VZCZCXRO5470
PP RUEHCHI RUEHDT RUEHNH
DE RUEHHM #0927/01 2330600
ZNR UUUUU ZZH
P 210600Z AUG 06
FM AMCONSUL HO CHI MINH CITY
TO RUEHC/SECSTATE WASHDC PRIORITY 1316
INFO RUEHHI/AMEMBASSY HANOI PRIORITY 0923
RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHHM/AMCONSUL HO CHI MINH CITY 1384

UNCLAS SECTION 01 OF 02 HO CHI MINH CITY 000927 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ECON EFIN PHUM EAID VM
SUBJECT: AMBASSADOR MEETS NEW HCMC LEADERSHIP: PEACE CORPS AND 
POST-WTO ECONOMIC DEVELOPMENT 
 
REF: HANOI 2051 
 
HO CHI MIN 00000927  001.2 OF 002 
 
 
¶1. (SBU) On August 3, the Ambassador met with Ho Chi Minh City 
(HCMC) Party Secretary and Politburo member Le Thanh Hai and 
HCMC People's Committee Chairman Le Hoang Quan, both promoted to 
their new positions after the April National Party Congress. 
The Ambassador underscored the USG's support for Vietnam's 
earliest possible entry into the WTO.  He lauded the work of the 
National Assembly in pushing legislation and reforms needed for 
Vietnam's WTO transition.  The Ambassador underscored that, by 
creating a robust and transparent economic and legal 
environment, Vietnam will position itself to attract increased 
flows of foreign direct investment (FDI).  As one of Vietnam's 
key economic hubs, HCMC is at the frontline of this effort; for 
example, its success in securing the USD 300 million Intel 
investment paves the way for additional FDI in the high-tech 
sector for the city and the country. 
 
¶2. (SBU) The Ambassador stressed that effective rule of law was 
critical to robust economic growth.  Unfortunately, he has heard 
concerns expressed by U.S. and foreign investors that the 
sanctity of contracts in Vietnam sometimes is not respected. 
This problem needs to be addressed to retain and attract foreign 
investment.  The Ambassador told Hai and Quan that rules should 
be transparent and that all officials -- down to the lowest 
level -- need to be trained on implementing Vietnam's post-WTO 
legal framework so they can respond to new demands.  In both 
meetings, the Ambassador noted the challenges that HCMC faces in 
dealing with a growing population, especially as migrants 
comprise up to 35 percent of the city's population.  He 
commended HCMC for its work in supporting religious freedom and 
added that it is important for Vietnam to continue to advance 
this issue to be taken off the list of Countries of Particular 
Concern. 
 
PEACE CORPS 
----------- 
 
¶3. (SBU) In both meetings, the Ambassador highlighted the 
concurrent visit of a Peace Corps delegation seeking to assess 
the viability of opening a program in Vietnam (reftel).  He 
described the Peace Corps program for the HCMC leaders and 
emphasized the benefits of having at least 15 volunteers in HCMC 
-- three at each participating university.  He stressed that a 
pilot Peace Corps program in Hanoi and HCMC would be an 
important symbol of progress in our bilateral relationship.  The 
Ambassador urged Quan to work with the Ministry of Education and 
Training to learn more about the Peace Corp program and how it 
fits with HCMC's development goals. 
 
¶4. (SBU) Both Hai and Quan welcomed improved bilateral ties and 
the upcoming visit of the President to Vietnam.  Both Hai and 
Quan were noncommittal on the Peace Corps proposal, saying that 
they would follow Hanoi's lead.   On economic development 
matters, Secretary Hai asked the Ambassador if the United States 
could adopt Japan's model and provide official development 
assistance (ODA) to build infrastructure.  Hai argued that 
Vietnam needed ODA "to prepare to receive FDI."  He said that 
although HCMC has called for private investors, the 
infrastructure projects are too big and private investors 
"cannot afford to participate."  He added that "the private 
investment level is hard to grow."  The Ambassador told Hai that 
the United States does not provide Japanese-style ODA.  He 
emphasized that private sector investment for large-scale 
projects was possible if the deal were structured properly. 
 
¶5. (SBU) Quan, who succeeded Hai as People's Committee Chairman, 
said he recognized that HCMC must learn from other countries 
experiences and that, in a globally integrated economy, HCMC's 
biggest challenge was to remain competitive.  His focus was to 
increase local government awareness of the post-WTO legal 
framework, improve training for government officials, improve 
general living standards and maintain social stability.  He did 
not offer any concrete proposals, however.  Quan emphasized that 
that "ensuring social stability" was key to attracting foreign 
investors and to encourage overseas Vietnamese to return. 
Touching on the Intel investment, he said that he would seek to 
continue HCMC's expansion into new economic sectors and 
transform HCMC into the national hub for highly skilled workers. 
 
 
¶6. (SBU) Comment:  There was nothing new in the remarks from the 
HCMC leaders.  Hai's focus on ODA as the resolution to HCMC's 
infrastructure problems instead of looking to the marketplace, 
in fact, was somewhat disappointing.  Some HCMC Party and 
business contacts continue to fret that Hai -- a consummate 
political insider -- and Quan -- a Party man with little big 
government experience -- do not have the skills to manage an 
economy as large and complex as HCMC's.  They rue the Party 
decision to promote former HCMC Vice-Chairman Nguyen Thien Nhan 
to Hanoi as Minister of Education and Training.  Nhan, they say, 
 
HO CHI MIN 00000927  002.2 OF 002 
 
 
was the technocrat that kept the HCMC economy moving forward. 
End Comment. 
WINNICK