They travel in tight packs, sometimes as many as 20 abreast. When the traffic is too thick, they move into the opposite lane or mount the pavement. Ten years ago there were only bicycles in Hanoi or Ho Chi Minh City. Now the streets of both cities seethe with thousands of Hondas, Toyotas and Piaggios. They make a constant din and cause acute pollution. It remains to be seen what will happen to the capital and its southern rival when cars replace the motorbikes, mopeds and scooters.
For now the mood is upbeat. Vietnam (population 86 million) is celebrating Hanoi’s millennium and the 120th anniversary of the birth of Ho Chi Minh, the father of national independence. The flag flutters everywhere, beside red banners with the hammer and sickle, a reminder that the country is one of the last to uphold Marxist values.
Twenty years ago, Vietnam was one of the poorest places in the world. Now it is among the middle-income countries and attracts donors, too, banking some $5bn a year in subsidies and loans from international agencies and Japan. Its ambition is to join the club of industrial nations by 2020.
The Vietnamese economy is weathering the current global financial crisis because of consumer spending, exports and a substantial flow of foreign direct investment ($10bn to $11.5bn a year). In 2009 the growth rate was 5.3% (down from 7-8% in previous years), though not without a stimulus package, equal to 10% of gross domestic product, adding a little more to the budget deficit. This year Vietnam should keep up with the leaders in south-east Asia, at about 6.5% growth.
The most striking attitude here is the determination to succeed. “Everyone here wants to get on. If there is no room they’ll find a way through even so. Even the officials are pragmatic, having set ideology aside. Vietnam has been experiencing a fantastic adventure for the past 15 years,” says an international official.
Vietnam converted to a market economy in 1987 and ever since it has sought to establish an international position. It joined the Association of South-east Asian Nations in 1995, then in 1999 signed a trade agreement with the US, enabling trade to take off. In 2007, it joined the World Trade Organisation. “They know where they are going and are very determined. They make fearsome negotiators. You come out of a meeting in shreds,” says Jean-Michel Caldagues, a French foreign trade consultant. “The priority in any negotiation is to include a training programme and technology transfer. They have an impressive appetite for learning.”
In the towns the middle classes are increasing in numbers, but the countryside is still very poor. “In 20 years we have moved from more than two-thirds absolute poverty to 11%. But there is growing inequality. It is one of our main problems for the future,” says the economist Vo Tri Thanh, the deputy head of the Central Institute for Economic Management (Ciem).
Big money is being made in Hanoi and Ho Chi Minh City. Vietnam’s nouveaux riches invest in Vietnamese property, since they cannot invest abroad. The country’s currency, the dong, is not convertible and people do not trust it, preferring US dollars or gold.
Occasionally there are demonstrations by farmers who have been thrown off their land, or workers angry about their tiny wages. People also complain about corruption, bureaucracy and the incompetence of petty potentates. But overall, Vietnam is under control and there is too little real opposition for it to make itself heard.
“My students say to me ‘the first of all human rights is to get rich tomorrow, so if the party creates a favourable environment for us to make it, we agree with the party’, ” says economist Daniel Van Houtte, who teaches at Hanoi University.
Under these circumstances demand is rising and imports are upsetting the balance of trade, which is now constantly in the red. For the first time exports (textiles, shoes) fell by 10% in 2009, after the financial crisis hit demand in the US, Europe and Japan.
This makes the relationship with Vietnam’s giant neighbour, China, more difficult. “The trade deficit with China (10% of GDP in 2009) accounts for two-thirds of the total,” says Jean-Raphaël Chaponnière, of the French Development Agency. It explains why Hanoi is always so keen to compensate elsewhere – particularly through trade with the US and Europe – while proclaiming its friendship with Beijing.
In 2011, the 11th party congress will almost certainly renew the national leadership. Meanwhile the government must fulfil its objectives, balancing the economy, checking inflation and maintaining growth. To attract more investors, it must solve the problem of Vietnam’s (non-existent) infrastructure and boost training.
“The country has changed gear. Success like this is both extraordinary and worrying,” says Hung Pham, a senior consultant with a leading international auditor. He is worried the government may not be able “to tame the wild stallion” Vietnam has become. “How long will it manage to reconcile the communist system with a capitalist economy?” he asks anxiously.
An attractive location, except for French firms
Since 2007, Vietnam has been the world’s third-most attractive country, after China and India, for foreign direct investment. Yet its old colonial master, France, is under-represented, although during the 1990s it had been the top western investor in Vietnam.
According to Alain Cany, the president of the European Chamber of Commerce in Vietnam, and Jean-Michel Caldagues, an export consultant, the French entered Vietnam in the early 1990s, convinced that the country would achieve rapid growth. When the 1997 financial crisis struck south-east Asia, the Vietnamese bubble burst. Most foreign businesses pulled out, switching their attention to China.
When the second phase of Vietnam’s doi moi (economic opening) started in the 2000s, the French missed the boat, although a few big companies such as Alcatel, Total and Alstom are still here. Cany says “France still has a sentimental advantage in Vietnam, at least, though it is better to keep a low profile and not be arrogant.” FB
This article originally appeared in Le Monde