VZCZCXRO6350
RR RUEHHM
DE RUEHHI #1749/01 2771619
ZNR UUUUU ZZH
R 041619Z OCT 07
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC 6463
INFO RUEHHM/AMCONSUL HO CHI MINH 3772
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS SECTION 01 OF 04 HANOI 001749 
 
SIPDIS 
 
STATE FOR EAP/MLS AND EB/CIP 
STATE PASS TO USTR JONATHAN MCHALE AND DAVID BISBEE 
COMMERCE FOR CORA DICKSON 
COMMERCE PASS TO NTIA FOR MBAKER,AHEINEMAN 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECPS ECON ETRD KIPR VM
SUBJECT: BUILDING TIES AND URGING REFORM IN VIETNAM'S ICT SECTOR 
 
Ref: A) HANOI 1360 B)HANOI 1561 
 
¶1. (U) Summary:  Ambassador David Gross, U.S. Coordinator for 
International Communications and Information Policy traveled to 
Vietnam to participate in the first-ever U.S.-Vietnam Information 
and Communication Technologies (ICT) Commercial Dialogue on 
September 17-18.  The Dialogue, an interagency initiative led by the 
International Trade Administration (ITA), aims to facilitate trade 
and investment in Vietnam's ICT sector at a time when U.S. companies 
are optimistic about Vietnam as both a manufacturing base as well as 
a growing market.  In the Dialogue and separate meetings with 
Government of Vietnam (GVN) officials and private sector 
representatives, Ambassador Gross advocated for closer cooperation 
in the telecom and IT fields.  The Ambassador explained President 
Bush's Digital Freedom Initiate (DFI) and urged continued GVN 
reforms to create a more transparent and competitive policy 
environment, focusing on issues such as technology neutrality, 
transforming the ownership structure of state owned firms to include 
private equity, and spectrum allocation.   His visit and the ICT 
Dialogue helped to build trust and understanding between the two 
governments and industries, and set a clear path forward for future 
engagement.  For its part, the GVN demonstrated an increased 
willingness to engage with the United States in these key sectors. 
End summary. 
 
¶2. (U) Ambassador David Gross, U.S. Coordinator for International 
Communications and Information Policy traveled to Vietnam to 
participate in the first-ever U.S.-Vietnam Information and 
Communication Technologies (ICT) Commercial Dialogue on September 
17-18.  He joined an interagency delegation led by ITA Deputy 
Assistant Secretary (DAS) for Manufacturing Jamie Estrada that also 
included DAS Meredith Atwell Baker from the National 
Telecommunications and Information Administration (NTIA), Deputy 
Assistant U.S. Trade Representative (DAUSTR) Jonathan McHale, 
Regional Director Greg Walters from USTDA's Bangkok office, and 
Economic Growth Program Manager David Brunell from USAID's Hanoi 
office.  In addition to the Dialogue meetings, Ambassador Gross met 
with officials from the Ministry of Information and Communications 
(MIC); officials from the Ministry of Planning and Investment; the 
Chairman of Vietnam Posts and Telematics Group (VNPT), the 
state-owned and largest telecom company in Vietnam; and 
representatives from U.S. ICT firms operating in Vietnam.  He also 
spoke to a crowd of 250 students from the Hanoi University of 
Technology. 
 
MIC - NEW NAME, NEW APPROACH? 
----------------------------- 
 
¶3. (SBU) In a September 17 pre-Dialogue courtesy call, MIC Vice 
Minister Vu Duc Dam, using his polished English, welcomed Ambassador 
Gross and other members of the U.S. delegation from the Department 
of Commerce (DOC) and Office of the U.S. Trade Representative 
(USTR).  The Vice Minister thanked the delegation for coming to 
Vietnam and noted his personal appreciation for his relationship 
with Ambassador Gross, which has developed through interactions at 
international telecommunications events. 
 
