VZCZCXRO2587
OO RUEHHM
DE RUEHHI #0945/01 1421035
ZNR UUUUU ZZH
O 221035Z MAY 07
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5427
INFO RUEHHM/AMCONSUL HO CHI MINH 3073
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS SECTION 01 OF 02 HANOI 000945 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/MLS AND EB/TPP/IPE JBOGER 
STATE ALSO PASS USTR DBISBEE AND RBAE 
STATE ALSO PASS USPTO FOR JURBAN 
STATE ALSO PASS LIBRARY OF CONGRESS FOR TEPP 
USDOC FOR 4430/MAC/AP/OPB/VLC/HPPHO 
 
E.O. 12958: N/A 
TAGS: KIPR ECON ETRD ECPS VM
SUBJECT: MICROSOFT SIGNS LANDMARK SOFTWARE LICENSE AGREEMENT WITH 
VIETNAM 
 
 
(U) SENSITIVE BUT UNCLASSIFIED, DO NOT POST ON THE INTERNET 
 
¶1. (SBU) Summary:  On May 21, Microsoft CEO Steve Ballmer and 
Vietnamese Prime Minister Nguyen Tan Dzung witnessed the signing of 
a multi-faceted agreement committing all GVN agencies to use 
licensed software.  For its part, Microsoft will increase its 
investment to develop Vietnam's information and communication 
technology (ICT) sector through training and capacity building 
programs.  Embassy intervened with GVN officials to make sure the 
signing took place after Microsoft met with the Ambassador and 
expressed last-minute concerns that the GVN would hold the agreement 
as a deliverable for the potential visit of President Triet later 
this summer.  The agreement is a significant demonstration of 
Vietnam's commitment to protect intellectual property rights (IPR) 
and stop rampant piracy.  Implementation of this agreement will move 
Vietnam from having the world's fifth highest, and Asia's highest, 
software piracy rate to a better ranking in the region and the 
world.  This may well constitute the most significant agreement 
Vietnam has ever signed with a U.S. business.   End Summary. 
 
¶2. (SBU) During his May 21 visit to Hanoi, Microsoft CEO Steve 
Ballmer joined Vietnamese Prime Minister Nguyen Tan Dzung, the 
Ambassador and other GVN officials to witness the signing of a 
multi-faceted agreement between the company and the GVN requiring 
all government agencies to purchase and use licensed software.  This 
follows through on the Memorandum of Understanding (MOU), signed in 
Washington during Deputy Prime Minister/Foreign Minister Pham Gia 
Khiem's March visit, which committed both sides to sign a 
comprehensive agreement on software licensing and collaborative ICT 
development efforts by the end of May.  Microsoft's President for 
Southeast Asia Chris Atkinson estimated that Vietnam would purchase 
licensed software for approximately 300,000 desktops through this 
deal.  In exchange, the agreement provides a foundation for 
Microsoft to assist Vietnam in developing its ICT sector through 
training, human resource development and other capacity building 
programs.  (Note: Though the figures are not public, Atkinson said 
the 300,000 licenses will cost the GVN approximately USD 20 million, 
while Microsoft's investment to develop the local ICT industry would 
be around USD 3 million.  End Note.) 
 
Last-Minute Concerns by Microsoft 
--------------------------------- 
 
¶3. (SBU) On May 18, Microsoft's Atkinson requested a last-minute 
meeting with the Ambassador to request his assistance in urging the 
GVN to follow through on its commitment in the March MOU to sign the 
formal agreement by the end of May.  Microsoft was concerned that 
the GVN would try to delay signing some or all of the substance of 
the agreement to preserve it as a deliverable for the potential 
visit this summer by Vietnam's President Nguyen Minh Triet. 
 
