Vietnam: A Guide to Economic and Political Developments (Guides to Economic and Political Developments in Asia)

Vietnam

The period since 1989 has seen massive changes in political and economic institutions across the communist world, not only as demonstrated by China’s rapidly growing economic and political power, but also in Vietnam where the model of concessions to free-market capitalism coupled with a one-party state has also been influential. This book provides an account of economic and political developments in Vietnam, focusing particularly on the period since the collapse of the Soviet empire in the years from 1989. The course and impact of the Vietnam War is discussed, and the book goes on to consider the challenges faced by Vietnam since 1975, as the reunited country faced the problem of how a poorer, planned economy in which state ownership and control dominated could successfully absorb more advanced, capitalist economic mechanisms. It also examines the politics of the Communist Party, the evolving pattern of Vietnam’s external relations, including the re-establishment of relations with the United States, and the effects of more recent episodes such as the Asian financial crisis, SARS and bird flu. This book provides a comprehensive overview of the current political and economic situation in Vietnam today, and is an important resource for all scholars interested in this country’s recent development. Ian Jeffries is Reader in Economics and member of the Centre of Russian and Eastern European Studies at the University of Wales Swansea. He is one of the foremost authorities on the post-communist world and has written extensively on communist and transitional economies. His publications include A Guide to the Socialist Economies (Routledge, 1990), Socialist Economies and the Transition to the Market (Routledge, 1993) and The Countries of the Former Soviet Union at the Turn of the TwentyFirst Century: The Baltic and European States in Transition (Routledge, 2004, the last of a five-volume series written by the author).

Guides to economic and political developments in Asia

1 North Korea A guide to economic and political developments Ian Jeffries 2 Vietnam A guide to economic and political developments Ian Jeffries

Vietnam A guide to economic and political developments

Ian Jeffries

First published 2006 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN Simultaneously published in the USA and Canada by Routledge 270 Madison Ave, New York, NY 10016 Routledge is an imprint of the Taylor & Francis Group, an informa business This edition published in the Taylor & Francis e-Library, 2007. “To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.” © 2006 Ian Jeffries All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data A catalog record for this book has been requested ISBN 0-203-96506-X Master e-book ISBN

ISBN10: 0–415–39214–4 (Print Edition) ISBN13: 978–0–415–39214–3

Contents

Acknowledgements

vii

Introduction and summary

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Political developments Political background 4 A chronology of political developments 9 The Vietnam War: the human toll 30 Vietnam’s armed forces 31 Communist Party membership 32 The boat people 32 Ethnic minorities 35 Religion 40 Demography 41 AIDS 43 SARS 44 Bird flu 46

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The economy Economic background 94 The economic system prior to and after 1989 95 Financial and exchange rate policy 102 The state sector 110 The non-state, non-agricultural sector 115 The ‘equitization’ programme 120 Further aspects of privatization 130 Foreign trade 135 Foreign debt and aid 148 Foreign direct investment 155

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Contents Agriculture 173 Economic performance 180 Postscript Narcotics 186 Bird flu 186 The economy 202

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Bibliography Index

205 210

Acknowledgements

I am much indebted to the following individuals (in alphabetical order): At the University of Wales Swansea: David Blackaby; Siân Brown; Dianne Darrell; Michele Davies; Peter Day; Chris Hunt; Frances Jackson; Jaynie Lewis; Nigel O’Leary; Lis Parcell; Mary Perman; Ann Preece; Paul Reynolds; Kathy Sivertsen; Jeff Smith; Syed Hamzah bin Syed Hussin; Clive Towse; Ray Watts; Chris West. Professors Nick Baigent, George Blazyca, Paul Hare, Lester Hunt and Michael Kaser. Russell Davies (Kays Newsagency). At Routledge: Yeliz Ali, Simon Bailey, Matt Deacon, Claire Dunstan, Amrit Bangard, Oliver Escrit, Tessa Herbert, Alan Jarvis, Liz Jones, Alex Meloy, Peter Sowden, Alfred Symons, Annabel Watson, Mike Wending, James Whiting, Vanessa Winch and Jayne Young. Ian Jeffries Department of Economics and Centre of Russian and East European Studies, University of Wales Swansea

Introduction and summary

Communism collapsed in Eastern Europe in late 1989, followed in late 1991 by the disintegration of the Soviet Union. Yugoslavia also disintegrated and in a generally very bloody fashion. The world economies today are market-orientated. Even politically communist countries such as China and Vietnam are moving increasingly in that direction and are allowing the private sector to play a greater role. The Vietnam War ended in 1975 and the reunited country faced the problem of how a poorer, planned economy in which state ownership and control dominated could successfully absorb a more advanced, capitalist economy. By the time China started to introduce its economic reform programme in 1978, the country had largely reorientated its trade away from Comecon – the communist trading bloc (after quarrelling with the Soviet Union in the early 1960s) – and was not aid-dependent. Vietnam, on the other hand, suffered from the collapse of communism. Winning the war proved easier than winning the peace, and after 1989 Vietnam felt compelled by the economic problems experienced to change course, specifically to adopt a market-orientated economic policy known as doi moi (usually translated as ‘renovation’). It is not easy to pigeon-hole Vietnam’s new economic policy precisely in terms of the ‘big bang’/‘shock therapy’ versus ‘gradualism’ division to be found in the theory of economic transition. There are always elements of both in the real world. Indeed, even China, the example par excellence of ‘gradualism’, has adopted some reforms quite speedily when the central green light has been given (e.g. in the case of the Household Responsibility System in agriculture). But my strong impression is that the distinction between the two schools of thought is still useful in the case of China and that many of Vietnam’s ‘renovations’ have been influenced by China’s economic reforms. Vietnam’s ‘renovation’ may have a greater number of faster elements than China’s gradual and partial economic reform process (e.g. price reform was speedier), but I would place Vietnam in the category of ‘gradualism’ overall if pushed. The ‘equitization’ (partial privatization) programme, for example, has proceeded at a snail’s pace (albeit speeding up somewhat of late).

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Introduction and summary

Vietnam has clearly been influenced by China’s Household Responsibility System. Vietnam’s agriculture is now based on the family farm (with land leased, since ownership is monopolized by the state). Despite the many problems associated with such a system (such as the problem of the lack of firm property rights and the small size of the typical farm) Vietnam is currently, for example, the world’s number two exporter of rice. Vietnam is quite heavily dependent on foreign trade in general. Important bilateral trade agreements have been signed (including one with the United States) and membership of the World Trade Organization is a prime goal. Vietnam’s attitude to economic reform has fluctuated. For example, the Asian financial crisis (which started in July 1997 with an attack on the Thai currency) dampened enthusiasm for a while). But generally the country has moved steadily in the direction of markets and greater non-state activity. Like China, Vietnam is determined to remain a one-party state, seeing economic reform as a means of helping the Communist Party retain that control in a stable country. Some of the Vietnamese who fled to the United States and other countries (the Viet Kieu) are remitting substantial sums to the old country and some are even investing in it (although direct foreign investment overall is still rather disappointing owing to problems such as bureaucracy, corruption, land-use rights and dispute settlement mechanisms). At the end of the Second World War in 1945 Vietnam was a classically poor country (with a low national income per head and most of the labour force working in agriculture, for example) and a generally poorly endowed one in terms of natural resources. (Despite considerable economic progress of late, Vietnam is still a relatively poor country.) Ho Chi Minh’s resilience in seeing off, in turn, such powerful opponents as France (the original colonial power), Japan and the United States is truly remarkable. (Vietnam went on to give China a bloody nose in the border war of February 1979 over Kampuchea!) Equally impressive is the nation’s capacity to forgive and forget. On the other hand, nobody is blind to the deficiencies of such a one-party state in terms of human rights (including those of ethnic minorities) and in terms of problems such as corruption. The World Health Organization (on 28 April 2003) declared Vietnam the first SARS-infected country to be free of the virus, but bird flu has taken a far higher human and poultry toll. Readers will note in the bibliography that I have published extensively on communist and transitional economies, but most books deal with groups of countries. Since the collapse of communism in Eastern Europe and the Soviet Union in and after 1989, the number of countries I have analysed has grown from fourteen to thirty-five! Owing to the large number of languages involved, I have had to rely overwhelmingly on English sources. I do not even read, let alone speak, Vietnamese! Thus I am unable to undertake frontier research on the country. Nevertheless, a large amount

Introduction and summary 3 of information is available in English and a book on Vietnam complements those on North Korea and China. There seems to be the need for a broad-ranging study covering both economic and political developments, with particular emphasis on events since 1989. The two Vietnams were reunited in 1975 and the two Germanys in 1990. But the two Koreas remain divided, with South Korea continuously stretching ahead of its economically benighted twin. I have tried to write a book which will be of interest to governments, business and academics (from a wide range of disciplines, including economics, politics and international relations). The companion volume on North Korea includes an appendix on the nature of central planning and one on the general issues involved in the transition from command to market economies. I present a richly endowed ‘quarry’ of up-to-date economic and political information (presented chronologically where appropriate) to allow the reader to dig out any desired facts and figures. This is not (and is not meant to be) original research but a broad-brush painting of the overall economic and political picture. I make extensive use of quality newspapers such as the International Herald Tribune (IHT), the Financial Times (FT), The Times, the Guardian, the Independent and the Daily Telegraph. Publications such as the Vietnam Courier, The Economist, the Far Eastern Economic Review (FEER), The World Today, Asian Survey, the Current Digest of the Post-Soviet Press (CDSP, before 5 February 1992 known as the Current Digest of the Soviet Press), Transition and Finance and Development have also proven to be invaluable. A review in The Times Higher Education Supplement (29 October 1993) kindly referred to my ‘meticulous referencing’, even though detailed referencing has the potential to be tiresome to readers. But since this is not original research and I am deeply indebted to many sources, I feel it necessary to make every effort to acknowledge the material used. It is not always feasible to name the correspondents or contributors, but I try, as far as possible, to ensure that credit goes where it is due. Partly for this reason and partly for accuracy I make extensive use of quotations, although where these include commonly quoted sayings or speeches I leave out specific sources.

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Political background Vietnam means ‘land to the south’ (of China). France began the colonial period for Vietnam in 1858 with the capture of present-day Da Nang, seized Saigon in 1861, and formed the protectorates of Annam and Tonkin by 1883. On 19 August 1945 a communist government was first proclaimed in North Vietnam, without the assistance of external forces. Independence was declared on 2 September 1945. War with France began the next year, following the reimposition of colonial rule. Recognition of the Democratic Republic of Vietnam by the socialist countries took place in January 1950. France’s defeat at Dien Bien Phu in 1954 was followed by the Geneva Accords in July of the same year that divided Vietnam along the 17th parallel and promised elections within two years in order to create a unified government and country. Saigon, the capital of South Vietnam, fell to North Vietnamese forces on 30 April 1975 after a long struggle with the United States and thirty years of war in total. Thus Vietnam was reunited after resistance, in turn, against powerful Japanese, French and American forces. The United States had withdrawn its combat troops by March 1973, although formal reunification as the Socialist Republic of Vietnam did not occur until 2 July 1976. The reunification then represented the only example of a socialist country incorporating a relatively large capitalist area. UN membership followed on 20 September 1977. Over the period 1976–8 there came about a unified financial system (including one currency), banking system and budget (Spoor 1988a: 104–5). The constant official aim was to ‘to build socialism and defend the Fatherland’. One common theme among analysts is that the imposition of the northern model on the South resulted in such serious economic problems that reforms became necessary. (See, for example, Beresford 1988.) But corresponding political reform (as in China) has not followed suit, with multi-party democracy ruled out and stress laid on political stability. Ho Chi Minh (born around 1890) founded the Vietnamese Communist

Political developments 5 Party on 3 February 1930, and the First Congress was held in 1935 in the Portuguese colony of Macau. The Communist Party became the Vietnamese Workers’ Party in February 1951 and the Communist Party of Vietnam in 1976. Ho left Vietnam in 1911 and did not return until thirty years later, although communist resistance dated from the 1920s. He died on 2 September 1969 and was succeeded by a collective leadership under Le Duan. Le Duan died in July 1986, to be followed by a stop-gap general secretary of the Workers’ Party, Truong Chinh, and his replacement on 11 December, Nguyen Van Linh (who himself retired on 26 June 1991 owing to ill health). The Sixth Congress of the party in December 1986 was a major event in both a political and an economic sense. Many of those who had led the country to triumph in war gave way: Truong Chinh (who was also president), Pham Van Dong (premier) and Le Duc Tho (chief negotiator with the United States at the Paris talks which ended in January 1973; he died on 13 October 1990) left the politburo, although they were named as ‘comrade advisers’ to the new politburo and the Central Committee in January 1987. In June Pham Hung and Vo Chi, both in their midseventies, became premier and president, respectively. The former died in March 1988; his stand-in was first vice premier Vo Van Kiet. A new, more technocratic and provincially based leadership was left to deal with economic problems so serious that the ‘renovators’ (‘renovation’ is doi moi, also translatable as ‘renewal’, ‘transformation’ or ‘radical change’) coined the phrase ‘The North won the war, the South must manage the economy.’ Do Muoi (seventy-one) became premier in June 1988 (and general secretary of the Communist Party on 26 June 1991). The government always takes pains to make sure senior offices are divided equally between north, south and centre. That is why the current prime minister comes from the south, while the head of the Communist Party is from the north, and the president is from the centre. (The Economist, 30 April 2005, p. 60) Philip Bowring argues that: ‘Despite the dominance of a one-party state consensus is highly valued and power is less centralized than in other communist systems . . . Provincial autonomy is a feature and a partial antidote to the authoritarian instincts of a one-party state’ (IHT, 21 December 2004, p. 9). Relations with China deteriorated to the extent of a border war in February 1979 (which gave invading Chinese troops a bloody nose) after the December 1978 invasion of Kampuchea (Cambodia) by Vietnam, which overthrew the tyrannical Pol Pot regime. Further clashes took place later on. Vietnamese troops were officially meant to leave Cambodia by midnight on 26 September 1989, but it seemed that some ‘advisers and

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technicians’ remained there for a while; the troops entered Cambodia in December 1978 as a result of attacks by the Khmer Rouge regime. China, along with the United States and the Soviet Union, helped create Pol Pot’s Khmer Rouge regime in Cambodia. Beijing, indeed, was the group’s chief patron when it held power from 1975 through 1978 and killed more than 1.7 million people, a quarter of Cambodia’s population, in its quest to create an agrarian Maoist utopia . . . Beijing, which did not want the Soviet Union expanding into its backyard, supplied the Khmer Rouge with arms, food, material, training, technicians and, most important, international political support . . . Cambodia’s brutal civil war intensified when the United States began covertly bombing the country as part of its Vietnam campaign . . . China, as well as the United States, Britain, Singapore and Thailand, continued supporting the Khmer Rouge even after Vietnam invaded Cambodia in 1978 and put an end to the devastation Pol Pot’s regime had unleashed. (Jeghangir Pocha, http://www.iht.com, 2 May 2005) A treaty of friendship and co-operation was signed with the Soviet Union on 3 November 1978. Vietnam built up the world’s fifth largest military organization in terms of personnel. (See the section on Vietnam’s armed forces.) The reaction of the Vietnamese leadership to the dramatic events in Eastern Europe starting towards the end of 1989 was to draw a clear distinction between political and economic liberalization. Multi-party democracy was rejected and political reform followed such lines as separating party and state (thus reducing the interference of the former in the running of the latter), ending abuses such as special privileges and corruption, and forging closer links with the people. As in China, stability was considered a prerequisite to successful economic reform (relations with China having warmed substantially). On 27 December 1991 Vietnam extended diplomatic recognition to the independent states which emerged from the break-up of the Soviet Union. The Draft Platform for the Building of Socialism in the Transition Period, which emerged from the 17–26 November 1990 Central Committee session in preparation for the June 1991 Seventh Party Congress, reaffirmed the commitment to socialism: In certain countries the communist parties have lost their leading role. Hostile forces are taking advantage of these errors and difficulties to launch a counter-offensive with a view to abolishing socialism . . . Socialism will regain its vitality and, regardless of the tortuous path ahead, will prevail. Obviously the fundamental contradiction of capitalism has not dwindled away, but rather has grown more and more acute and is bound to lead capitalism to inevitable disintegration. (cited in The Economist, 8 December 1990, p. 73)

Political developments 7 The Seventh Party Congress itself took place 24–27 June 1991. The retiring general secretary, Nguyen Van Linh, proclaimed that: ‘We affirm once again our wish to follow socialism under the clear-sighted leadership of the party.’ A multi-party system would lead to chaos, it was said; economic renovation was the priority and political stability was necessary for this. Seven members of the old twelve-strong politburo lost their positions, including Linh (ill health) and the foreign minister, Nguyen Co Thach (owing to his anti-China stance and his failure to improve relations with the United States substantially). The membership of the politburo was raised to thirteen, the average age reduced to sixty-four and southern representation increased. Do Muoi became general secretary, indicating basic continuity of policy. At home there was evidence of a tightening of political control, e.g. increased control of the press, more people sent to political re-education camps, and the dismissal of the liberal Tran Xuan Bach from the politburo on 28 March 1990 for stressing the need for political reform to accompany economic reform (including thinking about the idea of a multi-party system). On the other hand, there were some interesting political developments, e.g. in March 1990 the Club of Former Resistance Fighters was officially recognized as the Vietnam Veterans’ Association. This association formed an embryonic loyal opposition in that it pushed for greater reform in such forms as more openness and a freely elected prime minister. The draft of a new constitution (to replace that of 1980) was published on 30 December 1991 and ratified by the National Assembly on 15 April 1992 (Jeffries 1993: 223). Politically there was to be no multi-party democracy, but the role of the Communist Party was to be reduced. The economic reforms were approved. The formal features of the constitution were as follows: 1

2

The Communist Party would continue to play a guiding role, to set the general political line. But the National Assembly’s role was to increase: ‘the National Assembly is the only body vested with constitutional and legislative powers’; it will convene three times a year instead of twice, appoint the prime minister, ratify the cabinet appointed by the prime minister, and elect the president as head of state (the president’s powers also being increased). The state ownership of land was retained, but plots could be allocated for long-term use and the rights to the use of the land could be inherited or sold. The economic system was described as a ‘socialistorientated, multi-sectoral commodity economy driven by the state-regulated market system’. The status of the private sector was confirmed. The formerly guaranteed rights to work, housing, and free health care and education were removed. Foreigners had the right to own capital and assets and ‘enterprises with foreign-invested capital

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Political developments shall not be nationalized’. The pledge on nationalization also applied to the Vietnamese private sector, but there is another article in the constitution which says that the state can requisition property at market prices on grounds of national security.

