2000 VOL. 155 NO. 15
Stanmeyer/SABA for TIME
Vietnam is beginning to be measured by its attainments, not by
the war that ended 25 years ago.
quarter century after the two halves of the country were finally reunited,
Vietnam hopes to prove it has won the peace as well as the war
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
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.
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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 attaché 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
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
élite 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
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
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
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