREE FACTORIES),
TEXTILES, AND SEA PRODUCTS. THE PER CAPITA INCOME IS ABOUT
USD 300 PER YEAR, ABOUT 25 PERCENT UNDER THE NATIONAL
AVERAGE OF ABOUT USD 400 PER YEAR. CUONG SAID THE GDP
GROWTH RATE IS "STRONG," AT ABOUT NINE PERCENT THE LAST TWO
YEARS, BUT A MAJOR PRIORITY OF PROVINCIAL AUTHORITIES IS TO
"SEE THIS REFLECTED IN THE PER CAPITA INCOME."

---------------------------------------------
NEW BORDER CROSSING - BRING YOUR LAND CRUISER
---------------------------------------------

4. (U) CUONG SAID THAT WORK IS ONGOING FOR A NEW "NATIONAL
BORDER CROSSING" AT THANH THUY, ABOUT 90 KILOMETERS UP
HIGHWAY 46 FROM VINH. HE SAID PROVINCIAL AUTHORITIES HOPE
THE NEW BORDER CROSSING WILL IMPROVE TRADE FROM LAOS AND
NORTHEAST THAILAND, SINCE IT IS MUCH CLOSER TO THE CUA LO
PORT THAN THE INTERNATIONAL BORDER CROSSING AT NAM CAN
(REFTEL). ACCORDING TO CUONG, THE GVN PLANS TO EVENTUALLY
MAKE THIS AN INTERNATIONAL BORDER CROSSING AND ESTABLISH A
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PAGE 04 HANOI 02028 01 OF 03 160853Z
"SPECIAL BORDER ECONOMIC ZONE IN THE AREA," TO INCLUDE
BUSINESSES, A CUSTOMS OFFICE, BANKS, AND OTHER ACTIVITIES.
HE PREDICTED THIS WOULD BE POSSIBLE "WITHIN A COUPLE YEARS."
CUONG SAID THESE DEVELOPMENTS ARE IMPORTANT FOR VIETNAM'S
"REGIONAL INTEGRATION." CURRENTLY, MORE CROSS BORDER
TRAFFIC "IS PROBABLY" COMING THROUGH HA TINH PROVINCE,
LOCATED JUST SOUTH OF NGHE AN, BECAUSE THERE IS ALSO A PORT,
AN ESTABLISHED BORDER CROSSING, AND A "RELATIVELY GOOD
ROAD." (HIGHWAY 8).

5. (U) EMBOFFS' TRIP TO THE PROPOSED BORDER CROSSING
PROVED AN AMBITIOUS TASK. HIGHWAY 46 IS ONLY PAVED ABOUT
HALF THE DISTANCE. THE FIRST 25 KILOMETERS FROM VINH ARE
UNDERGOING IMPROVEMENT AND IT APPEARS THAT SECTION WILL BE
RELATIVELY GOOD WITHIN SIX MONTHS TO A YEAR. AFTER PASSING
THROUGH THE SMALL TOWN OF DUNG, ABOUT 40 KILOMETERS FROM
VINH, THE ROAD IS UNPAVED AND GRADUALLY BECOMES QUITE BUMPY
AND RUTTED. IN ADDITION, THERE ARE NUMEROUS TURNS TO GET TO
THANH THUY, NONE OF WHICH IS SIGNPOSTED. EVEN AN
EXPERIENCED EMBASSY DRIVER HAD TO STOP SEVERAL TIMES TO
CONFIRM DIRECTIONS. THE TRIP ALSO INCLUDED FORDING A STREAM
WHERE THERE WAS NO BRIDGE. A LOCAL PERSON ENCOUNTERED ON
THE BANK SAID THE STREAM EXISTS ONLY DURING THE RAINY SEASON
AND IT IS "NOT USUALLY A PROBLEM TO CROSS, UNLESS THERE HAS
BEEN VERY HEAVY RAIN."