On 23 September 1992 General Le Duc Anh became president. On the international scene there was substantial movement. On 18 July 1990 the United States announced that it was to open talks with Vietnam on Cambodia and was withdrawing diplomatic recognition from the threefaction coalition (including the Khmer Rouge) that held the UN seat; the United States had belatedly realized the danger of the Khmer Rouge regaining control of Cambodia. US secretary of state James Baker met foreign minister Nguyen Co Thach on 29 September (the latter visited the United States the following month). As a result of the signing of the UNsponsored Cambodian peace settlement on 23 October 1991, the United States agreed to open talks with Vietnam on normalizing relations. During the first week of September Nguyen Van Linh visited China, accompanied by prime minister Do Muoi and former prime minister Pham Van Dong (the UN Cambodian peace formula followed soon afterwards). General Vo Nguyen Giap visited China on 19 September. Border trade between Vietnam and China had been flourishing well before these visits. The Vietnamese foreign minister, Nguyen Manh Cam, visited China 8–12 September 1991; even more significantly Vo Van Kiet and Do Muoi followed 5–10 November. On 22 July 1992 Vietnam acceded to the 1976 Treaty of Friendship and Co-operation in South-east Asia, the first step towards possible full membership of the Association of South-east Asian Nations (Asean), comprising Brunei, Indonesia, Malaysia, the Philippines, Thailand and Singapore. On 23 October 1992 the United States announced that Vietnam had agreed to provide ‘all information’ about POWs and MIAs in the Vietnam War. This was considered an important step on the way to the possible normalization of relations. The United States promised some modest but speedy aid for flood victims and military veterans. This was followed by an announcement that US companies would be allowed to sign contracts, open offices in Vietnam, hire staff and carry out feasibility studies and technical surveys. But fulfilment of contracts still depended on the lifting of the trade embargo. (Jeffries 1993: 500) From 30 November to 4 December 1992 Li Peng visited Vietnam, the first visit by a Chinese prime minister for twenty-seven years. Zhou Enlai was the previous one. On 22 December 1992 diplomatic relations were established with South Korea.

Political developments 9

A chronology of political developments 20–22 November 1994: President Jiang Zemin of China visits Vietnam. The two countries agree to form a group of experts to consider the dispute over the Spratly Islands. (Brunei, China, Malaysia, the Philippines, Taiwan and Vietnam dispute ownership of the islands, with China, Taiwan and Vietnam each claiming all of them. As a result of a clash in 1974 China seized the Paracel Islands from South Vietnamese forces. In the 1988 Spratly incident the Chinese navy inflicted significant damage on Vietnamese naval vessels and seized a number of reefs. There have since been disputes over oil exploration. In January 1995 the Philippines accused China of building a base on one of the reefs.) 28 July 1995: Vietnam becomes the seventh member of Asean. Vietnam agreed to join the Asean free-trade plan at the beginning of January 1996, although it would have until 2006 (instead of the usual 2003) to reduce tariffs on most manufactured goods to a maximum 5 per cent (IHT, 31 July 1995, p. 9; FEER, 10 August 1995, p. 15). 22 October 1995: ‘Eight government bodies are to be merged into three new super-ministries, the ministry of agriculture, the ministry of industry and the ministry of planning and investment’ (IHT, 23 October 1995, p. 4). ‘The mergers are part of the government’s plan to reform the civil service and streamline bureaucratic procedures. The state committee for cooperation and investment, which handles foreign investment applications, has been merged into the new ministry of planning and investment’ (FEER, 2 November 1995, p. 13). 26 November 1995: Do Muoi begins a visit to China. December 1995: A campaign against ‘social and cultural poisons’ begins. In early February 1996 there were reports of campaigns against ‘social and cultural poisons’ such as gambling, drug abuse, prostitution, karaoke and advertising promoting foreign brand names (the name in Vietnamese has to be larger) (FT, 2 February 1996, p. 11; IHT, 2 February 1996, p. 1). 14 February 1996: Two railway lines are reopened on the border with China. 3 March 1996: The opening day of a meeting of the National Assembly. On 13 March prime minister Vo Van Kiet said that new emphasis should be placed on mobilizing domestic capital over the following five years and that it should be channelled directly into funding development. ‘We have allowed foreign investors to come in to develop infrastructure projects. It is all the more plausible for us to encourage Vietnamese people and Vietnamese investors in particular to engage in such projects’ (IHT, 14 March 1996, p. 15). 9 April 1996: The party reveals the contents of a draft report to be presented at the 28 June–1 July 1996 congress. The report outlines economic policy and forecasts over the next five years:

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The party is urged ‘determinedly not to accept political pluralism and multi-partyism’. There is a call for greater discipline among party members, whose ‘loss of confidence in socialism and the party’s leadership must be rectified’. Some of the 2 million party members have ‘engaged in illegal money making, corruption, smuggling, wrestling for privileges and authoritarianism’. Party members should ‘endeavour to raise their revolutionary morality’. The aim is to double per capita GDP by the year 2000 (compared with 1990). (The current level of per capita income is $200.) The average annual rate of growth of GDP is forecast to be 9 to 10 per cent and that of industrial growth 14 to 15 per cent. The goal is ‘to develop a multi-sector economy and apply the market mechanism to build socialism successfully’. The private sector would be encouraged, but the state and co-operative sectors’ share of GDP would rise from 40 per cent to 60 per cent of GDP. ‘Economic renovation and building a multi-sector economy operating within a market mechanism must be accompanied by the strengthening of the role of state management along socialist lines.’ Insurance, trading and infrastructure would remain reserved for the state. The ‘equitization’ programme would go ahead, but majority stakes would be held by the state.

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26 April 1996: The foreign ministry confirms the expulsion from the Communist Party (in mid-April) of the party’s ranking member in charge of economic policy, Nguyen Ha Phan, ‘for having committed serious mistakes in his past activities’ (thought to refer to allegations that while a prisoner he betrayed party and Viet Cong networks during the Vietnam War). ‘Some sources describe Phan’s ouster as a victory for the reformist wing of the party, which has been clamouring for a faster pace of economic liberalization. Phan is considered a proponent of a strong state role in the economy’ (Andrew Sherry, FEER, 9 May 1996, p. 22). 28 June–1 July 1996: The Eighth National Congress of the Communist Party takes place, with 1,198 delegates in attendance. For the first time since 1960 a Chinese delegation (led by prime minister Li Peng) attended the congress. The membership of the politburo was increased from sixteen to nineteen, including nine new members. (One member died two days before the congress but was still included in the list.) After considerable speculation in the West about their future, the three leading personalities retained their positions: party general secretary Do Muoi (seventy-nine and a northerner); president Le Duc Anh (seventy-five and from the central region); prime minister Vo Van Kiet (seventy-three and a southerner). (There was speculation that they would not exercise full power for the entire term of office.) A five-member standing committee of the politburo was established, the members being Do Muoi, Le Duc Anh, Vo Van Kiet,

Political developments 11 Le Kha Phieu (head of the army’s political department) and Nguyen Tan Dung (deputy interior minister). The standing committee’s exact role was not made clear but some dissatisfaction at the congress seems to have led to a watering down of its powers. (The representation of the military and internal security forces increased from four to six on the politburo and they have three of the five positions on the new standing committee that is to run day-to-day affairs: IHT, 24 July 1996, p. 17.) The target average rates of growth over the next five years were confirmed at 9 to 10 per cent for GDP and 14 per cent to 15 per cent for industrial output. But there was no mention of the aim, mentioned in the April 1996 draft report, of increasing the state and co-operative sectors’ share of GDP to 60 per cent. (According to Adam Schwarz, the 60 per cent target was to have been reached by the year 2020: FEER, 24 October 1996, p. 51.). Economic targets were lowered. The goal of increasing per capita GDP eight to ten times between 1990 and 2020 was changed to simply raising GDP by the same amount, thus discounting the rapid growth of population (FEER, 11 July 1996, p. 16). The state sector’s ‘leading role’ (‘foundation of the economy’) was stressed. Wholesale privatization was rejected. The congress decided that party members could engage in small, household businesses but not ‘private economic activities’ (FEER, 11 July 1996, p. 16). The ‘private capitalist economy’ was considered as being ‘capable of contributing to national construction’ (The Economist, 17 May 1997, p. 81). The Political Report warned of four threats, namely corruption, economic stagnation, deviation from socialism and ‘silent revolution’ (the insidious erosion of communist morals by the values and products of the West). President Anh accused unnamed foreign investors of evading taxes, underpaying workers, failing to transfer technology and trying to subvert socialism (Independent, 1 July 1996, p. 11). There were to be ‘party cells’ in all foreign-invested enterprises within six months of starting, the official reason being to educate local employees about the work of the party (FT, 3 July 1996, p. 4). General secretary Do Muoi urged foreign investors to come to Vietnam (IHT, 1 July 1996, p. 13; FEER, 11 July 1996, p. 16). A quiet congress was generally seen as cautiously confirming the economic reform process but stressing the need for stability (social and political order). 31 January 1997: President Le Duc Anh makes a television appearance, the first since he suffered a stroke in mid-November 1996. Four people are sentenced to death for large-scale corruption. 7 March 1997: China sets up an oil rig in disputed waters. (Vietnam gained the verbal support of Asean. But the organization’s formal position remained the same, namely that two countries in dispute have to solve problems bilaterally. On 7 April 1997 China confirmed that the oil rig had been removed after completing its exploration task.) 9 May 1997: The US ambassador, Douglas Peterson, arrives in Vietnam.

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14 May 1997: Twenty-two members of a heroin smuggling ring are convicted, including police and border personnel. Eight are sentenced to death by firing squad, eight are given life terms and six are given sentences ranging from a suspended sentence to twenty years in prison (IHT, 15 May 1997, p. 1). 23 June 1997: It is announced that party general secretary Do Muoi, president Le Duc Anh and prime minister Vo Van Kiet will not run for re-election to the National Assembly on 20 July 1997. All three will remain members of the politburo, but there will have to be a new prime minister and a new president since these must be members of the National Assembly. 20 July 1997: Elections to the National Assembly take place. Independent candidates are allowed to run, albeit after being approved by the Communist Party. Sixty-one of the 450 delegates are described as ‘non-party members’ of the National Assembly (IHT, 5 September 1997, p. 4, and 15 September 1997, p. 10). 23 July 1997: Burma (Myanmar) and Laos become members of Asean. Cambodia’s membership is postponed because of internal conflict in the country. 4 September 1997: The political prisoner Pham Duc Kham is released from prison. (He served seven years of a twelve-year sentence for allegedly plotting to overthrow the government. There are an estimated seventy well-known political prisoners: IHT, 5 September 1997, p. 4.) 24 September 1997: The National Assembly elects Tran Duc Luong (aged sixty) as president. 25 September 1997: The National Assembly elects Phan Van Khai (aged sixty-four) as prime minister. 7 November 1997: There are protests by farmers in a predominantly Catholic province north-east of Ho Chi Minh City. The protests concern corruption and attempts by local officials to confiscate church land for public building purposes (FEER, 20 November 1997, p. 13). (Further protests followed on 10 November.) 29 December 1997: Sixty-six-year-old General Le Kha Phieu (chief of the army’s political department, i.e. the army’s political commissar) replaces eighty-year-old Do Muoi as general secretary of the Communist Party. The party’s central committee also approves the departure from the politiburo of Do Muoi, former premier Vo Van Kiet and former president Le Duc Anh (FEER, 8 January 1998, p. 13). In recent years the reforming impulse has stalled. That trend was strengthened by the recent designation of General Le Kha Phieu as Communist Party chief, Vietnam’s highest political post. He is a military conservative more interested in preserving political control than in liberating economic energies . . . The others are prime minister Phan

Political developments 13 Van Khai, an economist closely associated with past reforms, and President Tran Duc Luong, a mining engineer. (editorial, New York Times in IHT, 13 January 1998, p. 8) 6 January 1998: A new Standing Board is chosen, comprising General Le Kha Phieu (who heads both this and the nineteen-member politburo), Tran Duc Luong (president), Phan Van Khai (prime minister), Nong Duc Manh (chairman of the National Assembly) and Pham The Duyet (in charge of ‘mass mobilization’) (FT, 8 January 1998, p. 3). 7 January 1998: Three former businessmen convicted of corruption are executed. One was the head of a trading company owned by the Communist Party, one was the director of a private company and one was from a state legal office (Guardian, 15 January 1998, p. 15; IHT, 15 January 1998, p. 4). 11 March 1998: President Clinton signs a waiver exempting Vietnam from legislation that restricts trade with communist countries. The president asks the US Congress to exempt Vietnam from the Jackson–Vanik Amendment, which prevents normalized relations with a communist country unless it permits free emigration. The waiver will enable US companies to qualify for a series of federal programmes, including government-backed financing from the US Export–Import Bank, for their Vietnam projects (IHT, 12 March 1998, p. 7). Currently only six countries do not enjoy most-favoured nation status, namely Afghanistan, Cuba, Laos, North Korea, Serbia and Vietnam. While Vietnam is still on the list President Clinton issued a waiver in March exempting Vietnam from a 1974 law that denies normal tariff treatment to countries with restrictive emigration policies. Vietnam is not eligible for most-favoured-nation status because it has yet to sign a bilateral commercial agreement with the United States. But the waiver did open the way for Vietnam to get government credits and investment guarantees. (IHT, 24 June 1998, p. 7) (On 3 June 1998 President Clinton reissued the waiver for the period 3 July 1998 to 2 July 1999.) 10 April 1998: Nguyen Co Thach dies. (He was foreign minister from 1980 to 1991.) 27 April 1998: Nguyen Van Linh dies. (He was general secretary of the Communist Party from December 1986 to June 1991.) 17 July 1998: The growth target for 1998 is reduced from 9 per cent to between 6 per cent and 7 per cent. 2 September 1998: Under an amnesty to mark independence the authorities release 5,219 prisoners, including two prominent dissidents (FEER, 10 September 1998, p. 16). ‘Nearly 8,000 prisoners, most ordinary criminals, were released in two amnesties during the late summer and fall [of 1998]. The releases included

14

Political developments

a number of political and religious dissidents’ (Mark Sidel, Asian Survey, 1999, vol. XXXIX, no. 1, p. 92). 19 October 1998: The official growth rate target for 1999 is cut to as low as 5 per cent from between 6 per cent and 7 per cent (IHT, 20 October 1998, p. 17). 7 January 1999: The Vietnamese Communist Party has expelled a veteran party member who has emerged over the past twelve months as the most outspoken advocate of fundamental reform of the country’s political system. Retired general Tran Do . . . served on the Communist Party’s central committee, gaining a reputation as a liberal before he was removed in 1991. Since late 1997 Tran Do has written a series of lengthy, critical letters to the party’s top leadership, which were unofficially circulated in Hanoi. Initially inspired by an outbreak of rural unrest in his home province of Thai Binh, the general argued that the party was losing the confidence of the people and needed to embrace radical reform in order to save itself. His letters have included calls for the easing of controls on the freedom of expression and for free elections . . . Last year [1998] the official media staged a press campaign against Tran Do, accusing him of disloyalty to the party. (FT, 8 January 1999, p. 5) 4 May 1999: The start of a session of the National Assembly. Nguyen Tan Dung, deputy prime minister [and governor of the central bank] . . . painted a gloomy picture of the country’s economic prospects . . . [He did not] say whether Vietnam would lower its 1999 target of 5 per cent to 6 per cent growth of GDP . . . During the current session delegates are expected to approve four new laws, including a landmark text aimed at ending discrimination against the private sector. (IHT, 5 May 1999, p. 19) The National Assembly passed a law according the private sector equal standing with state-owned companies (FEER, 23 September 1999, p. 30). 9 August 1999: The official growth rate target for 2000 is set at 5 per cent to 6 per cent (FT, 10 August 1999, p. 5). 16 August 1999: The United States opens a new consulate building in Ho Chi Minh City. 6–7 September 1999: US secretary of state Madeleine Albright visits Vietnam. 4–11 November 1999: The Eighth Plenum of the Central Committee of the Communist Party is held. The year [1999] was the second one in power for the new group of Vietnamese leaders who took over from the old triumvirate of Vietnamese leaders of Muoi, Anh and Kiet at the end of 1997. The new

Political developments 15 leadership came to power under the shadow of the Asian financial crisis, which exacerbated existing economic problems, and the peasant unrest in Thai Binh [province commencing in the summer of 1997: Nguyen Manh Hung 2000: 100], which undermined the authority of the party . . . During the first part of the Sixth Plenum of the Eighth Party Congress in October 1998, the leadership decided to back away from economic reform despite dire warnings of an impending crisis and concentrate instead on maintaining socio-economic stability. They stayed this course in 1999. In 1999 the Central Committee met three times: part two of the Sixth Plenum from 25 January to 2 February, the Seventh Plenum from 9–16 August, and the Eighth Plenum from 4–11 November. [In] part two of the Sixth Plenum . . . reform and personnel changes were anticipated, but in the event the plenum focussed instead on a number of fundamental and urgent issues in partybuilding work. The state intention of these activities was to ensure the creation of a politically, ideologically and organizationally strong party . . . The survival of the party as a ruling party required that it rid itself of internal disunity and close ranks against external challenges . . . As with the previous plenum, delegates to the Seventh did not engage in any serious discussion about economic reforms. Instead they focussed on the need to enhance the leading role of the CPV [Communist Party of Vietnam] . . . The Eighth Plenum . . . followed the same pattern . . . By the time the conclave had ended on 11 November no major economic reform measures had been adopted. (Nguyen Manh Hung 2000: 101–4) 13 January 2000: The politburo has named Truong Tan Sang [a member of the politburo], currently party chief in the business hub of Ho Chi Minh City, to be head of the party’s powerful economic commission. The move brings an official with long experience in dealing with private business, if not necessarily a high-profile reform figure, into the country’s top economic position at a time when the country’s leadership is struggling is struggling to decide how aggressively to pursue economic reform measures. (FT, 14 January 2000, p. 8) 13 March 2000: ‘The US defence secretary, William Cohen, began a historic three-day trip to Vietnam on Monday [13 March] . . . Mr Cohen is the first US defence secretary to visit Vietnam since the end of the war in the 1970s’ (IHT, 14 March 2000, p. 4). 29 April 2000: Pham Van Dong dies. He was prime minister until December 1986. 30 April 2000: Vietnam celebrates the twenty-fifth anniversary of the fall of Saigon to North Vietnamese forces.

