The monied heroes of a new Vietnam

Move over model worker, that Communist icon of self-sacrifice and sweat. Vietnam has a new hero: the model taxpayer.

Last month, Le Cong Tuan Kiet, an executive at a French-owned lighting company, woke up to find his name on a tally of top taxpayers in Ho Chi Minh City in 2006. His annual income-tax return of $15,000 put him at No. 5 on the list, which local newspapers printed along with ringing praise from the tax department for his contributions to their coffers. The No. 1 payer, who works at a Swiss pharmaceutical firm, kicked in $181,000, in a city where factory workers earn $45 a month.

Slightly embarrassed but unruffled, Paris-educated Mr. Kiet doesn't take his ranking too seriously. He points out that the list covers employees at foreign-owned companies, not Vietnamese entrepreneurs who also draw large salaries. Still, he reckons it should be a career booster, as corporate headhunters will know he commands a high price.

"Being wealthy in Vietnam isn't a problem today. Many people want to be rich," he says.

As foreign investors continue to pour money into Vietnam's vibrant economy, which grew by 8.2 percent last year, its 83 million people are dreaming of a bright future. After Vietnam suffered the privations of a state-planned economy, its new free-market policies – dubbed "renovation" by its architects – have, since the 1980s, slowly yielded to a turbo-powered model of capitalism that has put entrepreneurs back in the driver's seat.

Social attitudes toward public displays of wealth and success are shifting after decades of war and austerity, particularly among the under-24 crowd, which makes up over half of the population. Luxury-brand retailers are vying for consumers who until recently preferred to sock money away or invest quietly in real estate rather than flaunt it. And as Vietnam integrates fully into the world economy – it joined the World Trade Organization in January – such trends seem likely to grow, as more Vietnamese join the affluent classes and feel more secure about showing off.

"Vietnam is a country that's gone from looking down on entrepreneurs and private businessmen to revering them. This is a culture that worships successful entrepreneurship," says Than Trong Phuc, country manager for US chipmaker Intel, which is building a $1 billion plant in Vietnam.

Nowhere is the pace of change more apparent than in Ho Chi Minh City, Vietnam's commercial powerhouse.

When its stock exchange opened seven years ago inside a former colonial legislative assembly, it traded only a handful of stocks, three days a week. Turnover was paltry, and investors grumbled about the slow pace of government privatizations.

Last year, 76 new companies were listed on the exchange, daily turnover soared to $50 million, and the index climbed 144 percent. That pace has continued this year, making Vietnam the world's hottest stock market. Recent wobbles in neighboring China, which sparked global sell-offs, barely made a ripple as ordinary investors scramble to join the frenzy.

Authorities caution that the frothy market may slide after its vertiginous rise. "I'm worried about inexperienced investors who've never faced a situation where the market goes down," says Le Nhi Nang, deputy director of the Securities Trading Center.

Virtually all the stocks are in state-owned enterprises that have been partly privatized – or "equitized," as Vietnam calls it. Allocations of shares are typically distributed at a discount to company bosses and workers, then auctioned to an eager public and listed on the exchange.

Vietnam has said that it will maintain state dominance in strategic sectors such as oil, shipping, and telecommunications, a policy that, economists warn, could be a brake on future growth. Over the past decade, the share of national output of state-owned enterprises has fallen to 35 percent from 45 percent as the dynamic private sector expands, according to Tran Du Lich, president of the Institute for Economic Research, a city government think tank.

Observers say this trend may be irreversible, despite the rhetoric from Hanoi on controlling the "commanding heights" of its "socialist-oriented market economy." As in China, Vietnam's Communist neighbor, rising affluence has created its own momentum, and any clumsy intervention that damages the economy could backfire.

"The train has left the station. This leadership has committed to reform, and it's joined the WTO," says Intel's Mr. Phuc.

For all the buzz of stock millionaires and real-estate booms, Vietnam remains among the poorest countries in Asia, with per capita GDP of only $720. About three-quarters of the population lives in rural areas, and the United Nations estimates that one-third of children ages 1 to 5 are underweight.

Incomes in Ho Chi Minh City are about three times higher than the national average. The city's sizzling export-led economy daily absorbs an estimated 500 migrants, who arrive in search of work, usually in the informal sector. Poverty may lie cheek-by-jowl with wealth, but the sense of optimism and can-do dynamism is overwhelming.

"If you look forward at the next three to five years, it's a rosy picture," says Marijn van Tiggelen, chairman of Unilever Vietnam, a unit of the Anglo-Dutch consumer-goods giant. "I see stability in the economy and governance ... People are able to buy things they could never afford before."

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