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TO SECSTATE WASHDC PRIORITY 7299
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SECDEF WASHDC//ISA/ABLAGG//
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6. (U) EMBOFFS MANAGED TO GET TO WITHIN EIGHT KILOMETERS
OF THE NEW BORDER CROSSING, WHICH IS ACTUALLY ABOUT 17
KILOMETERS BEYOND THE VILLAGE OF THANH THUY. HOWEVER,
FURTHER PROGRESS WAS IMPOSSIBLE, WITH THE ROAD BLOCKED DUE
TO ONGOING CONSTRUCTION OVER A GULLY. A LOCAL WOMAN
BRINGING VEGETABLES TO CONSTRUCTION WORKERS ON HER
MOTORBIKE, EXPLAINED THAT THE BORDER ROAD HAD BEEN CLOSED
FOR "ABOUT ONE WEEK." SHE SAID SHE HEARD IT WOULD BE OPEN
IN ABOUT ONE MONTH. PRIOR TO THE CONSTRUCTION, LAO AND
VIETNAMESE CROSSED BACK AND FORTH "REGULARLY." WITH A
TRAVEL PERMIT, IT IS ALSO POSSIBLE TO STAY OVERNIGHT. SHE
HAD HEARD AN OCCASIONAL FOREIGNER CROSSED, BUT SUSPECTED
THESE WERE PROBABLY PEOPLE WORKING FOR AID ORGANIZATIONS OR
THE UNITED NATIONS-NOT TOURISTS. THE VENDOR SAID SHE HOPED
THE NEW BORDER CROSSING AND ROAD IMPROVEMENT WOULD INCREASE
CROSS BORDER TRADE, BUT NOTED, "WE ARE POOR ON THIS SIDE AND
THE LAO ARE EVEN POORER ON THE OTHER SIDE."

--------------------------------------------
TRADE DEVELOPMENT: SLOW, BUT WE'RE LEARNING
--------------------------------------------

7. (U) CUONG AND DOAN NAM, VICE DIRECTOR OF THE PROVINCIAL
MPI, SAID SEPARATELY THAT THEY ARE OPTIMISTIC REGARDING
IMPROVED TRADE AND INVESTMENT WITH THE U.S. IN THE WAKE OF
THE U.S.-VIETNAM BILATERAL TRADE AGREEMENT (BTA). NAM SAID
THAT THERE HAS NOT BEEN "A SIGNIFICANT" INCREASE IN INTEREST
FROM US INVESTORS, BUT HE EXPECTS IT WILL COME "IN TIME."
ONE MAJOR BENEFIT HAS BEEN THE OPPORTUNITY FOR VIETNAMESE
OFFICIALS AND BUSINESS PEOPLE TO TRAVEL TO THE U.S. TO LEARN
MORE ABOUT THE MARKETS THERE. IN ADDITION, SEMINARS
UNCLASSIFIED

PAGE 03 HANOI 02028 02 OF 03 160854Z
ORGANIZED BY GVN OFFICIALS HAVE HELPED THE LOCAL BUSINESS
COMMUNITY BETTER UNDERSTAND THE BTA AND WHAT NEEDS TO BE
DONE TO COMPETE IN THE US MARKET. CUONG OF THE PEOPLE'S
COMMITTEE SAID THAT MANY VIETNAMESE BUSINESS PEOPLE DO NOT
YET UNDERSTAND HOW TO DO BUSINESS WITH THE U.S., BUT IN THE
LONG RUN, THE BTA "WILL BENEFIT EVERYBODY." CUONG SAID
BASED ON FACTORS SUCH AS THE NGHE AN'S "CENTRAL LOCATION,"
THE RAILWAY, HIGHWAY 1, THE AIRPORT AT VINH, AND THE PORT,
HE IS OPTIMISTIC.

-----------------------------
LACK OF INFRASTRUCTURE INLAND
-----------------------------

8. (U) THE MPI'S NAM SAID THAT WHILE CONDITIONS ARE
GENERALLY IMPROVING IN NGHE AN, DEVELOPMENT IS STILL
HINDERED BY A LACK OF INFRASTRUCTURE. SPECIFICALLY, HE
NOTED THAT COMMUNICATIONS ARE POOR, WITH "SOME RURAL AREAS"
HAVING NO PHONE SERVICE AND NO INFRASTRUCTURE FOR MOBILE
TELEPHONES. IN ADDITION, THE INLAND ROAD SYSTEM IS "NOT
WELL DEVELOPED." CUONG SAID SEPARATELY, "YOU HAVE SEEN
HIGHWAY 7 (REFTEL), SO YOU KNOW THE PROBLEMS WE FACE AS AN
OUTLET TO THE SEA FOR OUR NEIGHBORS." CUONG ALSO MENTIONED
THE NEED TO UPGRADE INDUSTRIAL TECHNOLOGY. HE CITED ONE
SHOE FACTORY JOINT VENTURE WITH GERMANY THAT WAS FORCED TO
CLOSE LAST YEAR BECAUSE GERMANY "DID NOT SEEM INTERESTED" IN
PROVIDING UP-TO-DATE TECHNOLOGY. AS A RESULT, CUONG SAID
THE FACTORY COULD NOT MEET QUALITY STANDARDS FOR EXPORT.

