Cablegate: Phu Quoc Island - Bullish On Development But. . .

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

231005Z Sep 02

2002HANOI02297 - UNCLASSIFIED

UNCLASSIFIED PTQ8923

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FM AMEMBASSY HANOI
TO SECSTATE WASHDC PRIORITY 7604
INFO AMCONSUL HO CHI MINH CITY
AMEMBASSY PHNOM PENH
USCINCPAC HONOLULU HI//FPA//
USDOC WASHDC

UNCLAS SECTION 01 OF 02 HANOI 002297

SIPDIS

STATE FOR EAP/BCLTV

USDOC FOR 1431/MAC/AP/HPPHO

E.O. 12958: N/A
TAGS: ETRD ECON VM
SUBJECT: PHU QUOC ISLAND - BULLISH ON DEVELOPMENT BUT. . .

REF: A. HANOI 2200 B. HANOI 2232

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1. (U) SUMMARY. PHU QUOC ISLAND DISTRICT OFFICIALS ARE
OPTIMISTIC ABOUT DEVELOPMENT BEYOND AGRICULTURE AND FISHING,
ITS TRADITIONAL ECONOMIC MAINSTAYS. THEY HOPE THAT ITS
TROPICAL ISLAND SETTING AND IMPROVING (THOUGH STILL WEAK)
INFRASTRUCTURE WILL ENCOURAGE DEVELOPMENT, ATTRACT FOREIGN
INVESTMENT, AND BRING IN MORE DOMESTIC AND FOREIGN TOURISTS.
THE POTENTIAL FOR TOURISM IS REAL BUT WILL PROBABLY NEED
VASTLY MORE RESOURCES THAN NOW AVAILABLE. END SUMMARY.

2. (U) POLOFF AND POL FSN VISITED PHU QUOC ISLAND ON
SEPTEMBER 4. (REFTELS REPORTED ON COUNTERTERRORISM
DISCUSSIONS AND NARCOTICS ISSUES, RESPECTIVELY). THE ISLAND
IS LOCATED OFF THE SOUTHWEST COAST OF VIETNAM, 40 KILOMETERS
WEST OF THE VIETNAMESE MAINLAND AND ABOUT 15 KILOMETERS
SOUTH OF CAMBODIA. IT IS ADMINISTERED AS A DISTRICT OF KIEN
GIANG PROVINCE. THERE ARE GOOD BEACHES AROUND MOST OF THE
ISLAND, ESPECIALLY ON THE WEST AND SOUTHEAST SIDES. UNLIKE
THE DELTA MAINLAND, MUCH OF THE ISLAND IS HILLY AND HEAVILY
FORESTED.

3. (U) ACCORDING TO NGO RANG DONG, VICE CHAIRMAN OF THE
DISTRICT PEOPLE'S COMMITTEE, THE ISLAND CONSISTS OF ABOUT
600 SQUARE KILOMETERS AND HAS A POPULATION OF ABOUT 80,000,
97 PERCENT OF WHOM ARE ETHNIC KINH. THE MAIN TOWN, DUONG
DONG, IS LOCATED ON THE WEST SIDE OF THE ISLAND, WITH A
POPULATION OF ABOUT 30,000. DONG NOTED THAT AGRICULTURE "IS
MORE DIFFICULT THAN ON THE MAINLAND" DUE TO THE POOR QUALITY
OF SOIL AND THE LACK OF FLAT LAND. FISHING HAS
TRADITIONALLY BEEN MORE IMPORTANT; PHU QUOC IS ALSO FAMOUS
IN VIETNAM FOR ITS HIGH QUALITY FISH SAUCE AS WELL AS BLACK
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PEPPERS.

