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Cablegate: Hcmc Welcomes Secretary Gutierrez with Open Arms

VZCZCXRO1258
PP RUEHDT RUEHPB
DE RUEHHM #1131/01 3121035
ZNR UUUUU ZZH
P R 081035Z NOV 07
FM AMCONSUL HO CHI MINH CITY
TO RUEHC/SECSTATE WASHDC PRIORITY 3316
INFO RUCPDOC/USDOC WASHDC 0046
RUEHHI/AMEMBASSY HANOI 2284
RUCNARF/ASEAN REGIONAL FORUM COLLECTIVE
RUEHHM/AMCONSUL HO CHI MINH CITY 3531

UNCLAS SECTION 01 OF 02 HO CHI MINH CITY 001131

SIPDIS

SENSITIVE
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STATE FOR EAP/MLS
STATE PASS TO USTR DBISBEE
COMMERCE FOR 4431/MAC/AP/OPB/HPPO
EEB/TPP/BTA/ANA

E.O. 12958: N/A
TAGS: ECON EIND ETRD BEXP KTEX OTRA OVIP VM
SUBJECT: HCMC WELCOMES SECRETARY GUTIERREZ WITH OPEN ARMS


HO CHI MIN 00001131 001.2 OF 002


1. (SBU) Secretary of Commerce Gutierrez led the Department of
Commerce Vietnam Business Development Mission to Ho Chi Minh
City (HCMC) on November 6 and 7, opening the doors of literally
hundreds of Vietnamese policy makers, business community leaders
and potential customers to the twenty-two U.S. companies on the
mission. In addition to meetings with Minister of Industry and
Trade Vu Huy Hoang and Ho Chi Minh City People's Committee
Chairman Le Hoang Quan (SEPTEL), the Secretary addressed a
capacity crowd at the HCMC University of Science and Technology,
heard from leading HCMC entrepreneurs that Vietnam's regulatory
environment is improving and visited a water treatment facility
highlighting $25 million dollars in U.S. content. Companies
reported they made important new contacts and had various
long-standing issues clarified by government officials, but
urged the U.S. government to redouble business advocacy efforts;
a number of them stressed obtaining distribution rights as a top
priority. End Summary.

Opening Doors for the Delegation
--------------------------------
2. (SBU) The November 6-7 trade mission saw HCMC throw open
its doors, beginning with a meeting between the delegation's
twenty-two U.S. companies and Minister of Industry and Trade Vu
Huy Hoang. Companies laid out ambitions for new investment in
Vietnam and expanding existing investments (especially in
infrastructure, power generation and mineral extraction) and
increasing U.S. exports to Vietnam (including vehicles, medical
equipment and specialty chemicals) and well as increasing
tourism in both directions. Minister Hoang welcomed U.S.
interest in all sectors of the Vietnamese economy and wished the
delegation fruitful discussions with their Vietnamese
counterparts. In an additional bilateral meeting with the
Minister, the Secretary raised a number of U.S. concerns,
including intellectual property rights and distribution rights
(SEPTEL).

3. (SBU) To see one example of the key role U.S. investment
can play in HCMC's economy and development, the Secretary
visited the Thu Duc Water Treatment plant. When it becomes
operational in a few months, the plant will provide one-third of
HCMC's drinking water. The project boasts $25 million in U.S.
materials and equipment and employed U.S. services firms and
intellectual property. The Secretary called the plant "an
example of critical infrastructure projects and partnerships
with Americans that will spur growth in the region." From the
roof of the plant, hosts pointed out an aging water treatment
facility built by the United States in the 1960s that currently
supplies the majority of HCMC's drinking water.

