[Marxism] South Vietnam won?

Louis Proyect lnp3 at panix.com
Sun Nov 12 18:07:31 MST 2006

URL: http://www.msnbc.msn.com/id/15674091/site/newsweek/

Vietnam: The South Has Finally Won
Hanoi's communists won the Vietnam War, but 
southern-born reformers are leading an economic 
boom as the country opens up to the world.
By Michael Hastings and George Wehrfritz
Newsweek International

Nov. 20, 2006 issue - Grainy black-and-white 
photos show thin men riding bicycles along 
streets devoid of cars. A prominent chart tracks 
paltry monthly rice allotments to every category 
of Vietnamese, even communist cadres. Assorted 
ration cards and food stamps fill a display case 
above the stilted caption queuing to rice was 
always a suffering. These bits of recent 
history—part of a new exhibit staged in Hanoi's 
popular Museum of Ethnology through next 
month—chronicle the painful decade after North 
Vietnam's communist armies toppled the 
U.S.-backed government in Saigon in 1975. An 
introductory message describes the period as one 
of "inappropriate socioeconomic management." 
That's an understatement: from 1975 to 1986, 
Vietnam's rulers oversaw a disastrous experiment 
in Stalinist collectivization, herded thousands 
of Southern capitalists into labor camps and 
unleashed an exodus of boat people across the 
region. The human suffering was immense.

The government calls the show "Hanoi Life Under 
the Subsidy Economy, 1975-1986." But a sexier 
title would be "How the South Won the War." The 
Vietnamese capital portrayed in the exhibit bears 
scant resemblance to the bustling present for one 
simple reason: Hanoi is now playing by Saigon's 
rules. Economic reforms pushed by Southern 
entrepreneurs have fueled an economy that's grown 
nearly as fast as China's over the last decade. 
Manufacturing jobs are plentiful, and the 
national poverty rate has plummeted from 57 
percent in 1993 to about 18 percent today. Hanoi 
now boasts the trappings of affluence—imported 
cars, boutique coffee shops and stores brimming 
with everything from Louis Vuitton handbags to 
the newest Mercedes-Benzes. It's also home to 
several high-ranking political leaders from the 
South, including Prime Minister Nguyen Tan Dung 
and President Nguyen Minh Triet, elevated to their posts earlier this year.

All of this will be on display when U.S. 
President George W. Bush and other world leaders 
arrive for this year's Asia-Pacific Economic 
Cooperation summit in Hanoi this weekend. Hanoi 
has cast the conclave as a coming-out party—and 
it is. Timed to coincide with Vietnam's accession 
to the World Trade Organization, the meeting will 
showcase the emergence of what could become 
Southeast Asia's most important industrial 
economy in the coming decades, with the potential 
to surpass Thailand. This year alone, Vietnam is 
on track for $7 billion in foreign direct 
investment, roughly the same as giant India. 
"Overall, Vietnam is doing better than almost any 
other less-developed country," says Harvard University economist David Dapice.

Hanoi credits the turnaround to policies known 
simply as doi moi, or "renovations," launched 
with great fanfare in 1986. In fact, local 
leaders in Saigon, now known as Ho Chi Minh City, 
began testing the new approach years earlier by 
tapping an ethnic-Chinese business class that 
Hanoi viewed as ideologically suspect. Those 
officials later rose to national prominence, even 
as local entrepreneurs helped build a globally 
competitive, export-led economy funded mainly by 
foreign investment. Foremost among the 
forward-thinking southern leaders was Vo Van 
Kiet, who became deputy premier in 1986 and 
helped launch doi moi. He served as prime 
minister in the 1990s. "The official history of 
Vietnam's reforms doesn't include this first 
chapter," says Pham Chanh Duong, a key 
businessman from that era. "We gave [Hanoi] a 
practical example for the reforms they enacted in 
1986, but nobody dares talk about that."

The conquered South led the economic charge in 
part because it had experience with colonial 
markets and benefited from America's wartime 
infrastructure of roads, highways, airbases and 
ports. Over the past decade, though, the 
North-South divide has narrowed. Hanoi has 
improved its own roads, rails and ports to such 
an extent that light manufacturing now flourishes 
there and in nearby Haiphong. And the importance 
of opening the economy, once pushed by 
southerners, has become accepted wisdom in the 
capital. "There are a lot of stereotypes about 
the North and South having different points of 
views," says Minh Vu, a senior economic adviser 
to Prime Minister Dung, noting that the regional 
divide no longer plays a great role in shaping policy.

