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Web-only Exclusives
November 30, 2000

From Our Correspondent: Hirohito and the War
A conversation with biographer Herbert Bix

From Our Correspondent: A Rough Road Ahead
Bad news for the Philippines - and some others

From Our Correspondent: Making Enemies
Indonesia needs friends. So why is it picking fights?

Asiaweek Time Asia Now Asiaweek story

NO EASY HIGHWAY

Vietnam Gets Ready to Join ASEAN


REPAIRS ARE STILL MADE THE OLD-FASHIONED WAY ON VIETNAM'S NATIONAL HIGHWAY ONE. But soon modern equipment will move in to resurface battered sections of the north-south road, thanks to World Bank money and foreign expertise. It's all part of Hanoi's ongoing effort to rebuild a nation still suffering from decades of war and isolation. Since 1986, when the leadership launched its doi moi or "restructuring" program to reform a bankrupt economy, the country has been opening up to a world where its best potential friends were all former enemies. Last year the U.S. lifted its longstanding trade embargo and there is serious talk of full diplomatic ties. And now, 20 years after the end of the Vietnam War, Hanoi's road to recovery has led to a critical junction with its wealthy but once-wary neighbors.

When foreign ministers of the Association of Southeast Asian Nations gather in Brunei at the end of July for their annual conference, the six familiar envoys will welcome a seventh, Hanoi's Nguyen Manh Cam, to their ranks. After three years as an observer, Vietnam will formally join the ASEAN club on July 28. It will become the first Marxist country to gain a seat in the traditionally capitalist and pro-American group, an organization that was, ironically, created in part to contain the spread of communism.

Not only will entry into ASEAN be the new Vietnam's debut on the international stage. It will also be something of a test for Hanoi -- and for the organization it is joining. With the hype from the lifting of the U.S. embargo all but faded, Vietnam is struggling to convince investors that, despite lingering problems of a grinding bureaucracy, dilapidated infrastructure, corruption and the intrusion of ideology in the marketplace, it means business.

The new kid on the block will find a host of challenges in fitting in with its more advanced new playmates. So will they in absorbing a formerly hostile nation of 74 million mostly poor people. But Vietnam isn't arriving empty-handed. Its accession is sure to bolster ASEAN's political clout. And with Myanmar, Laos and Cambodia waiting in the wings, bringing Hanoi in from the cold is a major milestone on the way to the ultimate goal of a ten-member group.

For a country laboring to discard the remnants of its crumbling command economy, the immediate benefits of joining ASEAN are likely to be enhanced trade and investment. That, at least, is what Nguyen Duy Thuan and legions of other born-again Vietnamese entrepreneurs are hoping. Thuan is import-export director at the Hiep An Joint-Stock Company, one of three former state enterprises privatized last year. At its Ho Chi Minh City factory, rows of women put together slippers and luggage for export mainly to Europe, though a small part of the output now goes to the U.S. Business has never been better for the eight-year-old company. Turnover is expected to hit $5 million this year, up 43%. Hiep An's new freedom from state control means that its managers now make all their own decisions. Thuan and his colleagues have decided to bet on ASEAN and its soon-to-be 420 million consumers: "We want the chance to open new markets for our products."

But joining the regional bandwagon will not be simple. While Southeast Asian countries are already among Vietnam's main trading and investment partners, its emerging free market is still in its infancy. Though it might not appear so to the casual visitor in bustling Ho Chi Minh City, the Vietnamese economy is far less developed than those of its new partners. Nominal per-capita GNP is only $220, compared with Indonesia's $780 and Thailand's $2,315. "I don't think the government fully realized the economic implications of joining ASEAN," says Nguyen Trung Truc, Ho Chi Minh-based managing director of trading house Peregrine Capital Vietnam. "But they are starting to realize it now."

Certainly the importance of fostering ties with its neighbors is not lost on Hanoi. About a quarter of Vietnam's trade is with ASEAN members, and a similar share of its foreign investment comes from them. Vietnamese leaders make regular trips around the region: Cam has recently been to the Philippines and Singapore, Prime Minister Vo Van Kiet last year stopped in Singapore and Communist Party General Secretary Do Muoi visited Malaysia. ASEAN leaders often call into Hanoi.