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Political developments

14 September 2000: It is announced that President Clinton will visit Vietnam after the 15–16 November 2000 meeting of the Asia-Pacific Economic Co-operation Forum. This will be the first visit to Vietnam by a US president since the Vietnam War. Vietnam and Russia yesterday [14 September] unexpectedly settled a decade-long debt dispute, with Hanoi agreeing to pay back Moscow $1.7 billion in Soviet-era debt over twenty-three years . . . The two countries had been at loggerheads over how to value the roughly 11 billion [transferable] roubles owed Moscow . . . The debt agreement appears to have been a victory for Hanoi as it is much closer to the Vietnamese position on exchange rates. The Vietnam News Agency said 90 per cent of the repayment would be made by allowing Russia business concessions and access to goods and services in Vietnam. (FT, 15 September 2000, p. 13) 16–19 November 2000: President Clinton visits Vietnam, the first visit to North Korea and a reunited Vietnam by a US president and the first to the South by a serving US president since Richard Nixon went to Saigon in July 1969. ‘Clinton’s speech at Hanoi National University will be broadcast live by television in Vietnam, the first time that the communist leadership has allowed a visiting leader to address the nation’ (FEER, 23 November 2000, p. 26). ‘The speech was broadcast live on national television the first time the Vietnamese have accorded such a privilege to a foreign leader’ (IHT, 18 November 2000, p. 1). In contrast to the warm reception which President Clinton received from ordinary people and in response to his call for a more open society and economy, party general secretary Le Kha Phieu said: Where did the cause of our resistance war against invaders come from? Fundamentally it came because imperialists invaded to get colonies. Why did the United States bring its army to invade Vietnam when Vietnam did not bring an army to invade the United States . . . The resistance wars brought the Vietnamese people independence and reunification to advance the country towards socialism . . . [Nations could co-operate provided they respect each other’s] national independence and sovereignty . . . [and did not] interfere in each other’s internal affairs . . . We respect the choice, the lifestyle and political systems of other nations. We in turn demand that other nations respect our people’s choices . . . [Vietnam is] not going to draw back from the socialist path . . . For us the past is the root, the ground and the strength of the present and future . . . The future of the Vietnamese nation is independence and socialism . . . Our economy has many sectors, in which the state sector plays the leading role. We do have a private economy, but we do not privatize the economy.

Political developments 17 18 December 2000: The defence minister of South Korea arrives, ‘the first South Korean defence minister to visit Hanoi since the Vietnam War, when South Korea fought alongside American troops’ (IHT, 19 December 2000, p. 7). 25 December 2000: The presidents of China and Vietnam signed agreements in Beijing resolving a long-standing border dispute in the Tonkin Gulf . . . The agreements included a demarcation of the territorial waters and the economic zones of the two countries, as well as a fishing agreement . . . The signing follows a land-border agreement last year [1999]. (IHT, 26 December 2000, p. 3) Tran Duc Luong, the Vietnamese president . . . and Chinese president Jiang Zemin signed agreements settling a long-standing border dispute in the Tonkin Gulf, known in China as Beibu Bay. But the two did not discuss the Spratly and Paracel islands. (FT, 27 December 2000, p. 5) Vietnam and China signed an agreement on their mutual sea border in the Tonkin Gulf and on fishing rights in the long-disputed area. They also agreed not to aggravate outstanding maritime border disputes. The deal came during a visit to China by President Tran Duc Luong. The two sides still dispute island groups in the South China Sea. (FEER, 11 January 2001, p. 13) 1–2 March 2001: President Putin of Russia makes his first visit to Vietnam. [On 1 March] Mr Putin . . . [signed] a ‘strategic partnership’ with . . . President Tran Duc Luong and won for Russia the exploration rights on a . . . tract of Vietnam’s oil-rich continental shelf in the South China Sea. He also opened questions to sell state-of-the-art military equipment to Vietnam . . . The question of Vietnam’s Soviet-era debt of $11 billion was finally put to rest Thursday [1 March] . . . Last September Moscow agreed to forgive 85 per cent of the war-era credits and Mr Putin’s aides Thursday said the debt had been further reduced to $1.5 billion, which is to be paid back over twenty-three years, although most of the amount is expected to be repaid in barter shipments of coffee and rice. (IHT, 2 March 2001, p. 8) The trip [was] the first to Vietnam by a Kremlin chief . . . President Vladimir Putin declared a new strategic partnership – covering military, trade and economic co-operation – with . . . Vietnam. Russia said the issue of Vietnam’s debt of some $1.7 billion had been resolved under a restructuring deal that would see Hanoi pay $100 million a year. (FEER, 15 March 2001, p. 14)

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Political developments Last October [2000] Moscow forgave . . . Vietnam . . . a large portion of its debt. Instead of a total of 11 billion transferable Soviet roubles (or over $15 billion). Hanoi now owes . . . Russia . . . just $1.5 billion . . . Vietnam will henceforth pay us about $100 million a year. But it appears that Russia will be ploughing that money back into Vietnam. (CDSP, 2001, vol. 13, no. 9, p. 18) Beginning in 1992 the government allowed ‘self-funded students’ to find their own slot in universities abroad. At present an estimated 10,000 Vietnamese students are ensconced in Australia, the United States, France, Canada, New Zealand, Singapore, Thailand and Malaysia . . . Under the current system students simply submit their university acceptance letters to the ministry of public security, which issues them a passport . . . The ministry of education and training . . . is preparing tighter controls on study abroad. If draft measures are approved by the prime minister in June [2001] . . . each overseas student would require a special recommendation from the education ministry and unlicensed consultancies would be shuttered. (FEER, 8 March 2001, p. 22) 17 April 2001: The Communist Party’s Central Committee . . . removed . . . Le Kha Phieu on Tuesday [17 April] amid dissatisfaction with his policies and named a party stalwart seen as more reform minded in his place . . . Nong Duc Manh . . . the first ethnic [Tay] minority member to hold the top Communist Party position . . . Mr Phieu is being forced to resign as party general secretary because of dissatisfaction over his leadership . . . Mr Manh, sixty . . . [is] head of the lawmaking National Assembly . . . He is seen as a relatively weak leader who operates on the basis of consensus decision-making. His installation would likely indicate support for economic reforms. Prime minister Phan Van Khai . . . had threatened to resign out of frustration over the slow pace of reform . . . The selection of an ethnic minority member could also help assuage ethnic tensions that erupted in February. The 150 members of the new Central Committee, who were elected Monday, also selected fifteen members of the party’s policy-guiding Politburo, including four new members . . . The changes are to be rubber-stamped by a four-day national party congress that begins Thursday [19 April]. The congress, which meets every five years, will also approve a political report outlining social and economic policy over the next five years. A draft of the policy paper made public earlier this year said the government would ‘create a conducive policy and legal environment for the private capitalist economy to develop’ and privatize some enterprises. But it said Vietnam would retain state ownership in key areas of the economy . . . In a recent poverty-reduction plan prepared with the

Political developments 19 World Bank and the IMF, the government has pledged to liberalize foreign exchange and trade regulations and to reform state-owned enterprises and state banks. (IHT, 18 April 2001, p. 5) Le Kha Phieu . . . has proven to be an inept administrator . . . Mr Phieu, an ideologue who made his name as an army political commissar, has been seen as a drag on modernization since being named general secretary of the Communist Party in 1997. He sat for over a year on a report about the crucial issue of state enterprise reforms and he . . . [lectured] Bill Clinton on imperialism during the former US president’s groundbreaking October [2000] visit . . . Nong Duc Manh . . . on the other hand, has won praise for his leadership of the National Assembly. Under his guidance the assembly has evolved from rubberstamp body to a raucous forum for lively, televised debates. While certainly no radical, Mr Manh is seen as an effective administrator and negotiator . . . The $370 million three-year IMF loan package, approved by the fund board on 6 April, obliges Vietnam to strengthen ailing state banks, discipline state enterprises, foster the private sector and liberalize trade. Vietnam has made similar commitments to the World Bank to secure a $250 million loan. (FT, 19 April 2001, p. 9) 19–23 April 2001: The Communist Party holds its Ninth Congress. Party congresses are held every five years Vietnam’s departing Communist Party boss, Le Kha Phieu, yesterday [19 April] warned that public anger over the corruption and decadence of communist elites has become ‘a major danger threatening our regime’s survival’ . . . He [said] that Vietnam risked falling behind regional neighbours as long as cumbersome bureaucracy and poor policy co-ordination stifled local economic initiatives. ‘International competition is becoming increasingly fierce’ . . . he said . . . Mr Phieu said Vietnam must create the legal framework and policy environment to strengthen the private sector and attract foreign investment. He also called for Vietnam to raise productivity, lower costs, strengthen the weak banking system, increase the competitiveness of its products in the global market, reform state enterprises and slash irrational bureaucracy. Mr Phieu, who has led an anti-corruption campaign over the past two years, said tough measures were still needed to battle corruption. These include the abolition of petty administrative procedures that provide opportunities for bureaucratic harassment and the prosecution of corrupt officials. (FT, 20 April 2001, p. 10) The Communist Party formally named Mr Manh as secretary-general . . . when the group ended its twice-a-decade congress Sunday

20 Political developments [22 April] . . . Mr Phieu had wanted to serve another five-year term. Although the seventeen other members of the Politburo initially supported him, the larger Central Committee took the unusual step of overruling the decision . . . Fellow party members have viewed Mr Phieu as ineffectual, because he has been reluctant to push the aggressive economic reforms urged by younger officials. He has also faced allegations that he ordered wiretaps of fellow Politiburo members . . . In addition to electing the party leader, the delegates to the four-day congress selected new members of the party’s Central Committee and a slimmed-down, fifteen-member Politburo. (IHT, 23 April 2001, p. 5) Vietnam’s Communist Party yesterday [22 April] named Nong Duc Manh . . . as party boss and retired elderly conservatives from positions as advisers . . . [This is] the first time a member of an ethnic minority has risen to such a powerful post . . . Mr Manh, sixty, told congress delegates that he would push Vietnam’s industrialization and modernization efforts forward. He also vowed to fight corruption . . . Mr Manh is rumoured in Vietnam to be the [illegitimate] son of Ho Chi Minh. (FT, 23 April 2001, p. 5) Vietnam entered a new era yesterday [22 April] with its first leader to have played no direct part in the Vietnam War . . . Nong Duc Manh . . . is also the country’s first leader to have a university degree and the first from an ethnic minority. His mother was a member of the Tay ethnic group, allied to the Dais in China and the Thais of Thailand . . . Mr Phieu was tainted by allegations that he abused the intelligence service to protect his position. Mr Phieu was not named as a member of the politburo. (The Times, 23 April 2001, p. 13) Le Kha Phieu, an army general, became a driving force behind the party’s two-year-old ‘criticism and self-criticism’ campaign . . . [He had a] taste for beefed-up intelligence forays . . . When the Central Committee met for a March plenum each member, for the first time, was handed dossiers detailing the personal ‘errors’ they and their colleagues had made, as reported by colleagues and neighbours . . . Manh has not yet expressed any strong views on economic reform . . . The congress failed to send any clear signals on economic policy. The party stuck to a broad platform that assigned a vague ‘leading role’ to the state sector, but also encouraged the growth of the private sector and foreign investment . . . Eighty-four people were retained for the new 150-member Central Committee. Prime minister Phan Van Khai and president Tran Duc Luong are also expected to stay on, preserving the troika’s traditional balance between northern, southern and central

Political developments 21 Vietnam. One big change, however, is that the Central Committee’s three senior advisers – Do Muoi, Le Duc Anh and Vo Van Kiet – have respectfully been put out to pasture by a Central Committee decision to no longer have advisers. (FEER, 3 May 2001, pp. 19–20) ‘The ninth congress abolished the politburo Standing Board and replaced it with a Secretariat . . . The former body was appointed by the politburo while the latter is elected by the Central Committee’ (Asian Survey, 2002, vol. XLII, no. 1, p. 83). Prior to the ninth congress the Vietnamese economy was described as a ‘multi-sector commodity economy operating under the market mechanism with state management along the socialist line’. The Political Report revised this rather convoluted expression into the shorter ‘socialist orientated market economy’ . . . Nong Duc Manh . . . has pushed for the implementation of the Politburo Directive . . . issued in June. This directive requires all state and party officials to disclose their assets including property. Party members will be held individually responsible for corruption, wasteful spending and bureaucratisation in agencies under their authority. (p. 85) 8 June 2001: Vietnam will not extend Russia’s lease on its sole military base in South-east Asia when it runs out in 2004, the foreign ministry said. Instead, Vietnam plans to develop the harbour of Cam Ranh Bay on the south-central coast for civilian purposes. (The Times, 9 June 2001, p. 14) ‘Officials said that it might be used as a commercial port’ (FEER, 21 June 2001, p. 15). 24 July 2001: Russia is to abandon its military base at Cam Ran Bay because it cannot afford it. Moscow has had free use of the base (once used by the Americans and Japanese) since 1979, but the lease expires in 2004, when Hanoi will start to charge rent. (The Times, 25 July 2001, p. 13) (‘Russia is to leave the Cam Ran Bay airbase and deep-water naval facility by May [2002]. Hanoi allowed its ally the former Soviet Union to use the base rent-free from 1979’: FT, 16 March 2002, p. 10.) 23–25 July 2001: US secretary of state Colin Powell visits Vietnam. (An Asean meeting took place 23–24 July and regional security talks were held on 25 July.)

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Political developments August 2001: In late August the central government drafted a pivotal decree granting greater autonomy to Ho Chi Minh City, following prime minister Phan Van Khai’s verbal agreement in principle. The new communist party chief, Nong Duc Manh, has also given his nod . . . But wrangling over critical details has delayed the issuing of the final decree and highlights Hanoi’s fears of helping the south’s rich get richer . . . Ho Chi Minh City, providing one-third of the nation’s budget, dwarfs the capital in economic importance . . . Out of Vietnam’s sixty-one cities and provinces only five generate excess capital for the state budget . . . Municipal leaders of the northern city of Haiphong and the central city of Danang . . . are also pressing for greater autonomy . . . Hanoi has promised these cities more leeway, but not as much as Ho Chi Minh City . . . Ho Chi Minh City and some southern provinces are already more flexible for business than Hanoi and the northern provinces . . . Today 74 per cent of all investment is concentrated in Ho Chi Minh City and the southern provinces of Dong Nai, Binh Duong and Ba RiaVung Tau . . . [At present] Ho Chi Minh City . . . like any other city and province . . . must run to Hanoi’s ministry of planning and investment for approval of any project on more than one hectare of land. That includes even a road over a kilometre long. Local officials must request approval for investment projects that top $10 million . . . Southerners also long to play a more active role in reforming state-owned enterprises, or SOEs, which answer only to Hanoi. What particularly rankles is such firms’ inefficient use of land, the price of which is set well below market rates by the central government. (Margot Cohen, FEER, 13 September 2001, pp. 26–9)

(’A prime-ministerial decree in December [2001] . . . allows Vietnam’s southern hub to generate some revenue independently’: FEER, 18 April 2002, p. 8.) September 2001: [The US] House of Representatives endorsed a historic trade deal with Vietnam . . . Senate approval is still needed . . . A separate bill, which ties future US aid too Vietnam to improvements in its human rights record, was also passed by the house. (FEER, 20 September 2001, p. 14) ‘Vietnam was quick to sympathize with Washington over the terrorist attacks on the USA in September [11 September], but condemned the air strikes on Kabul’ (Far Eastern Economic Review, Asia 2002 Yearbook, p. 215). ‘Vietnam responded to the 11 September terrorist attacks on the United States by offering sympathy, condemning terrorism, but warning against a counter-productive overreaction. Vietnam supports a resolution to the Afghanistan situation under the auspices of the UN’ (Asian Survey,

Political developments 23 2002, vol. XLII, no. 1, p. 88). ‘Vietnam, Burma and Laos [have] all signed international agreements on combating international terrorism’ (IHT, 7 September 2002, p. 2). 17 October 2001: ‘President Putin restated plans to end the Russian base [at] Cam Ranh Bay by 1 January 2002’ (IHT, 18 October 2001, p. 7). ‘Russia has a lease until 2004’ (FT, 18 October 2001, p. 15). March 2002: The [Communist Party] Central Committee . . . has decided that party members can engage in private business. Members of the ruling party have always been officially barred from engaging in private business, but many have retained positions in state firms that have been partially or fully privatised while others have run small businesses for years. (FEER, 14 March 2002, p. 12) Insiders say that the party has not yet reached consensus on the definition of ‘private capitalism’ – leaving party members in the dark over exactly what is permissible and what is forbidden . . . In a bid for clarity top communist theoreticians . . . will meet on 21 March to thrash out the limits of acceptable capitalist behaviour. (FEER, 28 March 2002, p. 8) ‘[The] Central Committee [has announced] that the bosses of restructured state-sector companies will be allowed to remain party members’ (IHT, 4 April 2002, p. 14). Vietnam and the United States have agreed to conduct joint research on the effects of Agent Orange, the defoliant widely used by the USA during the Vietnam War. The move follows the first-ever joint conference on Agent Orange, which began in Hanoi on 8 March. Researches will seek to assess the impact of the chemical’s wartime use on the long-term health of the Vietnamese population. (FEER, 21 March 2002, p. 13) This year [2002] high officials in Hanoi, angered by their own government’s yielding to Chinese pressures, anonymously leaked information about a series of secret agreements recently imposed on Vietnam by China. In 1999 Hanoi agreed to turn over some northern territory, to be annexed and settled by China. In 2000 Hanoi agreed to new territorial divisions in the waters off Vietnam – lines that gave China more, and Vietnam less, than before. None of this was truly voluntary. (Arthur Waldron, IHT, 4 May 2002, p. 6) July 2002: While Hanoi issued a decree last November [2001] aimed at facilitating housing sales to Vietnamese with foreign passports, there are

