Vietnam

Good morning at last
Aug 3rd 2006 | HANOI
From The Economist print edition

An economic boom is accompanied by remarkable success in getting rid of poverty and raising life expectancy

AFP
SIGNS of rapid development are visible everywhere around Hanoi: from the flashy sport-utility vehicles on the city's roads to the dormitory villages of smart “executive” homes rising among the fields on the capital's outskirts. George Bush and other world leaders will see it for themselves when Hanoi hosts the Asia-Pacific economic summit in November. That meeting will take place in a new satellite-city, Tu Liem, which is now being built on Hanoi's south-western edge. The futuristic conference centre, with a distinctive wavy glass roof, looks almost finished. Nearby, a huge five-star hotel is getting a final coat of paint. Along Tu Liem's broad, four-lane avenues, some apartment blocks are already occupied, others are just steel skeletons. Between the building sites, cows and buffalo still graze in what was open pasture only recently.

Before starting its doi moi market-oriented reforms in the mid-1980s, the Socialist Republic of Vietnam flirted with real communism and came close to famine. Since then, a reform process that was uneven at first has gathered momentum. Recent economic growth, though not quite as stellar as China's, has been remarkable. In 2001-05 it averaged over 7.5%, reaching a peak of 8.4% last year. This year the government is going all out to hit an 8% target.


Since 1990, Vietnam's exports have increased faster than China's. Their growth shows no signs of slackening. Between January and July they amounted to $22 billion, a year-on-year rise of over 25%. Having alarmed the Brazilians by becoming their main competitor in coffee growing, Vietnam is now ramping up its exports of everything from shrimps to ships to shoes (the last prompting the European Union to announce anti-dumping tariffs last month). It has just become the world's largest exporter of pepper and aims soon to overtake Thailand in rice. It is even selling tea to India.


Foreign-owned factories are chalking up the fastest gains. The government's aim of increasing electronics exports by 27% annually should be boosted by Intel's recent decision to build a $605m microchip plant in Ho Chi Minh City. Though farmers' harvests are still rising, industry's still-higher growth rate means that agriculture's share of economic output continues to shrink—from about 25% in 2000 to 21% last year. By 2010 it may be down to 15%.


This economic revolution is being accompanied by a social one. Though Vietnam is still, overall, one of Asia's poorest countries, with income per head behind India's, its recent growth has been impressively egalitarian. The Asian Development Bank (ADB) reckons that deep poverty in Vietnam—defined as a daily income equivalent to under $1—is now only slightly more prevalent than the average for South-East Asia, whereas in 1990 Vietnam's figure was more than twice the regional average (see charts). By this measure, Vietnam has overtaken China, India and the Philippines and now has only slightly more poverty than Indonesia.


Life expectancy has jumped and infant mortality plunged since the 1990s. Vietnam does better on both these counts than Thailand, a far richer country. Almost three-quarters of Vietnamese children of secondary-school age are in class, up from about a third in 1990. Again, Vietnam has overtaken China, India and Indonesia.


The new five-year plan, approved at April's congress of the ruling Communist Party, is laden with targets for increasing output and improving infrastructure, with the objective of making Vietnam a modern, industrial nation by 2020. Of course, other Asian countries' leaders, from Malaysia to the Philippines, declare similar objectives. The difference is that Vietnam's rulers seem to mean it—and their recent record suggests they might pull it off.

The April congress was preceded by a purge of high officials suspected of corruption—most notably at a road-building agency where some staff stole millions of dollars to bet on football matches. While Nong Duc Manh, the party's general secretary, has survived, the other two members of the ruling triumvirate—the president and prime minister—have since been dropped in favour of youngish, southern Vietnamese officials, seen as supporters of continued economic reform.


Good times, bad times
Vietnam is on a roll and its prospects look good. But much could still go wrong. As Vietnam joins the global economy (it should become a member of the World Trade Organisation in the coming year or so) it is becoming more vulnerable to volatile commodity prices and fickle bond-market investors, whose gyrations are largely outside its control. The recent export surge has been helped by strong global demand and high prices for the things Vietnam sells, from rice to crude oil, but a world recession—or an economic bust in China—could cause a big slowdown. The government is racing to build enough power stations, roads and railways to keep the economy moving. Any delays in these would spell trouble.

