The optimism during Vietnam’s pre-2008 economic boom is over. The Communist Party knows it must take action. But it doesn’t seem to know what.
At one side of the large concrete Hoa Binh Market in Ho Chi Minh City’s District 5 sits an “illegal market,” where vendors set up small light bulbs over their produce and meat and loop wires over the large umbrellas. On special occasions like public holidays, police may chase away or even arrest the several dozen of these vendors. Sometimes, goods are confiscated. But that’s not their only problem now.
“Since last year our family’s income is down 40 percent, it’s almost half what it was,” says Phan Thi Khanh as she adjusts the iceberg lettuces rolling around loose in a shallow bamboo basket.
Khanh works 16 hours a day and says she takes home between 100,000VND to 200,000VND (about $5 to $10). She says her husband helps her out at work, while their sons work at local factories. They still live at home, she says, because rent is too expensive for them to afford their own places.
“Most of the buyers here are factory workers or people from outside provinces. Rich people don’t shop here,” she says. “The prices have gone up, but the salary of workers hasn’t, so they buy less.”
Official figures are vague, but locals say strikes have been an increasing at factories over low wages and poor working conditions. Worries over wages have been exacerbated by spiraling inflation in recent years. Inflation peaked at 23 percent last August, before dropping to 18 percent at the beginning of 2012. But it was still stuck at more than 8 percent last month. Economic growth, meanwhile, has dipped again and is unlikely to surpass 5.2 percent this year, according to the government.
The government is responding with plans for major reforms in three key sectors: the sluggish state-owned enterprise (SOE) sector, the banking sector and public investment. SOEs have lost money hand over fist for years. Indeed, state-owned shipping company Vinalines, which was said by state-owned media to have “wasted” a billion dollars, is only the most glaring example of many. Three of the firm’s executives have been arrested in a sector estimated to make up as much as 40 percent of the economy.
Vietnam’s national shipbuilder Vinashin, meanwhile, has flirted with bankruptcy after years of mismanagement. One of the problems identified was movement into “non-core” sectors, such as hotel management.
In a recent report to the country’s main legislative body – the National Assembly – the government said SOEs cut spending by close to $660 million over five years, ending late last year, according to local news.
However, government officials are increasingly concerned at the massive losses of state money. Ho Chi Minh City NA representative Do Van Duong, for example, told Thanh Nien News: “It’s time to investigate investments that cause huge losses of state money and hold accountable those responsible.” He said that the recent Vinashin and Vinalines cases were indicative of poor management of the sector.
Companies are now supposed to be required to publish earnings, though the plan is in its initial stages. But whatever the government says, it seems doubtful that real reform will happen anytime soon as SOEs resist change, foreign investment or restructuring. In addition, many (quietly) complain that government regulations ensure a large workforce in the state sector and free services for the poor, a problem, they lament, when trying to improve efficiency.
Last year, a number of local economists called the proposed changes the biggest since doi moi, the policy begun in 1986 that reopened the isolationist communist nation’s economy, and a move that has been credited by many analysts as the real driving force behind the rapid economic growth of the past two decades.
Some observers, though, are skeptical about such talk. “Oh I’d love to see that,” says former U.S. ambassador to Hanoi, Douglas “Pete” Peterson as talk of the comparisons with doi moi are broached in an interview. Peterson, who was a prisoner of war during the Vietnam War, was the first post-war U.S. ambassador to Vietnam, serving from 1997 to 2001. “Doi Moi was a one-off, a massive decision, but it paid off in just about every way.”
And there were, he says, some immediate gains from the policy. “It stopped people starving. It gave farmers back land, productivity surged overnight and you had food security. People were starving to death in the street [before the reform],” Peterson says.
Photo Credit: Daniel Werner
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Tyler
Conflict of interest at the crossroad for VN totalitarian leadership in term of how much control and personal wealth accumulation they have to give up in order to move the nation and its enormous human potential towards a more dynamic economy. For VN, leadership efficiency in restructuring and organization is the key to growth. It is a matter of time for more competent leadership to arise because the growing pressure from more vibrant, knowledgeable and youthful majority for rapid development, competition and active participation in VN society and political economy. With exposures to higher education and interaction with other more developed society, the youth have tasted blood and experiencing growing hunger coming with age, like a new generation of male lions in the pride, who are at the verge of challenging the ineffectiveness of the old male.
