Once a War Zone, Now a Capitalist's Haven

VIETNAM Airlines flight number 791, from Hong Kong to Hanoi, was full, and not just with passengers. A delegation of Southern Californian businesspeople was on board, and the cabin brimmed with anticipation about opportunities for making money in Vietnam.

``We're here to talk about tourism,'' announced a gray-suited American, gesturing broadly to an Asian man across the aisle. ``That's something the specter of which, if you will, is long known in the United States: Surfing Vietnam.'' He drew out the last phrase, his eyes brightening, possibly because he was imagining Vietnam's 2,020-mile coastline.

The choice of words sounded clumsy, but it was telling. Visiting Vietnam indeed brings forth a specter or two, a tinge of dread, a sense that one is returning to the scene of a crime. But overshadowing any historical anxiety that Americans, French, Japanese, or others might feel is the reality of Vietnam in the 1990s: It is the free market's newest conquest, where communists have embraced capitalism and opened the door to those with cash.

Nowhere is this transition more apparent than Hanoi, Vietnam's capital. The downtown area is a mix of tiled-roof, ocher villas the French built when they colonized Indochina in the 19th century, communist-looking concrete blocks of apartments and offices that have not aged as well as the villas, and the occasional modern glass building, pristine and characterless.

There are construction cranes everywhere. Because of the scarcity of office space that meets international standards, Hanoi rents are among the highest in the world. Developers are scrambling to meet the need. But it's not only newcomers who are short on space. Parts of the city are among the most densely populated areas on the globe.

Sandwiched between a group of United Nations buildings and the Australian Embassy is an aging, elegant villa, a narrow two-story structure with high ceilings. Stephen Woodhouse, the UNICEF representative to Vietnam, explains that both the UN and the Australians have tried to acquire the building to expand their offices. Both gave up, he says, because 100 people live in the villa, and the cost of compensating all of them for the dislocation would have been too high.

But there are enough corporate nameplates on other villas to suggest that Mr. Woodhouse's anecdote is the exception.

Hanoi is being transformed because of an economic policy called doi moi - renovation - that the government began to implement in the late 1980s. The Communist regime, faced with the decline of the Soviet Union and a failing economy, welcomed the free market and said Vietnamese socialism would mean that every Vietnamese should seek prosperity.

``What doi moi has done,'' says Graham Alliband, a former Australian ambassador to Vietnam who is now a businessman here, ``is release all the energies that have been pent up....,'' beginning with the Communist takeover of the south in 1975. The unification of Vietnam brought collectivization, a centrally run economy, and isolation from noncommunist nations.

Vietnam has been improving its international relations in search of foreign aid and investment - the US lifted its 19-year-old trade embargo in February - and the world has responded. As of the end of September, investments worth more than $10 billion had been approved. Vietnam wants to attract another $16 billion by the end of the decade, a government official says.

After earlier predictions that the 72 million people of Vietnam would soon create one of the most dynamic economies in the region, on a par with South Korea or Taiwan, some analysts have begun to take the shine off the apple. They warn that the country's legal framework remains inadequate to protect investors' interests and that Vietnam's dilapidated transportation, communications, and energy systems badly need improvements.

Businesspeople complain frequently about corruption. No major project can go forward, says one representative of a US investment bank, until ``the pope signs your papers,'' which often requires a payoff to a government official.

Nonetheless, the transformation continues, creating new wealth and odd contrasts in a country that until recently was socialist in practice as well as theory.

Six months ago a group of Vietnamese investors opened a dance club in one of Hanoi's expensive new hotels. Recently a Filipino band performed Tina Turner's ``Simply the Best'' and a disco version of the Ben E. King ballad, ``Stand By Me,'' for a crowd that included young Vietnamese in outfits inspired by, or conceivably created by, Giorgio Armani. For older Vietnamese, especially southerners, this scene is da vu. For those under 30, this is a new Vietnam.

To get a sense of the past three decades, one has only to go a short distance to Hanoi's Government Guest House, which now generates revenue for the state by accepting paying customers. The atmosphere feels thoroughly communist. The public rooms are oversized and austere, there is a lot of red carpeting in the hallways and green baize on the conference tables, and the furniture in the guest rooms is sized to fit East bloc basketball players.

The soundtrack at the Guest House is different, too. Out the window, a clock tower donated by what used to be Czechoslovakia plays an anthem to Ho Chi Minh everyday at noon.

Vinh: Talented people making money

ABOUT 180 miles south of Hanoi, in the cavernous, East German-built market of a city called Vinh, a vivacious woman named Hong presides over her stall like a chairman at a board meeting.

Surrounded by big piles of bedding, bundles of mosquito netting, and dozens of garments on hangers, Ms. Hong uses a well-worn measuring stick to keep the merely curious from messing up her carefully folded comforters.

She did much the same work before 1990, when doi moi reached her, except that she was a salaried employee of a state-owned department store. Now she is in business for herself. ``I prefer the market economy to the state economy,'' she explains. ``If people are talented they can make more money. Before, the lazy people and the talented people were all the same. The market sees who is talented.'' Adam Smith didn't say it any better.

Hong, wearing a gold chain, gold earrings, and a stylish black and white jumpsuit, is clearly not one of the lazy people. The changes brought by doi moi are an improvement, she says, ``because I can make a profit.''

* Thursday, Dec. 29, Part 2: Ha Tinh, Vinh Moc, Danang. Friday, Dec. 30, Part 3: Ho Chi Minh, Binh Long.