Flying Higher

  • Share
  • Read Later
DAVID LIEBHOLD/Ho Chi Minh City

In his modest home west of Hanoi, Chu Quoc Bao, director of State Farm 1A, tries to make sense of Vietnam's dramatic transformation. We have changed our way of thinking, explains the 51-year-old Communist Party stalwart. We believe that capitalism has many good points and we're trying to extract them. The discussion is interrupted by the arrival of Nguyen Van Dao, director of Hanoi's National University. He takes a seat, his back to Bao's Sony Trinitron and Sharp vcr, and calls for drinks. Bao shuffles away to another room and returns with a tray of small glasses and an elegant Remy Martin bottle. It isn't cognac, however, but local rice wine. The bottle is capitalist, declares Bao with a grin, but the liquid is socialist.

In today's Vietnam, form and content tend to get a bit mixed up. The walls of government buildings are still adorned with hammer-and-sickle emblems, and party officials still make speeches about Marxism-Leninism. But the market deregulation that began in the mid-1980s has already transformed Vietnam from a dour, Soviet-style police state into a vibrant, dynamic and increasingly open society. A quarter-century after communist forces liberated Saigon and ended the war, Vietnam is beginning to look and feel like a normal country. Although some Politburo members apparently are disturbed by the changes, a consensus seems to be emerging that the country has passed the point of no return. Vietnam is taking off, says Lo Kwok-luen, a Hong Kong-based real estate developer in Ho Chi Minh City, the former Saigon. There are questions about speed, but there's no turning back.

In recent years, Vietnam seemed intractably stuck in the past. Many of the multinational companies that galloped into the country in the early 1990s were disappointed by weak domestic demand and a corrupt bureaucracy. Their frustration has tended to color much of the reporting on Vietnam, spawning a steady stream of articles with titles like Goodnight, Vietnam, bemoaning the country's missed opportunities and lost promise. It has even been suggested that Vietnam won the war but lost the peace.


Twenty-five years after communist troops entered Saigon and reunified the war-torn country, its people are eager to forget the past and catch up with the rest of the world
• The war left a deep imprint on many
• A Time correspondent returns to the city he had to leave behind a quarter-century before


After keeping the country in the dark about former Prime Minister Keizo Obuchi's stroke, Japan's powerbrokers turn to a status quo figure to nurse the country back to health
• Obuchi's secret was to lower expectations
• Mori is a safe, if uninspired, choice
E.L. Doctorow's enthralling City of God examines religious faith at the end of a bloody centuryBut look again and you'll find real progress. As recently as the mid-1980s, the country still suffered from famines; now a self-sufficient Vietnam is one of the world's largest exporters of rice. With a per-capita gdp of $330, it remains one of the world's poorest nations. But over the past decade it has reduced poverty more dramatically than almost any other country in the world--from 58% of the populace in 1993 to 37% in 1998, according to the World Bank. More than 90% of the population can read. In most countries with a comparable level of development, the infant mortality rate stands between 60 and 90 per 1,000 live births. Vietnam's rate is 34. Ninety-eight percent of kids here are fully immunized, says Michael Linnan, the U.S. health attach� in Hanoi. That's a record most developed countries can't touch.

Not bad for a poor, agricultural nation that was racked by war for more than a third of the past century. By the time the conflict with America ended on April 30, 1975, Vietnam, according to official estimates, had lost 3 million people, as well as much of its infrastructure and industrial capacity. Severe food shortages persisted into the late 1980s in some regions, and hundreds of thousands of refugees fled the country in leaky boats.

The policy of economic renovation (doi moi) launched in 1986 did not revolutionize Vietnam as quickly or as completely as some foreign investors had hoped. But it has hugely improved living standards. By 1996 agricultural exports had skyrocketed and the economy was growing by more than 9% a year. Foreign investors such as Fujitsu and Nike, who produce for export markets, have generally done well. Many of those who tried to sell to the Vietnamese, however, were disappointed, though the past few months have seen business improve for companies like Unilever and Procter & Gamble, who had a rough time in the 1990s.

It's a tough act to sustain. For the moment, Vietnam's frenetic pace of change has slowed. But the nation's financial backwardness--it has no stock market and its currency, the dong, is not freely convertible--sheltered its economy from the worst ravages of the Asian crash. While South Korea, Thailand and Indonesia suffered significant economic contraction, the collapse of dozens of financial institutions and mass unemployment, Vietnam merely slowed down a little. Its 1999 growth rate of 4.5% was among the highest in East Asia. The country's external debt is minuscule, and the World Bank projects that if reforms proceed quickly, gdp growth could rise to 6.5% next year and 7% in 2002.