But once in the club, Vietnam will be expected to participate even more actively. The six current members have set a firm course toward establishing the ASEAN Free Trade Area, committing themselves to reducing import tariffs to 5% by 2003. How Vietnam accedes to AFTA will likely be one of the first topics of discussion with Hanoi. Currently, levies in Vietnam run as high as the 120% charged on imported cigarettes. An official at the ASEAN Secretariat in Jakarta says Vietnam will be granted a three-year grace period; it will not be expected to cut tariffs to the same level until 2006. "Joining AFTA is a measure of our willingness to enter ASEAN," said Vietnamese Trade Ministry official Ngo Khac Nghia after attending an ASEAN working group meeting in Jakarta in April. If Hanoi did not accept some kind of timetable, said Nghia, "it would be too much like playing an international game by our own rules."

That is just what Vietnam's participation is meant to avoid -- particularly as ASEAN increasingly tackles political and strategic issues. But chances are Hanoi will have some difficulty adjusting to the group's traditional consensus-building style. Some insiders fear that Vietnam may turn out to be a cat set among the pigeons. After all, Vietnam's 11-year military occupation of Cambodia, which ended only in 1989, put Hanoi squarely at odds with the same countries it is now wooing.

Then there is the competition for investor dollars. Vietnam's liberal foreign-investment regulations have attracted more than $13 billion (see June 23 issue) since 1988. Its success spurred Jakarta and Manila to liberalize further. Economic rivalry among members could cause friction in the ASEAN ranks. To avoid such problems, Thai Prime Minister Chuan Leekpai last year agreed to set up a telephone hotline between the foreign ministries in Bangkok and Hanoi.

But the recent bitter dispute between Singapore and the Philippines over the case of executed Filipino maid Flor Contemplacion showed just how quickly latent tensions can surface even among seemingly good friends. Vietnam's relationship with its fellow members, predicts Hanoi-based management consultant Nguyen Tran Bat, "will be cooperative, but not smooth." Lee Poh Ping, East Asian affairs expert at the University of Malaya, agrees: "Naturally, there will be differences. ASEAN has a lot of meetings covering all kinds of sectors. The topics discussed openly may not be to [Vietnam's] liking. So no doubt there will be teething problems."

But signs are that the strains of the 1980s have given way to genuine amiability. Singapore Senior Minister Lee Kuan Yew first visited Vietnam three years ago. At the time, "there was a certain tension," Information Minister George Yeo recalled recently after he accompanied the former premier on his third trip to Hanoi. "When Senior Minister called on former leader Pham Van Dong, it was like two old adversaries meeting." The diplomatic atmosphere is different now, Yeo said. "The ice has melted appreciably, and the comfort level on both sides has gone up. There is a frankness which we associate with old friendships."

While ties with Singapore may be close, some region-watchers believe Hanoi's longstanding rivalry with Bangkok for influence over Cambodia, and Indochina generally, could undermine ASEAN cohesion. "It will not go away," says academic Lee, "but I think for the moment it might be subordinated to the wider desire to have a unified Southeast Asia. The Thais seem willing to accept Vietnam into ASEAN."

Post-Cold War realities may have something to do with it. "The basic reason behind Vietnam's entry is strategic more than anything else," Lee adds. Lee Kuan Yew says ASEAN took a long-term strategic outlook when it decided to accept Vietnamese membership. With Hanoi on board and the eventual inclusion of Myanmar, Cambodia and Laos, the organization would be better placed to counter the main regional powers: China, the U.S. and Japan. Until the group reaches its full complement of ten, says Pham Chi Lan, secretary-general of the state-run Chamber of Commerce and Industry of Vietnam, "only then can we say that Southeast Asia is developing in a complete way." Cambodia will gain observer status at the Brunei meeting.

For ASEAN, the end of the Cold War and the withdrawal of U.S. forces from the Philippines have raised questions about the balance of security in the region. China is a key concern. Its recent military build-up has been matched by ASEAN members improving their own armed forces. Even Vietnam has joined in the modernization drive. Hanoi recently purchased six Russian-made Sukhoi Su-27 supersonic fighter bombers in a $180 million deal, its first major arms purchase in over 30 years. Despite recent improvements in Sino-Vietnam relations, Hanoi remains deeply suspicious of its northern neighbor, with which it fought a short border war in 1979.