¶4. (SBU) DAS Estrada thanked VM Dam for his hospitality at a time 
when the Ministry is undertaking internal restructuring following 
the August 2 cabinet reshuffle (REFTEL A).  MIC intends to complete 
that process "within the next two months," he said.  The Vice 
Minister, who was joined by a substantial delegation of MIC 
officials, explained that MIC wants to implement substantive changes 
(NFI) beyond simply integrating the former Ministry of Culture and 
Information's broadcast and print media departments into the 
structure of the former Ministry of Posts and Telematics.  Dam also 
explained that MIC will no longer own any companies, which he 
believes will be better for Vietnamese consumers and will enable 
telecom operators to keep costs down.  Note: In a meeting on 
September 19, however, digital terrestrial television provider VTC 
reported to Econoff that it is still 100 percent owned by the 
Ministry.  End note. 
 
¶5. (U) Turning to the ICT Dialogue, Vice Minister Dam described the 
two-day event as "very important" for the development of our 
bilateral relationship.  He expressed Vietnam's eagerness to work 
more closely with the U.S. Government and industry to expand ICT 
trade and investment opportunities.  Forums like this will be 
critical to build trust and mutual understanding, Dam said.  To 
better understand U.S. ICT policy making, he asked a series of 
questions about the structure of the U.S. Government 
telecommunications and information technology policy and regulatory 
agencies, noting Vietnam's keen interest in learning from the United 
States.  DAS Estrada called upon members of the delegation to 
explain their agencies' roles.  He also pointed to the Secretary of 
Commerce's upcoming trade mission in November as another sign of 
 
HANOI 00001749  002 OF 004 
 
 
deepening economic ties.  Ambassador Gross remarked that this first 
ICT Dialogue demonstrates that our countries' relationship is at a 
new level following Vietnam's January 2007 accession to the World 
Trade Organization (WTO) and the subsequent meeting between our 
Presidents.  Gross noted USG interest in supporting Vietnam's 
development of open, market-oriented telecom and IT policies to best 
serve its people and drive continued economic growth. 
 
¶6. (U) In a later meeting, Director of the MIC's Vietnam Public 
Utility Telecommunication Service Fund (VTF) Tran Manh Dzung 
repeated the Vice Minister's call for closer cooperation between our 
countries.  The VTF is responsible for connecting Vietnam's rural 
communities with modern telecommunication technologies through 
competitively bidding projects using the state-managed universal 
service fund.  Mr. Dzung thanked the U.S. Government for ongoing 
training and capacity building efforts for VTF staff, and hoped that 
the two sides can deepen their work together - particularly in 
developing fair and transparent regulatory policies.  Ambassador 
Gross agreed, explaining that a competitive environment will help 
bring the best technologies to rural populations most efficiently. 
 
REQUESTS FOR MORE U.S. ICT INVESTMENT 
------------------------------------- 
 
¶7. (U) Ministry of Planning and Investment (MPI) Foreign Investment 
Agency General Director Dr. Phan Huu Thang called for more U.S. 
investment in the ICT sector, particularly in telecommunications 
infrastructure.  He highlighted ongoing work with foreign companies 
to improve Vietnam's investment policies and create a more 
competitive environment.  MPI has created favorable incentives for 
foreign investors, Thang said, including long periods of tax 
exemption and low rental costs for land.  One U.S. delegation member 
stated that further improvements in areas like human resource 
development, intellectual property protection, government 
procurement and network security would help to attract more U.S. and 
foreign investment. 
 
VNPT - A REFORMING TELECOM GIANT 
-------------------------------- 
 
¶8. (U) VNPT Chairman Pham Long Tran described his organization's 
reform efforts to become more competitive domestically and expand 
its operations overseas.  State-owned VNPT was a monopoly until 
1995, and remains Vietnam's largest carrier with 80 percent market 
share in fixed line and 55 percent market share in mobile services. 
Tran explained that VNPT has over 90,000 employees and more than 100 
subsidiaries in diverse markets such as postal and telecom services, 
newspapers, tourism, construction, and health care.   He said that 
VNPT has submitted proposals to MIC to streamline and reform its 
operations to better compete with growing domestic and foreign 
competition.  One of the key proposals is to separate VNPT's telecom 
operations from its other lines of business. 
 
