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Viewing cable 07HOCHIMINHCITY1234, GRAPPLING WITH CORRUPTION -- HCMC SIDEWALKS

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Reference ID Created Released Classification Origin
07HOCHIMINHCITY1234 2007-12-14 03:50 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Consulate Ho Chi Minh City
VZCZCXRO1506
OO RUEHDT RUEHPB
DE RUEHHM #1234/01 3480350
ZNR UUUUU ZZH
O P 140350Z DEC 07
FM AMCONSUL HO CHI MINH CITY
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3445
INFO RUCPDOC/USDOC WASHDC PRIORITY 0053
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHHI/AMEMBASSY HANOI PRIORITY 2365
RUCNARF/ASEAN REGIONAL FORUM COLLECTIVE
RUEHHM/AMCONSUL HO CHI MINH CITY 3664
UNCLAS SECTION 01 OF 02 HO CHI MINH CITY 001234 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/MLS 
STATE PASS TO USAID FOR ANE 
STATE PASS USTR FOR DBISBEE 
COMMERCE FOR 4431/MAC/AP/OPB/VLC/HPPHO 
TREASURY FOR SCHUN 
 
E.O. 12958: N/A 
TAGS: ECON EFIN ETRD EIND PGOV VM
SUBJECT: GRAPPLING WITH CORRUPTION -- HCMC SIDEWALKS 
 
 
HO CHI MIN 00001234  001.2 OF 002 
 
 
1. (SBU) SUMMARY: From mobile noodle stands surrounded by 
brightly-colored plastic chairs to expansive motorbike parking 
lots in front of pricey restaurants, the sidewalks in Ho Chi 
Minh City (HCMC) are clogged with commerce.  HCMC's skyrocketing 
land prices make sidewalks a hot commodity, creating 
opportunities for official rent seeking and corruption when 
officials consider business permit applications.  Officials and 
media outlets fighting for transparency have seized on sidewalks 
as a politically acceptable issue to force public debate on 
sensitive issues of public goods use and corruption.  They 
appear to be making progress.  End summary. 
 
HCMC's Entrepreneurial Sidewalks 
-------------------------------- 
2. (SBU) Virtually every square foot of many city sidewalks has 
been rented out in one way or another, often with the approval 
of district and ward-level governments in exchange for formal or 
informal payments.  Ward-level governments regularly license 
sidewalk businesses, especially in the busy downtown districts 
where HCMC's property values can exceed New York's.  Nguoi Lao 
Dong, the newspaper of the HCMC Labor Federation, recently 
published a series on sidewalk commerce in which they documented 
more than 500 motorcycle parking lots in District 1 alone that 
posed a danger to pedestrians by forcing people to walk in 
traffic-clogged streets. 
 
3. (SBU) Businesses looking to use sidewalks for customer 
motorbikes say they pay "just a little bit more" than required 
when they settle their ward-level "security and national defense 
fund" fees (part of the official ward budget).  Other businesses 
that "sublet" the sidewalk in front of their buildings report 
making informal payments to ward-level police.  The practice is 
so widespread that many sidewalks are impassable. 
 
Rent seeking, Organized Crime and Official Corruption 
--------------------------------------------- -------- 
4. (SBU)  The reasons behind this behavior are clearly monetary. 
 Poor enforcement of Vietnam's Traffic Laws and lack of 
government accountability create opportunities for abuse.  Some 
ward-level government agencies responsible for monitoring 
sidewalks even profit from business operations in front of their 
own buildings.  District and ward-level governments collect 
questionable informal payments (to the national security fund) 
and formal taxes (on the income generated by sidewalk 
operations) from businesses using sidewalks to park motorbikes. 
 
 
5. (SBU)  This might be the end of the story if this were just 
another administrative fee, but only a small portion of the 
proceedings from sidewalk commerce appears to be reaching the 
official budget.  The rest goes to the pockets of businesses, 
ring leaders and officials who facilitate the licenses. 
According to the HCMC Taxation Department, District 1 alone has 
250-300 licensed sidewalk parking lots, but almost all the 
district-level governments say they collect "unknown" or 
"insignificant" taxes from these businesses. 
 
6. (SBU) Nguoi Lao Dong newspaper examined the connection 
between informal payments and organized crime, writing about a 
ring-leader well connected to senior district-level officials 
who would alert him ahead of potentially problematic 
inspections.  Another boss boasted to the paper that he acquired 
licenses for many sidewalk businesses by wining and dining local 
officials (including People's Committees, Police Departments, 
Urban Order Management Committees, and Taxation Departments) and 
giving them envelopes of money every month. 
 
Unexpected Champions for Transparency Step Up 
--------------------------------------------- 
7. (SBU) Raising the issue during a November municipal meeting, 
HCMC People's Committee Chairman Le Hoang Quan castigated 
district and ward-level officials for having rented out this 
public good and charged officials with cleaning up the sidewalks 
to improve city traffic.  One member of the HCMC People's 
Council suggested that the Chairpersons of the district and 
ward-level People's Committees should be held accountable for 
ensuring that the sidewalks are cleared to serve pedestrians. 
Others proposed that since there is a real need for parking 
space in HCMC, local governments should conduct open bidding for 
sidewalk space.  Still others wanted to authorize HCMC's Public 
Interest Service to regulate commercial activity on part of the 
city's sidewalks, reserving two-thirds of the sidewalk area for 
pedestrian use.  While the specifics of the proposals varied, 
 
HO CHI MIN 00001234  002.2 OF 002 
 
 
one common theme was establishing transparency in the management 
of this valuable public good. 
 
8.  (SBU) Since the reports and meetings began, local media 
outlets have kept a watchful eye on sidewalk commerce and some 
local government officials show signs of becoming more 
accountable and are clearing the sidewalks in their areas. 
After being stung by criticism that early crack-downs only 
targeted poor street vendors while ignoring large-scale abuses 
by expensive restaurants, the city changed its focus.  The CG 
personally witnessed an enforcement raid in which a team of city 
workers and police confiscated scores of motorbikes parked in 
front of expensive restaurants.  The same team ignored small 
street vendors in the neighborhood.  As a result of press 
coverage and the resulting aggressive enforcement, a large 
number of downtown sidewalks have been cleared and more than 60 
percent of District 1's sidewalk parking lot licenses have been 
revoked. 
 
Comment: 
-------- 
9. (SBU) HCMC sidewalks are both a symbol of the city's booming 
free market and a visible reminder of the temptation for 
officials to abuse public goods in Vietnam.  The good news is 
that some city officials are stepping up, driven in large part 
by local newspapers that seem increasingly willing to name names 
when it comes to official corruption.  These papers have found a 
politically acceptable way to publicly point fingers at dirty 
officials by focusing on public safety for pedestrians. This 
story also demonstrates the extent to which technical assistance 
is needed to improve municipal administration since even honest 
officials are having difficulty balancing the competing needs of 
the city's 3.5 million motorbikes and those of pedestrians and 
shop owners.  End comment. 
 
10. (U) This cable was coordinated with Embassy Hanoi. 
FAIRFAX