Vietnam: The tiger gets off the bicycle

By Gwynne Dyer

LONDON (JP): "We should not beg for help from foreign capitalists, but improve management and policy-making so as to serve the interests of the national economy and create conditions to compete with developed capitalist economies."

A slogan from a Stalin-era Soviet Communist Party Congress approving another Five-Year Plan? An exhortation from some Little Red Book-waving fanatic during China's Cultural Revolution?

No. This is a quote from Nguyen Van Linh, head of the Vietnamese Communist Party from 1986 to 1991 and the "father" of the reforms that started Vietnam down the road to a market economy. And Linh, now 82, would not condemn "unfair" competition by foreign investors and urge the government to protect local industry without the backing of powerful figures in the regime.

On the surface, Vietnam's opening to the outside world is still official policy. Postmodern office blocks and hotels have erupted in both Hanoi and Saigon (officially renamed "Ho Chi Minh City", but that's as futile as trying to rename Bombay "Mumbai"). The rush hour crowds that surge through both cities still move on a tide of bicycles, but the steady 8 percent annual economic growth seems to justify the optimistic phrase "tiger on a bicycle".

Moreover, this month's elections for the National Assembly were less tightly controlled than ever before. The vast majority of the 450 people elected were loyal Communists, but three genuine independents won seats, including a Catholic bishop in central Nghe An province and a prominent doctor in Saigon who once served in the U.S-backed South Vietnamese army.

"Tran Thanh Trai was elected... regardless of his previous record," said the official announcing the election results on July 28, in an unconscious demonstration of the ruling party's ambivalence about "opening" the economy and society. Opening the economy a little is clearly a good thing that brings in both money and praise -- but too much could threaten the regime itself.

The first people to feel the shift were foreign investors who started sniffing around Vietnam in the early 1990s, and then flooded in after the United States ended its trade embargo in 1994. At one point in 1995, two new international companies were setting up in Vietnam each week -- but this year, there have been many more leaving than arriving.

The first big shocks came last year, when the Communist Party launched a "cultural purity" campaign against foreign consumer goods and advertising styles. Coca-Cola's billboards were painted over, the Philippines brewery San Miguel was censored for implying that sharing a beer is a sign of friendship and bra ads of the German-based Triumph company were banned for prurience.

Beyond these symbolic difficulties, real problems were forcing foreign companies to rethink their investment: vast amounts of red tape delayed official approval of new projects for months or years; pervasive corruption; a sketchy and unpredictable legal system and utterly inadequate infrastructure from roads to telephones. On top of this came signs of government hostility.

Last year's Communist Party congress bristled with Marxist rhetoric and called for closer state control of the economy. Nobody intends a full return to the old centrally planned economy, but it is becoming clear the apparatchiks won't allow the huge bureaucracy that was created to run that economy be dismantled because that is where their jobs are.

If Vietnam must grow more slowly economically in order to avoid challenges to their monopoly of political power, they will willingly pay that price. (More precisely, their fellow- countrymen will pay it.) Nguyen Van Linh's recent outburst is only one of many signs that the Party membership is coming to precisely that conclusion. This tiger is getting off the bike.

Vietnam was never a very persuasive economic "tiger" anyway. Average per capita income in Vietnam is about the same as in desperately impoverished Myanmar, and between a fifth and a tenth of what it is in Indonesia, Thailand, the Philippines and Malaysia, the other big countries in the region. Moreover, it was never certain that the regime was really serious about change.

The self-serving, self-perpetuating Communist Party that has ruled northern Vietnam for fifty years, and the entire country for the past two decades, only embraced economic reform because it had to. Three-digit inflation, rural hunger and looming economic collapse forced it to restructure economically in 1986. Then the collapse of the Soviet Union, its main source of foreign aid, pushed it further down that road.

So Vietnam's currency was devalued to a realistic level, and farmers got their land back, and the regime passed a liberal investment code to attract foreign money. Inflation fell, the country returned to its traditional role as a net exporter of rice, and foreign firms flocked in. But that was then, and this is now.

"The reforms of the 1980s were absolutely necessary for the country to stay afloat," said a Hanoi-based diplomat. "Now, there is much less urgency for the government." The people in power fear that an unbridled free market would erode their political power, and now the crisis has receded.

So when the new National Assembly meets in September, the government will probably call a halt to further economic change. And the man tipped as new Communist Party chief is Le Kha Phieu, a conservative with close links to the Armed Forces.

Vietnam, like Myanmar, is being sacrificed to the interests of a relatively narrow elite (Communist in one case, military in the other, but it scarcely makes a difference). And will the 75 million Vietnamese accept it? They have little choice.

Reports from remote Thai Binh province this month talk of angry farmers demonstrating against poverty and corruption, fighting the security forces, even burning the houses of local Communist officials. That sort of thing happens occasionally in even the most tightly controlled states when people get desperate enough. But the Vietnamese Communists can probably hang onto power for at least another decade if they don't lose their nerve.

The writer is a London-based independent journalist and historian whose articles are published in 150 papers in 35 countries.