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Vietnam's promising future
by Jean-Claude Pomonti
Journalist, Le Monde Diplomatique
Vietnam has recently joined the World Trade Organisation and held discussions with southeast Asian leaders on improving regional integration, while its goverment has welcomed business and financial advice and investment from western sources.
Ho Chi Minh City (formerly Saigon) now drives the Vietnamese economy; it is doubling the number of intercity motorways,digging a tunnel under its river and planning its first underground railway, as well as a new airport in Long Thanh, on the road to the seaside resort of Vung Tu (formerly Cap Saint-Jacques). But its former rival Hanoi doesn't want to be outdone: a ring of new satellite towns is now springing up around it.
In the northeast, up on the Laotian border, the Savannakhet-Mukdahan bridge over the Mekong river was completed last December. Danang, a superb natural harbour in the centre of Vietnam, may fulfil its destiny as a port for southern Laos and northeast Thailand, relieving Bangkok's congested river traffic.
Over the past seven years the Vietnamese economy has been the most active in southeast Asia, with an annual growth rate of 7% up to 2004 and 8% since (1). Vietnam is the world's leading exporter of rice after Thailand and rivals Brazil for first place in coffee exports. In 2006 foreign investment rose by 50% over 2005, and topped $9bn. According to a survey by the Asia Business Council, Vietnam came third in the number of investment projects from multinational companies (38%), after China (85%) and India (51%), and ahead of the United States (36%) (2).
The Vietnamese diaspora, the survivors of the 1970s boatpeople and their children, constitute a reservoir of brains and capital which has been well accepted by the Vietnamese authorities. They have connected Vietnam to the
rest of the world and boosted its economy by $3.86bn last year. Donors are encouraging this trend, with $4.41bn committed for 2007, 20% more than 2006. The Asian Development Bank leads the way with nearly $1,165m, followed by the European Union with $942m, and Japan and the World Bank in
joint third place with $835m each. A first rush of foreign investors and tourists came to Vietnam in the 1990s, but the communist apparatus was reticent and outside interest faded quickly. Vietnam had been at war for 50 years and was not yet ready for change; Hanoi pulled its troops out of Cambodia only in 1989, and skirmishes on the Sino-Vietnamese border went on until 1990. That year the last prisoners from the Saigon regime, which fell in 1975, were released.
Relations with China were still tenuous, but even so Vietnam was able to sign the October 1991 Paris agreement restoring peace in Cambodia. China, which did not appreciate the way that Vietnam had derided Beijing for nearly 20 years, dictated its terms. The Communist party of Vietnam (CPV) was still reeling from the fall of the Berlin Wall, the implosion of the Soviet Union and the 1994 lifting of the US economic embargo.
In 1995 Vietnam became part of the Association of South East Asian Nations (Asean), its former sworn enemy, and diplomatic relations with the US were reinstated.
The Corporate Giants arrive
The false starts of the 1990s are over. In 2006 the US giant Intel opened the first microchip factory with scheduled investment of more than $258million. Last November Intel increased its investment to nearly $1billion with a technology complex near Ho Chi Minh City. That means 4,000 jobs and dozens of new subcontractors, suppliers and research units.
When Bill Gates made a short stopover in Hanoi last May he was mobbed by students. Although the 10th national party congress was in session, Vietnam's leaders went out of their way to meet him and listen to his advice, which was: do not be satisfied with making hardware, but launch into software and services outsourcing.
By 2005 the IT sector had increased by 40% and employed 15,000. Vincent Kapa of Synexer, an IT pioneer in Vietnam established in 2001, was already betting on a Vietnamese Bangalore. Results have exceeded expectations and Vietnam will soon surpass the Philippines, Thailand and even Malaysia, whose Multimedia Super Corridor, launched in 1996, has had setbacks. For political reasons, Taiwan and Japan are not willing to put all their eggs in the Chinese basket. Vietnam's young population is a great advantage; while only 10% of Vietnamese high school graduates go on to university, compared with 40% in Thailand, their high school mathematics are viewed as a sound base (the nation is obsessed with mathematical games and quizzes).
More than 14 million Vietnamese, 17.5% of a population of 84 million, were regular internet users in December 2006, compared with just 8 million in September 2005. Telecommunications growth came late, so mobile phones now make up for the lack of landlines. The number of new users doubles every two years: 18.5% of Vietnamese now have mobile phones.
Other corporations -- including Nike, Canon, Alcatel, Fujitsu, and Siemens -- are setting up in Vietnam or expanding their operations. Despite corruption, a poor infrastructure and shortcomings in the banking system,Vietnam counts on its strengths: an inexpensive labour force that can easily be trained on the job, and an autocratic bureaucracy that gets moving once a policy is clearly defined.
This strong growth may run out of steam. "When you get such a large amount of money from abroad, you have to think carefully about the type of investment you want," said Kongkiat Opaswongkarn, CEO of Asia Plus Securities. "When a country grows so fast, setbacks are possible," (3) he added, referring to current problems in Thailand.