Like China, Vietnam is governed by a collective 
leadership. But having southerners certainly 
helps keep up the momentum for reform. Dung, 56, 
is Vietnam's youngest postwar prime minister. He 
grew up in the impoverished southwest of the 
country, joined the Army as a teen and served for 
20 years. Prior to his new appointment, he ran 
the country's central bank, and he's led 
Vietnam's WTO negotiations. Before becoming 
president, Triet, 63, was most recently Ho Chi 
Minh City's Communist Party boss, where he led a 
high-profile anti-corruption campaign. "Our 
leadership is based on consensus building, and 
there's a consensus [to reform]," says Vu.

That consensus has been decades in the making. 
Duong, the Saigon businessman, was a small-time 
trader before 1975. Then he was asked by city 
officials to help manage a new company called 
Cholimex (short for the Cholon Investment and 
Import-Export Company) in Saigon's swampy Chinese 
enclave. Remarkably for the period, the firm was 
structured as a public-private joint venture in 
which ethnic Chinese like Duong ran the business 
and could buy shares using gold. Their mission 
was to jump-start idle factories seized by the 
government. "Local officials told us, 'We'll give 
you the license. Find money yourself'," Duong recalls.

Cholimex pooled gold from more than 1,000 
shareholders to procure and export rice and other 
agricultural goods, then leveraged the proceeds 
to import raw materials to make things like 
fertilizer, detergent and MSG for sale 
domestically. Soon they were brewing beer and 
rolling cigarettes, too, shipping frozen shrimp 
and catfish abroad and reinvesting the profits to 
build a textile industry. Hanoi bought out 
private shareholders and nationalized Cholimex in 
1983, but in a nod to its good work, the company 
was allowed to operate much as before.

One of the Saigon leaders who green-lighted 
Cholimex was Vo Van Kiet. A Southerner and 
communist war hero, he was instrumental in 
opening the country to foreign investors ahead of 
U.S. diplomatic recognition. As prime minister 
from 1991 to 1997, he joined ASEAN and pushed 
Vietnam further down the capitalist road. Much of 
the outside investment he cultivated went into 
light manufacturing clustered in 
export-processing zones, which were essentially 
an expansion of the export-import model pioneered by Cholimex.

Often compared to China, Vietnam is actually more 
similar to Taiwan circa 1970, an economy then 
burgeoning with small and medium enterprises 
ready to burst onto the global scene. "Today 
there are over 70 export processing zones in 
Vietnam," says Albert Ting, who oversees the Tan 
Thuan zone outside Saigon, where U.S. President 
Bill Clinton made a speech during his historic 
2000 visit. At that time, some 20,000 Vietnamese 
worked in Tan Thuan's foreign-owned or 
joint-venture factories. Today the tally is 
55,000, and it could double again over the next 
decade. In its latest report, the Vietnam 
Consultative Group (comprising key international 
development agencies) praises Vietnam for its 
"unusually diverse business sector" and notes 
that "roughly every other household runs a small business of some kind."

Vu, the prime minister's adviser, says that 
political leaders have changed with the times, 
too. "A lot of them been trained abroad," he 
notes. The country's minister of Agriculture 
spent time at Harvard, while the minister of 
Education holds a German Ph. D. Vu, 42, studied 
first in the Soviet Union and later at Princeton. 
To the Hanoi native, the American war is a 
distant childhood memory of "watching the 
missiles fly across the sky, like a game."

Vu has worked closely with Dung for seven years. 
He says that in 2001, when negotiations for a 
bilateral trade agreement with the United States 
reached a deadlock over banking services, Dung 
gave his delegation authority to make concessions 
at a "critical moment," paving the way for a 
deal. "The Americans remember him for his role in 
that," says Vu. Over the past two years, the 
government has changed more than 50 laws to 
comply with WTO rules. More recently, Dung and 
the leadership have even invited businessmen to join the Communist Party.

The struggle to develop Vietnam is far from over, 
of course. Both North and South face the same 
challenges, including rationalizing hundreds of 
money-losing state factories, fixing the 
country's outdated banking system, stemming 
corruption and improving rule of law. And even 
those fixes won't matter much unless industry 
advances up the value chain. According to Ben 
Wilkinson, head of Harvard's Fulbright program in 
Vietnam, the country needs to work on what 
economists call "backward linkages"—meaning local 
companies must start tapping the expertise of 
foreign firms to produce their own high-tech 
parts and develop a class of skilled managers.

Leaders like Dung are more open to economic than 
political reform, too. Still, there's a reason 
Vietnamese are so optimistic. Anyone in their 
teens is too young to recall ration books, 
collectivized farms or other aspects of the 
postwar crisis. For them, the formative 
experience will be their country's entry into the 
WTO and the vibrancy of a new Asian tiger 
beginning to roar. For now the South's commercial values are winning the peace.
© 2006 Newsweek, Inc.

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