¶9. (SBU) Additionally, VNPT is seeking to "equitize" (the Vietnamese 
term for transforming 100 percent State-owned enterprises into joint 
stock or limited liability companies) some of its subsidiaries. 
Tran said that the entire VNPT Group will eventually be equitized 
and listed on international stock exchanges.  He seemed frustrated 
when reporting delays in the equitization process for its 
subsidiaries such as mobile service provider MobiFone.  Despite 
pressure to move faster, Tran blamed cumbersome and difficult to 
understand government regulations for the holdup.  Because the GVN 
is currently reviewing its regulations on equitization (REFTEL B), 
he was unable to give a timeframe for completion.  Ambassador Gross 
noted that VNPT's equitization plans will be important to improve 
its competitiveness and to access capital markets that will help 
VNPT expand its services at home and abroad. 
 
¶10. (U) Chairman Tran expressed his desire to broaden cooperation 
with U.S. partners.  VNPT is currently awaiting a frequency license 
from MIC to implement a WiMAX trial in Hanoi and Ho Chi Minh City in 
partnership with Motorola, he said.  VNPT is also waiting for MIC to 
decide on its application for a 3-G license.  It is important that 
the Ministry be technology neutral in their licensing and other 
decision making, Ambassador Gross said, which will enable VNPT, and 
not the Ministry, to determine which technology will best suit its 
consumers' needs. 
 
U.S. PRIVATE SECTOR EXPERIENCES IN VIETNAM 
------------------------------------------ 
 
¶11. (SBU) Representatives from eight private sector companies and 
organizations described their experiences with public/private 
partnership efforts to expand broadband connectivity to rural areas 
in Vietnam through the Presidential Digital Freedom Initiative's 
"Last Mile Initiative."  Representatives from Microsoft and other 
 
HANOI 00001749  003 OF 004 
 
 
companies also reported on their joint work with USAID on the TOPIC 
64 project, designed to increase ICT training and build human 
resource capacity by opening IT training centers in all 64 
provinces.  One private sector representative opined that Vietnam 
should develop a national-level strategy for expanding Next 
Generation Networks for its citizens and companies.  Another 
suggested the GVN should designate an independent Senior Technology 
Advisor who is not aligned with a particular technology to guide 
Vietnam's ICT development strategy. 
 
¶12. (SBU) The GVN should allow the private sector to lead, and allow 
the market to drive innovation and determine prices, Ambassador 
Gross stated.  Fair and open competition between service providers, 
without heavy involvement by the government, will ensure that 
providers can meet their customers' needs at the lowest possible 
cost.  Equitization will also help attract foreign investment and 
allow capital growth in Vietnam's ICT sector, Gross continued.  He 
encouraged the U.S. companies present to continue to cooperate with 
the Vietnamese industry and governments from both countries to 
increase trade and investment opportunities in Vietnam. 
 
VIETNAM'S BRIGHT FUTURE 
----------------------- 
 
¶13. (U) Ambassador Gross delivered a presentation to a 
standing-room-only crowd of 250 students at the Hanoi University of 
Technology on the unique opportunities technology has created for 
the younger generation in Vietnam to improve their lives.  He 
remarked that it is important for them to continually encourage the 
government to give them the tools necessary to take full advantage 
of technology to create a brighter future.  In the follow-up 
question and answer session, the students asked a range of 
questions, including queries on how technology is transforming other 
societies around the world. 
 
ICT DIALOGUE - AN OPPORTUNITY TO FORGE NEW TIES 
--------------------------------------------- -- 
 
¶14. (U) The first-ever U.S.-Vietnam ICT Commercial Dialogue brought 
together industry leaders and senior government officials from both 
sides to find opportunities to deepen and strengthen cooperation in 
the ICT field.  The Dialogue was co-chaired by DAS Estrada for the 
USG and Director General Quan Duy Ngan Ha from MIC for the GVN.  In 
their opening remarks, MIC Vice Minister Dam and U.S. Ambassador 
Michael Michalak both commented on the importance of this event in 
jointly developing our ICT sectors to the benefit of citizens of 
both countries.  Dam noted that this first meeting will allow the 
two sides to become familiar with one another's priorities and 
determine areas where we can cooperate more closely. 
 
