Routledge Library Editions: Revolution in Vietnam
Volume 5
Vietnam The Incomplete Transformation
First published in 1999 by Frank Cass Publishers
This edition first published in 2022
by Routledge
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1999 GDI/Frank Cass
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British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
ISBN: 978-1-03-214885-4 (Set)
ISBN: 978-1-00-324163-8 (Set) (ebk)
ISBN: 978-1-03-215288-2 (Volume 5) (hbk)
ISBN: 978-1-03-215290-5 (Volume 5) (pbk)
ISBN: 978-1-00-324346-5 (Volume 5) (ebk)
DOI: 10.4324/9781003243465
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The publisher has gone to great lengths to ensure the quality of this reprint but points out that some imperfections in the original copies may be apparent.
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First published in 1999 in Great Britain by
FRANK CASS PUBLISHERS
Newbury House, 900 Eastern Avenue,
London IG2 7HH
and in the United States of America by
FRANK CASS PUBLISHERS
c/o ISBS
5804 N.E. Hassalo Street
Portland, Oregon 97213-3644
Website http://ww.frankcass.com
Copyright 1999 GDI/Frank Cass
British Library Cataloguing in Publication Data
Wolff, Peter
Vietnam: the incomplete transformation. (GDI book series; no. 12)
1. Industries Vietnam 2. Vietnam Economic policy
3. Vietnam Economic conditions
I. Title
338.9597
ISBN 0-7146-4931-7 (cloth)
ISBN 0-7146-4491-9 (paper)
Library of Congress Cataloging-in-Publication Data
Wolff, Peter, 1952-
Vietnam, the incomplete transformation / Peter Wolff.
p. cm. (GDI book series: 12)
Includes bibliographical references (p. ).
ISBN 0-7146-4931-7 (cloth). ISBN 0-7146-4491-9 (pbk.)
1. IndustriesVietnam. 2. VietnamEconomic conditions.
3. VietnamEconomic policy. I. Title. II. Series.
HC444.W653 1999
338.9597dc21 98-48942
CIP
All rights reserved. No part of this publication may be reproduced, stored in or introduced into a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of the publisher of this book.
Printed and bound in Great Britain by
Antony Rowe Ltd, Chippenham, Wilts
Abbreviations
ADBAsian Development BankAFTAASEAN Free Trade AreaAPECAsia-Pacific Economic CooperationASEANAssociation of South East Asian NationsBIDVBank for Investment and Development of VietnamBMZBundesministerium fur wirtschaftliche Zusammenarbeit und Entwicklung (Federal Ministry for Economic Cooperation and Development)BOTbuild-operate-transferCMEACouncil for Mutual Economic AssistanceCPVCommunist Party of VietnamESAFEnhanced Structural Adjustment FacilityFDIforeign direct investmentGDPgross domestic productGNPgross national productICORincremental capital output ratioIDAInternational Development AssociationIFCInternational Finance CorporationIMFInternational Monetary FundIUCNInternational Union for the Conservation of NatureMOSTEMinistry of Science, Technology and EnvironmentMPIMinistry for Planning and InvestmentNICnewly industrializing countryNGOnon-governmental organizationODAofficial development assistanceOECDOrganization for Economic Cooperation and DevelopmentR&Dresearch and developmentSCCIState Committee for Cooperation and InvestmentSNA(United Nations) System of National AccountsUNDPUnited Nations Development ProgramVCCIVietnam Chamber of Commerce and IndustryVICOOPSMEVietnam Union of Cooperatives and Small and Medium-sized EnterprisesWTOWorld Trade OrganizationWWFWorld Wide Fund for Nature
Summary
In 1986 Vietnam began a process of transformation under the slogan of doi moi (renewal), abandoning the planned economy for a multisectoral economy guided by market-economy principles, with property predominantly in the hands of the state and cooperatives and with government performing a strong steering function. Multisectoral is a reference to the co-existence of different forms of ownership - state, cooperative, private - with which the explicit recognition of the private sector, previously confined to small family enterprises, as an element of a socialist market economy was essentially associated.
The reform was triggered by the disappointing results produced by a policy of orthodox planned economy after the countrys unification in 1975. None of unified Vietnams economic objectives had been achieved because of gross errors committed during the integration of the South Vietnamese economy and the collectivization of agriculture and because of continued hostilities in the late 1970s and the consequent withdrawal of some foreign aid. Agriculture and industry - with the exception of some enclaves of heavy industry - stagnated; supplies to the people were often less satisfactory than during the war; the country became increasingly dependent on economic aid from the CMEA, which it had joined in 1978, whereafter it completely neglected foreign trade with the Asian region. The Communist Party of Vietnam (CPV), the driving force behind national liberation and industrialization and modernization in the socialist mould since the 1950s, saw its position threatened since, though the war had been won, the struggle to overcome economic backwardness was in danger of being lost.
Transformation began with some basic regulatory reforms, which were progressively implemented in the late 1980s:
the de facto dissolution of the agricultural production cooperatives, combined with long-term safeguards of peasants land rights and the general abolition of compulsory supplies of foodstuffs to the state and the monitoring of the domestic market;
the gradual reduction of plan targets to be met by state-owned firms, which were also permitted to dismiss employees;
the laying of legal foundations for the establishment of private enterprises in addition to the family firms already legalized in the early 1980s;
the removal of restrictions on foreign direct investment;
the abandonment of the monobank system for a two-tier financial system comprising a central bank and commercial banks.
Following these decisions of principle a macroeconomic stabilization program was implemented from 1989 to 1992 to reduce the hyperinflation to which flourishing parallel markets and the partial liberalization of prices in the 1980s had given rise. The stabilization program was based on a stabilization-cum-liberalization concept: a restrictive monetary and fiscal policy was combined with the radical decontrol of hitherto state-administered prices and an adjustment of the exchange rate to the parallel market rate, with a subsequent flexible exchange rate system and liberalization of foreign trade.
