MICHELIN Travel Discover the world
Home > > > > History and culture > The Vietnam today

Leaving for Vietnam

Where to sleep?

View 2801 hotels for Vietnam

The Vietnam today

Enlarge map

The Vietnam today

The scope of the country’s vast human resources initially led economists to predict a brilliant future but such forecasts have yet to be realised. Vietnam has not yet evolved from one of the world’s poorest nations into a tiger economy. The burden of an all-pervasive bureaucracy which discourages private initiative and foreign investment is of course a handicap. Yet at a time of globalisation and just after an economic crisis which severely affected the region, the system has paradoxically preserved the country from a slump, at least for the time being. Founded on economic openness but no real democracy, Vietnamese development has however already revealed its limits and at present the country finds itself trapped by what appear to be irreconcilable contradictions.

Political organisation

The regime of the Socialist Republic of Vietnam, developed by Ho Chi Minh between 1946 and 1969, was extended, with a few adaptations, to the whole country after reunification in 1976. Over the years this complex system, which is both rigid and rife with inner conflicts, has nonetheless shown a remarkable ability to survive and adapt.

A two-headed political system

Since the death of its historic leader, a collegial system, supposedly representing the main geographical and political interests, runs the country. The President of the Republic, Tran Duc Luong, no longer wields any real power. This is shared between the Communist Party General Secretary, Le Kha Phieu, a conservative general from the North backed by the army, and the Prime Minister, Phan van Khai, of Southern origins and one of the inventors of the Doi Moi in the early 1980s.

At the heart of the system is the National Assembly which in theory controls the State (Presidency, cabinet, justice). The Assembly is made up almost entirely of top officials, but since the declaration of the 1992 Constitution, private enterprise representation is growing steadily, an indication of how things are changing in the country. In reality, however, power is firmly in the hands of the government which rules by decree. At provincial, district and communal level, the Assembly is represented by People’s Councils (legislative bodies) which elect People’s Committees with a local executive role. Rivalry between these two institutions regularly hinders and blocks the decision-making process.

The role of the Party and the Army

The system’s main internal conflict resides in the opposition between the Communist Party and the State. In spite of the latter’s apparent sovereignty, the all-powerful Party is in fact responsible for all legislative initiative. Vietnam is still under a single-party regime, although only one-quarter of Assembly members are actually Party members. All ministries have a Party section and participate in this way in the election of its leadership. A 1 000-member Congress elects the Central Committee for five years, which in its turn nominates the 19 members of the ­Politburo, who in fact govern the Party and the country. ­After years of unity, the separation in the early 1990s of the Party and the State has evolved into rivalry. The Party represents knowledge and doctrine, while the State ­symbolises power and administrative experience. This dichotomy can be found at all ­levels, from one end of the country to the other and is the cause of endless conflict between the People’s ­Committees and local Party sections.

According to the majority of analysts, the picture is further complicated by the growing influence of the army, which took advantage of the Party’s weakness in the 1990s and seized a growing share of the country’s government. Finally, the role played by numerous popular organisations, such as the Youth Union, Women’s Union, Confederation of Trade Unions, Farmers’ Association or Veterans’ Association, should not be neglected.

A fast-growing population

With around 80 million inhabitants, Vietnam now ranks second in the ASEAN (Association of Southeast Asian Nations) in terms of population, but in 1936 it only had 19 million inhabitants and 31.6 million in 1960. The current demographic growth rate (2 % / year) is one of Asia’s highest. This phenomenon has played a decisive role in the country’s recent history and being forced to absorb a growing workforce every year represents a major challenge for its economy. Such growth has also had far-reaching effects on the country’s domestic geopolitical situation, with many Viet settling in relatively uninhabited zones where minority populations live.

Despite a very high density (240 people / km2), Vietnam’s population is in fact highly disparate. The Red River and the Mekong Deltas alone account for some 40 % of the population and 16 % of the territory, with densities in excess of 1 000 inhab / km2. In contrast, the figures are much lower in the northern foothills (less than 80 inhab / km2) or the Central Highlands (less than 50 inhab / km2).

Rural exodus and resettlement

In spite of a substantial exodus from rural regions, only 20 % of the total population lives in towns and cities. Apart from Hanoi (3 million) and Ho Chi Minh City (7 million), the country’s main towns are Haiphong, Da Nang and Hue. As a result of bombing and domestic policy before 1975, South Vietnamese migrated massively to the towns, now home to 43 % of the population (compared to 26 % in 1964). In the North, where the phenomenon was the opposite because the cities were too easy a target for bombing, the urban population was little more than 12 % in 1975. Between 1975 and 1979, 3 million recently urbanised South Vietnamese were resettled in their former villages. This resettlement gave rise to the flight of one million boat people. At the same time, 500 000 North Vietnamese moved to Ho Chi Minh City between 1975-79. In an effort to balance the population distribution, migrations were organised from the overpopulated plains to the central and southern mountainous zones. Some analysts and historians consider these far-reaching phenomena to be the last lap of the long “March southwards” of the North Vietnamese.

