Created: 2006-01-10 10:19
Released: 2011-08-30 01:44
Classification: UNCLASSIFIED
Origin: Consulate Ho Chi Minh City

This record is a partial extract of the original cable. The full text of the original cable is not available.

101019Z Jan 06


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                  ------------------7C4CC6  101020Z /38    

E.O. 12958: N/A
1. (SBU) HCMC and its neighboring provinces are the economic and
financial soul of Vietnam.  Textiles, footwear, furniture,
aquaculture -- key export industries  -- as well as the
country's USD seven billion oil and gas sector are centered
around HCMC.  With roughly 15 percent of the population, HCMC
and its neighboring provinces account for 36 percent of GDP, 34
percent of GVN tax revenue and at least 42 percent of the
country's total USD 26 billion FDI investment.  We believe that
at least half of Vietnam's USD three to six billion in
remittances flow into the HCMC area.
2. (SBU) In your meetings with government and Party officials,
political dissidents, Cardinal Man and business leaders and
entrepreneurs, you will want to stress the same broad themes as
outlined for your meetings in the capital.  On many of these
issues, Ho Chi Minh City's decision-makers have substantial
influence and "soft power" in the policy debate in Hanoi.  Most
of the people you will meet -- including the dissidents -- will
be particularly interested in how Washington sees Vietnam and
the bilateral relationship, Vietnam's WTO prospects as well as
regional issues, with a particular focus on China.
3. (SBU) U.S. corporations, such as Nike, ConocoPhillips, and
Citibank, and private American entrepreneurs  -- many from the
Vietnamese-American ("Viet Kieu") community -- help drive HCMC's
growth.  U.S., Japanese, and other foreign investors see
southern Vietnam as a cost-effective hedge to China, especially
in lower volume but higher quality products such as knitwear and
fine furniture.  City leaders acknowledge that rising labor
costs (underlined by recent violence-tinged strikes over wages),
and the lack of both vertical integration and world-class
transportation infrastructure threaten to undermine the region's
competitiveness.   Local officials may tell you that their
strategy is to move the city into higher value-added sectors,
such as software and technology.  As HCMC pushes into these new
areas, U.S. business is helping to lead the way.  There already
are a number of U.S.-linked, medium-sized software developers
based in the city.  HCMC's nascent tech sector will get an
immense boost if Intel's plans to open a USD 600 million
manufacturing plant here come to fruition.  More broadly, the
HCMC American Chamber of Commerce has played a real leadership
and informal advisory role in encouraging the GVN to stay on the
path of economic reform.
Leaders With Vision
4. (SBU) Vietnamese provincial leaders have a significant degree
of autonomy to implement Hanoi directives based on their
interpretation of "local conditions."  Leadership helps explain
why HCMC and some neighboring provinces are growing quickly --
up to 15 percent annually -- while other provinces are not.
Political leaders in the HCMC region are determined to create a
government culture more responsive to private business needs.
HCMC's recent Provincial Party Congress kept intact the city's
management team -- headed by HCMC Party Secretary and Politburo
member Nguyen Minh Triet, at least for now. Rumors persist that,
following the 10th Party Congress, Triet will be sent to Hanoi
to become Chief of the Commission on Organizational Affairs of
the Party's Central Committee.  In this capacity, he will remain
a Politburo member, and his protege, and current HCMC Party
Deputy, Le Hoang Quan, will succeed him (and also join the
5. (SBU) HCMC's leaders have been relatively progressive in
handling religious freedom and human rights issues.  Although
implementation problems remain, Cardinal Man will tell you that
HCMC has partnered with the Catholic Church to combat HIV/AIDS,
the first such faith-based partnership in Vietnam.  Similarly,
Protestant groups, including house churches, report improved
treatment here.  Two house church organizations recently have
been registered under Vietnam's legal framework on religion, a
first in Vietnam.  However, leaders of the staunchly
anti-Communist United Buddhist Church of Vietnam (UBCV) remain
under pressure, as does the city's small political dissident
community; the authorities view both the UBCV and the dissidents
as threats to the regime.
6. (SBU) Elsewhere in our Consular bailiwick, particularly in
the Central Highlands, leaders have been tougher on religion and
slower to enact the reforms needed to grow the local economy,
but even there we see progress; again, more dynamic provincial
leadership makes all the difference.  A case in point is Dak Lak
Province, where new leadership appointed during the recent
provincial Party Congress appears far more open to dialogue than
its predecessors, has eased pressure on religious groups, and
has facilitated the issuance of passports for ethnic minority
individuals seeking to join their families in the U.S. under the
VISAS-93 program.
Reform vs. Control
7. (SBU) Our contacts in southern Vietnam portray a Communist
Party on the horns of a dilemma as it prepares for the 10th
Party Congress this spring.  On the one hand, Party officials
fret that reform will erode the power and patronage that help
them control Vietnamese society.  On the other hand, Party
leaders here believe that their legitimacy rests in part on
satisfying the economic demands of the average Vietnamese.  They
also are looking anxiously at China, whose influence and power
is becoming an increasing preoccupation to nationalistic
Vietnamese inside and outside the Party.  Perhaps more than
anywhere else in Vietnam, leaders in HCMC seem to appreciate
that financial and capital market reform and stronger rule of
law are needed to prevent growth from sputtering, particularly
in a WTO environment.  They also appreciate that the HCMC region
needs capital to dramatically upgrade its inadequate roads,
ports and airports lest poor infrastructure become a bottleneck
to growth.  City leaders likely will press you to encourage more
U.S. infrastructure and technology investment in the province.
You may wish to point out that to succeed, the city must wean
itself from an overdependency on tied-ODA and seek competitive
market solutions for infrastructure development.
Attitudes Toward the United States
8. (SBU) Polling has shown that public attitudes toward the
United States are more positive in HCMC -- and in southern
Vietnam writ large -- than in the North.  However, this warmth
does not permeate the Party, which even in the more open South
remains ambivalent about the United States.  The most
progressive officials privately tell us that one-party rule is a
developmental dead end.  Pragmatists acknowledge that we are the
only economic, political and military counterweight to China.
Others, particularly Ministry of Public Security officials and
Party ideologues, suspect that the USG seeks to use economic
reform and pressure for greater human rights to engineer the
overthrow of the Party; hardliners have termed this notion
pejoratively, "peaceful evolution."  These themes are the
subtext for much of the ongoing debate between reformists and
Party hardliners in the run-up to the 10th Party Congress.
9. (SBU) Former Prime Minister Vo Van Kiet, senior statesman of
the Party in southern Vietnam, has emerged as the de facto
spokesman of the Party's reformist wing, which is pushing for
the Party Congress to endorse comprehensive economic, social and
political reform.  Kiet has accused conservatives of fostering a
climate of cronyism and venality that damages the Party's
legitimacy, stifles economic growth, and undermines Vietnam's
aspirations for international integration, including WTO
membership and improved relations with the United States.
Kiet's prescriptions -- economic and political -- are the most
comprehensive and far-reaching that we have seen emanate from
within the Party's senior ranks thus far.
10. (SBU) Kiet has become the darling of the reform-oriented
HCMC press, which has given his statements headline coverage.
HCMC's leading mass circulation newspaper also recently ran a
daring series highlighting the 60th anniversary of the founding
of the National Assembly in which it implicitly criticized that
Party for stifling representative government.  The outcome of
political jockeying leading to the Party Congress will set the
tone for national policy in coming years on a range of political
and economic issues of importance to the United States;
political and institutional leaders in HCMC will continue to
help shape that outcome.