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Political developments remarkably few takers – only two homes in Ho Chi Minh City have been sold to overseas Vietnamese and none in Hanoi. One reason is that the decree does not explicitly provide an overseas Vietnamese buyer with the right to resell the house . . . Another factor is cumbersome paperwork. Eligible buyers, limited to one home apiece, must be certified by the state as falling into certain categories . . . The scarcity of bank loans has also frightened off potential buyers. (FEER, 18 July 2002, p. 10) In July two Central Committee members were expelled . . . A corruption probe [is] tainted with underworld scandal . . . The state-run media in recent months has chronicled the dismissal of a high ranking public security official, two prosecutors, dozens of policemen and a media star from the Voice of Vietnam, the state-run radio. They are all suspected of shielding Truong Van Cam, known as ‘Nam Cam’, a Ho Chi Minh City underworld boss accused of running gambling and protection rackets and ordering the murder of a rival gangster. Nam Cam was arrested last December [2001]. (FEER, 8 August 2002, p. 21) Prime minister Phan Van Kai . . . appears to have a better shot this time at slimming down the nation’s 5,650 state enterprises, a prerequisite to recapitalizing the overburdened state-owned banks. In August [2002] the government will begin to dole out more generous cash payments to workers who volunteer to leave their state jobs, as part of a new ‘social safety net’ programme . . . Thanks to a recent law 2,000 new companies are being launched each month. (FEER, 8 August 2002, p. 20) 14 August 2002: The funeral [takes place] of a former Vietnamese general who had called for radical reform of the Communist Party . . . General Tran Do published a manifesto four years ago denouncing party corruption . . . In the past [he said] party and people ‘were one’; now they were divided into ‘the elite group of rulers [and] the people’ . . . He is regarded as one of a small group of ‘party idealists’ who believe that the ideals of the Vietnamese revolution have been betrayed. No senior party officials attended the funeral, but a wreath from the famous war leader General Vo Nguyen Giap – who is also said to be disillusioned with Vietnamese politics – was displayed in the funeral hall in Hanoi. (Guardian, 15 August 2002, p. 12) Tran Do, a dissident in Vietnam, died on 9 August, aged seventy-eight . . . He had fought against the French, the colonial power, and then against the United States, rising to the rank of general. After Vietnam’s independence in 1976 he had been awarded with a top job,

Political developments 25 as head of the Communist Party’s culture department. In 1998 this seeming stalwart wrote a letter to the party politburo, with copies to ‘concerned citizens’, proposing that the party should give up its monopoly of power. The latter found its way to the outside world through the internet . . . He did not specifically demand a multi-party system and free elections, but he came close to doing so, calling for ‘a true democracy’ . . . Mr Do was expelled from the party he had belonged to for fifty-eight years . . . When Mr Do was expelled a number of military veterans resigned from the party in protest . . . Tran could have been jailed . . . But . . . Mr Do was a much decorated war hero who had fought alongside Ho Chi Minh . . . In March this year [2002] the American State Department estimated that Vietnam held 150 political prisoners. (The Economist, 15 August 2002, p. 73) 5 June 2003: Vietnam’s top organized crime boss was sentenced to death Thursday [5 June] . . . to showcase the government’s resolve in fighting corruption . . . [The] country is ranked as one of the most corrupt in the world . . . Truong Van Cam, known as Nam Cam, will face a firing squad after being convicted of murder, bribery and five other crimes in the country’s largest ever criminal trial. The case [had] a total of 155 defendants. (IHT, 6 June 2003, p. 10) ‘Two senior Communist Party officials accused of protecting and assisting him were jailed’ (FT, 6 June 2003, p. 12). The court imposed the death penalty on southern gang leader Truong Van Cam, known as Nam Cam, and five of his underworld cronies. Nam Cam was found guilty of murder, bribery and organized gambling, among other offences. Much attention was given to sixteen officials punished with prison terms, including two ousted members of the Communist Party’s powerful Central Committee. (FEER, 19 June 2003, p. 22) 9 October 2003: ‘US and Vietnamese airlines can fly directly to each other’s countries under the first major aviation agreement reached by the two nations. The five-year accord . . . lets two passenger carriers per country make a daily round-trip each, starting immediately’ (IHT, 11 October 2003, p. 2). 30 October 2003: A US Navy frigate will make a port call in Vietnam [in Ho Chi Minh City] next month [November], the first visit since the end of the Vietnam War in 1975 . . . The Vietnamese defence minister [Pham Van Tra] will make an historic visit to Washington next month as well

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Political developments . . . Military relations had been confined to the repatriation of the bodies of American soldiers . . . Vietnam accepted an observer role in . . . military exercises between the United States and Thailand . . . [A] US diplomat described the growth in trade relations as probably the fastest in the world . . . In December 2001 both countries ratified a bilateral trade agreement; in the first year Vietnam’s exports to the United States grew by 130 per cent . . . [But there was] a recent trade dispute between the two countries over catfish and shrimp, two of Vietnam’s most important exports. (IHT, 31 October 2003, p. 2) November 2003: The party is dispatching an array of promising bureaucrats to the provinces, aiming to groom a new generation of leaders instilled with the hands-on skills and the proven resistance to graft that is needed to manage Vietnam’s transition to an industrialized market economy . . . The party hopes that technocrats . . . gain grass-roots experience in tackling knotty issues such as land disputes, underemployment, politically favoured state enterprises and other bottlenecks to growth . . . Through the programme the party also seeks to counter allegations that it is mired in corruption and losing touch with the masses . . . The new system reverses the traditional political career path from province to capital, which tended to put local loyalties above the national interest . . . More than 70 per cent of Vietnamese rely on agriculture to make a living. (FEER, 13 November 2003, pp. 24, 26) 10 November 2003: Defence minister Pham Van Tra made a historic visit Monday [10 November] to Washington . . . [He] became the first Vietnamese defence minister to visit the Pentagon and the first to visit the State Department since the war ended in 1975. Tra’s Washington visit is to be followed by a port call by a US navy ship to Ho Chi Minh City later this month. (IHT, 11 November 2003, p. 3)

19 November 2003: A US navy frigate begins a four-day visit to Ho Chi Minh City. 4 December 2003: ‘The signing of an aviation agreement allows direct flight between the two countries [Vietnam and the United States]’ (FEER, 18 December 2003, p. 23). 31 December 2003: Dissident Nguyen Vu Binh received a seven-year jail sentence on 31 December after a Hanoi court found him guilty of espionage. International human rights advocates condemned the case as part of a

Political developments 27 continuing crackdown on Vietnamese writers who rely on the internet to criticise government policies, protest against corruption and push for political reform. Binh is known as an outspoken critic of a Vietnam–China border treaty and alleged human rights violation in Vietnam. The court ruled that Binh had gathered anti-government documents to share with groups hostile to Hanoi. (FEER, 8 January 2003, pp 10–11) June 2004: Notorious gangster Truong Van Cam was publicly executed for murder and bribery in Ho Chi Minh City, his territory. Four of his accomplices were also executed. In the country’s largest criminal case Truong was convicted last year [2003] of ordering the killing of an underworld rival and trying to bribe state officials. (FEER, 17 June 2004, p. 14) 10 December 2004: ‘An American passenger jet liner landed in Vietnam on Friday [10 December], the first since the Vietnam War ended . . . in 1975. Vietnam and the United States signed an aviation agreement [in 2003]’ (IHT, 11 December 2004, p. 4). 16 April 2005: Vu Ky, the long-time secretary and confidant of Ho Chi Minh, died at the age of eighty-four . . . In the late 1980s Ky told foreign reporters that Ho Chi Minh had actually died on 2 September 1969, but the communist leadership had declared his death one day later to keep from spoiling National Day celebrations . . . [It is claimed by William Duiker that] Ky disclosed that Vietnamese leaders had deviated from Ho Chi Minh’s will by disregarding his wishes for a simple funeral. Instead, a massive mausoleum was built to hold the leader’s embalmed remains. (http://www.iht.com, 18 April 2005) 28 April 2005: Vietnam’s legendary general, Vo Nguyen Giap . . . [meets] Raul Castro, younger brother and designated successor of President Fidel Castro [of Cuba] . . . Giap was Vietnam’s military mastermind who used his guerrilla warfare to defeat the French and then later the Americans . . . [He was the man behind the defeat of the French at Dien Bien Phu in 1954 and the surprise Tet offensive against the Americans in 1968 . . . He remains the most revered figure in Vietnam after the late Ho Chi Minh. (http://www.iht.com, 28 April 2005) 30 April 2005: The thirtieth anniversary of the fall of Saigon [is celebrated] . . . Little trace remains of any hostility towards America . . . It went to war

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Political developments (in 1979) with China, a perennial enemy over the last millennium, and the authorities still seem more suspicious of their northern neighbours and fellow communists than of anyone else. America and Vietnam restored diplomatic ties in 1995 and signed a trade pack in 2000. America is now Vietnam’s largest export market. Disputes between the two countries hinge more on tariffs and market access than on war crimes or missing soldiers. Last year [2004] United Airlines resumed flights to Ho Chi Minh City . . . Ho Chi Minh City alone accounts for 17 per cent of national output, 30 per cent of foreign investment and 40 per cent of exports – far in excess of its 9 per cent share . . . Last year a group of Vietnamese and foreign academics analysing the differences in investment and growth rates between north and south came to the conclusion that the attitude of local bureaucrats explained the disparities better than any other factor. (The Economist, 30 April 2005, pp. 59–60)

‘Despite widespread opposition to the war in Iraq, most people express affection for the United States’ (Jonathan Watts, Guardian, 30 April 2005, p. 3). The government always takes pains to make sure senior offices are divided equally between north, south and centre. That is why the current prime minister comes from the south, while the head of the Communist Party is from the north, and the president is from the centre. (The Economist, 30 April 2005, p. 60) 5 May 2005: ‘Prime minister Phan Van Khai announced Thursday [5 May] that he planned to visit Washington in June, the first Vietnamese leader to do so since the Vietnam War ended’ (IHT, 6 May 2005, p. 5). ‘Khai’s visit to the United States, from 19–25 June, is the first by a Vietnamese prime minister since the Vietnam War ended . . . He is scheduled to meet with President Bush on Tuesday [21 June]’ (http://www.iht.com, 17 June 2005). President Bush . . . [said] that he supports Hanoi’s effort to join the WTO and that he would visit the country [Vietnam] in 2006 . . . The two leaders signed an agreement that Bush said would make it easier for people to worship freely in Vietnam . . . [Prime minister] Khai is meeting with business leaders . . . Khai: ‘We have a population of 80 million people, which means a huge market for American businesses’ . . . [Vietnam] . . . The United States has become Vietnam’s top trading partner. Last year [2004] bilateral trade was put at $6.4 billion . . . [There are] plans for US training of Vietnamese officers . . . [Vietnam is to] purchase four [Boeing] 787 airliners for Vietnam Airlines . . . [Vietnam and Microsoft] announced they had signed accords to train and develop more Vietnamese technology companies and to offer computer and software training to more than 50,000 teachers. (IHT, 22 June 2005, p. 7)

Political developments 29 ‘On Tuesday Bush spoke about a “landmark agreement” he signed in May in which Vietnam pledged to stop forcing people to renounce their faith, and to adopt straightforward and transparent regulations on registering new churches’ (http://www.iht.com, 22 June 2005). ‘Bush took note of an agreement signed in May committing Vietnam to end the detention of religious leaders and allow churches to open’ (IHT, 29 June 2005, p. 2). ‘[US–Vietnam] trade rose from $451 million in 1995 to $6.4 billion in 2004’ (The Economist, 25 June 2005, p. 60). Phan Van Khai rang the opening bell at the New York stock exchange . . . The Communist Party toyed cautiously with political reform in the early 1990s, when it allowed members to discuss the demise of communist ideology and the possibility that the Communist Party would eventually convert itself into a nationalist and ‘soft authoritarian’ ruling party. Party leaders, unnerved by the 1997–8 Asian financial crisis and unrest in central Vietnam, put a stop to the debate a few years ago. Now reform is back on the agenda for next year’s Tenth Party Congress. The government is not unpopular, but – as in China – rampant corruption and disputes over land provoke sporadic protests. Communist leaders speak of enhancing local democracy, building an ‘open society’ and giving more authority to the National Assembly, whose members can already question ministers in televised debates . . . [But] Vietnam still jails its dissidents, and controls the media. The National Assembly meets only twice a year and remains under the thumb of the party. (Victor Mallet, FT, 16 August 2005, p. 15) 1 November 2005: China has agreed to lend Vietnam more than $1 billion for a series of projects . . . that will help link the two countries more closely together . . . The deal was signed during the first visit to Vietnam by Hu Jintao, the Chinese president. (FT, 2 November 2005, p. 10) Hu Jintao . . . brought not just $1 billion in aid but also an agreement to hold joint military exercises. It marked a remarkable turnaround for neighbours that fought a bitter war in 1979, as well as multiple armed skirmishes in its aftermath. China and Vietnam are striking out the formal lines of a land border and discussing ways, with the Philippines, to manage their various maritime demarcations, along with the oil and gas that might lie within them. (FT, 9 December 2005, p. 17) 28 November 2005: Vietnam’s legislature yesterday [28 November] adopted a longawaited anti-corruption law that requires officials and their close

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Political developments relatives to declare their assets . . . The National Assembly adopted rules requiring officials to disclose their assets several years ago . . . But . . . at the time legislators rejected the proposal that officials’ relatives also be asked to disclose their assets . . . Even as the authorities express concern about corruption, they are adopting new laws that will increase the government’s discretionary authority to license and register businesses and projects, widening opportunities for graft . . . Earlier this year [2005] Hong Kong-based Political and Economic Risk Consultancy rated Vietnam the third most corrupt country in Asia, behind Indonesia and the Philippines. (FT, 29 November 2005, p. 8)

The Vietnam War: the human toll ‘The first deployment of American combat forces in Vietnam was made here [Danang] on the beach on 8 March 1965’ (IHT, 30 April 2005, p. 6). ‘At the peak of US involvement in 1969 there were half a million American troops in Vietnam’ (Guardian, 30 April 2005, p. 3). ‘American ground troops reached a high of more than 500,000. At the beginning of 1964 there were 15,000 American military advisers in South Vietnam’ (IHT, 20 July 2005, p. 4). On 3 April 1995 the government released, for the first time, figures on the Vietnam War. In the period 1954–75 the communist forces (North Vietnamese and Viet Cong soldiers) suffered over 1.1 million dead, 600,000 wounded and 300,000 listed as missing. Previous Western estimates had put the communist death toll at 666,000. Government statistics also showed that nearly 2 million Vietnamese civilians were killed and another 2 million injured. In addition, the government said that about 50,000 children were born deformed because of the use of Agent Orange by US forces. According to the United States, 58,153 Americans were killed in Vietnam and 300,000 were wounded from 1965 to 1975. The number of South Vietnam soldiers killed was 223,748 and the number wounded was 500,000. More than 5,200 South Koreans, Australians (424), New Zealanders and Thai soldiers also died. The number of American soldiers listed as missing in Indochina is put at 2,211, including 1,651 in Vietnam (IHT, 5 April 1995, p. 4; Daily Telegraph, 4 April 1995, p. 13). The number of Americans killed was 58,219 (The Times, 1 May 2000, p. 15). ‘Some 58,000 US soldiers and about 3 million Vietnamese troops and civilians were killed’ (IHT, 14 March 2000, p. 4). The conflict eventually claimed 58,193 American lives. But North Vietnam lost more than 1.1. million soldiers and 2 million civilians – in addition to 2 million civilians lost in the south . . . An estimated 300,000 tonnes of unexploded ordnance [was] left over from the war.

Political developments 31 That ordinance, throughout Vietnam, is reported to have killed as many as 35,000 people since the war ended – one-third of them children. (IHT, 30 April 2005, p. 2) By the war’s end 58,183 [US troops] had died – double the body count in the Korean War – at a cost of $165 billion. Vietnamese losses were far greater – more than 1.3 million fallen soldiers, most of them communist, and 4 million civilians killed or wounded . . . The 300,000 tonnes of ordnance that the United States rained down on Vietnam . . . [amounted to] more than all the bombs dropped in the Second World War. (Guardian, 30 April 2005, p. 3) ‘[In the Vietnam War] 58,226 Americans . . . died’ (http://www.int.com, 31 October 2005). ‘The biggest outstanding issue between the United States and Vietnam is the effect of Agent Orange, according to Vietnamese veterans who blame the defoliant for deformities in hundreds of thousands of children born after the war’ (Guardian, 30 April 2005, p. 3).

Vietnam’s armed forces ‘The army (whose regular forces totalled 1.2 million in the 1980s, complemented by 3.5 million reservists, and whose number is now down to 600,000 regulars) has set up more than 300 commercial enterprises (employing 66,400 full-time workers, mostly soldiers)’ (IHT, 18 October 1993, p. 7). Vietnam’s armed forces now number 572,000 (FEER, 13 April 1995, p. 26). ‘The state telecommunications monopoly is to be ended, with the military being allowed to set up a rival telephone company (FT, 6 July 1995, p. 5). Vietnam has only half the estimated 1.2 million troops it fielded less than a decade ago. According to one Western diplomat in Hanoi, Vietnam now has an army of about 550,000 soldiers, a navy of 40,000, an air force of 15,000 and a paramilitary force of 15,000. The army is shifting its targets from foreign invaders to internal security threats and its energies from the battlefield to the market place . . . Vietnam’s military has quickly seized new opportunities and now owns 300 major state enterprises. (Seth Mydans, IHT, 24 July 1996, p. 17) ‘The military is estimated at 500,000’ (FEER, 31 January 2002, p. 61).

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Political developments

Communist Party membership In 1996 Communist Party membership was 2.2 million (FT, 29 June 1996, p. 3). ‘In a nation of 76 million the party accounts for 2.4 million members. Less than 12 per cent are below the age of thirty; more than 41 per cent are over fifty . . . Over half of Vietnam’s population [is] below twenty-five’ (FEER, 24 August 2000, p. 26).

