Vietnam's Rush to Capitalism Increases Economic Disparities

A new BMW class emerges as social services are neglected

UNTIL recently, Dang Nghiem Van's family reunions were a little tense.

Sitting in a dingy room in Hanoi's state-run National Center for Social and Human Studies, Professor Van explains that one of his two brothers left Vietnam for Paris after the country's French colonialists were defeated in 1954. The other lives in New York. He went into exile after 1975 when the Communists took over all of Vietnam.

Van, however, stayed in Vietnam and stayed loyal to the revolution. When he talks about the Communist Party, he says ``we.'' The atmosphere among the brothers was strained.

``Before, it was PAAF,'' he exclaims, using the French equivalent of ``pow'' as he claps his hands. ``Now,'' he says of the family's recent gathering last May in Paris, ``it's `bonjour.' ''

What made their reconciliation possible is the economic renovation, called doi moi, that Vietnam's Communist Party embraced in the late 1980s.

The government has abandoned central planning in many industries, encouraged entrepreneurism, and aggressively sought foreign aid and investment.

Perhaps most important to Van's brothers, the communist and socialist ideologies espoused by those who evicted France and the United States have begun to fade, at least in practice, as free-market economics has taken hold. But at the same time, Vietnam's transition is creating new disparities, widening the gap between rich and poor.

``Socialism,'' Van says, echoing Vietnam's retooled party line, ``is a society where there is equality, where people are rich and prosperous, where there is no fighting.'' But the label isn't so important anymore, he suggests. ``That society I just described - you can call it socialist or nationalist, it's up to you.''

Well, not quite. Other officials and party members are much less willing to dismiss the old terms.

The Communist Party is resolutely in charge of the country, and brooks no discussion of multiparty politics. Vietnam is still socialist, says Do Duc Dinh, an influential economist in Hanoi. ``The content of socialism has changed,'' he adds. ``We can never again return to egalitarianism. No more equal distribution of poverty.''

Experts agree that doi moi has had broad benefits for Vietnam, pointing to greater economic opportunity, a rising standard of living, and a freer social atmosphere.

Most Vietnamese are simply glad they don't have to worry as much as they used to about getting enough to eat. But the end of egalitarianism has its downside as well.

Vietnam's rulers made mistakes in their push for equality, such as a brutal land-reform campaign in the late 1970s, but they also created a well-educated and healthy society, factors that now give the country an economic advantage.

``A high literacy rate has enabled the people to adapt quickly and flexibly to new technologies and know-how,'' says a United Nations Children's Fund (UNICEF) report released in April 1994.

``Good health has enabled sustained hard work and physical productivity, and the high status of women has vastly contributed to national economic output,'' the report said. Foreign investors routinely praise the quality of Vietnam's work force.

Now UNICEF, the World Bank, and other observers in Vietnam are worried that the government is shortchanging social services in the transition to a market economy. Hanoi no longer has communist allies willing to cover deficit spending on social services, and investors are demanding that the country spend more resources to improve infrastructure such as electric power, communications, and roads.

Addressing education, the World Bank said in a September 1993 report that ``there is evidence that the impressive gains achieved during the last 30 years are under serious threat.'' With the possible exception of primary school, the report says, ``enrollment rates at all levels of schooling have declined noticeably in the late 1980s ... because the government has disengaged from this service, relying more on the emergence of the private sector.''

As in other countries that have abandoned centrally planned economies, social services in Vietnam ``have been left languishing as a result of fiscal crises and changes in political values,'' the Bank says.

``The socialist philosophy of taking care of everyone on the same basis has been collapsing,'' says an Asian diplomat in Hanoi.

``The deterioration of health care - and the decline of primary education - is now a very serious social problem in this country,'' he adds.

Schools and hospitals have in recent years begun to charge fees that, though nominal, have made it harder for poor families to take advantage of these services.

Teachers and health-care workers, poorly paid by state-run institutions, have been spending more and more time earning money in the private sector.

Many Vietnamese are clearly benefiting from doi moi, but not all.

Stephen Woodhouse, the UNICEF representative in Vietnam, estimates that 70 percent of Vietnam's people have gotten richer, 20 percent have not seen much of a change, and 10 percent have gotten poorer in recent years.

``There are very rapidly increasing income and geographical disparities in Vietnam,'' he says, a reflection of the concentration of economic growth in big cities and the emergence of a class of newly rich businesspeople.

Mr. Woodhouse says he believes that officials have recognized the danger of a long-term neglect of social services. In 1993 and 1994, the government increased funding for education, health care, nutritional programs, water supply, and sanitation.

But there is an extent to which the architects of the ``new Vietnam,'' as some have labeled the country in the wake of doi moi, are comfortable with economic disparities.

``Vietnam needs to overcome the egalitarian system of the Communist Party,'' argues Le Dang Doanh, president of the Central Institute for Economic Management in Hanoi.

``The old system did not provide motivation,'' he says. For that, he adds, ``A minimum of inequality is necessary.''

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