VZCZCXRO2587
OO RUEHHM
DE RUEHHI #0945/01 1421035
ZNR UUUUU ZZH
O 221035Z MAY 07
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5427
INFO RUEHHM/AMCONSUL HO CHI MINH 3073
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
UNCLAS SECTION 01 OF 02 HANOI 000945
SIPDIS
SENSITIVE
SIPDIS
STATE FOR EAP/MLS AND EB/TPP/IPE JBOGER
STATE ALSO PASS USTR DBISBEE AND RBAE
STATE ALSO PASS USPTO FOR JURBAN
STATE ALSO PASS LIBRARY OF CONGRESS FOR TEPP
USDOC FOR 4430/MAC/AP/OPB/VLC/HPPHO
E.O. 12958: N/A
TAGS: KIPR ECON ETRD ECPS VM
SUBJECT: MICROSOFT SIGNS LANDMARK SOFTWARE LICENSE AGREEMENT WITH
VIETNAM
(U) SENSITIVE BUT UNCLASSIFIED, DO NOT POST ON THE INTERNET
1. (SBU) Summary: On May 21, Microsoft CEO Steve Ballmer and
Vietnamese Prime Minister Nguyen Tan Dzung witnessed the signing of
a multi-faceted agreement committing all GVN agencies to use
licensed software. For its part, Microsoft will increase its
investment to develop Vietnam's information and communication
technology (ICT) sector through training and capacity building
programs. Embassy intervened with GVN officials to make sure the
signing took place after Microsoft met with the Ambassador and
expressed last-minute concerns that the GVN would hold the agreement
as a deliverable for the potential visit of President Triet later
this summer. The agreement is a significant demonstration of
Vietnam's commitment to protect intellectual property rights (IPR)
and stop rampant piracy. Implementation of this agreement will move
Vietnam from having the world's fifth highest, and Asia's highest,
software piracy rate to a better ranking in the region and the
world. This may well constitute the most significant agreement
Vietnam has ever signed with a U.S. business. End Summary.
2. (SBU) During his May 21 visit to Hanoi, Microsoft CEO Steve
Ballmer joined Vietnamese Prime Minister Nguyen Tan Dzung, the
Ambassador and other GVN officials to witness the signing of a
multi-faceted agreement between the company and the GVN requiring
all government agencies to purchase and use licensed software. This
follows through on the Memorandum of Understanding (MOU), signed in
Washington during Deputy Prime Minister/Foreign Minister Pham Gia
Khiem's March visit, which committed both sides to sign a
comprehensive agreement on software licensing and collaborative ICT
development efforts by the end of May. Microsoft's President for
Southeast Asia Chris Atkinson estimated that Vietnam would purchase
licensed software for approximately 300,000 desktops through this
deal. In exchange, the agreement provides a foundation for
Microsoft to assist Vietnam in developing its ICT sector through
training, human resource development and other capacity building
programs. (Note: Though the figures are not public, Atkinson said
the 300,000 licenses will cost the GVN approximately USD 20 million,
while Microsoft's investment to develop the local ICT industry would
be around USD 3 million. End Note.)
Last-Minute Concerns by Microsoft
---------------------------------
3. (SBU) On May 18, Microsoft's Atkinson requested a last-minute
meeting with the Ambassador to request his assistance in urging the
GVN to follow through on its commitment in the March MOU to sign the
formal agreement by the end of May. Microsoft was concerned that
the GVN would try to delay signing some or all of the substance of
the agreement to preserve it as a deliverable for the potential
visit this summer by Vietnam's President Nguyen Minh Triet.
4. (SBU) Following the meeting, the Embassy contacted officials in
the Ministry of Foreign Affairs and the Office of the Government to
underline United States Government support for signing the agreement
now, so that our Presidents would be able to echo the signing's
important message and broad positive reaction during President
Triet's potential visit. For its part, Microsoft told the GVN it
would "mobilize all available resources" to spotlight Vietnam's
efforts to uphold its commitments to protect intellectual property
rights (IPR), as well as the opportunities for increased cooperation
between U.S. firms and Vietnam's ICT industry during the possible
Triet visit. Late on May 18, the GVN confirmed to Microsoft that it
would proceed with the signing now, with the hope that the two sides
could hold a second, "ceremonial" signing in Washington in
conjunction with the planned Triet visit.
PM Dzung and Microsoft's Ballmer Applaud This Step
--------------------------------------------- -----
5. (SBU) At the 30 minute signing ceremony, Prime Minister Dzung
stated that this agreement is evidence of Vietnam's commitment to
Microsoft, to the World Trade Organization and to the U.S.-Vietnam
Bilateral Trade Agreement (BTA). The Prime Minister said he highly
appreciates the cooperation with the United States in the ICT field
- both through USG assistance and cooperation and investment from
large U.S. enterprises - referencing specifically the anticipated
March 2008 launch of the Vinasat satellite built by Lockheed Martin.
He continued by saying that Vietnam will consistently follow market
practices, and will implement fully its international commitments,
including those on IPR protection. He told Microsoft's Ballmer that
he would personally ensure Vietnam fulfills its obligations under
this agreement. IPR protection is important to develop Vietnam's
"modest" USD 300 million software development industry and the ICT
sector as a whole, which will be critical in extending Vietnam's
HANOI 00000945 002 OF 002
wave of development, the Prime Minister said.
6. (SBU) PM Dzung talked about Vietnam's so-called Six Pillars of
Comprehensive Development (outlined in the World Bank/Asian
Development Bank/UNDP 2001 Vietnam Development Report) required to
ensure Vietnam's "sustainable development with social equity." He
noted that Vietnam will need to emphasize particularly the fifth
pillar, which he defined as education, training, science and
technology. This agreement provides a foundation for cooperation in
this pillar, Dzung said, expressing his hope that Microsoft would
continue to support Vietnam through participation in efforts such as
the Topic 64 Program and its ongoing work with Vietnam's leading IT
firm, FPT Corporation.
7. (SBU) Ballmer responded by stating that this agreement
demonstrates Vietnam's seriousness in protecting IPR and in creating
an environment and a platform for Vietnam's ICT industry to grow.
Echoing the Prime Minister's personal commitment, Ballmer agreed
likewise personally to ensure that Microsoft upholds its promises to
assist Vietnam's ICT sector.
Improving its BSA Software Piracy Ranking
-----------------------------------------
8. (SBU) The 2007 Business Software Alliance (BSA) and IDC Global
Software Piracy Study ranks Vietnam as having the world's fifth
highest software piracy rate. At 88 percent, this is the highest
rate in Asia. Significantly, Microsoft estimates that this
agreement alone will improve Vietnam's piracy rate by at least 10
percentage points, which would put it ahead of many other countries
in the region, including China, Indonesia and Thailand. Microsoft's
Atkinson told the Ambassador that this would be "one of the single
biggest percentage drops in the history of tracking software piracy
rates."
Comment
-------
9. (SBU) Of all the signings with U.S. businesses in recent years,
this agreement is likely the most significant for Vietnam in the
long term. Carrying through on its commitments will enable Vietnam
to take a giant step forward in its international respectability
with regard to protecting intellectual property rights. It sends a
strong signal about Vietnam's commitment to IPR protection as it
contemplates requesting consideration as a beneficiary under the
Generalized System of Preferences (GSP) Program and works to improve
its status under the Special 301 review process. The agreement will
also lead to a new level of development in Vietnam's ICT industry,
setting the stage for it to become a potentially significant player
in this rapidly expanding sector.
MARINE