A late starter
Vietnam only became a star among emerging economies last year: it was admitted to the World Trade Oanisation on 7 November, and successfully hosted an Asia Pacific Economic Cooperation summit soon after, with all the region's leaders and hundreds of journalists. The US Congress then voted, late in the day, to reinstate "normal and permanent trade relations". US companies had been waiting for that for some time, and used President George Bush's recent trip to Vietnam to sign $1.9bn worth of contracts, including electricity generation facilities for the main growth area in and around Ho Chi Minh City.
The government is no longer composed of war veterans who owe their position to past victories. The CPV still monopolized political power but admitted capitalists into its ranks at the 10th congress beside workers, peasants and intellectuals. Although the dictatorship of the proletariat still figures in the preamble to the constitution, Vietnam is getting used to a market economy. Since the 2001 reforms the private sector has generated far more jobs.
In an attempt to regain legitimacy, the CPV is reinventing itself as the motor of development. It is a firm, able negotiator that got Vietnam into the WTO. Foreign investors say a connection to the electricity grid takes 17 days in Vietnam (23 in Thailand) and a landline connection takes 9 days (against 15).
The communist apparatus is adapting to change pragmatically. It has allowed Ho Chi Minh City and the 13 surrounding provinces to drive the economy. The impetus often comes from the people, for the break with the past is a generational issue. Many card-carrying communists have family members with at least one foot, if not both, in business, construction, planning or development. Their average age is 50, most went to western universities, and, unlike the previous generation, they do not intend to lose sight of reality.
Though the CPV may be modernising its style of government, it still has serious problems, starting with corruption in its ranks. The scandal called PMU 18, after the ministry of transport's project management bureau, made news in 2006 and forced the communist leadership to take disciplinary action. It discovered embezzlement, protection rackets (at the highest party level), luxury lifestyles and decadence.
This rumpus drew General Vo Nguyn Giap out of his usual silence. In an open letter to the party, the victor of Dien Bien Phu, 1954, and the fall of Saigon, 1975, declared that "the party has become a shield for protection of corrupt officials."
`Vertical or Horizontal'
Since the death of L Dun in 1986, after 30 years at the head of the CPV, the party has been ruled by a troika whose members served a long apprenticeship before coming to power. Previously the troika had representatives from the north, centre and south regions. The 10th congress in 2006 produceda new trio: Nng Duc Manh, the outgoing secretary general of the Communist party, a northerner; and the president, Nguyn, Minh Trit, and prime minister, Nguyn Tn Dung, both southerners (this combination was a different approach). There was another change, less noticed but significant: the army and security services have been reinforced within the ruling apparatus, in case the wind changes.
A good measure of recent change is the literary revival. In the late 1990s a new generation of writers, often veterans and CPV members, challenged socialist literature. Nguyn Huy Thip, Duong Thu Huong, Bao Ninh, and Pham Thi Hoi ended the myths and hypocrisy. They claimed that Vietnam had undergone upheavals but not a revolution. Government censors could only counter the writers-cum-investigative reporters by expurgating them or rewriting history, a rear-guard action that has now relaxed a lot.
Publisher Thanh Nin brought out a novel by Bui Ngoc Tn, The Story of the Year 2000, describing the harsh conditions of his imprisonment 30 years ago, during an anti-revisionist campaign. The book went round the world before the authorities removed it from local circulation. But something had changed: the censorship had only happened after the event.
A new generation has dominated the literary scene since 2000. Young writers come from all over Vietnam and even abroad to Ho Chi Minh City, where they form small factions, including the anti-poets who founded the Mo Ming (open mouth) group, or the women poets called "praying mantises". The work of the groups is intimate and deals with individuals and feelings; it is cosmopolitan and draws inspiration from earlier writers. The culture police watches over their debuts. "Zen is not a dish of pre-cooked noodles," said Ly Doi, spokesperson for Mo Ming. Nhu, a painter, said: "It's a case of the vertical versus the horizontal: the correct form of expression is no longer dictated from above."
Vietnam is effervescent. The CPV accepts the situation though it keeps a firm hold on political dissidence. Many economic and political strangleholds endure. Although the average income has tripled since 1990, it was still only $620 in 2006, barely at economic takeoff level. Its 2010 objective is around $1,000 (4).
Jean-Claude Pomonti is a journalist
(1) The deputy prime minister, Pham Gia Khim, said it stood
at 8.2% in 2006, compared with 8.4% in 2005. Official
forecasts for 2007 are between 8.2% and 8.5%. According to
the World Bank, the economic expansion rate stood at 6.8% in
2000, 7.7% in 2004 and 8.4% in 2005.
(2) New York Times, 1 December 2006.
(3) Christian Science Monitor, Boston, 15 December 2006.
(4) In a speech to donors by Nguyn Tan Dung on 13 December
2006. See World Bank press release no 2007/185/EAP,
Translated by Krystyna Horko
ALL RIGHTS RESERVED (c) 1997-2007 Le Monde diplomatique
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