The political economy of vietnam’s transformation process

Contemporary Southeast Asia

Volumn 22, Issue 2, 2000, Pages 360-388

  Dinh, Quan Xuan ^a  

^a UNDP in Hanoi   (Viet Nam)

Author keywords

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EID: 2542601755     PISSN: 0129797X     EISSN: None     Source Type: Journal    
DOI: 10.1355/CS22-2G     Document Type: Note

References (67)

1. The Ministry of Invalids and Social Affairs (MOLISA) defines poverty as a person having a monthly income of 55,000 Vietnamese dong, or US$3.9, for people living in mountainous areas, VND 70,000 (US$5) for rural areas, and VND 90,000 (US$6.4) for urban areas. The VLSS takes into account food poverty and overall poverty. In 1998, food poverty was equivalent to US$92 per person per year, and overall poverty was US$128 per person per year. This is lower than the World Bank definition of poverty at US$1/day/person.
2. World Bank, Vietnam Attacking Poverty, CG meeting for Vietnam (Hanoi, December 1999).
3. Three banks were shut down. Executives at the Nam Do and Viet Hoa joint-stock banks were arrested. Nam Do bank was taken over by state-owned BIDV bank after it was found that overdue loans comprised 94.27 per cent of the bank’s outstanding loans. Viet Hoa bank was involved in Vietnam’s long-running dispute with Japanese and Korean companies on deferred letters of credit issued in 1995 and 1996.
4. Interview with Tran Xuan Gia, Minister of Planning and Investment, Reuters, 13 December 1999.
5. A. Fforde and S. de Vylder, From Plan to Market: The Economics of Transition in Vietnam (Boulder, Colorado: Westview Press, 1996); and J. Ljunggren, The Challenge of Reform in Indochina (Cambridge, MA: Harvard Institute for International Development 1993).
6. Ministry of Planning and Investment, PIP 1996-2000 (Hanoi, June 1996).
7. According to the Central Overseas Vietnamese Committee in Hanoi, Viet Kieu (overseas Vietnamese) injected an estimated US$1.1 billion into the home economy in 1999. It is estimated that for each U.S. dollar sent through the official channel, two U.S. dollars were sent through unofficial channels. This is bigger than ODA and FDI combined in 1999. See also Jonathan Haughton, “Money transfer”, Vietnam Business Journal (Hanoi), January 1999.
8. UNDP, Overview of Official Development Assistance in Vietnam (Hanoi, December 1999).
9. World Bank, “Economic Report on Industrialization and Industrial Policy”, Report No. 14645 (Washington, DC, October 1995), p. 105.
10. Ohno and Suygiyama, “Impact of Trade Liberalization”, ADB Institute Working Paper (Tokyo, June 1999). Focusing on the cement and sugar sectors, they show that SOEs are not competitive. Another example is Thai Nguyen Steel Mill and Hac Bac Urea Company, which is operating at only 50 per cent of its capacity. In Thai Nguyen, 30,000 employees work only 15 days a month.
11. A. Fforde, “A short assessment of the impact of Vietnam’s opening to the West since 1986” (Paper prepared for the Canadian International Development Agency, June 1999).
12. Wing Thye Woo, “Macroeconomic Performance and the Role of the State Sector in Vietnam”, in Development Strategies for Vietnam (Cambridge, MA: HIID, March 1997).
13. World Bank, Vietnam: Rising to the Challenge, An Economic Report of the World Bank Consultative Group Meeting for Vietnam (Hanoi, Vietnam, 7–8 December 1998).
14. Q. Dinh, “Banking Reform in Vietnam”, in Financial Resource for Development in Myanmar (Singapore: Institute of Southeast Asian Studies, 1999).
15. United Nations, Catching Up — Capacity Development for Poverty Elimination in Vietnam (Hanoi: UNDP and UNICEF, October 1996); United Nations, Poverty Elimination in Vietnam (Hanoi: UNDP, UNFPA and UNICEF, October 1995); D. de Walle, Protecting the Poor in Vietnam’s Emerging Market Economy (World Bank, September 1998); World Bank, Advancing Rural Development in Vietnam (December 1998); World Bank, Voices of the Poor (November 1999); and World Bank, Attacking Poverty (December 1999).
16. A key finding of the Vietnam Education Financing Sector Study (VEFSS) is that public expenditure for primary education is low relative to other sectors and relative to private spending. See Vietnam Education Financing Sector Study, World Bank Report 15925-Vietnam (Washington DC, October 1996).
17. Quan Xuan Dinh, “The State and Social Sectors in Vietnam”, ASEAN Economic Bulletin 16, no. 3 (December 1999).
18. Quan Xuan Dinh, “The State and Social Sectors in Vietnam”, ASEAN Economic Bulletin 16, no. 3 (December 1999).; The UN Report on Poverty Elimination in Vietnam (October 1995); World Bank, Vietnam: Voices of the Poor (November 1999); and UN Basic Social Services (December 1999). These reports give a good account of causes and difficulties of the poor.
