24 December 2015
When a War Zone Becomes an Economic Tiger
by Frank O’Nomics
It started with intensive bombing in response to concerns that the west was under threat, and then progressed via boots on the ground to a lengthy, bloody conflict followed by a mass exodus of some 1.5 to 2 million people in boats. No, not the ongoing conflict in Iraq and Syria, but the war in Vietnam. Forty years on from the end of that conflict, can we take heart and hope from the progress that has been made? And are there lessons for us, when looking at the Middle East, in facilitating the economic prosperity of a nation?
“We are like bees” said our guide Mi. Busy, industrious and gentle when left alone, but disturb us and we can sting, was the underlying meaning. Without knowing the history it would be hard to see much other than the positives when travelling through a Vietnam some 40 years after what they call ‘the American War’. In a region that has been struggling to sustain steady growth after an impressive decade, Vietnam stands out, continuing to sustain 6.5% per annum GDP growth and remarkably becoming the world’s number 2 coffee producer (they argue that they are number 1). It seems worth asking why this is the case and whether there are any lessons for the areas of current struggle in the world.
As you drive into Hanoi from the airport, it is hard not to be struck by the fact that you are leaving a new terminal and driving over a new bridge on a four-lane highway, all finished this year. Of slightly longer tenure is the world’s longest ceramic mural that covers the roadside on the approach to the city. The investment in infrastructure is still clearly not complete, and it is unnerving that a city that is surrounded by lakes has an approach road running along a dyke which is surround by property on both sides. “The property to the left is much cheaper than that on the right” says Mi, an acknowledgement that typhoons can have a big impact on the lake-side. Further, when you approach the centre, Hanoi does still look like a developing nation, with 7 million people thronging a city where old French architecture is subsumed by the myriad of street food vendors and shops. This mass of humanity is supplemented by roads that are literally full of scooters. Six million scooters sounds extraodinary, but not when you realize that the city’s numbers are enhanced daily by those coming in from the countryside to sell their produce. And it is here that some of the clues to the nation’s success are to be found. While the early years of a unified communist country were troubled by an ineffective government, high inflation and extreme poverty, the subsequent encouragement of trade has meant that (while the government owns the land) the populace is highly commercially motivated. Travelling just a few miles in this mass of scooters you realize how well they have been adapted for all purposes. Quite how do the Vietnamese stack so much produce on them? It has to be seen to be believed. Families of 4 on one scooter is a regular sight; 5 was the record we saw.
The second pointer to success comes from the happy coexistence of all religions. Clearly the sights to see in Hanoi are the Confuscion, Buddhist and Taoist temples, and the French cathedral remains an impressive sight. The government seems to be celebrating this diversity as part of the country’s heritage, rather than to suppress anything subversive, and the people seem more focused on the reverence for their ancestry and family rather than anything more devout. The Ho Chi Minh mausoleum and goose-stepping change-of-guard hold centre stage in the city, reminding the visitor that this was a hard line communist country, with the people’s struggle subsuming any reference to religion.
While there is a mixed view on the influence that China exerts on the country, with many uncomfortable with the closeness of the trading relationship and political influence, any wariness has done little to undermine the development of trade, with the aforementioned infrastructure development clearly helped by the Chinese. A trip to view the 1900 islands of Ha Long Bay to the east of Hanoi leaves you little more than 100km from the border with China, and the development of a tourist infrastructure to cater for the Chinese is clear to see. A new bridge has replaced the need to use a ferry to cross the bay and a cable car is also under construction to transfer tourists to a new aquarium. All of this is somewhat incongruous next to the floating fishing villages amongst the islands, but it will bring in a flood of much needed tourist Yuan to the area.
There is still a very clear difference between the 2 old parts of the country. Changing the name of Saigon to Ho Chi Minh City seems to have happened on paper, but much verbal reference is still to Saigon. And there is a striking difference between that city and Hanoi. HCMC much more similar to Singapore and Hong Kong, while Hanoi still retains the character of a less developed nation. Nevertheless, Hanoi has managed to attract a great many factories, with the vast facilities of companies like Canon, but there is a clear feeling that the educated entrepreneurial population feels more comfortable developing businesses away from the government in Hanoi. Hence the population of HCMH is closer to 11 million and growing. With such a demographic shift comes the usual problems of property price rises, and modest flats in HCMH are trading at levels that would not seem cheap in parts of London. Clearly this presents a significant potential problem for the future.
Perhaps a final aspect to be noted in the success of Vietnam has been the failure of its immediate neighbours to develop at anything close to the same rate. By being able to develop a strong industrial base Vietnam has been able to attract cheap labour and materials from both Cambodia and Laos and has exploited its position between China and these far less developed economies.
The success story of Vietnam may be very flawed and the pace of development will present some problems, and to some extent it already is. But it is hard to remember that this country was at war with the US just over 40 years ago. The huge resort hotels being developed by Sheraton, Hilton and other US entities in Denang are a great testament to the fact the Vietnamese have put this all behind them. Wouldn’t it be nice to think that other areas of geopolitical tension would be similarly changed in just 40 years time?
