Renovating Everything but Communist Rule

The main architect of economic reforms insists capitalism has arrived in Vietnam, even though a stock market and democracy are still not in sight

HO CHI MINH CITY, officially known as Saigon until 1975 and unofficially ever since, is the fountainhead of Vietnam's economic transformation.

A third of the foreign investment in Vietnam has been spent here. The average income in large parts of the city is $600 a year; the average for the entire country is closer to $200.

The power may reside in Hanoi, the capital, but the man some call the father of doi moi - as the ``renovation'' of the economy is known - lives in Saigon.

He is Nguyen Xuan Oanh, a Harvard University-trained former economist for the International Monetary Fund who served as central bank governor and acting prime minister in the south Vietnamese government.

His short political career led him to a nine-month period of house arrest after 1975, because the government of unified Vietnam was suspicious of his loyalties. Since then he has given new meaning to the term ``survivor.''

He has opened a business consultancy, served as a representative from Ho Chi Minh City in Vietnam's National Assembly, and become an economic adviser to Prime Minister Vo Van Kiet. An original Renoir painting decorates Mr. Oanh's office.

In addition to advising numerous international companies on their Vietnam operations, he is chairman of the Vietnam Frontier Fund, which counts former United States Central Intelligence Agency Director William Colby as an investor.

A soft-spoken, dignified man, Oanh offers soothing answers to the problems of Vietnam's economic transition.

Some investors worry that Vietnam has no reliable legal system for resolving disputes between business partners, but Oanh promises that administrative courts will soon be established and that Vietnam will join international arbitration agreements by the end of this year.

He agrees that Vietnam needs a stock exchange if the free market is to flourish. ``We must have a money market, but we cannot build a stock market overnight.''

Complaints about corruption?

It's not really a problem, Oanh says. Most of what is labeled corruption is ``harmless gift-giving ... of little significance.''

Vietnam has sometimes been compared to its large northern neighbor, China, in that the leaders of both countries are intent on keeping power in the hands of the Communist Party as they create essentially capitalist economies.

But Oanh argues that there are differences. Vietnam will not let growth ``overheat'' in certain areas, as has happened in coastal China.

And Vietnam will provide even greater political stability, so that investors will not have to worry about revolutions disrupting business.

``We haven't got anything like Tiananmen Square,'' he says, referring to the pro-democracy movement that Chinese leaders crushed in June 1989.

Oanh offers himself as proof that the Vietnamese Communist Party is not running a repressive state in its efforts to guarantee stability.

``I can do almost anything in this country, because they know I'm not trying to overthrow the government,'' he says. Anything includes discussing the prospect of multiparty democracy in Vietnam, which he says is possible ``in 10 or 15 years' time.''

Others are not given quite so much leeway. In 1993, eight dissidents were jailed by the government for circulating a newsletter called Freedom Forum, which called for multiparty politics.

Looking to sell a `strategic export'

IN the wall of a conference room on a rubber plantation near Binh Long, a town in the southern province of Song Be, hangs a picture of Ho Chi Minh. His portraits are commonplace in Vietnam, but this room also has a big red flag with a gold star, Vietnam's national symbol, and another red banner with a large hammer and sickle.

Walking out of the room, a Foreign Ministry official who arranged the interview explains with a mildly embarrassed smile that the local Communist Party cell just had its meeting in the room, as if to suggest that the place did not normally appear quite so communist.

Providing a friendly, unalienating welcome to foreign visitors is an important matter in Vietnam's rubber industry.

The government has declared rubber a ``strategic export'' and has been seeking international investors to help triple the amount of land under cultivation, from the current 97,000 acres to 283,000 acres by 2005. But rubber has drawn an underwhelming response, unlike Vietnam's oil and natural gas industries, which have attracted much of the foreign money coming into the country.

Vietnam's rubber industry needs, by the year 2000, about $400 million worth of investment to plant trees and develop plantations and another $240 million in improved processing facilities, says Thanh La, an official of the state-run Vietnam General Rubber Corporation. So far only three joint ventures have been licensed, with firms from Russia, Belarus, and Taiwan.

Mr. La does not know how much the projects will bring in, but says it is a small portion of what is needed.

In the meantime, the Binh Long Rubber Co., one of 18 state-owned companies that control all but a fraction of the industry, has been getting ready for the free market. Nam Xuoc, the company's director, says he has cut his work force from 16,000 to 6,000 employees, replanted trees, and increased productivity.

During a tour of a nearby processing facility, where only a few machines are in use and the rest seem old and decrepit, he admits that the place isn't as busy as it should be.

``There's not enough rubber,'' he shrugs.

After the factory visit, the officials insist on a tour of a nearby holiday village for rubber workers. There are cute cottages with air conditioning, playgrounds for the kids, and an open-air dining deck. It was built in the mid-1980s, they explain, for the workers to take free vacations.

There is a historical reason why the government has been nice to rubber workers under socialism.

It is one of the most profound ironies of Vietnam's transformation that the country is now asking foreign companies to help exploit rubber. Rubber-plantation operators were one of the most despised elements of French colonial rule.

Vietnamese workers were given numbers instead of being able to use their names, and many died on the plantations, where they were buried to help fertilize the trees.

``During the wartime, on the battlefield, Vietnam and some other countries were adversaries,'' Mr. Xuoc acknowledges. But those days are over, he adds. ``We want to cooperate with any country for mutual benefit.''

* Part 1 of this series ran Tuesday, Dec. 27. Part 2 ran yesterday.