HANOI, Vietnam -- While other Asian countries are grappling with the
regional economic crisis, Vietnam is backing away from the urgent calls
for
change it made earlier this year.
Even as Vietnam's sheltered economy begins to slow, Prime Minister Phan
Van Khai's opening speech to the National Assembly's fourth and last
session of the year verged on self-congratulation, analysts and diplomats
said.
Mr. Khai said the Communist Party's strength protected the country from
international speculators through a nonconvertible currency. He also said
capital controls had protected Vietnam from the turmoil afflicting its
neighbors.
"Political stability has enabled the country to continue to grow steadfastly,"
he said.
Reform Hits Roadblock
In earlier speeches the prime minister -- considered among Vietnam's
more progressive leaders -- urged speedier reform, particularly in selling
off inefficient and capital-eating state-owned companies.
But reforms such as laying off workers at state-owned companies create
hardship and stir discontent, especially when the economy is already
faltering. A year ago, peasants clashed with police and government
officials over corruption and taxes in the northern province of Thai Binh,
an
incident fresh in the minds of policy makers in one of the world's poorest
countries.
The prime minister's latest speech is consistent with the position of the
high-level 6th Party Plenum earlier this month, which responded to the
regional economic crisis by pledging to keep peasants in the countryside
happy.
"Lessons from the countryside are lurking," said Carlyle Thayer, the head
of the school of politics at the Australian Defense Force Academy in
Canberra and a leading academic on Vietnam.
So far the pace of change has been glacial. Only 39 of 6,000 state-owned
enterprises have been sold to workers, managers and investors, far below
the government's modest target of 150 by the end of this year.
Far from renewing calls to make painful cuts in unprofitable state
companies and step up the sell-off, Mr. Khai in his speech emphasized the
"leading role" of the state sector, which would have to practice more
"thrift." Mr. Khai also had good news for farmers when he said more of
the budget should go to agriculture.
According to Mr. Khai's speech, the government appears to be turning
inward, by relying more on the country's natural resources to generate
export revenue. Speaking to reporters after Mr. Khai's speech, Deputy
Prime Minister Nguyen Tan Dung said the government hopes investment in
Vietnamese agriculture, forestry and fisheries will jump to 30% from 8%
now, according to Dow Jones Newswires.
Vietnam's leaders do recognize the Asian economic crisis is leaking even
into Vietnam's protected economy, though. The National Assembly will
debate and approve economic targets for next year that have been
lowered from what some economists say are stratospheric to merely
unrealistic. The government now forecasts growth to be between 5% and
6% next year, compared with the target of 6% to 7% this year. The
usually upbeat World Bank estimates growth to be 3% to 5% this year.
But unless Vietnam stops pouring capital into wasteful state-owned
companies, opens its market to more competition, cleans up government
and reduces red tape -- especially for foreign investors -- many
economists predict growth rates of between 1% and 2% in the next two to
three years.
The government's rosy growth figures serve only to "paint the picture of
Vietnam as the exception to what's going on in the rest of the region,"
said
Mr. Thayer.
Vietnam's growth depends heavily on exports and direct investment by
foreigners, both of which are expected to reach only a third of last year's
levels. For the first time this decade, exports fell -- to $749 million
in
September, a decrease of 1.2% from August.
For the first nine months of this year growth in foreign investment dropped
to 4.3%, less than half the growth rate for a year earlier. July was the
first
time since the early 1990s that there were no new foreign investment
projects licensed.
Finding the Bottom Line
Then there's transparency, without which the government is in no position
to set realistic goals. Few state-owned enterprises are profitable, and
stock is piling up in their warehouses. Since few people even in
government or the companies themselves know the true financial health of
the state sector, it's difficult to make important policy decisions,
economists said.
"How can you make a difficult decision about [state-owned companies]
when you have no reliable information?" said Robert Glofcheski, chief
economist for the United Nations Development Programme in Hanoi.
Vietnam's leaders aren't even close, says Nguyen Minh Tu, a director of
the Central Institute for Economic Management, a government-controlled
economic think tank. "The government needs a clear strategy to deal with
economic problems, but right now there isn't one," he said. |