Chinese activity in the Spratlys has also alarmed Southeast Asians. The islands in the South China Sea and the potential petroleum riches that lie underneath are claimed in whole or part by Brunei, China, Malaysia, the Philippines, Taiwan and Vietnam. Manila recently challenged China over Beijing-built structures on tiny Mischief Reef and went so far as to destroy a number of Chinese markers in the area.

After July 28, all four of the non-Chinese claimants will be under the ASEAN umbrella. So far, Hanoi has preferred to deal with the Spratlys without confrontation. "We have consistently maintained that the issue should be settled through the observance of the status quo and peaceful negotiation," Deputy Prime Minister Phan Van Khai told the National Assembly in March. Will Vietnam's inclusion in ASEAN boost the ASEAN claimants' ability to deal as a group with Beijing? That may soon be evident. After the ministers' session in Brunei, the ASEAN Regional Forum on security will convene for its second formal meeting. The roundtable includes, among others, the seven ASEAN members and China. Despite objections from Beijing, which wants the matter discussed bilaterally among the claimants, the Spratlys issue will be on the agenda.

Having Hanoi inside the ASEAN tent is sure to have other effects as well. "You have to say that the immediate beneficiary is Vietnam because it needs to break out from its isolation, but in the long term it will be good for Southeast Asia as a whole," says the University of Malaya's Lee. Some in Vietnam hope the country's new partnerships will hasten urgently needed domestic economic reforms -- and encourage some political opening too. Despite the significant steps Vietnam has taken toward a free-market system, Hanoi's ruling Politburo still includes hardliners reluctant to let go of state controls.

Hanoi's Bat, chairman of the firm Investconsult, believes the government will inevitably become more like those in the rest of Southeast Asia. In particular, he says, Hanoi may be drawn to follow the regional trend of privatizing state companies. That would be a welcome development to Bat, a former Vietnamese government official who is critical of official plans to maintain a core state sector.

For its part, the Hanoi leadership is looking beyond ASEAN at broader goals. Lan says that when the time is right Vietnam will pursue membership in the forum on Asia-Pacific Economic Cooperation (APEC) and the World Trade Organization. Ironically, some analysts say Vietnam's potential political clout within ASEAN could lead to the group's eventual disbandment. "We found a meaning for existence in [opposing Vietnam's occupation of] Cambodia," says a secretariat official. "But APEC is likely to swamp AFTA before long, especially with Singapore looking more and more to the bigger picture. The inclusion of Vietnam, and next year probably Cambodia, is likely to make doing anything increasingly difficult."

To be sure, once it finds its feet Vietnam could become one of ASEAN's strongest members -- if it can keep up with all that membership entails. The organization holds more than 200 meetings a year on everything from trade to teaching. "I'm not sure Vietnam has the resources to take part in this kind of thing," says academic Lee. Japan is providing $82,000 toward the cost of sending the Vietnamese delegation to the Brunei meeting. Hanoi also lacks personnel able to communicate with sufficient ease in English, ASEAN's lingua franca. Civil servants are receiving crash courses in English in Australia, Britain, Canada, Malaysia, New Zealand and Singapore, funded by friendly governments.

ALTHOUGH FEW ORDINARY VIETNAMESE KNOW MUCH ABOUT ASEAN, some excitement is beginning to spread in Hanoi among better-informed government officials. At the Ministry of Foreign Affairs, one department recently held a Saturday afternoon seminar for staff to discuss the significance of joining. "We talk about it, but for most Vietnamese who know about ASEAN, they think joining will mean they will be able to travel more," says one ministry official. While this may be true, Hanoi has yet to decide whether it will allow visa-free entry for ASEAN citizens.

Among Southeast Asian expatriates in Vietnam, however, there is little doubt the new member will be more than welcome. Down in the laundry room of Hanoi's Hotel Sofitel Metropole, Filipino manager Tony Cantiller reckons Vietnam will fit into ASEAN very well. He and the few Filipinos resident in the capital have formed a social group they call "Pinoys sa Hanoi" (Filipinos in Hanoi). "We get along with the local people very well," says Cantiller. "After all, we share the same culture." That sentiment certainly bodes well for the expansion: in a sentence, it embodies the original spirit of ASEAN.


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