VZCZCXRO8782
PP RUEHCHI RUEHDT RUEHFK RUEHHM RUEHKSO RUEHNAG RUEHNH RUEHPB
DE RUEHHI #0469/01 1400945
ZNR UUUUU ZZH
P 200945Z MAY 09
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC PRIORITY 9655
INFO RUEHHM/AMCONSUL HO CHI MINH 5863
RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS SECTION 01 OF 03 HANOI 000469 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/MLS MBROWN 
SINGAPORE FOR TREASURY 
TREASURY FOR SCHUN 
USTR FOR DBISBEE 
 
E.O. 12958: N/A 
TAGS: ECON EFIN POL VM
 
SUBJECT: VIETNAM'S LEADERS VOW TO PURSUE GROWTH AND MACROECONOMIC 
STABILITY 
 
HANOI 00000469  001.2 OF 003 
 
 
¶1. (U) Summary:  The fifth session of the twelfth National Assembly 
began on May 20, 2009, with remarks by the Chairman of the National 
Assembly, the Deputy Prime Minister and the Chairman of the 
Fatherland Front.  The primary goals for the rest of the year, 
according to the speakers, are to promote economic growth, maintain 
macroeconomic stability and enhance social welfare.  The current 
session will focus on approval of the state budget, including a 
potential increase in permitted budget deficit, education system 
reform and consideration of 12 pending legislation bills.  End 
Summary. 
 
THE LEADERSHIP SETS 2009 GOALS 
----------------------------- 
 
¶2. (U) The fifth session of the twelfth National Assembly (NA) began 
on May 20, 2009, with remarks by the Chairman of the National 
Assembly Nguyen Phu Trong, Deputy Prime Minister (DPM) Nguyen Sinh 
Hung and Chair of the Fatherland Front Huynh Dam.  Chairman Trong 
began the day by stating that the world economic situation is still 
very serious, especially in countries with large economies, but 
noted that Vietnam's stimulus plans have been effective, pushing GDP 
growth to 3.1% in the first quarter of the year.  He said that for 
the remainder of 2009, Vietnam will stick to its main goals of 
sustaining growth, maintaining macroeconomic stability and 
preventing inflation. 
 
¶3. (U) Chairman Trong laid out the agenda for the upcoming session, 
including approval of the state budget, recommendations to 
restructure Vietnam's education system, and consideration of 12 
pending bills.  Laws to be discussed include the Law on Public Debt, 
the Law on Legal Entities, the Criminal Code, the Law on Diplomatic 
Representatives Abroad, the Law on Construction, and laws relating 
to IPR, housing and land, the Value Added and Corporate Income 
Taxes, healthcare and paramilitary forces, among others. The 
legislative session will run for a month, until June 23. 
 
PREVENT ECONOMIC SLOWDOWN AND MAINTAIN GROWTH 
--------------------------------------------- 
 
¶4. (U) DPM Hung then took the stage on behalf of the Prime Minister, 
who had been originally scheduled to speak.  Hung echoed Trong's 
statement that the GVN would focus on preventing economic slowdown 
and maintaining growth in 2009.  He touted Vietnam's "victory" over 
inflation in 2008, but admitted failing to reach GDP targets for 
2008 (6.2% rather than the target of 7% set by the GVN).  He 
expressed concern that unemployment had reached 667,000 last year. 
(Note:  This is a higher number than previously reported.) 
 
GVN TO PLAY "LEADING ROLE" IN OVERCOMING CHALLENGES 
--------------------------------------------- ------ 
 
¶5. (U) Looking to 2009, DPM Hung pointed to Vietnam's exports, 
capital markets and tourism as being the most affected by the global 
economic downturn.  He said that government investment should play a 
"leading role" in ensuring economic growth, so the GVN should work 
to mobilize capital from all sources and remove bottlenecks in 
project implementation.  He added that the GVN has instructed the 
state owned enterprises (SOEs) to invest in technology and 
environmentally-friendly projects.  The DPM listed many of the 
stimulus measures implemented to date, citing industrial production 
growth of 3.3% for the first four months of 2009 and 21,000 new 
enterprises registered by April.  He also commented on the success 
of GVN efforts to promote education, saying that the dropout rate 
has decreased 40% compared to last year.  Based on the success of 
government programs, he said that "the people's trust has 
increased." 
 
¶6. (U) DPM Hung then turned to some of the challenges for 2009, 
including exports hovering at the same value as last year and the 
lack of competitiveness of Vietnamese goods.  He noted that budget 
revenues were down while expenditures were up, also commenting that 
"administrative reform is still slow, so budget disbursement is 
slow."  Pollution, traffic and food safety continue to be 
problematic, he added.  Still, he said, "we are getting out of the 
most difficult time." 
 