19. Le Dang Doanh, “Economic developments and prospects”, in Vietnam Assessment: Creating a Sound Investment Climate, edited by S. Leung (Singapore: Institute of Southeast Asian Studies, June 1996).
20. A. Fforde, “A short assessment of the impact of Vietnam’s opening to the West since 1986” (Paper prepared for the Canadian International Development Agency, June 1999).
21. D. Dapice, “Point of no return”, Vietnam Business Journal (February 2000); and UNDP, East Asia: From Miracle to Crisis (Hanoi, June 1998).
22. From 1951 to 1996, from the Second to the Sixth NCP, through seven Politburos and 107 members (full and alternate), there were no university graduates except General Giap. Only workers and farmers were recognized as forefront classes in the struggle for the Party. Because of class struggle ideology, intellectuals were held in contempt by the CPV. Intellectuals have been accepted and incorporated into the Politburo since the Seventh NCP in 1991. For the Eighth NCP, five members of the Politburo are university graduates.
23. There are disparate accounts of the decision-making process under the bao cap period. M. Gainsborough from the School of Oriental and African Studies in London offers some explanation (Vietnam Business Journal, February 2000). According to him, in a political environment like Vietnam’s where political power is scattered rather than centralized, the tendency is to consult widely before decisions are taken. This is not about seeking “consensus”, rather it is about covering one’s back.
24. Members are proletarian, that is, workers or poor peasants.
25. Gyorgy Konrad and Ivan Szelenyi, The Intellectuals on the Road to Class Power (New York: Harcourt Brace Jovanovich, Inc., 1979).
26. The dichotomy between conservatives/ideologues and reformers/technocrats is not always straightforward. All factions agreed that Vietnam must change but how much change, at what speed and how much risk to take are their main areas of divergence. For example, Nguyen Van Linh, the former Secretary-General of the CPV and initiator of doi moi sided with the “conservative faction” at the last stage of the Eighth NCP. Describing the military as conservative is inaccurate as there is a large spectrum between the Political Directorate of the Army, the military apparatus and those involved in the army business sector. A large literature had tentatively explained the various interest groups and their conflicting views. See Thaverporn Vasavakul, “Politics of the reform of state institutions in the post-socialist era”, in Vietnam Assessment: Creating a Sound Investment Climate, edited by S. Leung (Singapore: Institute of Southeast Asian Studies, June 1996); Thaverporn Vasavakul, “Sectoral Politics and Strategies for State and Party Building from the Seventh to the Eighth Congress of the VCP (1991-1996)”, in Doi Moi: Ten Years After the 1986 Party Congress, edited by A. Fforde, Political and Social Change Monograph 24 (Canberra: Australian National University, 1997); and C. Thayer, “The Power Game”, Vietnam Business Journal 6, no. 5 (October 1998: 42). As doi moi took root, the strengthening of the “state governed by law”, the growing role of technocrats, the strengthening of the rights of the citizens, and improved information flow produced a large coalition of technocrats, party and former party members who are for change. Prime Minister Khai has been an advocate of reform and Secretary-General Phieu was instrumental in removing dissent. In addition, there is an emerging civil society. The recent toll-free police complaint hotline set up by the Hanoi Police Department to curb police abuse is an illustration of this new situation.
27. Hanoi Moi newspaper (Hanoi), 8 May 1995.
28. During a nationally televised interview, Dao Duy Tung, the contender for the Secretary-General’s position to replace Do Muoi in the Eighth NCP, failed to convey a strong sense of leadership. Nguyen Ha Phan, a contender for the position of Prime Minister, was expelled from the Politburo and the CPV for failing to report truthfully his activities during his imprisonment in South Vietnam, which caused the arrest of many communist cells.