-----------------
PORT PLAYS A ROLE
UNCLASSIFIED

PAGE 04 HANOI 02028 02 OF 03 160854Z
-----------------

9. (U) LE DINH NHAM, VICE GENERAL MANAGER OF THE NGHE TINH
PORT, LOCATED AT CUA LO (ABOUT 15 KILOMETERS NORTHEAST OF
VINH) SAID THAT HIS ROLE IS TO "HELP THE PROVINCE DEVELOP."
THE PORT, WHILE NOT NEARLY AS LARGE AS DANANG'S, CAN HANDLE
SHIPS UP TO 10,000 TONS AND CURRENTLY HAS 550 METERS OF
BERTHS. MOST SHIPS COMING INTO PORT ARE FROM INDIA,
MALAYSIA, ROK, PHILIPPINES, JAPAN, AND "STILL A FEW" FROM
RUSSIA. THE PORT HANDLES BOTH DOMESTIC AND INTERNATIONAL
CARGO AND IS FULLY STAFFED WITH CUSTOMS, HEALTH, AND POLICE
OFFICES. APPROXIMATELY 800,000 TONS OF CARGO PASSED THROUGH
THE PORT IN 2001. NHAM ESTIMATED ABOUT 15 PERCENT CAME FROM
LAOS, MOSTLY PROCESSED FORESTRY PRODUCTS GOING OUT AND
MANUFACTURED GOODS GOING IN. HE PREDICTED THAT THE AMOUNT
TO/FROM LAOS "MAY DECLINE" BECAUSE HE HEARD THE GVN HAS AN
AGREEMENT WITH THE LAO GOVERNMENT TO ENCOURAGE USING VUNG
ANG PORT IN HA TINH PROVINCE, IMMEDIATELY TO THE SOUTH, AND
PLANS TO BUILD A NEW ROAD PARALLEL TO HIGHWAY 8. (NOTE:
ACCORDING TO THE MINISTRY OF FOREIGN AFFAIRS, VIETNAM AND
LAOS OFFICIALS REACHED A "VERBAL AGREEMENT" ON USING VUNG
ANG PORT AT THE 24TH SESSION OF THE VIETNAM-LAOS
INTERGOVERNMENTAL COMMITTEE ON ECONOMIC, CULTURAL,
SCIENTIFIC, AND TECHNICAL COOPERATION, HELD IN JANUARY 2001.
END NOTE.) ON THE OTHER HAND, BUSINESS AT NGHE TIN MAY
PICK UP, ESPECIALLY WITH THE NEW BORDER CROSSING AND

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INFO LOG-00 NP-00 AID-00 ACQ-00 CEA-01 CIAE-00 CTME-00
ITCE-00 DOTE-00 SRPP-00 DS-00 EB-00 EXME-00 E-00
FAAE-00 FBIE-00 UTED-00 VC-00 FRB-00 H-01 TEDE-00
INR-00 IO-00 ITC-01 L-00 VCE-00 AC-01 DCP-01
NSAE-00 NSCE-00 OES-01 OIC-02 OMB-01 OPIC-01 PA-00
PER-00 PM-00 PRS-00 ACE-00 P-00 SP-00 SSO-00
STR-00 TEST-00 TRSE-00 USIE-00 EPAE-00 PMB-00 DSCC-00
PRM-00 DRL-02 G-00 NFAT-00 SAS-00 /012W
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P 160845Z AUG 02
FM AMEMBASSY HANOI
TO SECSTATE WASHDC PRIORITY 7300
INFO AMCONSUL HO CHI MINH CITY
ASEAN COLLECTIVE
USCINCPAC HONOLULU HI//FPA//
SECDEF WASHDC//ISA/ABLAGG//
USDOC WASHDC

UNCLAS SECTION 03 OF 03 HANOI 002028

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PAGE 02 HANOI 02028 03 OF 03 160854Z
IMPROVEMENTS TO HIGHWAY 46.

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

10. (U) IT WAS NOT SURPRISING TO HEAR OPTIMISM FROM THE
PEOPLE'S COMMITTEE AND THE MPI, BUT PROVINCIAL OFFICIALS
APPEARED RELATIVELY REALISTIC IN THEIR ASSESSMENTS. WHILE
THE TRANSPORTATION FACILITIES IN AND OUT OF THE PROVINCIAL
CAPITAL ARE A PLUS, THINGS GO DOWNHILL FAST AS ONE MOVES
INLAND TOWARDS THE LAO BORDER. BASED ON TWO EMBASSY TRIPS
TO NGHE AN OVER THE PAST 9 MONTHS, IT SEEMS CLEAR THAT
GENERAL DEVELOPMENT, AS WELL AS PROGRESS IN BECOMING MORE
PROMINENT AS AN OUTLET TO SEA FOR ITS NEIGHBORS, IS STILL A
WORK IN PROGRESS. PORTER

UNCLASSIFIED

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