Vietnam Tackles Chronic Economic Woes


HANOI, Vietnam -- Hanoi's decision to end its 10-year military occupation of Cambodia is only one element in a sweeping package of reforms introduced during the past two years.

A shopper buys rice in a Can Tho market.

The impact of the reforms can be seen in the crowds at newly opened nightclubs here, in blunt criticisms of public officials in the Vietnamese press, in the growing variety of goods in the country's shops and markets and in English language classes that now begin in grade school.

The reforms -- referred to in Vietnamese as doi moi, or renewal -- invite comparison with the changes Mikhail Gorbachev has brought to the Soviet Union.

At the very least, Soviet glasnost and perestroika, reported in considerable detail in the Vietnamese press, provide support for the arguments made by Vietnam's own proponents of market economics and greater freedom of discussion.

People from many backgrounds are pushing hard for reform in Vietnam. At one end of the spectrum is Nguyen Xuan Oanh, an economist who earned his Ph.D. at Harvard and worked for three years on the staff of the International Monetary Fund. At the other extreme is Tran Bach Dang, a veteran revolutionary who commanded communist forces in Saigon during the 1968 Tet Offensive.

They are grappling with the problems of a crowded country where the population of 63.7 million is increasing at a rate of more than 2 percent each year. Vietnam's farm production has grown much more slowly, and the country does not produce enough rice to give its people an adequate diet.

But with exports that amount to only about $15 per person each year -- and with debts of more than $14 billion to the Soviet bloc and $2.8 billion to the West -- Vietnam cannot buy enough food abroad to make up the difference.

Inflation has soared out of control. In 1987 and 1988 it was about 1,000 percent a year.

More modest reforms introduced in 1979 had little impact, so in 1986 Vietnam's Communist Party officially accepted a revised view of the world.

"In the past we thought that building socialism meant having a large state sector and collectivizing very quickly," says Le Dang Doanh, an adviser to Hanoi's Institute for Research on Economic Management. "Experience showed that not only was that not necessary, but it was not effective."

Women bundle finished work gloves at a Hanoi factory.

Vietnam's new conception of socialism -- still the Communist Party's stated goal -- embraces privately owned factories, foreign investment in plantations and factories and what amounts to a return to private ownership of farmland.

Vietnam has turned away from investing in large industrial plants and massive hydroelectric projects, like those that have soaked up most of its scarce investment capital and foreign aid since the war ended in 1975. Instead, Doanh says, the country will now focus on three areas: agriculture -- especially food; consumer goods; and export goods.

"We are concentrating about 70 percent of our investment capital in those three branches," he explains.

Another target for reformers is the country's bloated government payroll.

Tran Bach Dang

Out of Vietnam's total population of 63.7 million, says Tran Bach Dang, the veteran revolutionary, about 20 million are supported by family members with government jobs. But an average worker on a state salary brings home just 20-25,000 dong ($5-7) a month at a time when an adult needs 60-100,000 dong ($15-25) a month to maintain a decent standard of living.

The result is bureaucrats and factory workers who take things easy on government time so they will have enough energy to pursue the sideline jobs where they make most of their money.

"If we decrease the number supported by the state to five million," Dang says, "we could support them well, and we would still have plenty of people to get the work done."

There is no problem persuading ordinary Vietnamese that reforms are needed, Dang says, but at higher levels "the struggle is fierce."

Besides the old-line communists who oppose the reforms on ideological grounds, there are bureaucrats and managers throughout the country whose prestige, power and jobs are threatened by any hint of substantial change.

Supporters of reform include Communist Party General Secretary Nguyen Van Linh and Vo Van Kiet, who ran a strong second to Do Muoi, whom Vietnam selected as its new prime minister last year. But even these men do not enjoy the unchallenged prestige to bring Vietnam into the age of doi moi without a fight.

The reformers speak enthusiastically of efforts to recruit foreign investment, under the surprisingly liberal terms of the investment code published at the beginning of 1988. At least some of them say, however, that private investment can never meet all Vietnam's needs.

Vietnam needs $40-60 billion to build up its economy to the level of South Korea or Singapore, says Oanh, the economist. He argues that substantial amounts of this money -- especially the money to build the roads, railroads, ports and electric power systems needed to attract private investors -- must come from international agencies like the World Bank and the International Monetary Fund.

Vietnamese leaders agree that one key to securing this assistance -- and to luring any substantial amounts of private investment -- is gaining international acceptance. And one condition the United States and other governments have set for that acceptance is an end to Vietnam's military presence in neighboring Cambodia.

"We definitely will pull our troops out of Kampuchea," Doanh says. "And after Kampuchea, we believe there surely will be investment from foreign countries in Vietnam."

Text copyright © 1989 The News-Journal, Daytona Beach, Florida

Published Jan. 11, 1989

Photographs copyright © 1989 John Spragens, Jr.

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