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UNCLAS SECTION 01 OF 03 HO CHI MINH CITY 000821 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/MLS 
 
E.O. 12958: N/A 
TAGS: OVIP NEGROPONTE PREL PGOV PHUM ECON SOCI KIRF
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SUBJECT: (U) DEPUTY SECRETARY NEGROPONTE'S SEPTEMBER 12-13 VISIT TO 
HO CHI MINH CITY, VIETNAM 
 
HO CHI MIN 00000821  001.2 OF 003 
 
 
SENSITIVE BUT UNCLASSIFIED.  FOR INTERNAL USG USE.  NOT SUITABLE 
FOR INTERNET POSTING. 
 
¶1. (SBU) SUMMARY:  During the Deputy Secretary's visit to Ho Chi 
Minh City (HCMC) on September 12-13, HCMC government officials, 
business leaders and legal professionals outlined the many 
challenges and opportunities that will set the course for the 
future development of the city and the path Vietnam's economic 
transformation will take.  City officials discussed HCMC's role 
as Vietnam's engine of economic growth, noting the city now 
accounts for nearly a quarter of the country's economy and a 
third of the tax base.  Both government and business leaders 
agreed the most pressing problems HCMC faces today are the 
constraints created by the city's inadequate infrastructure and 
lack of skilled labor throughout all sectors of the economy. 
The U.S. business community urged an active role for the USG in 
Vietnam, not just because the United States is Vietnam's largest 
export market, but because we are seen by most as a leading 
partner in Vietnam's economic reform.  HCMC's Bar Association 
said further legal reform was essential in order to create a 
more just and predictable judicial system for businesses and 
individuals.  In support of U.S. efforts to promote religious 
freedom, the Deputy Secretary also met with the Secretary of the 
Bishop's Council and attended Mass at HCMC's historic Notre Dame 
Cathedral.  In all his meetings, the Deputy Secretary affirmed 
the USG's commitment to strengthening the bilateral relationship 
and broadening cooperation on economic governance, legal reform 
and education initiatives.  End Summary. 
 
--------------------------------------------- ------------ 
HCMC Leaders Discuss Economic Achievements and Challenges 
--------------------------------------------- ------------ 
¶2. (SBU) During Deputy Secretary Negroponte's September 12 
meetings with HCMC Party Secretary Le Thanh Hai and HCMC 
People's Committee Chairman Le Hoang Quan, both officials 
discussed Ho Chi Minh City's leading role in Vietnam's economy 
and the challenges they face maintaining momentum given the 
city's severe infrastructural and human capital constraints. 
Party Secretary Hai said Ho Chi Minh City capitalized on "doi 
moi" era reforms to become the country's "first city" in terms 
of its economic contributions, generating 24 percent of the 
national GDP and contributing 33 percent to the State budget. 
HCMC's double-digit growth rates consistently top the national 
average by almost 2 percent annually and its residents earn 
three times the national per capita income.  Despite these 
achievements, HCMC's continued growth is hindered by a crumbling 
and overburdened transportation system, skyrocketing property 
costs and growing environmental and quality of life issues. 
People's Committee Chairman Quan said HCMC's 2015 urban 
development plan followed a "U.S. model" that would transform 
HCMC from the "outside in."  By building modern residential 
communities and industrial zones on the outskirts of the city 
linked by an expanded mass transit system, inner-city residents 
could be relocated to new suburban satellites and HCMC planners 
could turn to restructuring the city center.  In terms of human 
capital, both leaders emphasized the need for educational reform 
and expanded vocational training for HCMC's workforce in order 
to maintain HCMC's competitive edge and expand into high-tech 
and high-end service sectors. 
 
¶3. (SBU) Both leaders highlighted the positive role U.S. 
investment and expertise was making in overcoming these barriers 
to growth and were optimistic U.S. investment dollars and 
development assistance would help transform HCMC into a 
world-class Southeast Asian capital on par with Bangkok or 
Singapore.  The Deputy Secretary said the U.S. was ready to work 
with government and business leaders to help them achieve their 
goals, and affirmed that education cooperation was a high 
priority.  The Deputy Secretary noted that the recently 
established Education Task Force would create a wealth of new 
opportunities for future collaboration, as would the upcoming 
educational conference in HCMC early next year.  He was 
optimistic the U.S. and Vietnam would continue to deepen 
economic and commercial ties, expand diplomatic cooperation and 
engage on a broad range of issues that would further strengthen 
the bilateral relationship. 
 