Tom Tran
To all: if you don't agree with someone's argument, avoid him, or treat him with respect. I respect Cam, nirvana and observer as much as John Chan, although everytime he opens his mouth he rants against Vietnam. I have the option not to argue with him, it doesn't help anyone or my country. He is not offering anything but his imaginary thought. But I don't feel the need to ridicule him. Regards,
Cam
Thanks for your suggestions. I realize while our counter-arguments can’t shut up those badmouth Chinese nationalists like that of John chan but at least it offers a different voice to rebalance the comment session of this blog. Otherwise, you will see a monologue as the wumaoers are flooding this blog with their garbage and I think the Diplomat knows this well.
Observer
@ tom tran,
Do you know that respect is earned and not given freely? JC and his chinese comrades just don't offer opinion, they spread lies and propaganda and slogans. So far, none, zero, nada, of any chinese dare to provide any links or stories that could dispute any of my statements. I had provided many well know sources to smash their ridiculous statements such as china won the border war in 1979, china did not attack anyone, US F-22 planes were made by china, and so on.
nirvana
All,
Thanks Tom Tran for the kind reminder. But let’s be clear. When I “fight” John Chan it is never against him personally, neither his race nor his nation. It is true that sometime I got carried away and used mockery. But what I tried to ridicule is the state propaganda behind John Chan. For me it is clear that people like John Chan (if there is A person behind the name) is a typical “product” of such state propaganda, perhaps even a “tool”. Therefore, we can not ignore “John Chan” per se. The purpose is neither to “silence” John Chan. The purpose is to convince the “silent majority” that this battle (of ideas) is also theirs.
Jonathan
TheVietnamese are such ungrateful people. They have totally forgotten how the Chinese helped them fight the French and the Americans and succeeded in reuniting with the South.
Propaganda
HA HA HA, that’s what written in the PRC books, please consider the try of “lesson” on the 1979 border war…
A small flash-back
http://www.time.com/time/photogallery/0,29307,1879849,00.html
PS: No need to explain why Vietnam invaded Cambodia with his ‘killing fields’…
PacRim Jim
Vietnam’s economy going to hell?
As the great American philosopher Nelson Mundt explains, “HA-ha!”
nirvana
There is in fact a large Chinese community in Vietnam, perhaps more from Taiwan, perhaps some have been there for generations (especially in Cholon). There are also big firms from mainland China that have won big projects too (the bauxite mining is one example), using perhaps corruption techniques. Considering the past and present conflicts, this presence is surprising.
But, John Chan, you should understand why the Vietnamese (its people and its army) do not fully trust China. Nobody does, why should Vietnam.
John Chan
@nirvana,
Your ignorance about Asia is astonishing, it seems you are not even a Filipino, if you are real Filipino you should know the Chinese in all SE Asia came from same areas in China, and it seems you are totally ignorant about the intertwined between Chinese and SE Asians in all aspects of lives.
The importance of Chinese in SE Asian economies is long established before the advent of PRC’s big projects, your comment makes one wonder how much you know about Asia.
Please do not confuse imperialist West’s toxic propaganda with real lives in SE Asia. The imperialist West’s toxic propaganda is to sow discords in SE Asia in order to destroy peace and prosperity, so that they can make handsome profits on the SE Asian’s misery and lives.
Nirvana, nobody trusts USA, Japan, and its other lackeys based on their non-stop bombing and killing records since WWII, why should the world change their minds because the predatory imperialist Westpac’s black information network is spinning out fabrication thru thin air like you?
Cam
@john chan,
It is china, who has been sowing a discord among ASEAN members to profit handsomely. This is well-known fact.
John Chan
@nirvana,
The westerners, be it Spaniards, Americans, French, or Anglos, they are not Asian, they are visitors no matter how mighty they appear to be at the time, they will leave Asia, and be gone for good; Spaniards, French, and Anglos are the examples, Americans will not be the exception.
Asians have to manage Asian business sooner or later, hedging on a visitor for long term issues is not a prudent choice.
a_canadian_observer
@John Chan: You sound like “Asia for Asians”. We’ve heard this before. Does pre WW2 ring a bell? Why should Asian nation trust this new slogan from a chinaman like you?
Cam
@john chan,
Are you sure Chinese like you are Asian? I think otherwise as if you are alien indeed because you always alienate your Asian neighbors. In East asia alone, we would support ASEAN plus 2 (Korea and Japan), no place for an alien like you. LOL.
nirvana
Today John Chan's motto is "Asia for Asians", tomorrow it will be "the Han leadership in Asia" and after tomorrow "the Party clever vision". First call for unity, second dominate, third assimilate. Your "periphery" knows what you mean by "pacification" , no need to recite your lesson here.
