Vietnam: A Resilient Country in Asia

Henry Srebrnik, [Charlottetown, PEI] Guardian

From 1940 to 1975, the Vietnamese people were almost constantly at war and fighting for their national independence, first against Japan, then France, and finally the United States. There was massive destruction of the environment; millions died.

Yet its powerful sense of national cohesion and culture based on ethnic homogeneity has made Vietnam arguably one of the most resilient nations on earth. Rising from the devastation of war, it is today one of the world’s economic success stories.

At first, the victorious Communists in the post-1975 state, which reunified North and South Vietnam, instituted top-down central state planning and collectivized agriculture. Under the command economy, the government decided targets and prices, input supplies, domestic wholesale and retail trade, and international trade.

All of this led to predictably negative results. But things began to change in the 1980s.

The impending collapse of the Soviet-led Communist bloc, plus continuing difficulties with neighbouring China (including a short but fierce border war in 1979), meant that Vietnam increasingly had to open itself up to the wider world.

In 1986, the “doi moi” (renovation) strategy was introduced, lifting restrictions on small private enterprises, and welcoming foreign direct investment in labour-intensive manufacturing.

Large state farms were divided into a market-oriented smallholder system, which immediately increased agricultural output. The country officially became a “socialist-oriented market economy.”

By the late 1990s, the success of the reforms ushered in was evident. More than 30,000 private businesses had been created, and the economy was growing at an annual rate of more than seven per cent. Small entrepreneurs produced a boom in local markets.

Foreign investment increased, especially following the establishment of diplomatic relations with the U.S. in 1995 and a bilateral trade deal in 2000 that opened American markets to Vietnamese goods. Vietnam also joined the World Trade Organization in 2007.

The European Union and Vietnam this year signed a free trade agreement which will remove nearly all tariffs on goods traded between them.

A vigorous export economy, the creation of more opportunities for small enterprises, and investment in agriculture has resulted in rising prosperity. Improved public services in education and health followed.

Instead of food shortages, the country achieved national food security and has become a major exporter of agricultural commodities such as rice and coffee.

Poverty has fallen from 58 per cent of the population in 1993 to under 20 per cent today.

Excessive bureaucracy and corruption do remain problems, and pockets of poverty persist, especially in the central highlands, home of the country’s ethnic minorities. Though 15 per cent of the population, they constitute 40 per cent of the poor.

More investment in transport and communications to improve market access, plus better education, would go a long way to alleviate this problem.

There is also a widening urban-rural gap, since much investment has gone to Hanoi and Ho Chi Minh City (formerly Saigon).

The Vietnamese will no doubt overcome these obstacles as well.