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 
 
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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