Last week, the communist-ruled country gained approval to become the World Trade Organization's 150th member. And when President Bush arrives later this week for the annual Asia-Pacific Economic Cooperation summit, he will see a vibrant nation light-years away from the war and poverty that once plagued its people. More than half of Vietnam's 84 million people are younger than 30, born after what people here call the "American War." They are the children of two decades of "doi moi" (renewal), a program of economic reforms that has cut poverty from more than 60% in the early 1990s to less than 20% today. Vietnam now has Asia's fastest-growing economy outside of China, with exports up 24% this year. And like China before it, the country is betting that its WTO entry will strengthen its stake in the global economy.
Some U.S. companies are already taking notice. Last week, Intel announced plans to invest $1 billion in building the world's largest microchip assembly factory in Ho Chi Minh City, formerly known as Saigon. Factories contracted by Nike employ 160,000 people, and recently increased their annual production to 70 million pairs of shoes, making Vietnam the world's second-largest source of Nike sneakers. (China is the largest.) The attraction for investors is obvious: Vietnam's labor force is educated, young and growing, while wages are even lower than in China's coastal cities. And the repressive political climate under the communists' monopoly on power creates a certain social stability, and the new government led by Prime Minister Nguyen Tan Dung has vowed to continue opening up the economy. Most of all, Vietnam's people are hard-working and eager for a better life. "I see a passion and a desire to succeed here that's similar to the Chinese," says Rick Howarth, Intel's new general manager in Vietnam.
As WTO rules open up its markets to foreign companies, U.S. banks and insurers are clamoring to cater to a small but fast-growing consumer class, where less than 5% of people have bank accounts or insurance policies. Foreign firms may crowd out inefficient state-run companies, but many Vietnamese look forward to having more choice in their daily lives. Le To Nga, 65, lived through the Vietnam War and stood in line for ration cards in the 1980s. Today, she's happily filling her shopping cart at Big C, a vast new supermarket on Hanoi's outskirts run by France's Casino Group. Shopping "is not a matter of patriotism at all," Nga says. "These days, we just buy what we like."
Vietnam's path into the global economy is not without speed bumps, however. There's the ingrained culture of corruption, secrecy and state intervention. Rules are often ignored in business dealings here and the WTO is all about rules, from treating foreign companies fairly to dropping tangled customs regulations. But the largest obstacle may be persuading U.S. legislators mindful of the impact on the U.S. of the flood of cheap imports and outsourcing that followed China's WTO admission in 2001 to extend normal trading partner status to Vietnam. Passage of permanent normal trade relations status, usually a WTO formality, failed this week in the House of Representatives as legislators struggled to muster the requisite two-thirds majority for fast-track passage. The move was resisted by lawmakers seeking to protect textile manufacturers in their home states, or seeking to punish Vietnam for its human rights record. For now, Vietnam finds itself in the unusual position of joining the world trading club but having none of the benefits of membership apply in the U.S. its biggest export market. The U.S. recently imposed anti-dumping tariffs on Vietnamese shrimp and catfish, while Europe has done the same for leather footwear, hitting some of Vietnam's biggest exports. While WTO membership allows countries to challenge such barriers, Vietnam joined as a "non-market economy," a classification that denies it some protections afforded to fully fledged members.
Thus translator Mai's second-most-important rule of the road in Vietnam: "Always be prepared for someone to do something unexpected."