¶15. (U) During the joint session between government and industry, 
DAS Estrada highlighted six key challenges for Vietnam's ICT 
development, and expressed a desire to work with Vietnam to address 
those areas, which include: infrastructure development; 
cyber-security; human resource development and training; 
intellectual property rights protection; e-commerce; and, government 
procurement.   As one of the steps to ensure that advanced telecom 
infrastructure is deployed widely, the U.S. side urged Vietnam to 
establish a transparent, independent regulator.  U.S. public and 
private sector representatives also encouraged Vietnam to continue 
the process of market liberalization, promulgate transparent 
policies and to ensure competitive safeguards, particularly now that 
it is a member of the WTO.  Ambassador Gross noted the importance to 
Vietnam's ICT sector of implementing a transparent and technology 
neutral spectrum allocation regime. 
 
¶16. (U) Representatives from Vietnam's ICT industry remarked on 
their confusion about U.S. standards and regulations.  A 
representative from Vietnam's software industry association said his 
member companies "pin strong hopes on the U.S. market," and asked 
for training to better understand how they can work more closely 
with, and sell products to the United States.  Vietnamese private 
sector representatives also commented on the lack of public 
understanding of IPR issues here.  They asked the U.S. side to 
enhance ongoing joint efforts to raise public awareness of this key 
issue.  Vietnamese firms also requested more human resource 
technical training, and encouraged the two governments to work 
together to ease visa procedures to enable more Vietnamese private 
sector officials to travel to the United States. (Note: U.S. 
companies, for their part, offered to devote resources to help 
Vietnamese firms cope with these issues.  For example, it was 
proposed to establish a public/private partnership on human 
resources, and to sponsor a series of capacity-building seminars on 
topics that may help them understand the U.S. market, such as IPR 
regulations. End note.) 
 
 
HANOI 00001749  004 OF 004 
 
 
¶17. (SBU) Vice Minister Dam and other GVN officials expressed 
appreciation for the comments and the frank exchange.  Dam stressed 
that Vietnam's legal framework is already consistent with its WTO 
obligations, however, the GVN remains committed to further reforms. 
Vietnam is currently drafting three new laws on Telecom, Frequency 
Allocation and Posts, and would welcome engagement with the U.S. 
side once the drafts are finalized.  On the issues of government 
procurement and technology neutrality, the Vice Minister pointed to 
the Vietnam Forum for IT Promotion, a regular forum which MIC hosts 
and in which U.S. industry participates, as evidence that the GVN is 
open to working with foreign companies to address these areas.  Dam 
stated that the United States and Vietnam seem to have different 
ideas about what constitutes an independent regulator.  The MIC 
serves as Vietnam's regulator, and has been independent from 
operators since a 2002 Government Ordinance, he explained.  The 
Ministry is now working to create additional separation between 
policy-makers and regulatory officials, but will likely not have an 
entirely separate regulatory body like the United States. 
 
¶18. (U) In closing, Vice Minister Dam commented that he and the 
Ministry remain open and willing to meet with the U.S. Government 
and industry to address issues in the ICT sector.  The two sides 
agreed to remain in contact to discuss concrete next steps, 
including possible workshops on issues such as cyber-security, WTO 
implementation, spectrum allocation, and electronic commerce.  Those 
discussions will help to develop the agenda for future meetings of 
the U.S.-Vietnam ICT Commercial Dialogue.  Ambassador Gross 
commented that the inaugural meeting was an important step forward, 
and provided a "clear vision for future collaboration."  VM Dam 
agreed, saying that the meeting resulted in a better understanding 
of the two sides' views, and the MIC looks forward to future 
exchanges. 
 
¶19. (SBU) Comment: The initial meeting of the U.S.-Vietnam ICT 
Commercial Dialogue and Ambassador Gross' visit contributed 
significantly to a growing trust and familiarity between the two 
governments and industries in the fields of telecommunications and 
IT.  The GVN demonstrated an increased willingness to engage with 
the United States in this important sector.  While they may not 
always agree with or accept U.S. views, the door for dialogue is 
more open now than ever before.  The U.S.-Vietnam ICT Commercial 
Dialogue provides a solid foundation and a clear path forward for 
future cooperation.  End Comment. 
 
¶20. (U) This cable was cleared by Ambassador David Gross and 
coordinated with Department of Commerce's ITA and NTIA. 
 
MICHALAK