Cablegate: Vietnam Pm Discusses Trade with Burma - Talk, No Much

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ZNR UUUUU ZZH
R 240605Z AUG 07
FM AMEMBASSY RANGOON
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RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHGG/UN SECURITY COUNCIL COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 1484
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UNCLAS SECTION 01 OF 03 RANGOON 000782

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STATE FOR EAP/MLS, EB/TRA
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TREASURY FOR OSIA:SCHUN

E.O. 12958:N/A
TAGS: PGOV PREL ECON ETRD EINV ENRG BM
SUBJECT: VIETNAM PM DISCUSSES TRADE WITH BURMA - TALK, NO MUCH
ACTION

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1. (SBU) Summary. During a two-day visit to Burma, Vietnamese
Prime Minister Nguyen Tan Dung, accompanied by a delegation of 47
Vietnamese businessmen, met with Senior General Than Shwe, Acting
Prime Minister General Thein Sein, and the Chamber of Commerce.
During the meetings, the Burmese leaders emphasized the need for
closer ties between the two countries and discussed ways to enhance
trade and investment. Although the Burmese Minister of Energy and
PetroVietnam signed a memorandum of understanding for oil and gas
cooperation, the Vietnamese Embassy expressed doubt that Vietnamese
companies would invest in Burma in the near future. Trade between
Burma and Vietnam has improved significantly over the past three
years, with Burmese exports to Vietnam up 250 percent since 2004 and
Burmese imports of Vietnamese products up 50 percent during the same
period. Bilateral investment from both countries, however, is
virtually nonexistent. End Summary.

Burmese Seek Vietnamese Investment
----------------------------------

2. (U) During his August 14-15 trip to Burma, Senior General Than
Shwe and Acting Prime Minister General Thein Sein wined and dined
Prime Minister Nguyen Tan Dung and invited him to plant a tree
during his tour of the new capital, Nai Pyi Taw. Emphasizing the
historical similarities between Burma and Vietnam, the Burmese
senior leadership and Prime Minister Dung on August 14 discussed
bilateral economic relations and ways to improve trade and
investment between the two countries. Acting Prime Minister Thein
Sein noted that Burma should follow Vietnam's example for economic
development, and expressed his ardent wish for Vietnamese investment
in the areas of oil and gas, transportation, and general trade.
Upon returning to Rangoon the evening of August 14, Than Shwe hosted
an elaborate dinner and reception in the Prime Minister's honor,
with more than 100 people in attendance. On August 15, the Prime
Minister and his delegation met with the Chamber of Commerce to
discuss further how to improve bilateral economic relations.

MOU on Petroleum the Only Deliverable
-------------------------------------

3. (SBU) Le Hai Chau, Vietnamese Commercial Counselor, categorized
the Prime Minister's trip to Burma, which lasted less than 36 hours,
as short but "somewhat successful." Despite a plethora of
high-level meetings, the Burmese only secured one deliverable: the
August 14 signing of a Memorandum of Understanding for strategic
cooperation in the petroleum sector, signed by Burmese Energy
Planning Department Director General Soe Myint and PetroVietnam
Chief Executive Officer Tran Ngoc Canh. Mr. Chau informed us that
the MOU did not specify any detailed cooperation, but rather was
more of an invitation by the Burmese for Vietnamese investment in
the oil and gas sector. Although the Burmese Government touted the
MOU as a clear win for the regime, Mr. Chau noted that no Vietnamese
companies are interested in investing in Burma's petroleum sector,
nor any other sector, at this time.

4. (SBU) Mr. Chau expressed his surprise that the Burmese senior
leaders and the Prime Minister did not talk about the Greater Mekong
Sub-region East-West Economic Corridor, which will connect the South
China Sea with the Bay of Bengal. The six countries involved --
Burma, China, Cambodia, Laos, Thailand, and Vietnam -- fully support
the construction of the corridor road, he noted, but lack of
financing impedes construction. Perhaps the reason the project was
not discussed, Chau opined, is because the Vietnamese Government
already declined the GOB's request for financial assistance.
Instead, the GOB will seek funding from thee Japanese for the
construction of the road that will connect Mae Sot at the Thai

RANGOON 00000782 002.2 OF 003

Border to Mawlamyine.