29. The CPV has an ideological bias against intellectuals (Hong Hon Chuyen, meaning “Loyalty is Better than Competency”). From 1951 to the Sixth NCP (1987), only workers and farmers were recognized as vanguard classes. Heavily influenced by Mao, the CPV held intellectuals at arm’s length. Various purges in the late 1950s, known as Nhan Van Giai Pham (NVGP), have excluded intellectuals from the CPV. NVGP is the equivalent of the “100 flowers movement” in China in which intellectuals were outcast because of their criticisms. The party maintains control over intellectuals/writers/artists through organizations such as the Vietnamese Writers Association, and so forth. See Nguyen Binh Thanh, “Technocrats and Intellectuals under the Eyes of the CPV”, Dan Chu va Phat Trien-Gesellshaft fur Demokratie und Entwicklung Vietnam, No. 17 (Warstein, Germany, 2000).
30. The BBC had announced prematurely that the reformers had the upper hand during the eleventh plenum, just before the opening of the Eighth NCP.
31. Tran Duc Luong (Geology), Phan van Khai (Economics), Nguyen Phu Trong (Semantics), Pham The Duyet (Mechanical), and Nguyen Dinh Tu (university professor, who died during his election).
32. Unlike Tran Xuan Bach, a member of the standing committee of the Politburo who was expelled in 1990 before the Seventh NCP for proposing bold reform, Kiet was left untouched.
33. Nhan Dan newspaper, 14 March 1998.
34. During April and August 1997, the province of Thai Binh was rocked by protests over corruption and exaction of illegal fees by local authorities. The imposition of numerous taxes and fees, request for “voluntary labour”, and widespread abuse of power by local authorities triggered the unrest. Complaints and petitions were not addressed, although protests to the district and provincial levels were legal and organized in a peaceful manner. The unrest in Thai Binh spread to 130 villages out of 235 in the province and six out of the province’s seven districts.
35. Nhan Dan, 3 January 1998.
36. Dissidents have been vocal in demanding that the CPV reform itself and allow more democratic freedom. International and overseas Vietnamese media publish their writings. General Tran Do, a former field commander of the North Vietnamese forces in South Vietnam before 1975, was respectively a member of the Central Committee (CC), Deputy Chair of the Eighth National Assembly, Deputy Minister of Information and Culture, and chief of ideology for the Commission of Culture, Literature, and the Arts of the CPV. A major factor influencing Tran Do was the rural riots in his home province of Thai Binh in 1997. In his letter to the CPV (leaked to the international press) on “the state of the country and the role of the CPV”, Tran Do pointed to the unrest in Thai Binh as an example of the former backbone of the party, the peasantry, turning against it. According to him, the only solution was democratization. He called for freedom of thought, opinions, speech, publication and the press, and for free elections. Broad democratic changes were necessary if the CPV was to avoid collapse. As he became more vocal, party leaders became concerned about his dissent. Tran Do was expelled from the CPV on 4 January 1999, just before the Sixth CC plenum (2nd session). Hoang Huu Nhan, a former secretary of the party in Haiphong, asked for pluralism, the recognition of a trade union outside the party, and fought against injustice committed by the CPV against its own members. He urged the CPV to amend and reform itself. Phan Dinh Dieu, a professor of mathematics at the University of Hanoi, is a member of the CC of the Father Front. In a speech to the Father Front, he analysed the fallacy of the socialist-based market, the one-party system and its negative consequences for the country. Nguyen Thanh Giang, a physicist and dissident, was persecuted because of his appeal to the CPV for reforms.
37. Nguyen Phu Trong is a member of the Politburo. His article, “Effect a New Change in the Study of Political Theory of Cadres and Party Members”, in Tap Chi Cong San — Communist Review (Hanoi), No. 11 (June 1999), re-emphasized the need for political education.
38. Deputy Prime Minister Ngo Xuan Loc was a strong advocate for the “equitization” process. He wanted rapid equitization. Loc had been implicated in a land scandal.
39. Le Kha Phieu, Nhan Dan, 12 November 1999.
40. J. Ryan and J. Wandel, Vietnam’s Reform Experience — The Quest for Stability During Transition, UNDP Working Papers (Hanoi, May 1996).
41. Le Dang Doanh, International Colloquium on Public Administration (Hanoi: GCOP, 24–26 September 1996).
42. Thaverporn Vasavakul, “Politics of the Reform of State Institutions in the Post-socialist Era”, in Vietnam Assessment: Creating a Sound Investment Climate, edited by S. Leung (Singapore: Institute of Southeast Asian Studies, June 1996).
43. Government of Vietnam, National Public Administration Reform Program (Hanoi: GCOP May 1993). (VIE/92/002 project document).