John Chan
@nirvana,
If Asia is not for Asians, then Asia is for whom? Are you suggesting Asia is destined to be enslaved by the European? Besides why should the Philippines care? It is always under one European master or another, even while it is under nominal independence right now, it is craving for another Anglo master again.
nirvana, tomorrow Martians might blow the globe up because they can’t bear to see the hypocrisy prevailing on the earth. Fabricating conjecture like a rain-man is a sign of delusion, because conjecture is not real; meanwhile ignoring one’s own nation under the military occupation of the USA and Japan is betraying those gave up their lives fighting independence for the Philippines.
nirvana
@John Chan
Well, before you show satisfaction with such slogan as "Asia for Asians", you should Google "Greater East Asia Co-Prosperity Sphere". And if you can't find any link on the Internet from where you are, you can look up as well "Hachirō Arita"
nirvana
@John Chan,
What I said was not very different from what you are re-stating above: a lot of Chinese arrived in Vietnam generations ago. This means that there is an sociologically and culturally “intertwin”.
But I maintain: despite all the historical legacy between China and Vietnam, including the 3rd Indochina war, the Chinese in Vietnam are treated relatively well. The proof is their visible presence today in the country. This shows that the Vietnamese, as well as as the Philippinos, as people are traditionally tolerant (crossing my fingers).
Where there is mistrust is in areas where the China state sponsoring is obvious. For Vietnam, you can apply this observation to the French state, the USA etc… Nevertheless, Vietnam “has been had” only once by these Western states but it “has been had” many times by its Northern neighbor. And btw, none of the Western powers have declared to the world that they wanted to teach Vietnam a lesson.
a_canadian_observer
@nirvana: I have a lot of friends from VN. A lot of them are of chinese origin, and surprised enough, they all side with the Vietnamese in their view towards china, albeit being proud of their origin. I guess the Vietnamese tolerance and generosity have resulted in such sentiment. War mongers like John Chan and other CCP agents have no chance of provoking them.
nirvana
And of all countries that Vietnam had to fight a war with, only one state allows its official media to threaten Vietnam of a SECOND "lesson". This is your state, John Chan. So at least do not perfidiously speak about healing past wound, don't serenade about building trust, let alone starting a friendship.
Propaganda
@John Chan,
For sure China doesn’t practice non-interference but wants just control whatever in taking land or sending Chinese people abroad. Curiously, China is one of the country in Asia having so much land conflicts with his neighbors (Russia, Mongolia…, TIBET…, Vietnam, Japan etc…). Is your country not big enough for your people or is it a kind of a strategy of colony?
Meaning Vietnam should open his door to more Chinese in order to face the ‘white power’ is ridiculous, you don’t let the wolf get in the farm. Meaning Vietnam or other SE Asia countries without the great China can not build and develop their country is snooty. Well that’s a kind of propaganda that the French did in the old time…
John Chan
@Propaganda,
You are wrong, China does not have land conflicts with most of its neighbours except 4, that is India, Vietnam, Philippines and Japan. All these 4 nations are encroaching on China’s land, fending them off is China’s right. Even that those disputes only intensified after USA’s pivoting to Asia-Pacific.
USA is bigger than China, why does it still occupying Hawaii, Ryukyu Kingdom, Diego Garcia with armed forces? The Anglo grabbed the whole Australia from the natives and they are still not satisfied, they invaded Indonesia and pried East Timor away from Indonesia too. Those are the example of “a strategy of colony.”
You are indeed pumping out misinformation to white wash the atrocity and the failure of developing SE Asia left behind by the White invaders. Chinese has been developing SE Asia way before the European could sail outside of the Mediterranean Sea in case you don’t know.
It is the era of free trade and free market, the West will banish any nation does not open up its door by bombing and killing in the name of installing democracy and protecting human rights. You are insisting Vietnam and other SE Asia countries to defy such open door doctrine; are you a commie? Homeland Security must pay you visit to ensure you are a terrorist that is undermining the western capitalism.
Propaganda
@John Chan,
Well it seems you have a very selective memory, you forgot some other conflicts:
China vs Bhutan (Bhutanese enclaves in Tibet, namely Cherkip Gompa, Dho, Dungmar, Gesur, Gezon, Itse Gompa, Khochar, Nyanri, Ringung, Sanmar, Tarchen and Zuthulphuk)
China vs South Korea (Ieodo Island/Suyan Rock (aka Socotra Rock)
I don’t even mention land that China already took over like Tibet or a part of Mongolia…
Well you also mention Australia and its white colony, why not America?