The boat people The start of 1996 found camps in Hong Kong, Indonesia, the Philippines and Japan housing a total of around 37,000 refugees. Around 19,000 Vietnamese returned home by choice in 1993 and more than 12,000 did so in 1994. But in 1995 the figure was less than 6,000. The US plan offers the chance of being allowed to settle in the USA after a screening process in Vietnam. (Adam Schwarz, FEER, 11 January 1996, p. 19) At the end of a two-day session (held 12–13 January 1996) of the International Conference on Indo-Chinese Refugees, it was agreed that the Vietnamese should generally be repatriated within six months (longer in the case of Hong Kong). The United Nations High Commissioner for Refugees stated that it would end its assistance to the camps (excluding Hong Kong) by 1 July 1996. (IHT, 16 January 1996, p. 4) On 6 March 1996 the UNHCR confirmed its programme for more than 16,500 asylum-seekers in South East Asia will end on 30 June 1996. (China has said that it does not want any of the 20,000 left in Hong Kong by the time it takes over on 1 July 1997.) The UNHCR said that there was to be no resettlement and no screening, but US officials announced their intention to expand an existing programme for the resettlement of returnees ‘who may be of special humanitarian interest’ to the United States. More than 77,000 non-refugees have already returned voluntarily to Vietnam. Another 74,000 recognised refugees who fled Vietnam and Laos have been settled in third countries, while over 500,000 people have left Vietnam legally under orderly departure programmes. (FT, 7 March 1996, p. 6) On 10 May 1996 there was a mass breakout from one of the detention camps in Hong Kong, the third and worst in less than a year (The Times, 11 May 1996, p. 14). On 15 May 1996 the United States and Vietnam agreed on a scheme whereby those who were in the south-east Asian camps by 1 October

Political developments 33 1995 and who returned to Vietnam would be eligible for a final appeal for asylum in the USA. More than 1 million refugees have been resettled and about 33,000 remain in the camps (about 18,000 in Hong Kong). (IHT, 16 May 1996, p. 4) (The refugees were told to sign up for the voluntary repatriation scheme by 30 June 1996 or else lose the ability to apply for asylum in the USA. By the deadline only a quarter of the camp population had signed up. ‘Not only were the refugees not given enough time or information to make a decision, but many important aspects of the programme itself remain unclear’: IHT, 29 June 1996, p. 6.) ‘On 27 June 1996 Singapore became the first country in South-East Asia to send back the last of its refugees. Some 24,000 refugees remain in the region, 15,000 of them in Hong Kong’ (IHT, 28 June 1996, p. 4). (Note that on 11 January 1995 Vietnam and Germany agreed to repatriate around 40,000 Vietnamese by the year 2000 in return for export credits and development aid. ‘Some 60,000 Vietnamese are unaffected, because of their acceptance as political refugees or immigrants. There are some 95,000 Vietnamese living in Germany, of whom only 55,000 are legal residents. Of the remainder, 10,000 tried to enter Germany illegally after reunification, another 10,000 are guest workers from the former GDR and 20,000 are asylum-seekers whose requests for refugee status have been rejected’: FEER, 9 February 1995, p. 28. The agreement was formally signed on 21 July 1995. ‘Under the terms of the 1995 agreement Vietnam was supposed to take back all 40,000 by the year 2000 in return for $140 in German aid. Some 2,500 were to be sent back to Vietnam in 1995 and 5,000 in 1996, but so far only eighty-nine have been returned. On 18 June 1996 Vietnam announced that it was ready to take back 2,073 living illegally in Germany’: IHT, 19 June 1996, p. 4). Twenty-five years after it began, the Hong Kong government is writing the last chapter in the saga of the more than 200,000 Vietnamese who have passed through the territory. On 30 May [2000] it will close the last refugee camp . . . It has offered 1,400 remaining Vietnamese – some classed as refugees, others as ‘stateless persons’ – the chance to stay in Hong Kong permanently by giving them an ID card . . . Multitudes passed through the territory in the late 1980s and early 1990s: 167,000 were resettled elsewhere, mostly in the United States, and another 56,000 were returned to Vietnam. (FEER, 11 May 2000, p. 63) ‘The 2 million Vietnamese living abroad send their relatives in Vietnam $600 million to $700 million each year’ (Vietnam Report, 1995, issue 3, p. 3). Of the 2 million Vietnamese who live abroad, about half are in the United States. According to official figures, overseas Vietnamese

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Political developments account for only fifty-eight investment projects in Vietnam (worth a total of less than $100 million) and send their relatives in Vietnam $600 to $700 million a year. (IHT, 5 August 1996, p. 4)

‘More than 2 million Vietnamese now live overseas. Remittances last year [1999] were estimated at $3 billion’ (IHT, 28 April 2000, p. 4). ‘Some 1.2 million people of Vietnamese descent live in the United States’ (FEER, Asia 2000 Yearbook, p. 213). [Of] nearly 2 million people more than half . . . have settled in the United States . . . [Some] 26,000 Vietnamese a year now emigrate to the United States . . . An estimated $2 billion a year [is] sent back to family members from the 2 million or so ethnic Vietnamese who now live in the United States . . . When the camps around Asia closed down in 1996 more than 100,000 people who had failed to gain asylum were obliged – sometimes forcibly – to return to Vietnam. As part of the deal the United States promised to interview these returnees one more time . . . Over the years the United States accepted close to 1 million people from Vietnam. (IHT, 8 November 2000, p. 2) ‘Vietnamese living abroad send back what by some estimates amount to $1 billion every year’ (IHT, 28 December 2000, p. 16). ‘In America, Europe and Australia [there is] a diaspora of over 3 million Vietnamese’ (The Economist, 11 November 2000, p. 31). Vietnamese living and working overseas have sent back to relatives an estimated $2.4 billion in 2002, a 14 per cent increase over last year [2001], the government says. An estimated 100,000 people work overseas in construction or as domestic helpers in South Korea, Japan, Taiwan, Malaysia and Russia. There are also about 2.5 million Vietnamese living permanently overseas . . . who often send money. (FEER, 26 December 2002, p. 11) The 2.7 million-strong overseas Vietnamese community [1.5 million in the United States] plays an increasingly vital role in the local economy. Remittances from relatives abroad reached $2.06 billion for 2002, up 17 per cent over the previous year. And that is only counting the funds that flowed through official channels such as banks and licensed agents. Estimates of undeclared funds vary widely, raising the total to anywhere from $2.5 billion to $4 billion, or the equivalent of 11 per cent of GDP . . . [By way of comparison in 2002] $2.34 billion of foreign direct investment [was] disbursed . . . [and] $1.45 billion [was] repatriated by the 370,000 Vietnamese workers sent to work abroad . . . [The government estimates] that more than half the money [remit-

Political developments 35 tances] is sent from the United States . . . [It is estimated] that some 70 per cent of remittances flow down south . . . For locals collecting the tax-free remittances in dollars or dong has never been easier. (FEER, 16 January 2003, p. 48) ‘Viet Kieu [overseas Vietnamese] remittances [amount to] about $3 billion a year’ (FEER, 15 May 2003, p. 48). ‘The United States has 1.3 million ethnic Vietnamese residents, about one-third of whom live in California’ (http://www.iht.com, 11 October 2003). [In 2004] overseas Vietnamese [Viet Kieu] officially repatriated $3.8 billion to Vietnam . . . [compared with] $3.1 billion in 2003 and $1.6 billion in 2000 . . . The money is sent back by the estimated 2.7 million Viet Kieu spread across about ninety countries . . . In the 1980s official remittances were just a small trickle, counted in the thousands of dollars . . . No one quite knows how much comes in as what is known as ‘hot transfers’ – hand-delivered bundles of cash arranged through a network of underground banks. (http://www.iht.com, 17 March 2005)

Ethnic minorities ‘There are fifty-four ethnic groups, but the Kinh account for 84 per cent of the population’ (Vietnam Courier, 1990, no. 12, p. 13). Soldiers, riot police and military helicopters patrolled two coffeegrowing provinces in Vietnam’s central highlands Thursday [8 February 2001] after a wave of sometimes violent protests by ethnic hill farmers over religion and land. The foreign ministry said authorities in Gia Lai Province arrested twenty people Tuesday [6 February] . . . Diplomats described the incidents as the worst Vietnam has had in years. (IHT, 9 February 2001, p. 7) Widespread protests in the central highlands of Vietnam this month were triggered by the arrest and torture of two Christian activists working for the rights of ethnic minorities, a US-based group alleged Friday [9 February] . . . [The group] said the protests began when two of its workers were arrested, severely beaten and imprisoned in a military camp. But the government, in a report Friday [9 February] by the official Vietnam News Agency, said the dispute erupted over longstanding land grievances after two ‘local provocateurs’ were arrested . . . The unrest . . . began on 2 February and ended three days later . . . The unrest appeared to die down 5 February, after soldiers and riot police were dispatched to the area. (IHT, 10 February 2001, p. 4)

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Political developments Troops, helicopters and riot police were deployed to stamp out ten days of protests by members of ethnic minority groups . . . A variety of ethnic groups who lay ancestral claim to the land were involved. The problems have been exacerbated by corruption among local officials. (Daily Telegraph, 9 February 2001, p. 22) Vietnam has closed two coffee-growing provinces in the central highlands to foreign visitors and strengthened its military presence there after thousands of angry minority ethnic demonstrators attacked government offices, blocked roads and clashed with soldiers in the worst civil unrest in years . . . Both soldiers and civilians were injured in the violence earlier this week . . . Vietnam’s central highlands have been transformed over the past decade by an influx of migrants from the densely populated coastal plains and the rapid expansion of coffee cultivation over huge tracts of previously virgin jungle . . . Most coffee farmers are migrants from the lowlands, encouraged by the government to resettle and grow coffee . . . Grievances over land encroachment have been exacerbated by mounting religious tensions. According to the US state department’s annual report on religious freedom, an increasing number of minority people in the central highlands have been converted to Protestantism. (FT, Friday 9 February 2001, p. 9) Troops, riot police and helicopters were deployed in Vietnam’s central highlands and arrested at least fifteen people following a wave of unrest by disgruntled hill tribes. Local officials alleged the suspects were former members of Fulro, a guerrilla group of mountain folk who fought with United States forces in the Vietnam War. The crackdown follows at times violent protests in Dac Lac and Gia Lai provinces by ethnic minorities, who want autonomy and are angry that their forests are being cut down to make way for coffee plantations, and at repression of fringe Protestant churches. Some reports say the protests were triggered by the arrest and beating of two Christians, whom the official media described as ‘provocateurs’. Another version says the unrest came when the ethnic minorities decided to hold a peaceful protest to air their grievances. Foreigners have been barred from the area. (FEER, 22 February 2001, p. 14) Thousands of Ede, Giarai and other ethnic-minority protesters took to the streets on 2–6 February. The demonstrators were fed up with northern migrants – from both the Kinh majority and other ethnic minorities – encroaching on their land and culture, some sources in the provinces and Hanoi say. By some accounts the protesters asked for political autonomy, freedom to practise their Protestant faith and the return of ancestral lands confiscated for coffee plantations . . .

Political developments 37 Communist Party leaders fume that some of those arrested were, according to foreign media reports quoting local officials, former leaders of the United Front for the Liberation of Oppressed Races, or Fulro, a hill-tribe guerrilla group that supported the Americans during the Vietnam War . . . [There were] a series of protests in Thai Binh province in 1997. In that case several thousand farmers from the Kinh group took to the streets to rail against embezzlement and other misconduct by local officials. (FEER, 1 March 2001, p. 25) Hanoi is continuing a crackdown on leaders of the Montagnard minorities who staged mass demonstrations in central Vietnam in February . . . [Prison sentences have been handed down] . . . The protests are said to have called for religious freedom, an end to the encroachment on their traditional land and the establishment of an autonomous zone. (FEER, 22 November 2001, p. 10) Fifteen men who fled Vietnam’s troubled Central Highlands to neighbouring Cambodia returned to Vietnam yesterday [19 February 2002] under the auspices of a United Nations repatriation programme that has drawn fire from human rights groups. The return of the fifteen . . . marks the delayed and scaled-down launch of the programme, which briefly stalled after Washington and human rights groups expressed fears about the well-being of potential returnees. More than 1,000 people from Vietnam’s disadvantaged ethnic minority groups have fled to neighbouring Cambodia from the coffee-growing Central Highlands since unprecedented protests over land rights and religious freedom rocked the region a year ago. Human rights groups say those now sheltering in Cambodia – mostly Protestant Christians – have fled harassment by communist authorities, who see the minorities’ activities as a cover for separatist political activities, fomented by US-based exile groups. (FT, 20 February 2002, p. 13) The past year [has seen] the flight from the highlands to Cambodia of more than 1,500 mainly Protestant ethnic minorities bearing tales of harsh repression . . . [There are] 1,000 people now sheltering in UNsupervised camps in Cambodia . . . The exodus of indigenous minorities – who are also known as Montagnards (hill people), but also sometimes call themselves Dega people – began last year [2001] after thousands joined unprecedented protests calling for religious freedom and land rights in the Central Highlands, which has had an influx of hundreds of thousands of ethnic Vietnamese settlers . . . The Protestants [are] converts dating back to the American presence from the 1960s . . . The Montagnards are considered suspect because of their

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Political developments wartime allegiance to the US military. Communists officials regard socalled Dega Protestantism . . . as a cover for separatism . . . With Hanoi demanding that the asylum seekers be returned to Vietnam by 30 April, the refugees’ future has also become a source of rising tension between Hanoi and . . . the US government . . . Hanoi . . . was also infuriated that thirty-eight of the first refugees to arrive in Cambodia were resettled in the USA . . . In January the Vietnamese government reached a deal with Cambodia, a close ally, and the United Nations High Commissioner for Refugees for a UN-supervised repatriation programme. But the programme was suspended after Cambodia and Vietnam said they had set a deadline for repatriations, which the UN said undermined the ‘voluntariness’ of the returns. (FT, 12 March 2002, p. 10) The United States is upset at reports that Cambodian police last month [February] used electric batons to break up a protest by Montagnard refugees during a visit by Vietnamese officials. The refugees were unhappy at the prospect of forced repatriation to Vietnam . . . US officials insist that any repatriation of refugees must be voluntary and that refugees should be given the option of third-country resettlement. More than 1,000 minority people fled to Cambodia after a crackdown on unrest in the central highlands early last year [2001]. The United States angered Vietnam by granting asylum to an initial group of more than thirty people. (FEER, 14 March 2002, p. 10)

‘Cambodia yesterday [31 March 2002] gave the United States the go-ahead to resettle more than 900 refugees, saying Hanoi had agreed to the move’ (FT, 1 April 2002, p. 6). ‘[In March] Cambodia [decided] to turn away all further Vietnamese asylum seekers’ (IHT, 24 April 2002, p. 5). Former refugees from the troubled central highlands have continued to face land ownership problems since returning to their homes months ago on their own or under the auspices of the United Nations . . . Montagnards who had returned late last year [2001] and early this year . . . continue to have their land confiscated with little or no compensation, according to US officials. Others are given poor land in forced exchanges . . . Nearly 1,000 refugees who fled to Cambodia refused to return to Vietnam and are now in the process of being resettled in the United States. (FEER, 18 July 2002, p. 12) ‘Vietnam confirmed Monday [12 April 2004] that there had been unrest in two Central Highlands provinces at the weekend, breaking the silence over a protest that echoed widespread ethnic uprisings three years ago’ (IHT, 13 April 2004, p. 8).

Political developments 39 [On 10 April] . . . Vietnamese authorities sealed off the Central Highlands following protests by hundreds of Montagnard Christians during which scores were arrested and injured. The Montagnards were reportedly protesting against alleged religious persecution and confiscation of their lands by the government. (FEER, 22 April 2004, p. 8) Vietnam is not the only party blaming an anti-communist United States-based group for instigating recent violent clashes in the country’s Central Highlands between police and ethnic minorities known as Montagnards. Some of the Montagnards themselves charge that Kok K’sor, leader of the Montagnard Foundation, recruited leaders of their community to organize protests in two highlands towns on 10 and 11 April . . . Representatives of the Montagnard Foundation admit that they supported the demonstrators, but deny that they organized the protests . . . Human Rights Watch of New York reported that one protestor was shot dead and nine others were beaten to death during the demonstrations against religious persecution and confiscation of their land by the government. (FEER, 13 May 2004, p. 8) On 10–11 April thousands of hill tribespeople in the Central Highlands took up banners and marched to demand that the government return their ancestral lands and allow them to worship in freedom. More than 1,000 of the predominantly Protestant Montagnards had trekked over the Cambodian frontier when they first protested in 2001. As those bedraggled, sick and hungry asylum seekers had emerged from their forest hiding places under United Nations protection, they told of massive Vietnamese police and military repression following the demonstrations. They claimed that their Christian faith and their combat allegiance to the United States during the Vietnam War, which ended in 1975, had left them despised by the authorities in Hanoi. And the spread of coffee and rubber plantations had them bereft of the forests where they once tended jungle farms, they said . . . [Cambodia] allowed almost 1,000 Montagnards to resettle in the United States after the 2001 protests and the subsequent influx. (http://www.iht.15 July 2004) Just 300 legal churches service Vietnam’s 2 million Protestants . . . Two-thirds of Vietnam’s Protestants are ethnic minorities and many live in remote areas . . . Evangelical Protestantism has exploded and is practised in thousands of illegal ‘house churches’. This is anathema to the communist government who apply strict regulations to ‘approved’ religion . . . Last Easter [2004] thousands of ethnic minority tribespeople took part in demonstrations in the Central Highlands. They were protesting against the confiscation of ancestral lands and religious

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Political developments repression. The marches, attended by around 30,000, according to Human Rights Watch, were brutally quashed by the military. Most of the Montagnards – the collective French name for the Highlanders – are Protestants . . . The US-based Montagnard Foundation claimed that 400 Christians were killed . . . The Vietnamese government put the death toll at two and called the Montagnard Foundation a terrorist organization . . . The ‘Yardies’ of the central Highlands fought alongside Americans during the war. (Independent, 15 October 2004, p. 32)

‘Vietnam said Thursday [22 July 2004] that it was willing to accept the third-country resettlement of Montagnard refugees who went to Cambodia after Hanoi’s crackdown on them in Vietnam’s Central Highlands’ (IHT, 23 July 2004, p. 5). Human Rights Watch accused Vietnam on Monday [10 January 2005] of carrying out mass arrests, persecution and torture of ethnic minority Christians in the troubled Central Highlands . . . [The organization says there have been] ‘alarming new reports of mass arrests, torture and increasing persecution’ . . . The organization also criticised Cambodia’s decision on 1 January to reinforce its north-eastern border with Vietnam in a bid to halt the flow of ethnic minority or Montagnard asylum seekers . . . More than 1,000 Montagnards fled the Central Highlands to Cambodia after security forces put down protests in February 2001 calling for religious freedom and return of ancestral lands. In April last year [2004] thousands of Montagnards again took to the streets across the impoverished region in Easter protests, triggering a brutal crackdown, according to human rights groups, and another mass exodus to Cambodia. During high profile tours to the Central Highlands in December [200] top Vietnamese officials pledged to respect freedom and called on local officials to encourage ‘peaceful and happy’ Christmas celebrations. However, Human Rights Watch said that in the weeks leading up to Christmas, police had rounded up and arrested dozens of Montagnard Christians. (http://www.iht.com, 10 January 2005) ‘Ethnic minorities, 10 per cent of Vietnam’s population, now all speak Vietnamese, even mostly dress like Vietnamese, who nowadays outnumber them in the Highlands’ (IHT, 28 February 2005, p. 8).

Religion ‘The government has authorized a Protestant general assembly to take place in Ho Chi Minh City from 7–9 February [2001]. It would mark the first church-wide meeting of Protestants in southern Vietnam since the communist victory in 1975’ (FEER, 8 February 2001, p. 12).