New Investment Not Likely
-------------------------

5. (SBU) According to the Chamber of Commerce, Vietnamese
investment in Burma totals $3.65 million, accounting for 0.03
percent of total foreign investment. Mr. Chau confirmed this
investment, which is in the medical equipment sector, but noted that
there has been no new Vietnamese investment in Burma for more than
10 years. While the visiting Vietnamese business delegation made
important contacts with the Burmese business sector, he explained,
Vietnamese businesses continue to be concerned about Burma's poor
investment climate. Companies may be willing to invest in joint
ventures with other foreign companies, but even that, he noted,
would be unlikely.

6. (SBU) The Chamber of Commerce depicted a different picture: U
Aung Myint, Consultant and member of the Chamber of Commerce, told
us that during the August 15 meeting, many Vietnamese companies
expressed interest in investing in Burma. The Chamber of Commerce
acknowledged that it plans a reciprocal visit to Vietnam in
September, with a delegation of more than 20 businessmen, to
investigate investment opportunities in Vietnam.

Trade On the Rise
-----------------

7. (SBU) Mr. Chau confirmed that trade between Burma and Vietnam
continues to increase annually, although the value of Burmese
exports to Vietnam is much greater than imports. Between FY 2004 and
FY2006, Burmese exports increased from $16,606,648 to $58,166,325,
an increase of 250 percent. In the last year alone, exports to
Vietnam rose more than 50 percent, with the largest increases
occurring in the sale of minerals and timber products. In FY 2006,
the export of timber and forest products to Vietnam totaled almost
$36 million, up from $19.5 million in FY 2005. The export of
minerals, primarily copper, was $13 million in FY 2006, an increase
of 123 percent from $5.8 million in FY 2005. The export of both
timber and mineral products accounted for almost 85 percent of total
exports to Vietnam in FY 2006.

--------------------------------------------- ---------
Vietnam-Burma Trade, FY2004-Present
In US Dollars
--------------------------------------------- ----------
Fiscal Burmese Percent Burmese Percent
Year Imports Change Exports Change
--------------------------------------------- ----------
2004 8,640,333 -- 16,606,648 --
2005 9,859,118 14.1 38,610,118 132.5
2006 12,917,754 31.0 58,166,325 50.5
2007* 6,746,190 21,965,291
--------------------------------------------- ----------
*Through June 30, 2007
Source: Business Information Group (BIG), August 2007
Note: The Burmese fiscal year (FY) runs from April 1 to March 31.

8. (SBU) Burmese imports of Vietnamese products also increased
during the past three years, although not at the same rate as
exports. Between FY 2004 and FY 2006, Vietnamese exports to Burma
increased almost 50 percent, from $8.6 million to $12.9 million.
Vietnamese exports to Burma consist primarily of medicines,
plastics, textiles, and other commodities. Mr. Chau noted that
between FY 2005 and FY 2006, there was an increased demand for

RANGOON 00000782 003.2 OF 003

medicines and other commodities, which increased 204 percent and 107
percent respectively. The Vietnamese Embassy predicts that imports
of Vietnamese products will continue to rise in the future, as the
demand for plastic products, textiles, and medicines rises.

9. (SBU) FY 2007 trade data shows an increase in trade between
Burma and Vietnam over last year's levels. According to Mr. Chau,
overall bilateral trade has increased 35 percent since last year.
He expects both import and export values to exceed last year's
amounts by between 20-30 percent.

Comment
-------

10. (SBU) The GOB continues to try to improve economic relations
with the rest of Asia, in order to reduce their dependence on China
and Thailand. The Burmese Government sees Vietnam as an example of
what Burma can be in the future -- and seeks to strengthen ties in
order to learn how to best move forward. The Burmese clearly want
more investment, but fail to understand that until the investment
climate improves, no Vietnamese companies, nor any foreign
companies, will commit. Instead, they will only talk generally
about plans for investment. The Burmese leaders do not show any
comprehension that their greediness and mismanagement repels, rather
than attracts, investment, despite the country's rich resources.

VILLAROSA

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