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Quick Facts About Viet Nam

Electricity Consumption (2003)
36.9 billion kWh (53th out of 216 countries)

Top Industries
Food processing, garments, shoes, machine-building, mining, cement, chemical fertilizer

Top Exported Products
Crude oil, marine products, rice, coffee, rubber, tea, garments, shoes

Major Export Partners
U.S. 15.0%, Japan 14.8%, Australia 7.7%, Germany 6.7%, China 6.1%, Singapore 5.6%

Top Imported Products
Machinery and equipment, petroleum products, fertilizer, steel products, raw cotton, grain, cement, motorcycles

Major Import Partners
Singapore 12.7%, Japan 12.7%, South Korea 11.5%, Taiwan 11.4%, China 11.4%, Thailand 5.8%

Source: CIA World Factbook

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Unleashing the Rising Dragon

These days, Viet Nam seems to be a country of many contradictions. On the one hand, about half of its population is under the age of 25 and they have very little memory of the Viet Nam War. But on the other, almost all of its political leaders are old veterans of the Viet Nam War. This kind of paradox is one of the country's greatest strengths, along with its greatest weakness.

Attracting More Flies With Honey Than Vinegar

Beginning in the late 1980s, Viet Nam's communists implemented a new plan toward economic and social modernization, called "doi moi." Its goal was to increase foreign investment, tourism, encourage small private enterprises, and increase overall economic growth while still allowing the communists to retain their political and economic control. This plan was very similar to China's modernization plan. Up until 1998, it was largely successful as Viet Nam's gross domestic product (GDP) grew about 9% each year from 1990 to 1997.

However, since then, Viet Nam's economy has stagnated. Farmer and his water buffalo © Geoffrey Clifford/Getty Images There were several reasons for this slowdown. A large part of this was due to the Asian financial crisis of 1997 that significantly weakened the economies of many of Viet Nam's biggest investors and export markets. Because businesses in other Asian countries weren't doing very well, they had less resources to buy goods made in Viet Nam. Another reason is that banks and investment companies from Asia and Europe were becoming more selective in financing development projects.

As I mentioned, almost all of Asia was hit hard at this time. As a result, foreign investment fell from $8.3 billion in 1996 to $1.6 billion in 1999 and GDP growth slowed to about 4% in 1998, but has since picked up to around 6% in 2002. Analysts point out that this economic slowdown highlights Viet Nam's greatest weaknesses -- uncompetitive, inefficient, and unprofitable state-run industries, a weak banking system, an inefficient state enterprise sector, falling export growth, and most importantly, rampant government corruption.

Corruption is Just Another Form of Desperation

In fact, when the country's economy began facing problems in the late 1990s, Viet Nam's government seemed to actually become even more inefficient and even more thoroughly corrupt. As any Vietnamese business owner or even knowledgeable tourist can tell you, nothing gets down unless you offer some government bureaucrat a bribe. For many of us, that happens the momemt you arrive in Saigon's airport -- you want to sail through customs nice and easy? Hustle and bustle on the streets of Saigon © Paul Chesley/Getty Images Then slip a $5 bill in your passport as you give it to the airport official who stamps it. You want to keep your karaoke business free from police harassment? Make sure to get your monthly bribes in on time.

Corruption among government officials is not just a minor inconvenience but can also be a significant obstacle toward economic development. Fortunately, the communists were not able to spoil my entire vacation. They tried a few times, but I kept my cool and wisely avoided creating an international incident.

Just as damaging as this pervasive culture of corruption, the Vietnamese government has consistently slowed or completely blocked much-needed structural reforms aimed at making the country's industries more competitive internationally. Instead of closing down failing industries and factories or restructuring their management operations, they continue to pretend that everything is just perfect the way it is. Therein lies Viet Nam's greatest tragedy. Rather than addressing critical issues in the economy, the communists are desperately trying to hold onto power, fearing that further modernization will eventually lead to their political demise.

It's not as though Viet Nam is at any type of major disadvantage in the international economy, as it was in the past. President Clinton normalized relations with Viet Nam in 1994 and lifted all remaining trade restrictions with Viet Nam in 2000. And after plenty of delay and controversy, in November 2001 Viet Nam finally ratified a new comprehensive trade agreement with the U.S. In theory, this new trade agreement with the U.S. should help Viet Nam's economy by making it much easier and cheaper for goods and products made in Viet Nam to be exported to and sold in the U.S.

But Viet Nam will still have to deal with intense economic competition from its Asian neighbors who are trying to do the same thing and have had more experience in developing their export sector, such as China, the Philippines, and Indonesia. Let's hope they set the future free © Glen Allison/Getty Images It will also remain to be seen just how the communist authorities implement the agreement's provisions for opening up their internal markets and perhaps by implication, their tight grip on economic control.

As another example of the paradoxes of Viet Nam's economy, the communists are trying to promote the Internet as a mechanism for socioeconomic development but at the same time, is tightly censoring any information that they may perceive as anti-government and subversive. Further, the Vietnamese government has recently stepped up its efforts to encourage overseas Vietnamese who fled the country beginning in 1975 (the "Viet Kieu") to return to Viet Nam as tourists, business owners, and investors as another strategy for economic development.

In the meantime, Viet Nam's bright, talented, and hard-working population is suffering and being prevented from realizing their full potential. As many economists point out, if Viet Nam's government would just let them, Viet Nam's workers would turn the country into the next Asian powerhouse that would quickly rival the economies of its more established neighbors, such as Thailand, Malaysia, and even Taiwan.

But instead, Vietnamese authorities are spending their time and resources cracking down on sporadic local uprisings, particularly in the country's highlands, which they see as the first sparks that could ignite a full national rebellion. The people of Viet Nam have put the Viet Nam War behind them and are looking forward to the future. They have more important things to worry about these days. They are young, ambitious, industrious, creative, and anxiously waiting for the opportunity to display their full potential. Let's just hope they get that chance before it's too late.

Author Citation

Copyright © 2001- by C.N. Le. Some rights reserved. Creative Commons License

Suggested reference: Le, C.N. . "Viet Nam -- Unleashing the Rising Dragon" Asian-Nation: The Landscape of Asian America. <> ().

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