HANOI - The capitalist credentials of
Vietnam's Communist Party will be under the global
spotlight when the country hosts the Asia-Pacific
Economic Cooperation (APEC) summit. [1] At the
same time, the massive security presence
surrounding the event has underscored the strict
social controls that still exist alongside
Vietnam's booming market economy.
When
world leaders arrive in Hanoi on Friday, they will
be chauffeured around in Ford and Mercedes
vehicles manufactured
in
Vietnam, sip local Trung Nguyen coffee, and take
notes at meetings with fancy Thien Long pens
provided by the event's organizers. The new US$250
million National Convention Center was designed to
dazzle with its imitation limestone islands rising
dramatically from a simulated ocean on its roof, a
seeming allegory for Vietnam's recent dramatic
economic emergence.
All roads leading to
the new facility have been freshly built or
repaved, with certain main avenues laid with
porcelain tiles. Flower beds spelling out
"welcome" messages to APEC guests have been
planted throughout the city, while little
ubiquitous blue-and-white APEC flags flutter in
the autumn wind. Officials have been toiling on
the capital's facelift for well over two years.
Behind that pretty veneer is a heavy
security presence, underscoring Vietnam's
still-severe social and political restrictions.
Armed police, dressed in battle fatigues and
carrying automatic weapons, greet visitors at the
street entrance of five-star hotels. Military
vehicles are commonly seen on the streets,
prompting some visiting foreigners to ask whether
Vietnam is still under some sort of siege.
Small-scale capitalists operating on the
city's sidewalks without official permission,
including cafes, newspaper stalls and fresh-fruit
stands, have been abruptly closed down. There has
been a coincident clampdown on entertainment
facilities, where in recent weeks police have
visited bars, restaurants and karaoke lounges to
remind them of their government-mandated midnight
closing time. There have been unconfirmed news
reports that street children have been bundled
away and hidden out of sight of passing
dignitaries.
Vietnam's sharp contrast of
openness and repression, modernity and tradition,
capitalism and communism, speaks of a society in
rapid transition from isolationism toward
engagement with the wider world. For all the
communist leadership's efforts to show the
country's bright upside, it will be glaringly
clear to the meeting's many distinguished
participants that Vietnam's extraordinary economic
progress has not yet initiated significant
political or social loosening.
Follow
the leaders Significantly, this week's
APEC meeting has been stage-managed to introduce
the country's new Communist Party leaders to the
world as individuals rather than the faceless,
nameless cadres of the party's recent past.
For the first time since 1975, when
communist forces from North Vietnam conquered the
US-backed government in the South and reunited the
country, Vietnam's new leadership hails
predominantly from the country's more commercially
oriented southern regions. Since assuming office
in June, they have expedited many significant
economic reforms, including revisions in
foreign-ownership and land-usage laws, toward
meeting the country's obligations under World
Trade Organization (WTO) rules and regulations.
Prime Minister Nguyen Tan Dung, who was
groomed for the top spot for more than nine years,
has so far impressed foreign investors with his
no-nonsense approach in implementing economic
reform. Dung, 56, has notably taken a more
forceful approach to rooting out government
corruption - although media coverage of the most
recent purges has been muted to avoid undermining
the party's public image.
Dung graduated
from a Vietnamese university with a bachelor's
degree in law and served in the army for 20 years
before taking up provincial positions of
authority. Then he was instrumental in defusing
tensions in the northern heartland province of
Thai Binh, where retired army officers had sparked
unrest over corruption in the local leadership -
one of the first signs of peasant unrest that is
now spreading across Vietnam.
Dung's
nine-year spell as a deputy prime minister came as
Vietnam's relations improved within the region and
among Western countries, the country launched its
stock market, and foreign investors started to
return in droves. He also served as a temporary
governor of the State Bank as it sought to loosen
controls across Vietnam's extensive state-owned
banking sector.
The premier has a strong
and capable ally in President Nguyen Minh Triet,
who is best known for leading a high-profile
corruption-busting campaign in Ho Chi Minh City,
which was aided by his intimate understanding of
who's who in the southern city's commercial scene.