------------------------------------------- 
Maintaining the Momentum of Economic Reform 
------------------------------------------- 
¶4. (SBU) During the Deputy Secretary's meetings with members of 
the U.S. and Vietnamese business community, corporate leaders 
shared city officials' sentiments regarding HCMC's inadequate 
infrastructure and lack of human capital as a road block to 
growth, and noted the problems are further exacerbated by the 
poor coordination among the various government agencies 
responsible for implementing HCMC's urban development plans.  In 
 
HO CHI MIN 00000821  002.2 OF 003 
 
 
export operations, this has resulted in a situation where brand 
new container terminals have yet to be connected to existing 
land transit routes, creating additional bottlenecks for the 
overtaxed HCMC port that handles 80 percent of Vietnam's 
container traffic.  Energy demands exceed supply by about 17 
percent.  As a result, industrial zones suffer routine losses of 
power due to rolling brown-outs and random black-outs that 
result in significant production losses for the food product and 
dairy industries. 
 
¶5. (SBU) Turning to labor issues, U.S. producers and their 
Vietnamese partners also discussed the lack of effective labor 
dispute resolution mechanisms that has created a "strike as a 
first resort" mentality among factory workers, especially in the 
joint venture garment factories that represent the lion's share 
of foreign investment firms in the South.  More than 500 strikes 
have taken place so far in 2008, in contrast to a total of 500 
strikes in all of 2007.  Vietnam's young population of 85 
million still constitutes an attractive market, and businesses 
are succeeding.  But entrepreneurs said shortages of skilled 
workers have compelled sectors as diverse as radio/TV 
broadcasting, energy, and information technology to establish 
private training institutes to fill the vocational skills 
deficit. 
 
¶6. (SBU) The Deputy Secretary commended the private sector's 
pro-active response to human resource constraints and 
underscored the USG's support for continued improvements in 
governance that would establish a more transparent rule-based 
investment climate.  On the economic policy front, the Deputy 
Secretary outlined plans to begin negotiations on a Bilateral 
Investment Treaty in coming weeks and to commence Open Skies 
Agreement negotiations in October. 
 
-------------------------------------- 
Building a Foundation for Legal Reform 
-------------------------------------- 
7.(SBU) In a free flowing exchange of ideas, members of the HCMC 
Bar Association relayed to the Deputy Secretary their concerns 
about the lack of transparency, independence and professionalism 
in Vietnam's legal system.  Lawyer Le Cong Dinh cited several 
positive developments, including the growing ranks of legal 
professionals practicing in Vietnam today. National Bar 
membership has gone from 400 to 4000 lawyers in past ten years 
and the HCMC Bar Association accounts for 2500 of those lawyers. 
 Gradual improvements in the functioning of Vietnam's legal 
system including the growth of international and domestic 
commercial arbitration centers, greater client access for 
defense lawyers, and more open exchanges between lawyers and 
judges in the courtroom. 
 
¶8. (SBU) Bar President Nguyen Dang Trung said despite these 
developments, more needed to be done to promulgate fundamental 
concepts of rule of law.  He said that "many people say Vietnam 
has rule of law because we have a system of courts, judges and 
lawyers," but in reality citizens are unfamiliar with their 
legal rights and responsibilities and lack confidence in the 
judicial system's ability to resolve their claims fairly and 
transparently.  Educating Vietnamese citizens regarding their 
basic legal rights would enhance the ability of civil society to 
engage meaningfully with the GVN on legal reform priorities. 
 
¶9. (SBU) The Bar Association offered several specific ideas 
about where U.S. assistance could play a positive role in 
promoting transparency, including expanding educational 
opportunities and exchanges between Vietnamese and U.S. legal 
professionals.  A former Fulbright fellow, Tung said increasing 
the number of scholarships for Vietnamese lawyers to study in 
the U.S. would be a welcome step forward and all lawyers agreed 
more exchanges would help build mutual understanding as well as 
the capacity needed to meet Vietnam's current and future legal 
challenges. 
 
¶10. (SBU) The Deputy Secretary voiced his support for the HCMC 
Bar's efforts to advance judicial and legal reform, and agreed 
rule of law presented a promising area for more constructive 
collaboration.  The Ambassador said the United States has 
committed to the process by supporting NGO work in rural areas 
to discuss civil rights and responsibilities, and promoting the 
publication and dissemination of Supreme Court decisions.  The 
Consul General welcomed the idea of more exchanges, noting the 
recent successful visit by U.S. District Judge Janet Bond 
Arterton with city and provincial legal professionals through 
the Mission Speakers Program.  The Deputy Secretary was 
optimistic about broadening these efforts, noting that as 
Vietnam continues to expand engagement in the international 
arena, its judicial system must evolve to meet the challenges 
 
HO CHI MIN 00000821  003.2 OF 003 
 
 
ahead. 
 
