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Cablegate: Tourism Success in Central Vietnam Town of Hoi An

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

UNCLAS SECTION 01 OF 02 HO CHI MINH CITY 001092

SIPDIS

SENSITIVE

STATE PASS USTR ELENA BRYAN
USDOC FOR 4431/MAC/AP/OPB/VLC/HPPHO

E.O. 12958: N/A
TAGS: ECON EINV PGOV VM LABOR
SUBJECT: TOURISM SUCCESS IN CENTRAL VIETNAM TOWN OF HOI AN

REF: HCMC 667

1. (SBU) SUMMARY: The historic coastal town Hoi An in central
Quang Nam province is a model of private sector development. A
thriving trading center 300 years ago, Hoi An in recent years has
drawn on its tradition of entrepreneurship and has leveraged the
progressive attitudes of provincial leaders to turn itself into
one of Vietnam's top tourist destinations. Hoi An - and Quang Nam
- authorities understand that a successful tourism industry is
based on private sector leadership rather than state dominance.
END SUMMARY.

2. (U) In an October 6 meeting with the Consul General and members
of the ConGen HCMC team, Hoi An People's Committee Chairman Mr. Le
Van Giang and Director of Trade and Tourism Ms. Dinh Thi Thu Thuy
said a flourishing private sector was the key to Hoi An's success
in transforming itself into one of Vietnam's most popular tourism
destinations. In 2004, Hoi An hosted 500,000 visitors, a third of
them foreign tourist, and that number is expected to climb to
600,000 in 2005. (NOTE: According to the Vietnam National
Administration of Tourism, 1.6 million international tourists came
to Vietnam in 2004. END NOTE.) On average, tourists stay two-and-
half days in Hoi An and spend about USD 50 per day. Hoi An's per
capita income is USD 700.

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3. (U) Giang said that prior to the early 1990s, Hoi An was a
sleepy backwater that little resembled the bustling international
port it had been in the 16th through 18th centuries, when Hoi An
was a trade center for merchants from China, Japan, and Europe. A
spirit of entrepreneurship dating from this period allowed it to
capitalize on Vietnam's doi moi reforms to open small shops,
restaurants and hotels, relying heavily on the backpacker trade.
The town and the province lobbied for and achieved Hoi An's
designation as a World Heritage Site by UNESCO in 1999, spurring
the opening of foreign invested hotels and resorts.

4. (SBU) A progressive and flexible attitude on the part of Quang
Nam provincial leadership also encouraged Hoi An's development,
Giang said. Provincial authorities allow municipalities to
implement policy in a way that best suits municipal needs, and the
authorities are willing to let the private sector take the lead in
economic growth. "The people are pioneers," Giang said. "The
government needs to realize this and issue policy that gives
people the freedom to develop as they see fit."

5. (U) Since the early `90s, Hoi An's tourism has thrived, almost
entirely as a result of private, indigenous initiative. Foreign
investment followed the domestic private sector. Hoi An is now
home to 70 hotels with 2,650 rooms, which surpasses the number of
hotel rooms in Hanoi, Giang noted. Thirty percent of the hotels
are four-star, and only two hotels are government-owned. Hoi An's
first foreign-invested hotel, the Victoria Hoi An, opened in 1998.
Hoi An's hotel industry employs 2,500 people.

6. (U) Just as private enterprise has formed the basis of Hoi An's
hotel business, so too has it led the development of other tourism
services, including historic sites, restaurants and shops. The
Hoi An officials noted that Hoi An is home to more than 1,300
historic sites, many of them 300-year-old homes that individual
homeowners have opened to tourists for profit. Giang and Thuy
reported that 60 percent of Hoi An's population of 80,000 works in
the tourism industry, directly and indirectly. Hoi An also
supports 2,000 visiting workers per day; these are workers who do
not live in Hoi An, but who have jobs in the town's tourism
sector.

7. (U) The two main challenges facing Hoi An's tourism industry
are environmental concerns and human resources needs, especially
job training. Hoi An's leaders are trying to balance the rapid
development of the tourism sector with the need to conserve the
environment that is the source of the sector's success. For
example, in 2005, the town will be looking for investment in a USD
10 million wastewater treatment plant; in addition to addressing
Hoi An's wastewater needs, the project will also help clean the
polluted canal that flows beneath Hoi An's star tourist
attraction, the Japanese Bridge.

8. (U) Hoi An Chairman Giang admitted that another challenge to
Hoi An's growth is providing trained labor to the tourism
industry. Currently, only Hoi An's large hotels provide formal
training to its employees. The vast majority of town's tourism
workers receive only on-the-job training. Hoi An's leadership
does not have specific plans to address this challenge, though it
recognizes the dilemma inherent in transforming rural laborers
into employees capable of functioning in a demanding service
sector.

9. (SBU) COMMENT: Hoi An authorities have wisely allowed the
market to determine the path of the town's development. Chairman
Giang said that Hoi An has been so progressive in its policies
that on occasion the town's leaders have been "reined in" by the
GVN. Hoi An's success in the tourism sector is a marked contrast
to the only modest success of the nearby imperial capital, Hue,
where tourism continues to be both tightly controlled by the
government and dominated by SOEs. (reftel)

10. (SBU) COMMENT, CONTINUED: Hoi An's success is due not only to
local initiative, but also to support from Quang Nam's progressive
leaders, including Provincial People's Committee Chairman Nguyen
Xuan Phuc. (Analysis of Quang Nam's leadership is provided
septel.) Phuc is a graduate of the HCMC-based Fulbright Economics
Teaching Program and advocates a leading role for the private
sector in Quang Nam's economy, including in the tourism industry.
He is rumored to be a potential candidate for Minister of Tourism,
should the GVN create such a ministry.

WINNICK

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