He served as the secretary to the city's Communist
Party Committee, and for more than 20 years was
involved with the party's Youth Union before being
appointed to leadership positions in the
provinces.
Dung and Triet have risen to
prominence at a crucial juncture in Vietnam's
doi moi (renovation) reform drive, which
started more than 20 years ago but throughout the
1990s was often hampered by backsliding. After 11
years of protracted negotiations, Vietnam's
petition to join the WTO was approved this month
and the country is expected to join the global
trade club formally in January.
Strong
credentials Vietnam's economic-reform
credentials are no longer in doubt. Over the past
decade, economic opening has lifted tens of
millions of people out of poverty, falling from
61% to 19% of the country's 84 million people,
according to multilateral-aid-agency statistics.
Market reforms have ushered in booms in
construction, manufacturing and tourism, and
Vietnam's new stock market is up 75% this year,
distinguishing it as one of the world's best
performers.
The country has come huge
distances from 1975, when, after toppling the
US-backed government in Saigon (now Ho Chi Minh
City), it institutionalized repressive political
control and implemented an ill-fated
communist-style command economy. Even the ruling
Communist Party now refers to that low-growth era
as a period of "inappropriate socio-economic
management".
Now, Vietnam's transformation
from a command to a market economy is accelerating
at a higher pace than most economic analysts fully
comprehend, because of a paucity of reliable
official data. Some economists compare today's
Vietnam to Thailand and Taiwan during the 1980s, a
period when both of those consolidated their
earlier economic-reform programs and catapulted on
to a higher growth trajectory.
Vietnam has
recently passed laws that allow state-owned
enterprises to hire foreign managers, including to
the level of chief executive officer. The
government recently hired a team of foreign
consultants at its Tax Department to help it
improve collections.
"The main constraint
on economic growth everywhere is the availability
of human capital, the availability of talented and
skilled people, particularly managers. I think
this is a particularly important challenge for
Vietnam," said John Quelch, a professor at Harvard
Business School, who recently visited the country.
Ben Wilkinson, head of Harvard's Fulbright
program in Vietnam, contends that Vietnam needs to
work on its "backward linkages" - meaning that
local companies should start tapping the expertise
at foreign firms to move up various value-added
ladders and develop an indigenous class of skilled
managers.
There is arguably only one last
hurdle blocking Vietnam from taking those
important steps and entering the ranks of Asia's
externally oriented open economies. Apparently
because of concerns about labor rights, the US
Congress on Tuesday rejected a deal that would
have allowed President George W Bush to grant
Vietnam permanent normal trade relations (PNTR)
status during his visit to Hanoi.
At a
November 7 meeting with Vietnamese and American
business people - the same day the WTO made its
long-awaited announcement - Dung openly called on
the US to grant it PNTR status coincident with
Bush's visit. "The US will approve trade
normalization for Vietnam sooner or later," he
said. "The approval of PNTR for Vietnam will
conclude the long-standing eventful history
between the two countries," he added, a reference
to the two countries' history as war adversaries.
With or without immediate US congressional
blessing, all indications - including the
extravaganza Vietnam's Communist Party has
unveiled for this week's APEC meeting - are that
Vietnam has left its sad war-torn past behind and
is enthusiastically embracing a hopeful global
future.
Karl D John is chief
executive officer of the TCK Group
(www.tckgroup.org), a Vietnam-based investment
consulting group. He has more than a decade of
involvement with Vietnam and lives in Hanoi.
Note 1. The Asia-Pacific
Economic Cooperation forum is a group of Pacific
Rim countries that meet with the purpose of
improving economic and political ties. It has
standing committees on a wide range of issues,
from communications to fisheries. The heads of
government of APEC members meet annually in a
summit called the APEC Economic Leaders' Meeting
rotating in location among APEC's member
economies. Its members are: Australia, Brunei,
Canada, Chile, China, Hong Kong, Indonesia, Japan,
South Korea, Malaysia, Mexico, New Zealand, Papua
New Guinea, Peru, the Philippines, Russia,
Singapore, Chinese Taipei (Taiwan), Thailand, the
United States and Vietnam.
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