But keep in mind one thing, nowadays I’m not sure the ‘White’ blocks wants invade the countries of SE Asia or take lands but for sure have their influence sphere.
In the case of China, they want both in using the soft and hard power…
It is not because China is an Asian country that China has the right to lead all the others. If you don’t understand that, you probably don’t understand why for thousand years Vietnam fight vs China for their independence or fought French, Japan or American. The best thing that can happen for Vietnam is get away from the Chinese influence!
I don’t know who you called commie? Your comments are full of official propraganda of the PRC.
If you are eager to help Asian countries or asian people, why should you not start with North Korea, they seemed to be as happy as China before the economic revolution…
I don’t even mention how China helped his other good friend RED KHMERS form CAMBODIA…
Conclusion: Respect the international laws and rules over lands and seas, not bullying and don’t answer China is a big country and ASEAN are smallers in order to claim your right…so people will maybe start to respect China.
Observer
Gotta love it.
This article is about Vietnam and its economy, NOT about china or chinese. Yet we have the 50 cents/wumao members came in here and brag about how great it is in china.
Hey guys, check your own country (google “china pollution pictures”) before you brag, ok? Check and see how hundreds (not just a few) of million of chinese live in squalor conditions for less than $2 USD a day.
“The empty drums usually are the loudest ones” – old proverb.
Jam
@Observer hits the nail on the head! :) The Chinese should stop bragging about China until they can deal with their pollution problem. China is NOT a shining example of real progress. Its only claim to “fame” today is its military might, not the way it treats its own people. It has never learned the humility and decency taught by its ancient sages. What a pity. Those learned men of ancient times were China’s REAL treasures.
John Chan
@Observer,
Chinese tried to help Vietnam with solution, only troubled people like you will drag dead war victims into this article and deteriorate the debate into bad mouthing contest.
No wonder you never dare to show where you come from, because you can demonstrate how low you can go irresponsibly. Facing gutless opponents like you, China fears none.
India economy is deteriorating fast, its GDP growth has dropped below 5% while China maintains 8%, its inflation is 25%, and its national bond has been downgraded to junk bond status of BBB-. India’s garbage stench is driving foreign investor away. 525 million tons of untreated garbage a year is piling up on India farm lands and burying the head in the sand is not going get India to keep its position in the BRIC.
a_canadian_observer
@John Chan: “china tried to help VN…” LMAO. Last time china helped the Cambodia’s Khmer Rouge, 1/3 of Cambodians were exterminated. The Vietnamese would say: thanks but no thanks.
John Chan
That is fine if you don’t want China help you, we are helping Laos and Cambodia instead. These two poor countries will become Chinese provincces soon. We lease their lands, populate with our people and we will claim these later on.
John Chan
@”John Chan” the impostor,
China follows non-interference principle; it treats all nations as equal and with respect. Vietnam, Laos and Cambodia are all the same. Only unscrupulous people like you is selling snakeoil to them using hijacked name.
50 cents bridgade
Lets face it, no country is China. China is an exception case. Even India is a sinking ship. Now you know why Vietnam and Philippine is inching to drill oil in the Spartly. They are just 2 greedy countries trying to lay claim on these island.
Propaganda
That’s typically a answer from a nationalist chineese.
Can you read somewhere in that article mentioning the Islands conflict between China and Vietnam, Philippine?
But if you insist, respect first the international law and rules over the sea.
1. South China Sea doesn’t mean it belong to China
2. As that sea is shared with so many countries, you don’t respect the 200 miles with such view.
Nationalist is very close to imperialist so China is maybe a big country but is China ready for a war with the whole world. A lot of big Empires fell because they though that they can conquest the world.
Girish
Chinese ship is shinking too as like everyone’s else (if you mean low economic performance) . Its just that CCP do not want you to know much about Chinese issues and rather prefer you to live in dilusion and bang here on the forums.
Son Nguyen
Three main problems: Low education achievement(especially at university level , ask Intel), perpetual corruption and poor management of state controlled companies will stop Viet Nam economic progress. Viet Nam will not make any real economic progress beyond what Thailand did until these three [problem resolve
BE
Remember, we are a “socialist-directed” economy. So, it is quite normal that there are more and more people who own nothing. All the capitals now are going into what we (or more correctly the statesmen) call “collective possession” (moneys, lands, even our bodies someday…). For you who live in the “corrupt” capitalism and do not comprehend what it means, well, simply saying, a euphemism for “leaders’ pocket”.