MINDING SOCIAL WELFARE 
--------------------- 
 
¶7. (U) He listed economic growth, macroeconomic stability and 
ensuring the social welfare as the top priorities for the coming 
 
HANOI 00000469  002.2 OF 003 
 
 
year.  He said that the GVN would also work to increase 
infrastructure investment and production capacity in 2009 and 
beyond, while also trying to ensure the effective use of resources, 
including bauxite and other minerals.  Other goals include the 
simplification of investment procedures, increased training and 
education opportunities, progress on equitization of SOEs, tourism 
promotion, increased investment in oil, gas, energy, mining and 
agriculture, prevention of trade protectionism and a host of smaller 
issues. 
 
LEGISLATURE ASKED TO INCREASE BUDGET 
-------------------------- 
 
¶8. (U) Specifically, the DPM said that the GVN would ask the NA to 
increase the allowable budget deficit from 4.8% to 8% of GDP this 
year and to ease the tax burden on businesses and individuals. 
(Note:  He was likely referring to making the personal income tax 
deferral, implemented as part of the first stimulus package, into a 
permanent cut.)  He also asked that the 2009 GDP growth target be 
revised down to around 5% from 6.5%      He closed by saying that 
implementation and monitoring of GVN programs are the 
responsibilities of all ministries and provinces, and that therefore 
they should endeavor to provide accurate and timely progress 
reports, including via websites, so that the public can gauge their 
success.  The DPM noted that the mass media also plays a key role in 
the dissemination of information and the monitoring of policies. 
Finally, he asked that the NA grant greater power to its standing 
committee to actively manage GVN policies and programs throughout 
the course of the year.  (Comment:  A greater role for the Standing 
Committee might make the NA more efficient and able to handle more 
draft legislation throughout the year.  End comment.) 
 
FATHERLAND FRONT CRITICIZES "SLOW" STIMULUS 
------------------------------------------- 
 
¶9. (U) The last speaker was Huynh Dam, Chairman of the Vietnam 
Fatherland Front (VFF), speaking on behalf of the NA members. 
(Note:  The VFF is an umbrella group of pro-government "mass 
movements" in Vietnam.)  Unlike the first two speeches, Dam's 
remarks were not subject to live interpretation nor distributed in 
written form.  He began by criticizing the data collection 
capabilities of the GVN, saying that there were big discrepancies in 
the numbers reported by different government ministries and 
agencies, which made appropriate policy responses difficult.  With 
regard to the economic stimulus package, he said it had "good 
intentions," but was "slow and troublesome in implementation."  For 
example, the Vietnam Farmers Association and the Union of 
Collectives told VFF that they had a tremendous need for capital but 
getting access to subsidized loans was very difficult.   Dam asked 
the GVN to improve the procedures and increase the timeframe and 
scope of eligibility for the loans. 
 
¶10. (U) Chairman Dam also said that the GVN's policies for 
developing the agricultural sector had not achieved their target of 
reducing wealth disparities.  He commented on the poor management of 
land issues, noting some recent cases where local government seized 
land for development (including for golf courses) without proper 
vocational training or other preparation for affected farmers, 
resulting in more complaints at higher levels of government.  He 
asked for stronger supervision over policy implementation, citing 
the misappropriation of the individual stimulus payments made to the 
poor around Tet as an example.  Dam asked that "severe penalties" be 
given to the officials who stole the money. 
¶11. (U) On industry and the environment, Dam said that "there are 
strong concerns over serious cases of environmental pollution that 
haven't been dealt with thoroughly."   He said that displacement of 
people due to infrastructure projects, e.g. Son La Hydro Power 
Plant, has not been done properly, and asked the GVN to task the 
Ministry of Industry and Trade (MOIT) to strengthen supervision over 
these projects.  Dam also asked that the Central Highlands bauxite 
mining project be placed on the NA's program for annual review to 
ensure that implementation is in line with the Politburo's 
guidelines.  On corruption, he said that "extravagant spending" is 
still popular in the public sector, including the import of 
"nonessential" expensive items and the abuse of state cars and 
property for private uses. 
 
COMMENT 
------- 
 
¶12. (SBU) With Vietnam still enjoying positive growth and investment 
 
HANOI 00000469  003.2 OF 003 
 
 
and trade holding their own in this difficult year, the continued 
emphasis on macroeconomic stability from the country's leaders is 
encouraging.  It appears that the National Assembly will continue to 
take an active and vocal role this session, at least in economic 
matters.  While NA members are nearly all Communist Party members, 
the public debates that will take place over the next month will 
provide some of the few instances of true and unfettered criticism 
of GVN policies and offer a rare glimpse into the consensus-building 
process.  Post will follow the session and report the results 
septel. 
 
MICHALAK