A significant overseas community

Over 2.5 million Vietnamese or Viet Kieu (expatriate Vietnamese) live abroad. Between the two World Wars, many chose to study in France and stayed on after the Indochina War. The largest exodus took place in 1975 when Saigon fell to North Vietnam. The numbers of South Vietnamese fleeing the new Communist regime were increased by thousands of boat people, followed by others between 1979-80, who wanted to join their families abroad. The United States of America is home to the largest foreign community (over 1 million), France comes second with 250 000. In 1981, students and workers were sent on patriotic missions to former Eastern-bloc countries and some remained behind after the collapse of the Soviet Union. The increased pace of Vietnam’s political openness, clearly a by-product of the demise of Communism, served to heighten the economic importance of its diaspora. Some 250 000 families in Ho Chi Minh City live off their foreign relatives who send bank transfers and parcels, often of medicine, which is then sold. Since the 1990s, the return of Vietnamese refugees who have taken foreign nationality, has enabled joint ventures to be mounted with relatives in Vietnam who serve as figureheads.

A convalescent economy

Vietnam’s economy still bears the burden of over thirty years of wars and destruction, further exacerbated by the consequences of the Cambodian occupation and the American embargo. Only lifted in 1994, the embargo had prevented the country from trading freely and from acquiring foreign high-tech know-how and equipment. The rigid economy planning applied in the years after 1975 was rife with mistakes and aggravated the situation still further. Since 1986 when the 6th Communist Party Congress opened the door to capitalism, the legendary Doi Moi reform programme had been felt to be more an issue of survival than of policy. In the light of this Vietnamese-style perestroika, centralisation, planning, industrial voluntarism and nationalisation have been played down in favour of market laws. Monetary reforms have also been implemented.

Vietnam and the Asian crisis

Rampant inflation was the first direct consequence of this turnaround. However, it was accompanied by a high growth rate throughout the 1990s with peaks of 9 %. Other indicators, such as the high investment rate (28 % of the GNP) and the low national debt, seemed to suggest that development would be lasting and solid. But the financial crisis of 1997, which originated in Thailand, shook most of the nations in the area. Vietnam’s less internationally-open economy was also affected and growth dropped to around 4 %, while exports slowed down and foreign investment fell ­dramatically.

Despite Vietnam’s undeniable progress, it remains one of the poorest countries on the planet, with a GDP per inhabitant of US$370. The poverty of part of its large rural popu­lation remains one of the government’s main preoccupations. Overall living conditions have improved, but at the same time, social services are less freely available and disparities ­between rich and poor are growing. Endemic unemployment and meagre salaries mean that the majority of Vietnamese either have to have several jobs or grow their own vegetables to survive. This said, Vietnam’s relatively well-educated and large population is undoubtedly one of the country’s major assets.

A growing service industry

Even though agriculture continues to employ two-thirds of the population, it only produces up to 26 % of the ­nation’s wealth. The staple crop is rice, after which come coffee, rubber, corn, soya, tea, potatoes and bananas. Fishing, together with pig and poultry farming, are also significant. Industry, which only accounted for 1.5 % of the GDP in 1954 when France retreated, now ­contributes 33 %. Sectors include food, clothing, tyres, oil, coal and steel. The most spectacular progress has, however, been that of the service industries, which now account for 41 % of the GDP. Tourism has played a significant role and the state depends on this sector’s ability to bring in foreign currency. After a lull in 1998, the number of visitors increased from 60 000 in 1989 to 2 million in 2000.

An uncertain future

Several obstacles continue to hinder the path of progress and deter foreign investment. An excessive and unpredictable bureaucracy and high taxes are the main factors cited by Vietnam’s would-be investors. Following the economic crisis, investments dropped spectacularly from US$8.3 billion in 1996 to US$1.6 billion in 1999. Economic reforms are slow to appear and industry is still 50 % state-run. At the same time, private enterprise, the most dynamic economic sector, employing 80 % of the population, is beset with heavy taxes, without the support of bank loans or effect­ive investment grants.

A member of the Asia-Pacific Economic Cooperation (APEC) and ASEAN and a candidate for the World Trade Organisation, Vietnam is under increasing foreign pressure to adapt its economy to market laws and to pay back its foreign debt, which amounts to around 23 % of GDP (US$5.7 billion).

Top of page