[Vnbiz] In Vietnam, market economy thrives

[Phan, Tai]

In Vietnam, market economy thrives
The Economist


A sustained boom, with annual economic growth consistently around 7 to 8 percent since 2000, has transformed Vietnam.
Ho Chi Minh City (formerly Saigon) is bustling, confident and expanding fast. Its fancy restaurants and designer shops are not just for the increasing numbers of foreign tourists and businessmen. The middle class seems broader, and the gap between rich and poor narrower, than in many other Southeast Asian cities.

It has been more than 20 years since Vietnam's ruling Communists abandoned collectivism and embarked on market-based reforms, not unlike those China adopted a few years earlier. The country has come far since then.

Vietnam, with 84 million people, is a serious contender in the world economy, especially since joining the World Trade Organization this year. It has become Brazil's main rival in coffee exporting and Thailand's in rice.

Americans are welcome these days, especially if they bring dollars to invest. Likewise, an ancient animosity with China -- a frequent invader down the centuries -- has been put aside in the interests of prosperity.

Reform has come in fits and starts, but at present, Vietnam's palpable success encourages boldness. The National Assembly this week urged the government to press on with building a market economy. The government in turn is pressing state firms for faster privatization plans. Vietnam had only begun opening when Asia's 1997 economic storm hit, so, unlike some of its neighbors, it was largely unscathed, and growth has accelerated since.

Where did it all go right? One factor is the self-confidence that comes from having, as they see it, beaten off three world powers (America, China and France) in the past half-century. There is also Confucianism: Vietnam has kept some useful bits, such as the belief in education and self-betterment, without the feudalistic overtones. And success has bred success: Liberalization is producing prosperity, encouraging further reform.

Vietnam has a corruption problem but is taking serious steps to tackle it. A former deputy trade minister was jailed last week for 14 years for bribery -- the latest among dozens of top officials given stiff penalties for dishonesty. The armed forces, such a baleful influence in some countries, are fairly clean. Many Asian economies are sucked dry by entrenched, predatory elites. In Vietnam, although collectivist economics have gone, the government remains collective and consensual.

Keeping the masses happy

The Vietnamese are enjoying new-found wealth and personal choice, including being allowed to educate their children abroad. Party bosses, conscious of what happened to their former backers in the deceased Soviet Union, realize that they must keep the people happy to stay in power. So far it is working.

"Right now people don't think about politics," said Nguyen Kim Dinh, a former city government worker who now plays Vietnam's stockmarket full-time. "They just think about earning money."

Even so, the National Assembly, once a rubber stamp, has become a forum for real debate and scrutiny. Serious criticisms of the government are aired and reported in the press. A record number of self-nominated candidates are standing for assembly elections due in May.

However, the party remains terrified of the slightest challenge to its monopoly on power.

The press remains party-run and independent candidates for the election still must be party-approved. The government claims no one is arrested for political views, but in reality it jails pro-democracy activists for supposed spying or sabotage.

"The dissidents are getting bolder," said Nguyen Manh Hung, a U.S.-based Vietnamese academic. But Carl Thayer, a veteran Vietnam-watcher from the Australian Defense Force Academy, reckons that stronger pressure is coming from reformers inside the party whose demands are similar to the dissidents'.

Either way, as the Vietnamese enjoy more economic freedom, and as more exiled Vietnamese return, bringing foreign ideas of pluralism and free speech, expectations of political liberty will grow.