Political developments 41 The Federation of the Evangelical Church of Vietnam elected a board and adopted a new charter during a landmark two-day meeting in Ho Chi Minh City. The group represents several hundred churches in southern Vietnam which have been striving for official recognition for years and the meeting is seen as a step towards winning this. (FEER, 22 February 2001, p. 14) ‘The Protestant Church of Southern Vietnam was officially recognized in April 2001 after nearly three decades in limbo’ (FEER, 13 February 2003, p. 8). In September [2001] . . . the leader of the Buddhist Youth Movement in central Vietnam, burned himself to death to protest against restrictions on his group . . . In October Vietnam sentenced a dissident Catholic priest to fifteen years in prison on charges that he undermined national unity . . . A prominent Buddhist monk has remained under house arrest since 1992. Other religious groups have also faced harassment. (Far Eastern Economic Review, Asia 2002 Yearbook, p. 215) ‘The Vatican has agreed to appoint bishops in consultation with government authorities’ (IHT, 26 October 2001, p. 4). [In negotiations over diplomatic recognition] the Chinese seemed to accept the Vatican’s right to nominate bishops . . . They would [then] be appointed by the Chinese government . . . A similar system operates in Vietnam, which also tightly controls religious practice. But there have been standoffs between the Vatican and Vietnam’s government, which has sometimes stalled in seating the papal nominees. Because of such a dispute the diocese of Thanh Ho was without a bishop from 2002 to 2004. (IHT, 17 May 2005, p. 8) (See the section above on ethnic minorities.)

Demography Some basic demographic details are to be found in Vietnam Courier (1990, no. 10, pp. 10–11). The April 1989 census put the population at 64,411,668, compared with 22,155,000 in 1943. The birth rate in 1989 was 31.3 per thousand, while life expectancy two years earlier was sixty-two for males and sixty-seven for females. Between October 1979 and April 1989 the average annual population growth rate was 2.13 per cent. ‘In early 1991 the population reached approximately 67 million; in 1988 the death rate was seven to eight per thousand, while a population control programme has been vigorously pursued since the early 1960s’ (Vietnam Courier, 1991, no. 22, p. 10).

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The EIU (Country Profile, 1987–8, pp. 9–10) provides the following demographic details: crude birth rate, forty-seven per thousand in 1960 and thirty-five per thousand in 1984; crude death rate, twenty-one and eight, respectively; infant mortality, 157 and fifty, respectively. There were 1.5 million to 2 million deaths from military action, 1960–80. There were 750,000 emigrants after 1975. Life expectancy was forty-three years in 1960 and sixty-five in 1984. Some 85 per cent of the population are literate. ‘The population growth target of 1.7 per cent a year on average for the periods 1981–5 and 1986–2000 was not attained’ (Nguyen Tuong Lai and Nguyen Thanh Bang 1991: 87). In October 1988 a tougher population control policy was announced (the previous one based on taxes and economic incentives was ineffective). Normally, a family with more than two children will be penalized by having to contribute towards education and medical care, do extra community work, accept a lower priority on housing waiting lists or building land allocation, and pay a higher rent for more living space. More than three children entails the inability to move into cities. Free contraceptives and abortion will be available and a ‘commendation and award scheme’ will encourage vasectomy and sterilization. Ethnic minorities in the northern mountains and central highlands are permitted three children. (Murray Hiebert, FEER, 8 December 1988, p. 32) ‘The literacy rate today is a high 88 per cent, compared with only 5 per cent in 1945’ (The Economist, 28 March 1992, p. 73). In October 1992 it was announced that the population was 70.7 million (IHT, 28 October 1992, p. 2). ‘The population is 77 million’ (FEER, 7 December 2000, p. 36). ‘The population is close to 80 million’ (FEER: Asia 2002 Yearbook, p. 215). Prime minister Phan Van Khai: ‘We have a population of 80 million people’ (IHT, 22 June 2005, p. 7). ‘[Vietnam has a population] of 82 million people’ (http://www.iht.com, 3 October 2005). At almost 230 people per square kilometre (600 per square mile) Vietnam has twice the population density of China . . . In May 2003 the government passed an ordinance on population that supposedly brought the country in line with a declaration issued by a UN-backed conference on population and development held in Cairo in 1994 and signed by 179 nations, including Vietnam. This states, among other things, that people have the ‘basic right’ to decide when to have children and how many to have . . . For years [Vietnam] has presided over a population policy in which choice was officially allowed – but not encouraged . . . In the past families may not have been officially punished, but state employees (of whom there are many) tended suddenly to find promotions and bonuses hard to come by . . . [There has been

Political developments 43 a] sudden spike in three-children families . . . Official fear the country may exceed its target of 88 million inhabitants in 2010 and of 120 million by the middle of the century. With the population already shooting above 82 million that seems increasingly unlikely . . . [Blame is put on] the desire of couples to produce a male heir for undermining the government policy . . . A few weeks ago . . . the politburo . . . announced that carrying out the two-child policy was the obligation of every citizen and called for the ordinance on population not to mention ‘other inappropriate policies’ to be revised. (The Economist, 14 May 2005, pp. 63–4) ‘Half the population . . . is under thirty years old’ (FT, 15 July 2005, p. 9). The proportion of boys to girls is already above average, and seems to be rising quickly. In the first half of this year [2005] for every 100 girls there were almost 111 boys. (The normal ratio is around 105.) In some parts of the country the difference is even more pronounced: in An Giang province, in the Mekong river delta, for example, there were 128 boys for every girl . . . The 1999 census reported an overall ration of 107, ranging as high as 113 in the Mekong delta. Most couples want at least one boy, since Vietnamese tradition dictates that boys look after parents in their dotage, while girls are considered part of their husband’s family after marriage . . . In 2001 the government issued an ordinance banning abortions on the basis of sex. But it is difficult to enforce. (The Economist, 3 December 2005, p. 72)

AIDS ‘[Internationally] the HIV virus [was] first noticed in 1981’ (IHT, 29 July 2005, p. 6). ‘An estimated 20,000 Vietnamese have AIDS . . . An estimated 180,000 Vietnamese are infected with HIV, the virus that causes AIDS’ (FEER, 15 January 2004, p. 8). ‘Vietnam has 210,000 people living with HIV/AIDS’ (IHT, 7 July 2004, p. 7). Washington has selected Vietnam as one of fifteen ‘focus countries’ which will be the greatest beneficiaries of a $15 billion campaign to fight HIV/AIDS in the developing world. Vietnam is the first country outside Africa and the Caribbean to be included in the five-year AIDS plan unveiled by President George W. Bush in 2003. Epidemiologists say that Vietnam has about 200,000 people living with HIV, which is still under 0.5 per cent of the population, but the virus is spreading fast. (FT, 24 June 2004, p. 11)

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Political developments ‘Boom’ . . . is how one epidemiologist describes the spread of AIDS in Vietnam . . . [Vietnam is] witnessing sky-rocketing infection rates among drug users, from whom the disease might soon start spreading to the wider population . . . After years in which AIDS was denounced as a social evil Vietnam’s communist rulers have begun to attend AIDS-awareness functions and promote AIDS-prevention schemes. (The Economist, 2 July 2005, p. 59)

SARS SARS (Severe Acute Respiratory Syndrome) is a highly infectious strain of pneumonia. ‘The earliest cases of SARS appeared in Guangdong [province in China] in November [2002], but the WTO [World Health Organization] first heard about the disease in February [2003]’ (The Economist, 5 April 2003, p. 13). The World Health Organization on Monday [28 April 2003] declared Vietnam the first SARS infected country cleared of the virus . . . Outbreaks of the disease had peaked in Canada, Singapore and Hong Kong, but not in China . . . [Vietnam] was one of four countries in which local transmission of the disease took place . . . Although sixtythree people became infected with the disease in Vietnam, including five medical workers who died, there have been no new cases since 8 April. (IHT, 29 April 2003, p. 5) The UN health agency said [on 28 April] that outbreaks of the disease had peaked in Canada, Singapore and Hong Kong, but not in China . . . The disease has killed at least 332 people [worldwide], has infected 4,800 people, mostly in China and Hong Kong . . . Hong Kong’s death toll has reached 138 . . . China has reported 3,106 infections . . . The reported number of cases [infections]: China (mainland), 3,106; Hong Kong, 1,557; worldwide, more than 4,800. Reported number of deaths: China (mainland), 139; Hong Kong: 138; worldwide, 332. (IHT, 29 April 2003, p. 5) ‘Vietnam . . . on 28 April was declared by the WHO to be the first nation to contain and eliminate the disease . . . [Vietnam] recorded sixty-three infections, including six critical cases. Five people died’ (IHT, 7 May 2003, p. 1). Not a single case of SARS has been reported [in any country] this year [2005] or in late 2004. It is the first winter without a case since the initial outbreak in late 2002 . . . The epidemic strain of SARS that caused at least 774 deaths worldwide by June 2003 has not been seen outside a laboratory since then. SARS is not even the nastiest bug in

Political developments 45 its neighbourhood, as health officials warn that avian influenza in South-east Asia poses a far greater threat . . . Health officials have categorized SARS into three known outbreaks: the worldwide epidemic of more than 8,000 cases that began in November 2002 and ended in June 2003; the second outbreak from December 2003 through January 2004 that involved a milder strain of the virus; and the nine cases traced to laboratory accidents in China, Taiwan and Singapore between March and May of last year [2004]. (http://www.iht.com, 15 May 2005) ‘The outbreak of SARS in 2003 killed fewer that 1,000 people but cost Asia $40 billion in economic losses’ (IHT, 15 July 2005, p. 6). A worldwide scientific effort identified the cause of SARS in March 2003, four months after the disease had broken out in southern China . . . SARS had the biggest impact on China, where the disease originated and caused the largest number of deaths – 349 . . . SARS prompted Beijing to launch a $1 billion programme to improve the country’s readiness for future epidemics. The programme includes a better reporting system and the founding of a centre for disease control . . . Analysts found it hard to estimate the full economic cost of SARS, through travel disruption and lost output, but most authorities put the figure at more than $30 billion . . . Although there were a few isolated cases of SARS last year [2004], some caused by escaping viruses from research laboratories, the epidemic strain in effect disappeared in the summer of 2003. Many experts assume that the virus is still lurking in the animals from which it emerged as a human disease . . . [One theory is that] SARS started with rats, which infected civet cats, which in turn passed the virus to people. (FT, 30 July 2005, p. 7) Probable SARS cases and deaths, respectively, in the period November 2002 to July 2003 were as follows: China: 5,327 and 349; Hong Kong: 1,755 and 299; Taiwan: 346 and 37; Canada: 251 and 43; Singapore: 238 and 33; Vietnam: 63 and 5; Philippines: 14 and 2; Thailand: 9 and 2; Malaysia: 5 and 2 (FT, 30 July 2005, p. 7). The SARS virus, which killed 774 people and caused severe economic losses, particularly in Asia, as it spread to Canada and other countries, has long been known to come from an animal. Now two scientific teams independently say that the Chinese horseshoe bat is that animal and is the reservoir of the virus in nature. The reservoir is the hiding place for the virus, where it can survive without causing illness in its host . . . SARS first appeared in China in 2002. Then it spread widely in early 2003 to infect at least 8,098 people in twenty-six countries, according to the WHO. The disease died out and no cases have been reported since then . . . During the SARS outbreak attention focussed

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Political developments on the role of the Himalayan palm civets in transmitting the disease after scientists identified the virus in this species and in a raccoon dog sold in markets in Guangdong . . . But officials of the WHO and scientists elsewhere cautioned that . . . civets . . . most likely were only intermediaries in the chain of transmission to humans, largely because no widespread infection could be found in wild or farmed civets. (IHT, 30 September 2005, p. 8)

‘Later studies found no widespread infection in either wild or farmed civets’ (IHT, 6 October 2005, p. 8). The outbreak of SARS in Asia in 2003 only infected around 8,000 people and killed about a tenth of these. According to the most pessimistic estimates, it caused almost $60 billion of lost output, with tourism-related businesses being especially hard hit. (http://www.economist.com, 20 October 2005) ‘The latest data from the WHO show that a total of 8,097 people contracted SARS and 775 people died from it’ (http://www.iht.com, 21 October 2005). ‘[The] SARS outbreak led to estimated losses of between $30 billion and $50 billion’ (http://www.iht.com, 25 October 2005; IHT, 26 October 2005, p. 3). ‘SARS, which killed 800 people, caused an economic loss of around 2 per cent of East Asian regional GDP in the second quarter of 2003, according to a report from the [World] Bank on 8 November’ (The Economist, 19 November 2005, p. 95).

Bird flu On 13 January [2004] the World Health Organization announced that two Vietnamese children and one adult had died of . . . bird flu . . . Vietnam, South Korea and Japan are scrambling to control a fresh epidemic . . . So far, Vietnam appears to be the only country where the dreaded H5N1 avian influenza is affecting humans . . . The big question is whether human-to-human transmission will be detected . . . The epidemic has triggered a mass poultry slaughter in all three countries. (FEER, 22 January 2004, p. 11) ‘The bird flu . . . could become a bigger problem for the region than SARS . . . The same strain of bird flu killed six people in Hong Kong in 1997’ (IHT, 15 January 2004, p. 3). Vietnam on Thursday [15 January 2004] reported four more human cases of the bird flu that has infected poultry in three Asian countries . . . Vietnam already has fourteen confirmed cases of avian flu, with three deaths. One of the four suspected new cases has died. (http://www.iht.com, 15 January 2004)

Political developments 47 Vietnam reported four new suspected cases of bird flu in people on Thursday [16 January], including one death, bringing up to eighteen the number of people believed to have been infected by the virus that has ravaged the country’s poultry industry. Doctors have already confirmed that the disease has killed three people . . . In all thirteen people have died in cases believed linked to bird flu in Vietnam, although only three were confirmed in laboratory tests conducted by the World Health Organization. (http://www.iht.com, 16 January 2004) A fifth person had died from bird flu . . . the World Health Organization said Monday [19 January] . . . The UN agency’s spokesman in Vietnam . . . said there was no evidence that this latest victim . . . had contracted the disease from another human . . . No confirmed or suspected deaths have been reported in South Korea, Japan and Taiwan, which are all coping with their own bird flu outbreaks. (http://www.iht.com, 19 January 2004) An outbreak of the virulent H5N1 strain of bird flu in Hong Kong in 1997 infected eighteen people, killing six. It was the first time an avian virus had been observed crossing directly to humans. Hong Kong authorities slaughtered the territory’s 1.5 million chickens. Hong Kong was hit by a second bird flu scare in 2001. Another mass slaughter was ordered . . . In February 2003 . . . in Hong Kong two cases of H5N1 were confirmed in a nine-year-old boy and his father, who died . . . In July 2003 a flu outbreak in Vietnam led to the cull of 20,000 chickens. (FEER, 29 January 2004, pp. 12–13) Thai officials announced Friday [23 January] that two boys had become infected with avian influenza and that six more people were suspected of having it, and they later admitted they had been concealing the outbreak for ‘a few weeks’ . . . [It was also] reported Friday that Thai officials had announced that, additionally, a man had died of the illness. And in Cambodia an outbreak of the disease made it the sixth Asian nation confirmed to be affected . . . Vietnam has already reported five confirmed cases in people near Hanoi, all of whom died before the lab tests were even finished, and is testing seven additional suspected cases of infection around the country. (IHT, 24 January 2004, p. 1) Thailand is among the world’s top five poultry exporters. Bird flu has killed five people in Vietnam and infected millions of chickens in South Korea, Japan and Vietnam. Together with the reemergence of SARS, Asia is on a region-wide health alert. (http://www.iht.com, 23 January 2004) Indonesia reported Sunday [25 January] that millions of poultry had fallen ill with avian influenza . . . South Korea, Japan, Vietnam,

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Political developments Cambodia, Thailand and Hong Kong have previously confirmed the disease in birds, while Taiwan has reported a less dangerous strain of bird flu in some chickens there . . . Thailand has five suspected cases [in humans] . . . In Vietnam at least five people have died. (IHT, 26 January 2004, p. 20)

‘The virus has already killed six people in Vietnam’ (FT, 26 January 2004, p. 8). Thailand . . . announced the country’s first confirmed death and said the disease might have taken five other lives. Two other Thai patients were sick with the virus that has killed up to twelve people in Thailand and Vietnam, where six people have died. A total of ten people in Thailand, including the five who had died, were suspected of having bird flu. The deaths include four announced Monday [26 January] and that of a . . . man who died Friday [23 January] . . . There has been no evidence of human-to-human transmission and only Thailand and Vietnam have confirmed cases of infection in humans. Pakistan, meanwhile, said Monday [26 January] that a strain of bird flu was behind the death of thousands of chickens in its south, indicating that the illness had spread westward . . . The virus has infected millions of chickens in Thailand, Vietnam, Cambodia, South Korea, Japan and Taiwan. Indonesia and Pakistan have reported outbreaks that have yet to be confirmed by the WHO . . . Indonesia confirmed a bird flu outbreak among chickens on Sunday [25 January], but authorities said they found no evidence that the disease had spread to people. (http://www.iht.com, 26 January 2004) China said Tuesday [27 January] that avian flu had been found in fowl in three regions, as three international agencies issued a global appeal for donor nations to help bankroll Asia’s fight to forestall a lethal flu epidemic in humans . . . Ten Asian governments have reported outbreaks among poultry, with Laos joining the list Tuesday. Thailand has confirmed its second fatality, bring the toll among humans in the region to at least eight as of Tuesday. (http://www.iht.com, 27 January 2004; IHT, 28 January 2004, p. 4) On 28 January Vietnam announced that two more people had died. China denied a British publication’s report blaming it for the beginning of the epidemic . . . The New Scientist said it appeared that the bird flu cases began a year ago, most likely in China. It alleged the Chinese authorities hid the emergence of the disease. (IHT, 30 January 2004, p. 5) The WHO has said that the current outbreak of H5N1 in birds started in South Korea in December [2003]. However, New Scientist, a British