Certainly Hanoi is making the right noises about reforming areas like banking, state-owned enterprises and trade policy, as well as improving the investment climate. New laws have greatly simplified the process of setting up private companies. We are seeing very tangible progress that's making it easier for businesses to operate--and operate more efficiently, says John Shrimpton, whose Dragon Capital has invested $25 million in 17 small and medium-sized Vietnamese companies. Shrimpton is particularly bullish on the prospects for information technology because the Soviet-style education system, which emphasized the hard sciences, has left the country with a surplus of engineers. Vietnam has probably the greatest potential for software development anywhere, he claims.

And if nothing else, circumstance should keep Vietnam focused on rapid growth. More than half of the country's 79 million people are under 25, and each year some 1.2 million workers enter the job market. Official statistics put unemployment at 7.4%; most economists reckon that, just to absorb new job seekers, the country needs economic growth of at least 8%. At the same time, those born since the war have greater access to information and higher expectations than their parents. Some are already impatient with the government's tentative approach to change. I buy the newspaper every day, so I know what's going on in the world, says Toi, 23, a part-time porter in Ho Chi Minh City. Compared with other countries, Vietnam's development is very slow. Ho Chi Minh's system was right at the time, but it's not appropriate anymore.

In fact, precious little remains of Ho's socialism. All but the most destitute citizens are now expected to pay for health care and their children's education. What is left are bloated state industries and a one-party political �lite that will not tolerate dissent. The news media are tightly controlled and expected to disseminate the party line. (Last month, the government awarded a certificate of commendation to the English-language Vietnam News for its outstanding service to information and propaganda, as the daily itself proudly reported.) Amnesty International and other rights groups estimate that as many as 150 Vietnamese are currently imprisoned for their political or religious beliefs.

Yet after observing the fate of the former Soviet Union, the senior party leadership may feel justified in deregulating more slowly than Western economists recommend. Our country is a success story compared with Russia, says Nguyen Dinh Mai, deputy director of the Department of Planning and Investment in Ho Chi Minh City. We've reformed cautiously, gradually, through a process of trial and error. A sick person has to suck porridge first. Just yesterday we suffered together in the war. If today we structure the economy in a way that benefits only one group of people, I don't think it's fair--whether you call it socialism or capitalism.

Vietnam is no longer the police state it once was. The party's O.K., says U.S. Ambassador Douglas (Pete) Peterson, who spent six-and-a-half years as a prisoner of war in North Vietnam. The party is serving a very useful purpose in the sense that it provides stability, and only through stability can an economy develop. We're not looking at the necessity of [a] multi-party [system]. As long as the communist leadership is compassionate, benevolent and aware of people's needs, says Peterson, then the people on the street don't care, [and] the international community won't care--as long as international standards of human rights are respected. I don't think that our national policy aims to overthrow the party, he adds. We want whatever systems exist in this country to become more efficient, more effective and thus more productive.

If free elections were held tomorrow, the Communist Party would do well--not on the strength of its communism but because of its reforms. In the past we never dreamed of having our own land and our own home, says Vu Duy Quang, 38, a former MiG-21 fighter pilot who now works as a security guard at the Hilton hotel in Hanoi. In 1990, Quang's family was allowed to buy its two-bedroom apartment from the state for $430. Each month he and his wife, who works at a state-owned garment factory, save about half of their combined income of $170. They and their six-year-old son are sharing the tiny flat with Quang's mother and brother, but they've bought a plot of land and hope to start building a house next year. Happy as they are, Quang says there should be further reform: The biggest challenge facing Vietnam is catching up with the rest of the world without giving up our national identity.

But as Vietnam's wounds heal, the postwar generation is developing a new identity that is more complex than the image--promoted by both Hollywood and the communist leadership--of tireless self-sacrificing repellers of foreign invaders. There's no question that the Vietnamese are fiercely independent. That has been proven over more than 2,000 years of battling the Chinese, French, Japanese and Americans. But self-reliance, toughness and pride are not the only qualities Vietnam has to offer the world. Foreign businessmen are nearly unanimous in their praise for the workforce, which they describe as industrious and quick to learn. When the Vietnamese know where they're heading, they are without peer, says a Western diplomat. Now they again have the luxury of choosing where to focus their energy and talents.

In the 25 years since the last U.S. helicopter lifted off the embassy roof in Saigon, the word Vietnam has been used to denote a war, then a dismal outpost of the Soviet empire and finally a chimerical investors' paradise. Maybe the time is approaching when Vietnam can be understood as just another country.

With reporting by KEN STIER/Ho Chi Minh City and HUW WATKIN/Hanoi