44. In a reorganization of the government apparatus, the number of ministries was reduced from 49 to 22. Many ministries have been eliminated or absorbed by others.
45. The Government Committee for Organization and Personnel (GCOP) is the equivalent of the Civil Service. It manages the civil service personnel, as well as human resource training. It is in charge of organization, personnel, and reorganization of the state structure at national, provincial and local levels. GCOP is a creation of the doi moi process.
46. Newly appointed administrative judges are trained through a three-month course; civil servants are updated through a one-week to two-month course.
47. South China Morning Post, 11 January 2000.
48. Nhan Dan, 15 March 2000.
49. See Le Dang Doanh and T. T. Cuong, “The SOEs Reform Policies in Vietnam and their Implementation Performance”, JICA-CIEM project, in Study on Economic Development Policy (Ministry of Planning, JICA, February 1998).
50. The SOE managers were given discretion to disburse bonuses and retain some profits to fund enterprise-wide social services. Restrictions on investment expenditure were also eased. There were allegations that such reforms allowed the SOEs to embezzle the profits, which were distributed to the managers and workers.
51. Vietnam News, on-line, 6 April 2000.
52. Fukase and W. Martin, The Effect of the United States’ Granting Most Favored Nation Status to Vietnam, Research Report No. 2219 (Washington, DC: World Bank, November 1999).
53. Tran Viet Phuong’s article in the “Tap Chi Cong San-Communist Review”, reprinted by Nhan Dan on-line, 23 October 1999, affirms that Vietnam’s integration into the global market is a necessity.
54. “Drastic SOE Overhaul Needed: Deputy Prime Minister”, Vietnam News Agency, 29 November 1999.
55. Vietnam News Agency, 22 March 2000. According to VNA, the slow equitization of the enterprises was due to several factors: the lack of plans for selling, transferring, contracting or leasing the SOEs; executives were fearful of losing their power; and workers were afraid to lose their jobs. The time taken in assessing the value of the property and the advantages of going public also hindered the equitization process.
56. The technocrats are centred around the Prime Minister’s Research Group or PMRG. Ad hoc experts can supplement this small group of senior advisers. They work with the Central Institute of Economic Management (CIEM), various line ministry experts and the CPV. The Central Committee and the Politburo of the CPV have their own technical staff.
57. Quan Xuan Dinh, “Banking Reform in Vietnam”, in Financial Resource for Development in Myanmar (Singapore: Institute of Southeast Asian Studies, December 1999).
58. J. E. Stiglitz, “Whither Reform: Ten years of the Transition”, Annual World Bank Conference on Development Economics, Washington DC, 28-30 April, 1999.
59. According to PERC’s March 2000 report, Vietnam ranks as the third most corrupt country in Asia, behind Indonesia and India. Corruption among Vietnamese bureaucrats drove away foreign investors and drew the ire of Vietnamese peasants, sparking rural unrest. This state of affairs fuelled a battle between Vietnam’s reformers and conservatives over who was responsible for the depth of corruption.
60. The national budget used to be confidential. Since 1999, however, the government has started to publish a summary of this document. The document is incomplete but constitutes a first step towards transparency.
61. General Tran Do’s letter to the Politburo on “the state of the country and the role of the CPV”, was leaked to the overseas media and published, notably in The Ky 21, (California, USA, 1998).
62. Ta Xuan Dai, “State Administrative Reform – Main and Urgent Task of Renovating the Current Political System”, Tap Chi Cong San (Communist Review) (Hanoi), no. 14 (July 1999).
63. D. Rodrik, Making Openness Work: The New Global Economy and the Developing Countries (Washington DC: ODC, January 1999), chp. 4.
64. AP News (Hanoi), 2 February 2000.
65. Under the principle of democratic centralism, debate is allowed before a decision is made. Once a decision is reached, it is final. With this outlook, the party will accept only occasional mistakes or errors.
66. The UNDP report, 2000, Overcoming Human Poverty says that the government is often the cause of poverty. Governance is defined by the Asian Development Bank as the manner in which power is exercised in the management of a country’s social and economic resource for development
67. Asian Development Bank (ADB), Vietnam: Greater Stability through Good Governance — Key Issues for Consideration (Manila, 1999).