-------------------------- 
A Glimpse of HCMC's Future 
-------------------------- 
¶11. (SBU) To better understand of how the key issues of labor, 
infrastructure, governance and land can be both challenges and 
opportunities for investors, the Deputy Secretary visited Phu My 
Hung (PMH) company's "Saigon South" development, a dynamic mixed 
industrial, retail and residential development.  A PMH executive 
explained that in the early nineties, his Taiwanese development 
company negotiated a relatively free-hand to develop 1,500 acres 
of swamp.  Working with leading American planners and 
architects, PMH developed an award-winning master plan that has 
guided the development of a region characterized by livable 
spaces, a balance of greenery and mid-density housing and 
10-lane roads, new bridges and space for planned mass transit 
lines that contrasts sharply with the chaotic sprawl that 
characterizes most of Ho Chi Minh City.  Its private power plant 
makes "Saigon South" the only place in southern Vietnam immune 
to rolling brownouts.  Despite the development's success and 
popularity as both a residential and commercial area, PMH stay 
true to its vision of being a mixed-cost residential profile 
that offers housing affordable to the managers and skilled and 
unskilled works that staff nearby companies and factories.  The 
Deputy Secretary also toured the firm's Tan Thuan Export 
Processing zone, the first industrial development in Vietnam to 
offer a true "one stop shop" for investors that cut the approval 
process from months (or years) to an average of just seven to 
ten days.  Tan Thuan Export zone has been a success almost from 
the start and generated ten percent of Vietnam's foreign 
exchange until 2005. 
 
¶12. (SBU) Over lunch in Saigon South, a roundtable of ten HCMC 
business leaders described both the challenges and opportunities 
facing businesses and entrepreneurs today.  One human resources 
company drew out the need to link education more closely with 
the needs of business, saying that vocational training in 
particular would help remove human resources bottlenecks from 
Vietnam's economy.  One of Vietnam's leading industrial park 
developers outlined her company's efforts to expand its 
vocational training center and establish a new university based 
on U.S. curriculum.  The private sector is stepping up to fill 
all sorts of training gaps, the chairperson of a Vietnamese 
media company explained, saying that she has started a training 
academy for media professionals.  Power and infrastructure 
companies argued that despite a linger state sector bias, in the 
provinces and districts where the letter and spirit of Vietnam's 
economic reforms has taken root there are opportunities for 
private sector. 
 
¶13. (SBU) The Deputy Secretary applauded the private sector's 
role in continuing to help open Vietnam's economy and emphasized 
their crucial efforts to improve Vietnam's education system. 
Improving vocational training and establishing partnerships with 
U.S. universities will both help Vietnam to training the human 
resources it needs.  The Deputy Secretary also recognized the 
role of women as leaders in Vietnam's business community, noting 
that nearly half the leaders present at the PMH roundtable were 
women.  Phu My Hung's "Saigon South" is setting a great example 
for the future of Vietnam, he concluded. 
 
------------------------------- 
Reflecting on Religious Freedom 
------------------------------- 
 
¶14. (U) In the Deputy Secretary's meeting with Secretary of the 
Bishop's Council, Father Nguyen Van Kham, Father Kham expressed 
appreciation for the USG's support for religious freedom, noting 
the positive growth the Church has experienced under the new 
legal framework on religion.  Today, there are 6 million 
Catholics residing in Vietnam's 26 dioceses, with 10 percent of 
those in HCMC.  While discussing the Church's efforts to expand 
charitable and educational services, Father Kham highlighted the 
GVN's continuing refusal to countenance returning the many 
schools and other facilities confiscated after 1975.  Touching 
briefly on the recent confrontations between demonstrators and 
authorities at Thai Ha parish in Hanoi, Father Kham said the 
situation is complex and resolving claims on confiscated 
properties would remain a key concern.  The Deputy Secretary 
underscored U.S. support for continued dialogue between 
religious groups and the GVN on these issues, and received a 
warm round of applause from parishioners after Father Kham 
acknowledged his presence during Mass on September 13. 
FAIRFAX