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GETTING THERE IS HALF THE FUN
-----------------------------

4. (U) THE ISLAND IS REACHED EITHER VIA FLIGHTS FROM HO
CHI MINH CITY (ONE HOUR) OR THE PROVINCIAL CAPITAL OF RACH
GIA (ABOUT 25 MINUTES), OR VIA A DAILY FERRY FROM RACH GIA
(ABOUT SEVEN HOURS). ONE FOREIGN TOURIST DESCRIBED THE
FERRY TRIP SIMPLY AS "HELLISH" BUT CHEAP AT USD FOUR.
DONG CLAIMED THAT THE PROVINCE IS NOW IMPLEMENTING A PLAN
FOR A HIGH-SPEED FERRY THAT WILL REDUCE TRAVEL TIME IN HALF,
BUT WAS UNABLE TO SAY WHEN THE NEW FERRY SERVICE MIGHT
ACTUALLY BEGIN. ONCE ON LAND, THE ROAD SYSTEM IS QUITE
BASIC; ONLY ABOUT 27 KILOMETERS OF THE 60 KILOMETERS OF ROAD
ARE PAVED, DONG ADMITTED. HE NONETHELESS ASSURED POLOFFS
THAT "IF YOU COME BACK IN FIVE YEARS, IT WILL LOOK
COMPLETELY DIFFERENT."

--------------------
COUNTING ON TOURISM
--------------------

5. (U) TRAN QUOC KHANH, CHIEF OF THE DISTRICT INDUSTRIAL
AND TRADE AFFAIRS OFFICE, NOTED THAT TOURISM IS GROWING
STEADILY. WHILE HE WAS UNABLE TO PROVIDE PRECISE FIGURES,
KHANH ESTIMATED THAT TOURISM IS GROWING AT "FIVE TO 10
PERCENT" PER YEAR. HE CITED THE ISSUANCE OF GOVERNMENT
DECREE 97 IN AUGUST 2000 AS A KEY MILESTONE, CREATING IN
DUONG DONG TOWN AND THE SURROUNDING AREA AN "OPEN ECONOMIC
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ZONE." (NOTE: KIEN GIANG PROVINCIAL PEOPLE'S COMMITTEE
OFFICIALS TOLD AMBASSADOR IN JULY 2002 THAT THE PROVINCE WAS
STILL AWAITING CENTRAL GOVERNMENT APPROVAL FOR PARTS OF THE
PROJECT, WHICH THEY NOTED WOULD EVENTUALLY ALSO INCLUDE A
RESIDENTIAL AREA, "CLEAN" COMMERCIAL ACTIVITIES SUCH AS
INSURANCE AND BANKING, AN AIRPORT, AND A DEEP-WATER PORT.
END NOTE) SINCE THEN, THE NUMBER OF HOTELS HAS INCREASED
FROM FOUR TO NINE (THERE ARE NOW ABOUT 200 HOTEL ROOMS ON
THE ISLAND); NUMEROUS NEW RESTAURANTS HAVE ALSO OPENED.
KHANH PREDICTED THAT WITHIN THE NEXT FIVE YEARS "AT LEAST"
FIVE MORE HOTELS WILL BE BUILT.

6. (U) TOURISTS ARE NOW ABOUT EVENLY SPLIT BETWEEN FOREIGN
AND DOMESTIC, DEPENDING ON THE SEASON, ACCORDING TO KHANH.
DURING SUMMER AND FALL, THERE ARE RELATIVELY MORE VIETNAMESE
TOURISTS, MOST COMING IN ORGANIZED GROUPS OR THROUGH
SPONSORING ORGANIZATIONS (WORK UNITS, WOMEN'S ASSOCIATIONS,
ETC.). FOREIGN TOURISTS TEND TO ARRIVE DURING THE WINTER
MONTHS. THE ASSISTANT MANAGER OF PHU QUOC'S SOLE THREE STAR
HOTEL SEPARATELY CLAIMED TO HAVE HAD "ABOUT 80 PERCENT
OCCUPANCY" OVER THE PAST THREE MONTHS, WITH INCREASING
NUMBERS OF ORGANIZED JAPANESE GROUPS, AS WELL AS FRENCH AND
GERMAN TOURISTS.

