VZCZCXRO5851
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHHI #0114/01 0310858
ZNR UUUUU ZZH
R 310858Z JAN 08
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC 7081
INFO RUEHHM/AMCONSUL HO CHI MINH 4211
RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHGP/AMEMBASSY SINGAPORE 2491
UNCLAS SECTION 01 OF 02 HANOI 000114
SIPDIS
SENSITIVE
SIPDIS
STATE FOR EAP/MLS AND EEB/TRA
STATE FOR EEB/TRA VIKI LIMAYE-DAVIS
STATE FOR EEB/TRA/AN TERRI ROBL
USTR FOR DBISBEE
USTDA FOR STEINGASS, ROSSITER
USDOC FOR 4430/MAC/ASIA/OPB/VLC/HPPHO
SINGAPORE FOR FAA MARY WALSH
E.O. 12958: N/A
TAGS: ECON EAIR EIND EINV ETRD VM
SUBJECT: VIETNAM: AMBASSADOR MEETS MINISTER OF TRANSPORT
REF: (A) 2007 HANOI 1664 (B) HANOI 29
HANOI 00000114 001.2 OF 002
1. (SBU) Summary: On January 29, the Ambassador met with Minister
of Transport Ho Nghia Dung to promote an Open Skies Treaty, request
GVN funding for the follow-on phases of the USTDA Aviation Safety
Technical Assistance Project, and advocate for ratification of the
Cape Town Convention on aircraft financing. The Minister told the
Ambassador that the Civil Aviation Administration of Vietnam (CAAV)
is in the early stages of developing a "roadmap" that would
eventually lead to further discussions on Open Skies. He said the
Ministry of Transport (MOTR) hoped to secure funding from the
Ministry of Finance for the Safety Upgrade Project during the first
half of 2008, and indicated that the GVN plans to ratify Cape Town.
He also asked the Ambassador to help attract U.S. foreign direct
investment to develop Vietnam's transportation infrastructure. End
Summary.
2. (SBU) On January 29, the Ambassador paid a courtesy call on
Minister of Transport Ho Nghia Dung. The MOTR, which oversees the
road, rail, aviation and maritime sectors, has dozens of constituent
agencies and organizations, including the CAAV, the Vietnam Maritime
Administration (VINAMARINE), Vietnam Register, and the Vietnam Road
Administration (VRA).
OPEN SKIES
----------
3. (SBU) Under the accompanying Memorandum of Consultations to our
2003 bilateral Air Transport Agreement, the USG and GVN agreed to
meet within four years to consider further expansion of commercial
aviation opportunities for the airlines of each side. CAAV has not
replied to the Embassy's September 17, 2007 Open Skies demarche (Ref
A), and the Ambassador asked Minister Dung to consider further
liberalization of Vietnam's aviation market. He noted that Open
Skies would give Vietnam Airlines (VNA) fifth-freedom traffic rights
between Japan and the United States on the carrier's planned Ho Chi
Minh City-Osaka-Los Angeles route. Dung reaffirmed Vietnam's
commitment to international economic integration and expressed
support for Open Skies, but said that Vietnam's civil aviation
market needs more time to develop.
4. (SBU) Nevertheless, Dung said the CAAV is in the early stages of
developing what he called a "roadmap" that would eventually lead to
further discussions on Open Skies. The Ambassador noted that it
might be useful to begin exploratory discussions now since VNA
intends to begin direct service to the United States in late 2008 or
early 2009. The Minister demurred but said the CAAV would provide
us with a copy of the roadmap "later in 2008." The Ambassador noted
that the existing Air Transport Agreement would expire in January
2009 if not extended.
USTDA AVIATION SAFETY TECHNICAL ASSISTANCE PROJECT
--------------------------------------------- -----
5. (SBU) TDA provided grant funding for Phase I of a $1.4 million,
three-phase air safety upgrade project to help the CAAV obtain
Category I status under the Federal Aviation Administration's (FAA)
International Aviation Safety Assessment Program (IASA). The
project, partially funded by Boeing, would permit direct access to
the United States by Vietnam's air carriers. In May 2007, as the
first phase neared completion, TDA asked the CAAV to provide funding
toward the project's follow-on phases to demonstrate the GVN's
overall commitment to the program. In late 2007, the CAAV promised
to contribute $50,000 toward the second phase (estimated to cost
$511,980) and hire at least two full-time flight operations
inspectors.
6. (SBU) The Ambassador asked Minister Dung to expedite the funding,
which the CAAV has yet to procure, and asked about the hiring of the
flight operations inspectors. The Minister replied that the MOTR
hoped to secure the $50,000 from the Ministry of Finance during the
first half of 2008 and noted the difficulty of obtaining funding
within the Vietnamese Government. He assured the Ambassador that
Vietnam intends to complete the follow-on phases. He also asked the
Ambassador to convey a request to allow the CAAV's two flight
operations inspectors to continue to work part-time as senior pilots
for Vietnam Airlines (VNA). The Ambassador cast doubt on the idea,
which contravenes International Civil Aviation Organization (ICAO)
standards, but said he would pass the request to the FAA and TDA.
7. (SBU) The Ambassador pointedly noted that the CAAV should work to
remain engaged on the project while awaiting funding if only to
HANOI 00000114 002.2 OF 002
demonstrate that Vietnam is still interested in working with the TDA
to complete the program. "We understand your implication and
reiterate our determination to move forward," the Minister replied,
adding, "We will accelerate the process as much as we can."
8. (SBU) The Ambassador also informed Dung that VNA's August 6, 2007
filing with the U.S. Department of Transportation for a foreign air
carrier permit triggered an impending FAA safety audit of Vietnam's
regulatory aviation safety posture tentatively scheduled to take
place between April and June 2008. With just one of the three
project phases completed, he noted that failure to secure a Category
I rating could delay flights to the United States by two years or
more. Minister Dung replied that the CAAV was "ready" for the
assessment, expressed confidence that Vietnam would pass muster, and
said that VNA was reluctant to wait until 2010 to begin direct
service to the United States.
CAPE TOWN CONVENTION
--------------------
9. (SBU) Turning to the Cape Town Convention, a risk mitigation
agreement on aircraft financing, the Ambassador noted that
ratification would reduce financing costs on future aircraft
deliveries to Vietnam's air carriers and trigger the release of $24
million in deposits associated with the financing of four 777
aircraft by VNA. Approval would also raise VNA's international
profile - critical as the state-owned airline prepares to equitise
partly in early 2009 (Ref B), the Ambassador said. Dung implied
that the GVN would ratify the Convention and said the document was
currently making its way through the GVN's interagency process
before landing on the Prime Minister's desk for signature. He
mentioned the Ministries of Justice (MOJ), Planning & Investment
(MPI), and Foreign Affairs (MFA) as critical to the process. The
Convention does not require approval by Vietnam's National
Assembly.
TRANSPORTATION DEVELOPMENT
--------------------------
10. (SBU) Dung said the GVN would expand Hanoi's Noi Bai
International Airport and build a second international airport in
southern Vietnam to supplant Ho Chi Minh City's congested Ton Son
Nhat International Airport. The new airport would serve 50-80
million passengers per year, he said.
11. (SBU) The Minister also asked the Ambassador to help increase
U.S. foreign direct investment to develop Vietnam's transportation
infrastructure, particularly roads, ports and maritime logistics.
In response to the Ambassador's query, the Minister said the MOTR
had yet to negotiate transportation build-operate-transfer (BOT)
agreements with foreign investors but hoped to do so in the future,
particularly with U.S. firms. He noted that the Ministry of
Transport's web site lists projects that are open for investment.
MICHALAK