¶4. (SBU) Following the meeting, the Embassy contacted officials in 
the Ministry of Foreign Affairs and the Office of the Government to 
underline United States Government support for signing the agreement 
now, so that our Presidents would be able to echo the signing's 
important message and broad positive reaction during President 
Triet's potential visit.  For its part, Microsoft told the GVN it 
would "mobilize all available resources" to spotlight Vietnam's 
efforts to uphold its commitments to protect intellectual property 
rights (IPR), as well as the opportunities for increased cooperation 
between U.S. firms and Vietnam's ICT industry during the possible 
Triet visit.  Late on May 18, the GVN confirmed to Microsoft that it 
would proceed with the signing now, with the hope that the two sides 
could hold a second, "ceremonial" signing in Washington in 
conjunction with the planned Triet visit. 
 
PM Dzung and Microsoft's Ballmer Applaud This Step 
--------------------------------------------- ----- 
 
¶5. (SBU) At the 30 minute signing ceremony, Prime Minister Dzung 
stated that this agreement is evidence of Vietnam's commitment to 
Microsoft, to the World Trade Organization and to the U.S.-Vietnam 
Bilateral Trade Agreement (BTA).  The Prime Minister said he highly 
appreciates the cooperation with the United States in the ICT field 
- both through USG assistance and cooperation and investment from 
large U.S. enterprises - referencing specifically the anticipated 
March 2008 launch of the Vinasat satellite built by Lockheed Martin. 
 He continued by saying that Vietnam will consistently follow market 
practices, and will implement fully its international commitments, 
including those on IPR protection.  He told Microsoft's Ballmer that 
he would personally ensure Vietnam fulfills its obligations under 
this agreement.  IPR protection is important to develop Vietnam's 
"modest" USD 300 million software development industry and the ICT 
sector as a whole, which will be critical in extending Vietnam's 
 
HANOI 00000945  002 OF 002 
 
 
wave of development, the Prime Minister said. 
 
¶6. (SBU) PM Dzung talked about Vietnam's so-called Six Pillars of 
Comprehensive Development (outlined in the World Bank/Asian 
Development Bank/UNDP 2001 Vietnam Development Report) required to 
ensure Vietnam's "sustainable development with social equity."  He 
noted that Vietnam will need to emphasize particularly the fifth 
pillar, which he defined as education, training, science and 
technology.  This agreement provides a foundation for cooperation in 
this pillar, Dzung said, expressing his hope that Microsoft would 
continue to support Vietnam through participation in efforts such as 
the Topic 64 Program and its ongoing work with Vietnam's leading IT 
firm, FPT Corporation. 
 
¶7. (SBU) Ballmer responded by stating that this agreement 
demonstrates Vietnam's seriousness in protecting IPR and in creating 
an environment and a platform for Vietnam's ICT industry to grow. 
Echoing the Prime Minister's personal commitment, Ballmer agreed 
likewise personally to ensure that Microsoft upholds its promises to 
assist Vietnam's ICT sector. 
 
Improving its BSA Software Piracy Ranking 
----------------------------------------- 
 
¶8. (SBU) The 2007 Business Software Alliance (BSA) and IDC Global 
Software Piracy Study ranks Vietnam as having the world's fifth 
highest software piracy rate. At 88 percent, this is the highest 
rate in Asia.  Significantly, Microsoft estimates that this 
agreement alone will improve Vietnam's piracy rate by at least 10 
percentage points, which would put it ahead of many other countries 
in the region, including China, Indonesia and Thailand.  Microsoft's 
Atkinson told the Ambassador that this would be "one of the single 
biggest percentage drops in the history of tracking software piracy 
rates." 
 
Comment 
------- 
 
¶9. (SBU) Of all the signings with U.S. businesses in recent years, 
this agreement is likely the most significant for Vietnam in the 
long term.  Carrying through on its commitments will enable Vietnam 
to take a giant step forward in its international respectability 
with regard to protecting intellectual property rights.  It sends a 
strong signal about Vietnam's commitment to IPR protection as it 
contemplates requesting consideration as a beneficiary under the 
Generalized System of Preferences (GSP) Program and works to improve 
its status under the Special 301 review process.  The agreement will 
also lead to a new level of development in Vietnam's ICT industry, 
setting the stage for it to become a potentially significant player 
in this rapidly expanding sector. 
 
MARINE