7. (U) KHANH ADMITTED THAT "IT IS NOT ENOUGH" JUST TO

UNCLASSIFIED

UNCLASSIFIED PTQ8924

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UTED-00 VC-00 FRB-00 H-01 TEDE-00 INR-00 ITC-01
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OPIC-01 ACE-00 SP-00 SSO-00 SS-00 STR-00 TEST-00
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/009W
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P 231005Z SEP 02
FM AMEMBASSY HANOI
TO SECSTATE WASHDC PRIORITY 7605
INFO AMCONSUL HO CHI MINH CITY
AMEMBASSY PHNOM PENH
USCINCPAC HONOLULU HI//FPA//
USDOC WASHDC

UNCLAS SECTION 02 OF 02 HANOI 002297

SIPDIS

STATE FOR EAP/BCLTV

USDOC FOR 1431/MAC/AP/HPPHO

BRING TOURISTS TO THE ISLAND -- IT IS ALSO IMPORTANT TO
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PROVIDE THEM WITH INTERESTING ACTIVITIES. HE EXPRESSED A
WISH THAT DISTRICT AUTHORITIES WILL TAKE ADVANTAGE OF THE
"NATURAL BEAUTY" OF THE ISLAND AND ORGANIZE ECO TOURS AS
WELL AS TOURS AROUND THE SEA AND THE FORESTS. KHANH NOTED
THAT THE PROVINCIAL PEOPLE'S COMMITTEE HAD SPECIFICALLY
DIRECTED THE DISTRICT TO ENGAGE IN TOURISM THAT PROTECTS THE
ENVIRONMENT.

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OPEN FOR BUSINESS - SORT OF
---------------------------

8. (U) KHANH ALSO EXPRESSED A HOPE THAT INCREASED TOURISM
COULD FORM THE BASIS FOR MORE FOREIGN DIRECT INVESTMENT. HE
ASKED THAT POLOFFS TAKE BACK TO THE US EMBASSY THE MESSAGE
THAT PHU QUOC IS INTERESTED IN FOREIGN INVESTMENT,
ESPECIALLY IN THE TOURISM AND INDUSTRY SECTORS. IN THE
TOURIST SECTOR, KHANH SUGGESTED A JOINT VENTURE WORLD-CLASS
RESORT MIGHT BE FEASIBLE. IN THE INDUSTRIAL SECTOR, KHANH
SPECIFICALLY POINTED TOWARD SEAFOOD PROCESSING AS AN AREA
WITH "GREAT POTENTIAL." KHANH ADMITTED THAT, AS FAR AS HE
KNOWS, THERE IS NO US FOREIGN DIRECT INVESTMENT AT THIS
TIME. HOWEVER, PHU QUOC AUTHORITIES "WOULD VERY MUCH
WELCOME US INVESTMENT," HE DECLARED.

9. (U) DESPITE KHANH'S APPARENT INTEREST IN ATTRACTING
FOREIGN INVESTMENT, PHU QUOC HAS NOT YET ESTABLISHED AN
INVESTMENT PROMOTION OFFICE, HE ADMITTED. KHANH EXPRESSED A
HOPE THAT THE PROVINCIAL AUTHORITIES WOULD ESTABLISH SUCH AN
OFFICE SOON, BUT HE WAS UNABLE TO PREDICT WHEN. INSTEAD,
THE THREE STAR HOTEL, FOR A FEE OF USD 50, PROMISES TO
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PAGE 03 HANOI 02297 02 OF 02 231018Z
ORGANIZE BUSINESS MEETINGS AND PROVIDE INFORMATION ON
INVESTMENT OPPORTUNITIES. KHANH SAID HE WAS AWARE OF THIS
SERVICE, WHICH HE CHARACTERIZED AS THE HOTEL'S INITIATIVE
AND NOT INVOLVING DISTRICT AUTHORITIES.

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COMMENT
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10. (U) PHU QUOC ARGUABLY HAS THE NATURAL BEAUTY AND
TROPICAL CLIMATE TO COMPETE FOR INTERNATIONAL TOURISTS WITH
THAILAND'S PHUKET OR INDONESIA'S BALI. HOWEVER, WITHOUT
SIGNIFICANT COMMITMENT OF RESOURCES DEVOTED TO
INFRASTRUCTURE DEVELOPMENT, AND EVEN MORE FAVORABLE
INVESTMENT CONDITIONS THAN NOW EXIST, PHU QUOC'S TOURISM
BOOM IS APT TO REMAIN LIMITED, AND ITS ECONOMIC PROSPECTS
MODEST.
BURGHARDT

UNCLASSIFIED

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