Broad Public Interest
---------------------
4. (SBU) An estimated nine hundred students crammed the HCMC
University of Science and Technology auditorium to hear the
Secretary's message that Vietnam is doing well in the global

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competition to create an environment that welcomes investment.
Education creates the entrepreneurs for tomorrow's economy in
Vietnam and countries like Burma that stifle innovation clearly
suffer economic consequences. Vietnam is growing because it has
unleashed the entrepreneurial spirit of the Vietnamese people,
the Secretary said, adding that the United States has an
obligation as a good friend to encourage Vietnam to improve its
record on human rights. Students asked about the future of the
trading relationship, global opportunities for Vietnamese
engineers, and how the United States can help Vietnam improve
its educational system. The Secretary pointed to Ambassador
Michalak's commitment to increase U.S. efforts, particularly by
increasing the number of Vietnamese that study in the United
States and Americans that study in Vietnam.

5. (SBU) HCMC entrepreneurs shared stories of their successes
with the business delegation over lunch. Economic reform has
unleashed the potential of the Vietnamese people, the Secretary
agreed. Business leaders predicted (and welcomed) that in a few
years time the United States will become the biggest foreign
investor, direct and indirect, in Vietnam. Some credited
Vietnam's slow pace of privatization with preventing the
creation of a class of Vietnamese oligarchs. In 2000 just one
million Vietnamese had access to the Internet, a computer gaming
entrepreneur noted, but now 20 million have access and 40
million will have access to the Internet in just a few years --
this rapidly changing environment creates the ideal environment
for entrepreneurs. The Secretary applauded their success.

Members Report Distribution Rights Took Center Stage
--------------------------------------------- -------

HO CHI MIN 00001131 002.2 OF 002


6. (SBU) After nearly two hundred individual meetings, the
twenty-two companies uniformly credited the mission with opening
doors and kicking off further discussions, "we did in three days
what normally takes us months" one medical equipment
manufacturer noted. Companies said they met with
decision-makers and found potential partners, distributors and
customers that will lead to increased trade and investment. One
tourism company asked the U.S. Mission consider the "China
approach" that the representative described as a pilot program
at U.S. Embassy Beijing in which reputable local (possibly
state-owned) companies are able to provide additional
information to inform the non-immigrant visa adjudication
process. Several companies in the process of seeking investment
licenses (power generation) said that the visit prompted
Vietnamese decision-makers to make incremental steps forward in
the complex licensing process, and thanked the Secretary for his
advocacy on their behalf. Vietnamese companies and officials
are tremendously interested in U.S. technology, companies noted,
but added that successfully commercializing this interest will
be a challenge.

7. (SBU) A number of companies advised the Secretary that
their business is being impeded or even harmed by their
inability to sell directly to end-users and distribute their
products directly. [Note: According to Vietnam's services
commitments, foreign enterprises do not get distribution rights
until 2009. End note.] One vehicle manufacturer assessed that
obtaining distribution rights immediately for U.S. companies
would significantly impact on our $8 billion trade deficit with
Vietnam. The regulations are clear, the manufacturer added, but
not favorable to U.S. business and are ripe for USG advocacy.
The Secretary noted that he raised distribution rights in
virtually every meeting and agreed this is the top issue for
follow-up.

Comment:
-----------
8. (SBU) Secretary Gutierrez was warmly welcomed by HCMC's
business and government leaders. Media coverage of the
Secretary's visit to HCMC was extensive and very positive. In

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addition to in-depth reports in daily newspapers, weekly
magazines, on national television (VTV, HTV), and on news web
sites, the visit was covered by television stations from nearby
Binh Duong and Dong Nai provinces. Reports focused on the
university speech, issues raised at the press conference, U.S.
support for Vietnamese exports, and on the bilateral meetings
held with MOIT and the Chairman of the HCMC People's Committee.
Companies have clearly identified distribution rights as an
important issue needing further USG attention. The Secretary's
visit also opened eyes in the U.S. business community to
Vietnam's potential. One member summed his company's situation,
saying "we've been consumed by China and India" and now need to
work hard to get into Vietnam. End comment.

9. (U) This cable was cleared by the delegation and coordinated
with Embassy Hanoi.
FAIRFAX

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