Political developments 49 magazine, said experts had told it that the outbreak probably began a few months earlier in China. (The Economist, 31 January 2004, p. 56) Two Vietnamese sisters who died of bird flu may have caught the disease from their brother, the World Health Organization said Sunday [1 February]. If confirmed it would be the first known case of human-to-human transmission of the virus . . . The sisters became sick after attending their brother’s wedding reception. Their brother died on 14 January but was cremated, so no samples were available to determine whether he had bird flu . . . The sisters were among the eight Vietnamese whose deaths were confirmed to be from bird flu . . . The virus has infected poultry, mostly chickens, in at least ten countries. Thailand has confirmed two human deaths from the disease . . . The WHO . . . said Sunday that China . . . must improve its detection and handling of diseases . . . [China] must quickly improve its surveillance network of animal diseases or face increased risks that the strain of the bird flu could jump to humans there . . . China announced new suspected infections of bird flu in two more provinces on Saturday [31 January] . . . The WHO has said that China’s chances of halting bird flu are dwindling. (IHT, 2 February 2004, p. 2) A teenage boy in Vietnam and a woman in Thailand on Monday [2 February] became the latest deaths from bird flu . . . [which] has now killed twelve people . . . The two countries are the only ones where humans have died from this strain of avian influenza . . . Infections in people have only been reported only in Thailand and Vietnam . . . Bird flu spread between humans in a 1997 outbreak in Hong Kong that killed six people. (http://www.iht.com, 2 February 2004) The human death toll from bird flu rose to thirteen on Tuesday [3 February] . . . A seven-year-old boy became the fourth person to die from the disease in Thailand. Nine people have died in Vietnam . . . China reported more confirmed and suspected outbreaks of the virus in its poultry stocks. (http://www.iht.com, 3 February 2004) The death toll from Asia’s bird flu outbreak rose to fifteen on Wednesday [4 February] as the virus ravaged poultry flocks in ten countries and spread in China. Vietnamese authorities said tests confirmed a six-year-old boy who died earlier in the week had been infected with the H5N1 virus . . . Twelve of China’s thirty-one provinces have confirmed or suspected outbreaks of the disease. The UN agency said bird flu had been confirmed in fifty-three of Vietnam’s sixty-four provinces . . . The death of a seventeen-year-old girl from

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Political developments avian flu in Vietnam was the country’s tenth death from the virus. All fourteen deaths in the region so far are believed to have resulted from direct contact with infected poultry. (http://www.iht.com, 4 February 2004) Asia’s human death toll from bird flu rose to fifteen on Wednesday [4 February], while China addressed its broadening zone of infected poultry by creating a bird flu headquarters . . . New deaths were announced Wednesday in Vietnam, where a sixteen-year-old girl became the country’s tenth bird flu fatality, and Thailand, where a sixyear-old boy died, bringing that country’s total to five. Human cases of bird flu have not been reported in any other countries. China said Wednesday that it had no human infections, but that officials were investigating cases in poultry in twelve of its thirty-one regions. (IHT, 5 February 2004, p. 2) When Vietnam’s agricultural officials began a mass culling of chickens in the province of Vinh Phuc last July [2003], and resumed the slaughter in northern and southern Vietnam in December [2003], the government said nothing to the FAO [UN Food and Agricultural Organization]. It was only in early January [2004] that FAO officials in Hanoi heard about the culling from the Vietnamese. (FEER, 12 February 2004, p. 19)

‘The death toll from the bird flu epidemic sweeping through Asia rose to sixteen on Thursday [5 February] . . . as Vietnam announced that a sixteen-year-old girl had become its eleventh flu victim’ (http://www.iht.com, 5 February 2004). Tests conducted on pigs in Vietnam have been positive for the bird flu virus infecting millions of poultry, the UN Food and Agricultural Organization [FAO] said Friday [6 February] . . . Experts have said it is possible that the virus has jumped to humans through another mammal, such as pigs. (http://www.iht.com, 6 February 2004) The disease has killed nineteen people – fourteen in Vietnam and five in Thailand – and has prompted ten governments in the region to slaughter more than 50 million chickens and other fowl . . . Seven other Asian governments have also reported bird flu outbreaks: Cambodia, Indonesia, Japan, Laos, Pakistan, South Korea and Taiwan. The United States last week confirmed an outbreak in the state of Delaware. In Pakistan, Taiwan and the United States the bird flu is milder than the A (H5N1) virus that has jumped to humans in Vietnam and Thailand. (http://www.iht.com, 10 February 2004) The WHO said on Thursday [12 February] that it could find no evidence that human-to human transmission of bird flu was responsible for

Political developments 51 the deaths of two Vietnamese sisters last month [January]. Although the new test results could not prove the sisters did not catch the illness from their brother, they were nonetheless reassuring, officials from the UN health agency said. (http://www.iht.com, 12 February 2004) ‘Ten governments in the region have dealt with strains of bird flu since South Korean officials reported an outbreak there in early December [2003]’ (http://www.iht.com, 13 February 2004). Bird flu claimed its twentieth fatality in Asia [on 14 February] . . . with the death of a thirteen-year-old boy in Thailand . . . It is confirmed to have killed six people in Thailand and fourteen in Vietnam . . . WHO officials have expressed concerns that China may also be suffering human cases, given the broad range of poultry infections there. (IHT, 16 February 2004, p. 2) A man has died of bird flu in Vietnam, the ministry of health said on Wednesday [18 February], taking the human toll from the virus to twenty-two. Vietnam accounts for fifteen of the deaths from the A(H5N1) virus . . . Earlier Wednesday a four-year-old boy died of the disease in Thailand . . . South Korea was the first country to report poultry infections in the outbreak in December [2003]. (http://www.iht.com, 18 February 2004) Bird flu has jumped to new species in Asia, killing three house cats and infecting a white tiger in Thailand, while a low-risk variant of the virus has been detected on a farm in Canada, officials said Friday [20 February] . . . The infection of three cats in Thailand has raised fears that the disease could spread from felines to humans . . . The pet cats . . . are the first domesticated mammals known to have contracted the disease in the current outbreak . . . A white tiger at Khao Khiew Zoo near Bangkok was also found to have the virus, but it has since recovered and was in good health. The zoo is the same one where a clouded leopard died of bird flu last month [January], the first mammal apart from humans known to have died in this year’s outbreak . . . A WHO official has suggested that Indonesia could have some human bird flu despite reassurances by the government that the disease has not spread to humans there. (http://www.iht.com, 20 February 2004) ‘A woman has died of bird flu, raising Thailand’s death toll in the outbreak to eight . . . The death brings the region’s death toll from bird flu to twenty-three, with fifteen victims in Vietnam’ (http://www.iht.com, 16 March 2004). ‘[In March] in Vietnam a twelve-year-old boy died, taking Asia’s death toll from the virus to twenty-four’ (FEER, 1 April 2004, p. 13).

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Political developments The government said that it had stamped out the bird flu epidemic that killed sixteen people in the country and caused the nation’s poultry industry to be wiped out. The government made the declaration after more than one month without any new outbreaks being discovered. However, the World Health Organization was more cautious, especially given that a twelve-year-old boy died just two weeks earlier from the H5N1 virus in Vietnam. (FEER, 8 April 2004, p. 11) A week after declaring itself free of bird flu, Ho Chi Minh City has banned the sale of live poultry in markets, which are widely suspected of being where bird flu first jumped the species barrier to humans. An outbreak of the disease this year killed sixteen people in Vietnam. Under new regulations the killing of birds must be done at government approved slaughterhouses. (FEER, 15 April 2004, p. 13) According to the available data, all infected people contracted the virus from birds. There is no confirmed evidence of human-to-human transmission yet . . . Airborne influenza viruses are much more easily spread than SARS, partly because still-healthy carriers shed large amounts of virus. This is why the basic containment measures – isolation and quarantine – that worked so well for SARS would not work for a recombined avian-human influenza. (IHT, 12 April 2004, p. 8)

‘China reported a new outbreak of bird flu Tuesday [6 July 2004] and Thailand said it had a suspected case’ (IHT, 7 July 2004, p. 8). ‘In China officials said they had found a single infected bird . . . in Anhui province’ (http://www.iht.com, 7 July 2004). Scientists voiced growing alarm on Wednesday [7 July] that avian flu may have become impossible to eradicate in Asia and could eventually spread easily among humans. The warning came as China, Thailand and Vietnam, which all found chickens dying of the disease again in the past week, began culling thousands of birds in the hope of preventing a human outbreak. Earlier this year [2004] ten countries reported cases in poultry and more than 100 million chickens were killed . . . [A journal article] concludes that the disease is firmly rooted in domesticated ducks in southern China. (http://www.iht.com, 7 July 2004; IHT, 8 July 2004, p. 8) Vietnam broadcast a nationwide warning on Thursday [12 August] about a recurrence of bird flu, saying that three people who died of respiratory illness have been identified as having been infected with the H5 virus . . . The announcement . . . did not specify if the deaths were from the H5N1 type of bird flu that killed sixteen people in

Political developments 53 Vietnam earlier this year and eight in Thailand. If confirmed as the H5N1 strain the deaths would be the first reported from avian influenza since . . . the end of March. (IHT, 13 August 2004, p. 4) Vietnam confirmed Friday [13 August] that three people had died from the same disease that claimed twenty-four lives across the region earlier this year. The WHO said that further tests would be needed to see if three other people who died over the past two weeks from a similar illness had also been infected with avian influenza . . . Vietnam was widely criticised for prematurely announcing on 30 March that the country was free of the disease. (http://www.iht.com, 13 August 2004) Vietnam said two children who died of bird flu this month had tested positive for the same strain of virus that killed twenty-four people across Asia this year, raising the number of fatalities from the latest outbreak to three. The strain of virus, H5N1, is the only strain of bird flu known to pass from infected poultry to humans and cause illness. (http://www.iht.com, 17 August 2004) A senior Chinese health official disclosed on Friday [20 August] her country had found a lethal strain of avian influenza among pigs at several farms, a discovery that could move the virus one step closer to becoming a global problem for humans . . . The A(H5N1) strain of avian influenza, or bird flu, infected chickens in at least eight countries this year [2004] and killed twenty-three of the thirty-four people in Thailand and Vietnam who caught the disease directly from poultry . . . The discovery of the bird flu strain in pigs is alarming . . . because scientists have long regarded pigs as an important conduit for new influenza strains in humans. Most kinds of influenza viruses live only in birds, not people. But pigs can be infected with both bird strains and human strains of influenza. When these viruses mix and reassort genes inside a pig, the result can be a new virus for which humans have little immunity. (IHT, 21 August 2004, p. 5) Vietnam confirmed that there have been three new deaths from bird flu . . . The three, including two children, died in early August of the H5N1 strain of the virus. They marked the first officially confirmed cases of the disease since an outbreak last February left twenty-four people dead in Thailand and Vietnam. (FEER, 26 August 2004, p. 11) ‘The avian influenza virus . . . has crossed another species barrier to infect cats, and can be spread among them as well, Dutch scientists have found’ (http://www.iht.com, 3 September 2004).

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Political developments A woman who cradled her dying daughter in her arms for ten hours at a hospital in north-western Thailand, and later fell sick and died herself, was the first probable case of human-to-human transmission of avian influenza this year [2004], Thai and international health agency officials said Tuesday [28 September] . . . An outbreak of A(H5NI) in Hong Kong in 1997 included several probable cases of human-to-human transmission. (IHT, 29 September 2004, p. 5) [The Thai lady] is the first person believed to have contracted the disease from another human, rather than poultry . . . The country’s tenth confirmed fatality . . . [Her] daughter was cremated and there is no proof she died of A(H5N1) avian influenza. (http://www.iht.com, 29 September 2004)

‘Thai and international health officials confirmed on Tuesday that the first probable human-to-human transmission had been recorded in Thailand’ (IHT, 30 September 2004, p. 6). Vietnam confirmed a new bird flu death to bring Asia’s human toll to thirty on Wednesday [29 September] . . . A baby in Hanoi became Vietnam’s twentieth victim . . . The recent deaths in Vietnam and Thailand are part of a second wave of outbreaks since . . . the start of this year [2004]. (http://www.iht.com, 29 September 2004) The strain, A(H5N1) has killed thirty of the forty-two south-east Asians it infected in the past year . . . A handful of cases of human-tohuman transmission may have occurred during bird flu outbreaks in Hong Kong in 1997 and in Europe a year ago, but neither resulted in a pandemic. (http://www.iht.com, 1 October 2004) The human toll from bird flu reached thirty-one on Monday [4 October] when Thailand confirmed that a nine-year-old girl had died from the disease . . . The girl’s death brought to eleven the number of human deaths in Thailand . . . In Vietnam, the only other country to suffer human cases of the virus, twenty people have died. (http://www.iht.com, 4 October 2004) ‘Tests performed in Japan have identified its first human case of avian disease and four other cases that are almost certainly the same ailment’ (http://www.iht.com, 23 December 2004). A sixteen-year-old girl from southern Vietnam has become infected with the avian flu strain that has killed thirty-two people and devastated the poultry industry across Asia, a doctor said Thursday [30 December 2004] . . . The girl is the twenty-ninth person confirmed with

Political developments 55 the disease in Vietnam, where it has killed twenty. In Thailand twelve have died. (http://www.iht.com, 30 December 2004) [The sixteen-year-old girl died on 8 January 2005] . . . the country’s third casualty in two weeks . . . With Asia’s death toll from the deadly bird flu now at thirty-five, Vietnamese officials said another patient . . . an eighteen-year-old girl . . . has been infected by the virus . . . The latest death brings to twenty-three the number of victims for the country since bird flu was first reported in December 2003 . . . The disease has wiped out about 17 per cent of Vietnam’s poultry industry. Bird flu killed twelve people in Thailand last year [2004] but no new cases have been reported there since November [2004]. Malaysia, which has had no human cases, declared itself free of the virus last week. (http://www.iht.com, 10 January 2005) ‘Vietnam confirmed its fourth death from bird flu in two weeks Thursday [13 January] . . . The eighteen-year-old woman who died on Monday [10 January] was infected with the H5N1 strain of the virus’ (http://www.iht.com, 13 January 2005). ‘Vietnam has banned all imports of poultry as the epidemic of bird flu . . . spread to the whole country’ (http://www.iht.com, 18 January 2005). Bird flu claimed its fifth human victim in three weeks when a thirtyfive-year-old woman died of the virus . . . The woman died Tuesday [18 January] . . . She tested positive for the H5N1 strain of bird flu . . . The virus has killed at least twenty-five people in Vietnam and twelve people in Thailand over the past year. (http://www.iht.com, 19 January 2005) An eighteen-year-old woman has died of bird flu in Vietnam, bringing the death toll there since December [2004] to six on Thursday [20 January 2005] and Thailand has confirmed outbreaks of the virus for the first time this year [2005] . . . The latest deaths take to at least twenty-six the number of people on record as having died from the H5N1 strain of bird flu in Vietnam since the end of 2003. The real number of deaths is thought to be higher as tests were not carried out on some suspected cases. (http://www.iht.com., 20 January 2005) Vietnam issued a confirmation Friday [21 January] of its seventh death from bird flu in three weeks . . . a forty-seven-year-old man . . . Vietnam has reported seven bird flu deaths since 30 December [2004]. The latest victim . . . brings the toll to twenty-seven in Vietnam over the past year . . . With three new bird flu deaths confirmed this week, the WHO expressed concern about the high fatality rate – more than

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Political developments 70 per cent of those infected have died . . . As more human bird flu cases occur, the chances become greater for the deadly virus to acquire more ability to be transmitted from person to person. That could spark the next global pandemic – possibly killing millions. (http://www.iht.com, 21 January 2005)

‘Vietnam on Friday [28 January] reported another human death . . . a thirty-two-year-old man . . . from bird flu, bringing the toll to ten people over the past month’ (http://www.iht.com, 28 January 2005). In southern Vietnam a ten-year-old girl died from bird flu, the twelfth victim of the disease in Vietnam in the past month, doctors said Monday [31 January 2005] . . . The deadly influenza has killed a total of forty-four people in Vietnam and Thailand. (http://www.iht.com, 31 January 2005) ‘The avian flu H5N1 has killed forty-two of fifty-five known sufferers’ (Guardian, 21 February 2005, p. 10). A conference expected to attract international scientists and representatives from countries battling bird flu will open Wednesday [23 February] in Ho Chi Minh City . . . organized by the World Organization for Animal Health and the Food and Agricultural Organization . . . Vietnam is the only country to have suffered bird flu-related human deaths this year [2005]. It has been the worst hit by the disease, with thirty-three human deaths from two outbreaks of the A(H5N1) strain of the bird flu virus since late 2003 . . . The bird flu epidemic . . . has hit several Asian countries and has killed forty-five people since 2003 . . . Bird flu has already affected Cambodia, Thailand and Vietnam in 2005, after being discovered in eight countries in 2004, including China, Indonesia, Japan, Laos and South Korea. Twelve have died in Thailand. (http://www.iht.com, 21 February 2005) Shigeru Omi (regional director of the World Health Organization): [The virus appears to be] evolving in ways that increasingly favour the start of a [human] pandemic . . . We at the WHO believe the world is now in the gravest possible danger of a pandemic. We must all work together to make sure what is happening in the animal world does not spill over and cause health emergencies for humans . . . There are many terrible diseases in Asia, but this one is the most urgent because global health is now at risk . . . We are now confident in our judgement that this virus has become endemic in Asia. We have been through three waves of human cases of the virus in Vietnam over the last year. (FT, 24 February 2005, p. 11; http://www.iht.com, 24 February 2005)

Political developments 57 Since 2003 avian flu has killed forty-six people – about 80 per cent of those identified as infected . . . Two may have caught it from other humans. International health officials fear the virus may mutate – or recombine with a human flu virus – into a form easily transmitted from person to person. (FT, 24 February 2005, p. 11) ‘A sixty-nine-year old man has died of bird flu in Vietnam, the fourteenth fatality from the disease in the country this year’ (IHT, 28 February 2005, p. 6). ‘[This is] the forty-sixth fatality in South-East Asia this year’ (Independent, 28 February 2005, p. 27). A twenty-six-year-old male nurse who tended a patient with bird flu has caught the virus that has killed forty-seven people in Asia, a health official said Monday [7 March]. It was not yet clear whether the nurse had caught the virus, known as H5N1, from the patient or through other means . . . Experts fear that if the versatile and resilient virus mutates into a form that could easily jump between humans it would kill millions in a global pandemic. Almost all of the Asian victims – thirty-four Vietnamese, twelve Thais and a Cambodian – have caught it from infected poultry. Bird flu kills more than 70 per cent of those known to have been infected, but doctors say victims can be saved if they are diagnosed early. (http://www.iht.com, 7 March 2005) ‘A twenty-six-year-old Cambodian man and a seventeen-year-old Vietnamese woman have become the latest victims of bird flu, raising the death toll in South-East Asia to forty-eight’ (The Times, 26 March 2005, p. 41). For the first time North Korea confirmed an outbreak of bird flu and said Sunday [27 March] that hundreds of thousands of chickens had been culled . . . ‘Bird flu has recently broken out at two to three chicken farms, including Hadang farm’ [North Korea said] . . . Hadang is one of the five largest chicken farms in Pyongyang . . . North Korea had previously declared itself free of the disease, which has swept much of East and South-East Asia, killing forty-eight people and millions of birds since late 2004 . . . Since late 2004 the WHO has registered more than sixty-nine cases of humans infected with the H5N1 strain of avian flu. It has killed thirty-four Vietnamese, twelve Thais and two Cambodians. (http://www.iht.com, 27 March 2005) ‘North Korea . . . said that hundreds of thousands of chickens had been killed to prevent the spread of the disease and that the disease had not been passed on to humans . . . the outbreaks occurred at a “few chicken farms” [North Korea said]’ (IHT, 28 March 2005, p. 9).

