Sun, Oct 21, 2012 - Page 14 News List

Bust threatens middle class made by Vietnam’s boom

Inequality and corruption may unravel all the good from the country’s post-war economic rebirth

By Nick Heath, Jason Folkmanis and Nguyen Dieu Tu Uyen  /  BLOOMBERG

Even so, the country has come a long way since 1986, when the government swapped Soviet-style central planning for Doi Moi, or economic renovation — allowing private business and granting land to farmers to grow their own crops.

Do and other coffee growers were some of the first to gain.

Production of coffee, introduced in French colonial days, more than quadrupled in the five years following the start of Doi Moi, reaching 118,800 metric tonnes in 1991, according to the US Department of Agriculture’s Foreign Agricultural Service.

Vietnam is now the world’s largest coffee exporter after Brazil, shipping 1.6 million tonnes in the last crop year, according to the government. The 10 tonnes a year that Do harvests from her 2.5 hectare plot earned her enough to build a 160 million dong home, school her nine children and send two of them on to college.

Change spread as entrepreneurs started businesses in other industries, and the opening attracted overseas manufacturers.

“It was exciting,” said Le Quoc Vinh, 44, chief executive of publisher Le Media Joint-Stock Co in Hanoi, who was studying English at Hanoi University as Doi Moi began. “It was the first time we really felt we had to compete to improve our lives.”

Vinh publishes five consumer titles, including Vietnam’s best-selling fashion magazine, Dep, or “Beauty.” Like Do, he prospered during the boom and now drives a Mercedes, and his eldest son is studying in Australia. He said many clients have cash flow challenges and advertisers are struggling to sell their products.

“If you’re not inside the system, you don’t really have a chance,” Vinh said. “If you’re not friends with that bank, it’s almost impossible to borrow. If you’re not friends with that state-owned company, it’s difficult to win a contract.”

Even with the restraints on business, the commercial hub of Ho Chi Minh City shows the changes of the boom years. In the new terminal at Tan Son Nhat Airport, the scene of intense fighting in the last days of the Vietnam War, travelers eat at Burger King and Domino’s Pizza.

The carved images of gods of the 18th-century, incense-filled Giac Vien Pagoda rub shoulders with the water slides of Dam Sen water and amusement park, where the increasingly chubby children of the new middle class view the changing city from a Ferris wheel.

Intel Corp opened a US$1 billion assembly and testing plant in 2010 in Saigon Hi-Tech Park that Rick Howarth, general manager of Intel Products Vietnam, last month said was “ramping up smoothly.”

In Jabil Circuit Inc’s factory nearby, a young Vietnamese technician carefully solders parts for an electronic point-of-sale terminal, checking her work against a computer screen above her station. As many as 20 percent of Jabil’s 1,350 local workers had no previous computer experience, said Kesavan Swaminathan, general director of the Vietnam unit of US-based Jabil.

“We teach them here,” Swaminathan said at the plant, which operates 24 hours a day, seven days a week. “Some of them initially freaked out, but as they are being guided and coached, they realize it’s an additional skill they are learning.”

Symbols of Vietnam’s boom years in the capital Hanoi are juxtaposed with reminders of how far the country still has to go to even out the benefits of economic gain.

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