Harry
Well said, but not enough men. Leaders themselves will not possess anything more than the Party law allows, yet, their relatives, associates, aquaintance do. This is a problem, which intertwines to form the so-called “cloning capitalism” in Vietnam.
John Chan
@Son Nguyen,
You left out one major problem that caused the demise of Vietnam economy; it is the expulsion of Chinese in Vietnam. Thailand as well as all SE Asia nations depends on the localized Chinese to keep their economy running. The European invaders realized the Chinese commercial capability was a serious threat to their rule right at the beginning; they suppressed Chinese relentlessly and gave the indigenous people guns to keep the Chinese under thumb.
The sooner the Vietnam rectifies the mistakes it made, the earlier the Vietnam will embark on the path of prosperity. American and Japanese have no wellbeing of SE Asian at heart at all, they are in the SCS to make it a peg’s breakfast so they can make some handsome profits. Aligning with those two snakeoil salesmen definitely is not the correct path to build an economy.
Cam
@john chan,
As usual, your twisted logic is laughable! China is every problem the Vietnamese face today, economic sabotage, land grabbing, cultural invasion, . As soon as Vietnam gets out of communist China’s shadow, it would get much better. Vietnamese people hate the bad big bully China, their patience is running out and the VCP knows this well so they can’t dance with the CCP for too long.
John Chan
@Cam,
China practices non-interference policy, it treats all nations as equal with respect, why do you admitted Vietnam is under China’s shadow? Is Vietnamese feeling inferior? Copying Whiteman’s bad habit of blaming others for its own handicap is not going make Vietnam get out of its economic demise.
nirvana
@John Chan,
The Vietnamese do have an inferiority complex vis-à-vis the Yuan Empire, the Ming Empire, the French Empire, Imperial Japan, the great USA,…
If China does not have a superiority complex, why do we read that China wants to "slap country X on the face", "teach country Y a lesson" all day round on OFFICIAL Chinese media?
Observer
@ JC,
Sure, Vietnamese people would invite chinese back right after chinese invite Japanese back and ask them to do what they did to china and chinese at Nanking. Remember how Japanese soldiers treat chinese women? How they treat chinese men?
“Those that fail to learn from history are doomed to repeat it” – George Santayana
John Chan
@Observer,
If you are a Japanese, I will tell some story about why there are so many hybrid Japanese in Argentina.
John Chan
@Editor of The Diplomat,
Why are you not showing my comment pointing out Observer’s mistakes and bad commentary manner? Afraid to let the truth known to people?
John Chan
@Observer,
Chinese are the nation builders, they built Vietnamese economy; Vietnamese current economic doldrums is because they made a mistake by failing to realise their handicaps, for the wellbeing of the Vietnamese, I suggest a solution to help Vietnam get out of its economic demise.
The westerners and the Japanese are destroyers; they bring destruction, atrocity and misery wherever they go. Vietnamese suffered terribly in the Fascist Japanese hands. It is hard to tell which one committed more crimes and atrocity in Vietnam against the hapless Vietnamese between the French, American, Australian, S.Korean, Filipino and the sadistic Fascist Japanese.
Observer, we are trying to help Vietnamese, bad mouthing China will not help Vietnamese at all. India is better to honour its contract with Vietnam, lip services only prove India not creditworthy.
Errol T
Are you saying that Hanoi should invite the Chinese back? Maybe the Chinese from Singapore, Taiwan, and elsewhere, but from PRC? I don’t know how they would accept the idea, considering the history between Vietnam and mainland China.
John Chan
@Errol T,
Please read some real history, not propaganda, before commenting, your ignorance is not an excuse to put out idiotic comment.
cam
@john chan,
As usual, nothing is good and positive coming out of your mouth. Instead of debating, you are ranting non-stop from a computer program and as we can see, it is full of bad codes – ridiculous logic, nonsensical, black-turned-white, out of place bs. It looks like you are not even a Chinese because you always make china a laughingstock. The more you rant, the more china is hated by its neighbors. My advice to you, ask your handler to change the better implanted chip.
Watcher
You are right JC. Chinese are the superior race (I presume the Han), and you other guys should understand that you should let China run the affairs of Asia. Look what a good job they are doing at it in China!
Have we heard similar arguments in history? Imperial Japan, Imperialist Western powers?