Free Enterprise System Sweeps Into Hanoi

JUST a few years ago profit was a dirty word in this tropical capital. But today Vietnam is embracing sweeping economic reforms, intended to move the country from Marx to market. This has transformed profit and enterprise into symbols of excellence, not excess.So the people of north Vietnam are undergoing their own re-education. Having lived under doctrinaire communism for nearly four decades, they are now becoming familiar with consumerism. Most of the country's relatively small amount of foreign investment heads to what was South Vietnam, as does much of its thriving foreign trade. Ho Chi Minh City, still commonly called Saigon, leads Vietnam's halting efforts at economic development. But Hanoi is proving a quick, though not always model, study. In the past year alone, the city has enjoyed a surge of private start-ups, mainly shops and restaurants. Avoiding the strict United States trade embargo, Western-made goods are increasingly commonplace. This lucrative trade - not all of it legal - is enriching many Vietnamese. It is almost as easy in Hanoi to buy a can of Coca-Cola or 7-Up as it would be at any convenience store in the US. The drinks are canned in Singapore and either shipped via middlemen to Ho Chi Minh City or smuggled through Cambodia. New color television sets made by JVC of Japan are offered at any one of several shops on Hang Gai Street, in the city's old quarter. Shiny Honda motorbikes are sold on a nearby street. Merchants appreciate US dollars, rather than the inflation-ridden and non-convertible Vietnamese dong. The North may be open for business, but it still lacks a sharp business acumen inherent to the South. Observes a Vietnamese who left the country and has now returned to pursue real estate and other investment projects, "In Hanoi, if you open the door, they don't know what to do. In Saigon, if you don't open the door, they'll kick it down." Visa credit cards are an example. Due to the trade embargo, only cards issued by non-US banks are valid in Vietnam. Visa is slowly gaining acceptance in Ho Chi Minh City since its recent introduction, but it is regarded with wonder in Hanoi. A foreign visitor was told it would be possible to cover a hotel bill with a Visa card, and tried to use it. A hotel employee took the card in both hands and, expressing great surprise, confessed that she had never before seen a credit card. In fact, the hotel was unable to accept Visa and the foreigner had to pay in cash. Hanoi may be slow to change, but those changes that have been managed so far are striking. With more goods available, Vietnamese are spending money they once hoarded. Among the first purchases, for those who can afford it, are motorbikes - usually Hondas made in Japan. Hanoi's noisy streets indicate that more than a few Vietnamese are able to pay. Buying a car is still unattainable for most Vietnamese, and is considered ostentatious. The Japanese-manufactured Nissan sedans that crowd Hanoi's tree-lined streets are mostly owned by government agencies and embassies, or are rented by foreign companies. An inherent problem with this march of capitalism is that its purveyors are communists. The ruling Vietnamese Communist Party began economic reform nearly five years ago when it introduced a policy called "doi moi," or economic renovation. It calls for streamlining everything from banking to rice harvests. Its progress so far has been severely hampered by political infighting and a leadership unschooled in the vagaries of the free market. Allowing independent stores and restaurants to thrive has raised living standards for some, particularly in the cities. Loosening state controls on agriculture production has helped farmers. But the darker aspects of reform are prominent, and perhaps dominant, throughout Vietnam. Smuggling is rampant, untaxed, and breeds corruption. Arenas where individuals might gain legitimate wealth, such as international shipping, private car services or running an airline, are the state's domain. The party has promised to privatize smaller, inefficient state industries. But it is split in a long-running quarrel over which specific enterprises to reform. Some of the more traditional communists oppose even a small amount of privatization, fearing it could force some weak companies into bankruptcy and swell the ranks of Vietnam's many unemployed. More liberal reformers believe that, without dramatic alterations now, the burdensome state sector will create a worse drain on the economy. They fear it could also undermine the party's standing in the nation.