Malls hit a privatizing Vietnam

Economic reforms have yielded an annual growth rate of more than 7 percent.

Dong Minh Ha is busy at the cash register of the newly opened Levi's store here, one of a row of glittering shops displaying products from Givenchy perfumes to Adidas sneakers in Vincom City Towers, a sparkling mall looming above a maze of streets here.

"I think every young person likes these," says Miss Ha, pointing to jeans at prices - marked in US dollars - from $70 to $129. "Many people come here to buy. The standard of living is higher."

In a country where the average per-capita income is $450 a year, a newly well-to-do elite is emerging as the economy races ahead at an average annual growth rate of more than 7 percent.

"The place is booming," says Jonathan Pincus, an economist for the UN Development Program here. He notes that it's one of the fastest-growing economies in Asia.

The boom reflects what business people and analysts say is a carefully planned reversal in policies since the first decade or so of economic hard times after the final defeat of the US-backed Saigon government on April 30, 1975.

The UN team here dates the economic surge from the onset of reforms known as "doi moi" - renovation - in the late 1980s.

UN and World Bank economists worry that the wealthiest Vietnamese are seeing their incomes grow most rapidly. But, they say, most of the country's 83 million people are sharing in economic success.

"The incidence of recorded poverty has fallen sharply and living standards are now more than three times higher than they were 20 years ago," says a UN report. It adds that Vietnam "is increasingly integrated into the global economy."

Raymond Mallon, a consultant for the World Bank, recalls "abject poverty" in 1988 as the economy hovered on the brink of disaster. One critical change at the time was designating the household, not the commune, as the basic economic unit, encouraging families and individuals in small and medium enterprises.

"You don't see much poverty now," says Mr. Mallon. "The changes are fairly dramatic."

Although Vietnam's gross domestic product of $40 billion last year was still only half that of the Philippines, an economically troubled country with approximately the same population, the country shows remarkable promise in areas that are expected to keep growing for years.

From such labor-intensive industries as footwear and clothing, Vietnam is moving into electronics. Crude oil, most of which was imported during and before the war, is now drilled offshore and ranks as the country's biggest export, followed by textiles, shoes, fish products, rice, coffee, and rubber.

Vietnam's search for foreign trade and investment is also drawing international names on a once-unimaginable scale.

"Over the past year or two, more and more people are putting up factories," says Sesto Vecchi, a US lawyer who has practiced here for the past 12 years, with Singapore, Korea, and Taiwan leading the way.

Mr. Vecchi notes, however, that while the government has joined the Association of Southeast Asian Nations and the Asian Free Trade Area, and has formed bilateral trade agreements with a number of countries, including the US, it will have to reform further to join the World Trade Organization. "Whether they like it or not, they've got to accelerate change in a lot of laws," he says.

Jeff Puchalski, chairman of the American Chamber of Commerce in Ho Chi Minh City, says membership in the WTO "is still achievable." As general manager of a company that owns three luxury hotels and two golf courses, he adds, "I don't find [doing business here] as hard as it used to be; a lot of rules are changing."

The banking system is viewed as a weak link in the drive for lasting economic success. The government now is preparing to sell off some of its banks to private commercial interests.

"This is still a socialist-oriented market economy," with 40 percent of the economy in government hands, says a foreign financial analyst. Corruption is also a problem. "A lot of government officials in Hanoi are getting richer faster because of land deals," says one UN official.

But an increasingly consumer-driven economy is a lure for such brands as Levi's. The Vietnamese firm that got the franchise plans to open six more Levi's shops throughout the country.

"Everybody can do business," says Hoang Van Cung, an antique dealer in Saigon. "There are lots of poor people, but things are better than 10 years ago."

Mr. Cung hid out for nine years after 1975 because of his work as a photographer for United Press International during the war. He was caught and sent to a reeducation camp until his release in 1992.

"It was horrible," he says. "Many people died there. Now it's better. They want to open up. I am no longer afraid."

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