The communist government's continuing acceptance by ordinary Vietnamese rests largely on its success in delivering prosperity and better public services. If it fails to reduce corruption or produce jobs for the more than 1m young Vietnamese who join the labour force each year and the 1m villagers migrating to the cities, the country's social cohesion and sense of purpose would be in danger.

That makes it vital to accelerate the government's programme to restructure and sell thousands of state-owned firms. They are more graft-prone than private companies, and devour the lion's share of scarce land and credit while creating few new jobs. The private sector provides most of the growth in jobs and exports, but would do better still if it was not crowded out by the public sector. Le Dang Doanh, an economic adviser to the government, reckons that, but for the vested interests slowing down privatisation, Vietnam could now be growing at 11%, just like China.

for Vietnam.


So what does everyone think?

Vietnam becoming a mighty and glamorous nation like South Korea and Japan isn't going to happen anytime soon. Catching up to the likes of Thailand or Malaysia is quite far away as well. But the Vietnamese goverment is investing into its people, and this can be where we can focus on and have pride in.

Vietnam's poverty rate is at 10% in 2003 whereas it was almost half in 1990. We are doing better than India, China, and the Philliphines in this regard. Vietnam is doing better than Thailand in life expectancy and low infant mortality rates.

We can't build mighty giant shiny skyscrapers like China or have a cultural wave like Korea right now, but at least we can work towards giving everyone in Vietnam a comfortable living with hope of more in the future.

good news but i would like vn to give free education for children from 6-18 years of age ......

There is no need for Vietnam to be like China or South Korea or Japan.

We can grow our economy and be uniquely different and still be appreciated by other people and other nations.

I'm happy, if only reforms could help the economy grow faster.

VN's economy is already the 2nd or 3rd fastest growing in the world. Even faster growth would cause inflation, confusion, and disarray.




The thing is, Chinese influence of Vietnamese culture didn't just end with French colonialization and communism, VN's economic reforms and social policies are very much following modern China's footsteps.

Vietnam can develop into something beautiful and unique that China cannot compare.

ummm okay....

it's not going to if you keep talking like that without having any REAL directions.

real direction does not mean we have to copy chinese direction

well, the reality is that Vietnam is.

Vietnam is a beautiful country.

We can develop Vietnam into something beautiful and special.

We don't need to do whatever is necessary to become like China, Japan, or Korea.

Vietnam has alot of Potential

yes, let's just repeat it over and over again and it'll magically happen.

we don't know what that beautiful and specialness is, but it'll happen.

StephenDedalusFromAsia Today, 07:52 PM:

Take your annoying, petty act to the Chinese Chat.

StephenDedalusFromAsia, get your @$$ out of this chat

this thread is probably getting a lukewarm response because it actually shows that the communist government is actually doing great things for Vietnam.

The issue is not your opinion - with which I agree up to a point - but the way you express it, which I find disrespectful - not that I qualify for sainthood myself.

Your self-satisfaction with the PRC model of development is giving you some blind spots with respect to its shortcomings and side effects - and these are serious enough to jeopardize the stability of the PRC society itself, if not adequately addressed. Yes, the PRC society is developing very rapidly, but it is developing as an angry, frustrated society.

I want Vietnam to do more about underage prostitution and punish the pedophiles like cutting off their balls and caning their penises.

that's the PRC.

with Vietnam, the article states that the government has been surprisingly egalitarian with spreading the new wealth around. "angry frustrated society"??? that sounds too fluffy for me. what alternative do you propose??

There is probably no other alternative course. However, neglecting the side effects such as local land confiscation in no small part due to local corruption, charging for education to families who can barely make ends meet, polluting without responsibility or restraint, breaking up workers' strikes, letting Taiwanese and Korean bosses get away with physically assault PRC workers, restricting fredom of speech and access to information, etc. - this witches' brew of side effects will lead to a social explosion. And there is nothing fluffy about social explosions in the PRC.

why would anyone neglect those issues?? the answer of "angry frustrated society" is fluffy.

i think all Vietnamese should support the communist government and force it to evolve for the better.

like you said, there isn't an alternative.

I already told you twice why neglecting these issues could and will cost the PRC dearly, and I am not going to do it a third time. If you incapable of listening, then take take yourself off this Vietnamese Chat. If I had wanted to argue with brick walls, I would have joined an Israeli-Arab forum.