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Cablegate: Vietnam: Us-Asean Business Council Meetings In

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

UNCLAS HANOI 002003

SIPDIS

STATE FOR EAP/BCLTV
STATE ALSO PASS USTR FOR EBRYAN
USDOC FOR 6500 AND 4431/MAC/AP/OPB/VLC/HPPHO

E.O. 12958: N/A
TAGS: EFIN ETRD EINV VN IPROP ASEAN
SUBJECT: VIETNAM: US-ASEAN BUSINESS COUNCIL MEETINGS IN
HANOI

1. During a visit to Hanoi July 12-13, 26 member firms of
the US-ASEAN Business Council, accompanied by Ambassador and
embassy officers, met with key GVN leaders including Prime
Minister Phan Van Khai, Deputy Prime Minister Vu Khoan,
Foreign Minister Nguyen Dy Nien, Finance Minister Nguyen
Sinh Hung, Trade Minister Truong Dinh Tuyen, Minister of
Planning and Investment Vo Hong Phuc, and Politburo Member
Phan Dien. At these meetings, the firms described their
concerns about doing business in Vietnam. Outlined below
are the key issues raised.

-- Insurance licenses: Noting that this was its highest
priority, the Council called on the GVN to issue long-
pending licenses to three US firms, ACE and New York Life
for life insurance, and American International Group (AIG)
for non-life.

-- Transparency: The Council called for Vietnam to continue
to enhance transparency and rule of law throughout the
government. Government procurement should also be fair and
transparent.

-- IPR and innovation: The council pointed to the need for
improved IPR protection in order to foster innovation. In
particular, there was concern that satellite television
broadcasts should only provide licensed content for which
appropriate royalties have been paid.

-- Customs: the council noted that Vietnamese Customs
currently inspects every package that enters or leaves the
country, even those shipped by express delivery services.
This practice can double the time required to deliver goods
to and from Vietnam. If such inspections continue, Vietnam
may preclude being selected to participate in the global
supply chain.

-- Auto Taxes: The Council noted that with the sharp
increase in the special consumption tax (SCT) on
automobiles, auto sales were down and the operations of
firms assembling cars here were facing serious problems.
The Ford Motor Company representative noted that full
implementation of multi-year increases in the SCT "will
absolutely destroy our business." Ford executives also
noted that Vietnam is the only market in the world where the
firm's sales are "deteriorating."

-- Shipping: Noting that there were reports that the Port
of Saigon would be relocating in the future, the council
called for transparent information be provided to all
companies engaged in shipping activities, not simply to
state-owned firms, so that they could make informed
decisions about increasing their investments.

2. COMMENT: This US-ASEAN Business Council delegation ranks
as one of the largest, most senior business groups to travel
to Vietnam in recent years. The tone of the visit was
positive, with delegation members expressing optimism
regarding commercial opportunities in Vietnam. In turn, GVN
officials seemingly grasped the group's message regarding
the constructive role member firms could play in supporting
Vietnam on WTO accession and other matters of concern to
Vietnam. Still, it remains unclear whether the GVN can
muster the political will to deliver on key industry
concerns. On the priority Business Council issues of
operating licenses for three U.S. insurance firms and relief
from excessive auto tariffs and taxes, GVN reactions were
defensive and non-committal, offering little hint of
progress from the GVN positions presented on these topics
during the Council's last visit in February of this year.
End Comment.
BURGHARDT

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