VIETNAM'S LOST PARADISE -- GRIM ECONOMIC PREDICTIONS


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VIETNAM'S LOST PARADISE:
GRIM ECONOMIC PREDICTIONS SHATTER SOCIALIST DREAMS

BY THI LAM, PACIFIC NEWS SERVICE

A character in Duong Thu Huong's award-winning novel "The Blind
Paradises" describes Vietnam's communist rulers as "people who have spent
almost their entire life designing a paradise on earth, but their limited
intelligence has not allowed them to understand the nature of this
paradise nor the road leading to it..."

The novel, by Vietnam's best known post-war writer, was published in
Hanoi in 1988, during the regime's cultural liberalization period known
as "Doi Moi."

Today, as the country commemorates the 24th anniversary of its
reunification, paradise seems as illusory as ever. Even after 13 years of
Doi Moi -- a mixture of free market capitalism and command economy -- all
signs point toward an impending recession. Yet top party planners,
encouraged by the deceptive stability of the country's economy amidst the
Asian financial turmoil, confidently project a five to six percent growth
rate.

Western analysts, on the other hand, project a growth rate closer to two
to three percent. And that growth rate masks the fact that Vietnam
remains one of the poorest countries in the world, with a per capita
income of U.S. $300 and more like $60 in rural areas. (Even when their
economies hit bottom, Thailand and South Korea registered a per capita
income seven and 22 times higher.)

Other indicators point to an imminent economic downturn. Net foreign
investments for 1998 decreased 40 percent from the previous year; some
400 foreign companies left Vietnam during the first ten months of 1998.
The budget deficit rose from 1.7 percent to 5 percent of GDP; the
official unemployment rate stood at 4 million -- not including millions
of part time or unemployed farm workers.

Economic analysts explain Vietnam's relative immunity from the regional
crisis by the fact that the country has no stock market and that the dong
-- the Vietnamese currency -- is non convertible overseas. The economy
remains by and large a command economy with the government subsidizing
debt-ridden state enterprises. Most important, the government has imposed
tight controls on foreign investment and capital flows.

Vietnam's economic insulation has carried another price tag. As
neighboring countries were busy fixing their problems by restructuring
banks and corporations, stimulating domestic consumption and easing
restrictions on foreign investments, Hanoi remained complacent. As the
region rebounds, many observers fear Vietnam will be left holding the bag.

"Vietnam has been fishing in a lake while its neighbors have ventured out
into the open sea," observes a Los Angeles-based Vietnamese economist.
"They may incur storms and tempests, but when the ocean finally calms
down, they'll be positioned to catch the big fish, while Vietnam searches
frantically for the small fry left behind."

To be fair, Vietnam's communist leaders have recognized that corruption
is the mother of all problems, a roadblock to socialism. Corruption, in
fact, dominated the agenda of the Party Central Committee's meeting in
Hanoi early this year, prompting party officials to call for
"self-criticism." Western diplomats predict that some heads will roll,
but only at the middle and low echelons. Absent political rights or
freedom of the press, corruption will remain.

Anger over high taxes, rampant corruption and a widening gap between the
cities and rural areas triggered protests and popular uprisings in some
of the most impoverished provinces in the Red River Delta last year. A
worsening economy will likely foment further unrest and possible social
upheaval.

"The road to hell is paved with good intentions," goes a Western proverb.
As Vietnam enters the new millennium, it's all too obvious that good
intentions alone won't pave the way to an ever elusive paradise.

(c) pns 4/23/99
 
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