VZCZCXRO9648
RR RUEHCHI RUEHFK RUEHHM RUEHKSO RUEHNAG RUEHPB
DE RUEHHI #0370/01 0590427
ZNR UUUUU ZZH
R 280427Z FEB 07
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC 4740
INFO RUEHHM/AMCONSUL HO CHI MINH 2640
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION

UNCLAS SECTION 01 OF 02 HANOI 000370 
 
SIPDIS 
 
SENSITIVE BUT UNCLASSIFIED 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EIND ECON EINV ETRD VM
SUBJECT: VIETNAM TOURISM BOOMS, BUT "HIDDEN CHARM" UNDER THREAT 
 
 
HANOI 00000370  001.2 OF 002 
 
 
SENSITIVE - DO NOT POST ON INTERNET 
 
¶1. (SBU) Summary: Vietnam's tourism industry is set to boom in the 
coming years, with Government of Vietnam (GVN) officials expecting 
the number of foreign tourists to rise roughly 15 percent annually 
from 3.6 million in 2006 to 6 million by 2010.  Despite the positive 
trend, tourist industry executives say they are frustrated with the 
GVN lack of cooperation, initiative and transparency on the issue. 
They add the GVN is failing to market the country's potential 
adequately while over-development in some areas could create 
long-term damage.  End Summary. 
 
Hidden Charm 
------------ 
 
¶2. (U) The Government of Vietnam's official tourism slogan is 
"Vietnam: The Hidden Charm" -- a motto evoking the gentle streams, 
peaceful rice paddies and smiling villagers so common in postcards 
sold in Vietnam's tourist shops.  With annual economic growth above 
eight percent, and with Vietnam gaining greater publicity as a 
result of Vietnam's WTO membership and last year's hosting of the 
Asia Pacific Economic Cooperation forum, the country's tourism 
industry is set to boom.  Deputy Director of the Vietnam National 
Administration of Tourism (VNAT) Huoang Tuan Anh told Econoff the 
number of foreign tourists to Vietnam is expected to increase at an 
annual rate of about 15 percent over the next few years, from 3.6 
million in 2006 to over 6 million by 2010.  Revenues, which rose 20 
percent in 2006 to USD 2.3 billion, are expected to rise similarly 
over the next five years, he added.  The GVN sees the industry's 
rise as a boon for economic development.  Tourism is currently the 
largest foreign currency earner for countries worldwide, according 
to the Pacific Asia Travel Association, and Vietnam, with its many 
beaches, famous cuisine, tropical climate and friendly, colorful 
citizens has much to offer.  Tourism also helps small and medium 
sized enterprises, assisting the government with its goal of 
equitable growth, Anh said.  "The government considers tourism a 
major sector of economic development.  We want to make Vietnam a 
major destination in Southeast Asia," Anh said. 
 
¶3. (U) Recent press reports have described a raft of new tourism 
projects: 
--The Kanagawa-Vietnam Economic Exchange Association and Japan's 
Riviera Group have submitted a proposal for a USD 500 million trade 
center in Hanoi which would include a five-star hotel, an office 
tower and sports complex.  The hotel is one of seven five-star 
properties to be approved by the Hanoi People's Committee this year. 
 
--Saigon Tourist reportedly plans to build a USD 200 million World 
Trade Center in Ho Chi Minh City, including a 400-room, five-star 
hotel to lure increasing numbers of so-called MICE (Meetings, 
Incentives, Conventions and Exhibitions) visitors to the city. 
--The luxury hotel and resort firm Raffles plans to build a USD 65 
million resort complex near Danang at the idyllic China Beach in 
central Vietnam where U.S. troops were once based. 
--The GVN plans to spend USD 46.8 million on tourism infrastructure 
in 2007, up from USD 38.8 million in 2006.  Government projects 
include the building of three secondary vocational schools of 
tourism in Can Tho, Dalat, and Nha Trang.  Ten more such schools 
will be built in the next four years.   A new College of Tourism 
will be also established in 2007 in Danang. 
 
Private Sector Frustrated, However 
---------------------------------- 
 
¶4. (SBU) Despite the expected growth, industry executives have 
expressed increasing frustration over the GVN's tourism efforts.  In 
interviews with Econoff, they have said that a lack of coordination 
with industry, poor planning and corruption threaten to spoil 
Vietnam's most picturesque locations due to over development and 
environmental damage just as the industry is set to take off.  Joe 
Mannix, Vietnam General Manager of United Airlines and the head of 
the Tourism Working Group (TWG) for the Vietnam Business Forum, said 
the National Tourism Administration (NTA) refused to consult with 
industry before the NTA submitted a five-year tourism master plan to 
the Prime Minister.  "I would hope that this is changing, but we 
have struggled to get the government to the table," he said.  "The 
words are there but not the action."  The result, he said, was that 
plans were developed in a vacuum.  In his opinion, Vietnam needs to 
focus more on visitors from wealthier countries and develop better 
services for wealthier tourists.  He asserted that the GVN also 
needs to demonstrate a greater commitment to marketing, perhaps with 
a campaign similar to the "Malaysia Truly Asia" campaign which 
helped that country boost its number of foreign visitors to 11 
million foreign visitors in 2005.  Thailand receives nearly 14 
million on average.  "The government has not reached out well enough 
to understand what a comprehensive tourism operational plan is," he 
said. 
 
¶5. (SBU) Other industry executives criticized the quality of sites 
 
HANOI 00000370  002.2 OF 002 
 
 
and services, as well as Vietnam's failure to address well known 
environmental degradation of certain sites such as Halong Bay, a 
UNESCO World Heritage Site.  "Halong Bay has become clogged with 
tour boats and strewn with garbage," said Michael Johnston, General 
Manager of Handspan Adventure Travel in Hanoi.  "But the big problem 
is that there are too many officials on the take."  He said 
government corruption and poor planning are leading to a range of 
problems including overbuilding, unsafe construction and 
environmental degradation at sensitive resort areas.  Other industry 
executives blasted the lack of investment in museums in Vietnam's 
main cities.  "What is there to see in Hanoi?" asked Vu Viet Hung, 
Senior Business Development Manager of the Sheraton Hanoi.  "The 
tourism sites are the same ones that existed 20 years ago.  Nothing 
has changed." 
 
Tourism Board Responds 
---------------------- 
 
¶6. (SBU) The Tourism Board's Anh responded to criticism by noting 
that much work is underway and stressing that resources are limited. 
 Vietnam does not have a budget to carry out an international 
advertising campaign akin to Malaysia's, he said, defending the 
government's refusal to share the tourism master plan with the 
tourism industry.  "I don't think they are interested," he said, 
adding that government ministries need to coordinate further before 
the plan is released.  Regarding its marketing plans, the GVN is 
focused on the issue and is working with a number of international 
consultants, he asserted.  Such consultants included an "expert" 
from Cuba, Anh said.  At the end of the meeting, Anh handed Econoff 
a set of tourism materials. Included were several brochures and a 
calendar, from 2005. 
 
¶7. (SBU) Comment: The Vietnam tourism industry, though developing 
rapidly, is plagued by the same problems affecting Vietnam's 
development overall: a sluggish, non-transparent bureaucracy, 
corruption, a poor infrastructure, weak human resources and limited 
financing, to name a few.  While the industry will no doubt grow -- 
and do so quickly -- it is becoming increasingly possible that 
Vietnam's "hidden charm" will disappear if the GVN does not improve 
its game plan for the industry's development over the next few 
years.  End Comment. 
 
MARINE