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Political developments North Korea admitted bird flu had broken out in Pyongyang . . . although it remained unclear if the virus spotted was the H5N1 strain, which has been known to spread to humans from birds . . . South Korea confirmed nineteen cases of the H5N1 strain at poultry farms between December 2003 and March 2004. (FT, 28 March 2005, p. 6)

‘South Korea was the first Asian country to report a bird flu outbreak in December 2003 . . . the country reported one case of low-pathogenic bird flu last year [2004]’ (FT, 29 March 2005, p. 6). A top UN bird flu expert . . . flew to Pyongyang on Tuesday [30 March], a day after North Korea told the agency [the Food and Agriculture Organization] of outbreaks of the disease without saying which strain caused them . . . The H5N1 strain can jump from birds to humans . . . [and] has killed forty-nine people in Asia since late 2003 – sixteen since the virus erupted anew in December [2004] . . . [The expert] will be joined by two consultants from China and Australia . . . The FAO has sent avian flu diagnostic kits to North Korea, where the agency already has a project to improve veterinary laboratories, provide equipment and create a network for sharing information on the disease . . . The UN agency says bird flu is now endemic in the region and experts no longer talk about eradicating it. Now they just hope to contain it before it mutates into a form that can pass between humans easily and set off a global pandemic. (http://www.iht.com, 30 March 2005) The human toll from bird flu reached fifty yesterday [6 April] with the news that a ten-year-old girl had died . . . on 27 March . . . She had the H5N1 virus . . . Over the last sixteen months bird flu has killed thirtysix people in Vietnam (fifteen of those in the past four months), twelve people in Thailand and two in Cambodia. (Guardian, 7 April 2005, p. 16) Prior to the latest outbreaks bird flu was thought to be rare in poultry and unlikely to spread between countries. Today, however, it has affected eleven countries all the way from Japan to Indonesia and caused the death of over 120 million Asian birds. This outbreak is without precedent. (The Economist, 16 April 2005, p. 53) China has ordered emergency measures to prevent an outbreak of avian flu after investigators said migratory birds found dead in the country’s west this month were killed by the virus . . . China’s most recent known case of bird flu occurred last July [2004] in the eastern province of Anhui . . . The regional death toll in the latest bird flu outbreak rose to fifty-three this week when another fatality was reported in Vietnam. (http://www.iht.com, 22 May 2005)

Political developments 59 Indonesian health officials confirmed the first human case of bird flu in the country on Thursday [16 June 2005] . . . Indonesia is the fourth country to report a case of the bird flu virus in humans . . . The virus has infected more than 100 people and killed fifty-four people in Vietnam, Thailand and Cambodia since late 2003. (http://www.iht.com, 16 June 2005) ‘The World Health Organization has confirmed 107 cases of human infection in South-east Asia, fifty-four of them fatal. China has reported no cases of human infection’ (http://www.iht.com, 22 June 2005). In response to the possibility of a worldwide avian influenza pandemic, UN experts convening here [Kuala Lumpur] unveiled on Tuesday [5 July] the most comprehensive global strategy to date to address the current crisis in Asia and to prepare other regions for similar outbreaks . . . There is no evidence that the highly pathogenic bird flu virus is easily transmissible between humans, but health experts are concerned that the volatile virus, which has surfaced across Asia in various strains, could mutate and trigger a global pandemic. Such a pandemic could kill millions of people, WHO officials said. (http://www.iht.com, 5 July 2005) ‘[Bird flu has] infected 108 people, killing fifty-four’ (FT, 7 July 2005, p. 11). Indonesia confirmed its first human deaths from [the H5N1 strain of] bird flu Wednesday [20 July], a man and his two daughters . . . who died earlier this month [July] . . . bringing Asia’s toll from the disease to fifty-seven people . . . Though there is no evidence yet that the three had contact with infected poultry . . . [the Indonesian health minister] said human-to-human transmission of the disease appeared unlikely at this stage . . . Bird flu has killed thirty-eight people in Vietnam, twelve in Thailand, four in Cambodia and – with the latest deaths – three in Indonesia. Experts say most of the deaths so far have resulted from an animal passing the virus to a human. (http://www.iht.com, 20 July 2005) Virologists have long been concerned about bird flu, worrying that the virus which causes it might mutate in a way that allowed it to be transmitted easily from person to person. This, they fear, might result in a catastrophic epidemic among humans, similar to the one just after the First World War that killed 20 million to 40 million people. (The Economist, 23 July 2005, p. 79) Global health officials fear . . . the H5N1 flu virus . . . could mutate into a lethal strain that could rival the 1918 Spanish flu pandemic that killed between 20 million and 40 million people. Bird flu was first seen to jump the species gap to people in 1997 in Hong Kong, when it

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Political developments infected eighteen people and killed six . . . The spread of H5N1 avian flu has so far been confined to south-east Asia . . . However, even though the cost to human health has so far been relatively small, the virus has devastated the poultry trade in many Asian countries. Investment bank CLSA said the crisis had already cost the region between $ 8 billion and $12 billion. The EU has prolonged its ban on poultry meat and live bird imports from eight Asian nations until September [2005] and this may be extended still further. (Alan Bullion, The World Today, 2005, vol. 61, nos 8–9, pp. 30–1) Russian authorities confirmed yesterday [Monday 25 July] an outbreak of highly infectious avian flu in Siberia that has already resulted in the death of about 1,200 birds The virus recently detected was different from earlier registered virus strings . . . The first cases were registered in the Novosibirsk region last week. Domestic poultry are believed to have been infected by migrating migratory birds. This is the first outbreak of the disease in Siberia or central Asia. (FT, 26 July 2005, p. 12)

‘Investigators have determined that a strain of bird flu infecting fowl in Russia is the type that can infect humans . . . The agriculture ministry identified the virus as avian flu type A(H5N1)’ (IHT, 30 July 2005, p. 3). ‘Russia will today [2 August] begin a mass cull of poultry in eighteen Siberian villages’ (FT, 2 August 2005, p. 7). ‘In the Kazakh province of Pavlodar officials said they had slaughtered 2,350 geese and 250 ducks after 600 poultry died from bird flu’ (The Times, 2 August 2005, p. 24). [Russia] said Tuesday [2 August] that the deadly bird flu virus had been found in a third Siberian province, as officials began a mass culling to contain its spread . . . The virus was found in the west Siberian province of Tyumen, following an announcement of outbreaks in the provinces of Novosibirsk and Altai . . . The A(H5N1) subtype has killed at least sixty people in parts of South-east Asia since 2003. (IHT, 3 August 2005, p. 5) ‘The outbreak began in the Novosibirsk region [of Russia] early last month [July] and has killed thousands of domestic fowl’ (The Times, 3 August 2005, p. 34). US government scientists say they have successfully tested in people a vaccine that they believe can protect against the strain of avian influenza that is spreading throughout Asia and Russia. Officials have been racing to develop a vaccine because they worry that if that strain mutated and combined with a human influenza virus to create a new virus it could spread rapidly. Tens of millions of birds have died from infection with the virus and from culling to prevent the spread of the

Political developments 61 virus. About 100 people have been infected and about fifty have died from this strain of the avian flu virus, called A(H5N1). So far there has been no sustained human-to-human transmission, but that is what health officials fear, because it could cause a pandemic . . . An earlier vaccine against A(H5N1) avian influenza virus was prepared after the virus first appeared in the world, in Hong Kong in 1997. That vaccine was never fully developed or used, and the strain has mutated since then . . . The only medicine known to work against bird flu [is called] Tamiflu . . . Only a few human cases of A(H5N1) influenza have been found. Although a few cases may have been transmitted from person to person in Asia, the A(H5N1) strain has not gathered enough strength to spread widely among humans anywhere. As of Friday night [5 August], according to the WHO, the avian strain has killed fifty-seven of the 112 people it has been known to infect in four countries. The countries are Cambodia (with four cases), Indonesia (with one case), Thailand (with seventeen cases) and Vietnam (with ninety cases). (http://www.iht.com, 7 August 2005; IHT, 8 August 2005, p. 4) ‘A bird flu outbreak in Russian Siberia worsened yesterday [10 August] as neighbouring Kazakhstan confirmed cases of the deadly H5N1 strain of the virus and Mongolia reported its first cases’ (FT, 11 August 2005, p. 7). An outbreak of the bird flu virus that health officials are battling in Asia has spread westward in Russia from Siberia to a Ural Mountains region, the agriculture ministry said on Monday [15 August] . . . [The ministry] said in a statement that the A(H5N1) strain had been detected in a settlement in the Chelyabinsk region . . . No cases of human infection have been found. The authorities say they believe the virus was brought to the country by migratory birds. (IHT, 16 August 2005, p. 8) ‘An outbreak of avian flu among wild and domestic birds in Russia is spreading west and starting to approach Europe’ (The Times, 16 August 2005, p. 27). ‘The outbreaks in Russia and neighbouring Kazakhstan prompted the EU to declare a Europe-wide ban on imported birds from both to contain the spread of the disease, although neither country exports poultry to the EU’ (FT, 17 August 2005, p. 10). Amid further reports of bird deaths in Russia, just over the mountains that separate Asia from Europe, European countries were preparing Tuesday [23 August] for the possibility that migratory birds might carry the dread avian influenza virus to Europe in coming months . . . Until recently scientists believed that the major route of spread was through the transport of infected chickens and meat. But in the last few months outbreaks in which the virus appeared to have hopped

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Political developments from western China, to Mongolia, Russia and Kazakhstan – places that have little poultry trade between them – have highlighted the likelihood that wild birds have also disseminated the virus . . . Although scientists have long known that the disease could be spread by either domestic or infected animals, the shipment of infected animals between farms and market was previously thought to be the major route . . . Because officials had long assumed that domestic poultry was the primary culprit in disease transmission, the EU had previously sought to protect itself from outbreaks by banning all imports of meat from China and south-east Asia. That ban was extended to Russia and Kazakhstan on 12 August, when the disease was discovered in these countries . . . [The Netherlands] declared that as of this week all commercial chickens and turkeys would have to be housed indoors or in outdoor pens that would prevent contact with wild birds . . . An outbreak of a less virulent strain of bird flu decimated the country’s poultry industry just two years ago . . . They lost 50 per cent of their poultry population in 2003 . . . Dutch officials had long suspected that their 2003 outbreak may have been caused by migratory birds, since no other origin was ever discovered. (IHT, 24 August 2005, pp. 1, 4)

‘Finnish authorities said they found a suspected case of bird flu in the north of the country . . . The case involved a gull. Final results of the tests are not expected for three weeks’ (Independent, 27 August 2005, p. 24). Indonesia yesterday [19 September] declared a national ‘extraordinary event’ after four children were taken to hospital with suspected bird flu and the Jakarta zoo was closed for three weeks after nineteen birds tested positive. None of the patients . . . are thought to have caught the H5N1 strain of the illness . . . at the zoo. But experts have yet to discover how they became sick, just as they cannot yet pinpoint where the woman who died of bird flu in south Jakarta ten days ago caught the virus. She was the fourth Indonesian to die of bird flu, all of them in unexplained circumstances. At least sixty other people have died of the virus since November 2003 in Vietnam, Thailand and Cambodia . . . Indonesia [said it] could not start the culling procedures recommended by the United Nations because it could not afford to compensate poultry owners. (Guardian, 20 September 2005, p. 20) Indonesia has officially confirmed four human deaths since July from bird flu, all of them in Jakarta . . . H5N1 was first found in Indonesian chickens in August 2004 . . . The first deaths were confirmed in July. But officials continue to resist calls for a cull, declaring it too costly and impractical . . . preferring to vaccinate selectively instead . . .

Political developments 63 Doctors . . . were yesterday [20 September] monitoring at least seven suspected human cases . . . Indonesia’s health minister on Monday [19 September] officially declared an ‘extraordinary’ outbreak, giving officials legal powers to force treatment on anyone showing symptoms. (FT, 21 September 2005, p. 7) ‘Since the deadly H5N1 strain of bird flu was detected in chickens in the archipelago in 2003, Indonesia has conducted only selective culls of poultry’ (FT, 22 September 2005, p. 10). [Results of tests relating to] a woman’s death of avian flu in Jakarta . . . [showed] that the virus had not yet mutated in ways likely to make it more of a threat to people . . . The WHO’s representative . . . [said that it] ‘seems like a virus that has gone directly from birds’ . . . The government of Indonesia had declared Monday that the disease was an ‘extraordinary event’, a step allowing additional spending beyond usual budget restraints and allowing the government to force suspected victims to be hospitalized and isolated . . . The Indonesian government has also begun an extensive slaughter of chickens in or near flocks where birds have been infected with the disease. The culling marks a shift in policy, as Indonesia had resisted large-scale culling last year [2004] when the disease spread through Thailand and Vietnam; Indonesia tried then to vaccinate chickens instead . . . The WHO added another bird flu death . . . to its count for Vietnam. That brought the total there since the beginning of last year to sixty-four cases, twenty-one of them fatal. There were also seventeen confirmed cases of bird flu in Thailand last year, twelve of them fatal. (http://www.iht.com, 21 September 2005) A five-year-old girl died [in Jakarta] yesterday [21 September] after suffering from bird flu symptoms. Initial tests gave proved negative for the virus, but . . . [it was announced that] more tests would be done . . . Four Indonesians are confirmed to have died since July from the H5N1 strain of bird flu . . . Bird flu has killed sixty-four people in four Asian countries since late 2003. (Independent, 22 September 2005, p. 29) ‘[In] Indonesia a fifth victim died on Monday [26 September]’ (http://www.iht.com, 30 September 2005). Worried scientists have finally managed to catch the attention of politicians. Last week at the United Nations General Assembly President George W. Bush announced a new international partnership to discuss flu and pandemic influenza. World health ministers will meet in Canada next month [October] to discuss how to pool resources, boost surveillance and improve the capacity to contain and respond to an outbreak. The WHO wants more governments to draw

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Political developments up preparedness plans (only forty have these so far) and agree on how they will co-ordinate their responses . . . In the global pandemic of 1918 25 million to 50 million people died. Many scientists now believe that another influenza pandemic is inevitable some time soon. (The Economist, 24 September 2005, p. 113) South-east Asian nations approved the creation of a regional fund to fight bird flu and other animal diseases, officials said Friday [30 September] . . . Details of the fund and other measures to curb bird flu were expected to be announced later on Friday at the end of the meeting by the Asian ministers and their counterparts from China, Japan and South Korea . . . Asean [comprising Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam] will also endorse a global plan to contain avian influenza, which has killed sixty-six people in four Asian countries since late 2003 . . . Millions of birds have been destroyed, causing estimated losses of $10 billion to $15 billion to the poultry industry [according to the Food and Agriculture Organization] . . . Asean would also endorse the global bird flu plan proposed by the world animal health body OIE [World Organization for Animal Health], the Food and Agriculture Organization (FAO) and the World Health Organization (WHO). The three agencies plan to hold a bird flu conference in December to try to raise the $102 million they say is needed over the next three years to contain the virus . . . The WHO, the UN health agency, said on Thursday that if the bird flu virus spreads among humans the quality of the global response would determine whether it ends up killing 5 million people or 150 million. (http://www.iht.com, 30 September 2005) South-east Asia’s agriculture ministers endorsed a United Nations plan Friday to combat bird flu – a move they hope will win enough international aid to halt the disease before it becomes a catastrophic epidemic with the potential to kill millions of people globally. The ministers from the ten-member Association of South-East Asian Nations said in a statement that fighting avian flu . . . requires ‘an allout co-ordinated regional effort’ . . . David Nabarro of the WHO has been appointed as the UN co-ordinator to lead a global drive to counter a human flu pandemic, which could strike if the bird virus mutates into a strain that is deadly to humans and can easily spread among people . . . Nabarro: ‘[It would be] extremely wrong [to ignore the serious possibility of a global outbreak] . . . The avian flu epidemic has to be controlled if we are to prevent a human influenza pandemic. We expect the next influenza epidemic to come at any time now, and it is likely to be caused by a mutant of the virus that is currently causing bird flu in Asia. Between 5 million and 150 million people

Political developments 65 could die in a pandemic – the higher figure being likely if governments fail to act now’ . . . The meeting ended with the endorsement of a regional plan for control and eradication of bird flu and directed a task force to formulate ‘a detailed action plan for implementation and proceed to identify potential sources of funding’, according to a joint statement. The plan covers ‘eight strategic areas over a period of three years from 2006 to 2008 to prevent, control and eradicate the disease’, the ministers said. The plan was drafted in May by the UN Food and Agriculture Organization and the World Organization for Animal Health and will be presented to donors in December for implementation early next year [2006]. (http://www.iht.com, 30 September 2005) The WHO . . . said Friday [30 September] that it was impossible to estimate how many people might die from a new influenza pandemic, though it added that it had warned countries to prepare for a death toll as high as 7.4 million . . . Dick Thompson (a spokesman for the WHO): ‘We think this is the most reasoned position . . . [Even though several estimates could be plausible the agency] cannot be dragged into further scaremongering’ . . . Scientists’ estimates of how many people could die in a flu pandemic have ranged from fewer than 2 million to more than 100 million, depending on how contagious and lethal the virus is. Neither factor can be known until a pandemic strain emerges. (IHT, 1 October 2005, p. 6) ‘The WHO said yesterday [30 September] 2 million to 7.4 million deaths was a reasonable forecast for a global pandemic – distancing itself from . . . [David Nabarro’s] figure of up to 150 million’ (FT, 1 October 2005, p. 6). Scientists have made all sorts of predictions, ranging from fewer than 2 million to 360 million. Others have quoted 100 million. Last year [2004] WHO’s chief for the Asia-Pacific region predicted 100 million, but until now that was the highest figure publicly mentioned by a WHO official. (Independent, 1 October 2005, p. 29) Two teams of federal and university scientists [in the United States] announced Wednesday [5 October] that they have resurrected the 1918 influenza virus, the cause of one of history’s most deadly epidemics, and have found that, unlike the viruses that caused more recent flu pandemics of 1957 and 1968, it was actually a bird flu that jumped directly to humans . . . The new studies find that today’s bird flu viruses share some of the crucial genetic changes that occurred in the 1918 flu . . . [The 1918] virus killed 50 million people. (IHT, 6 October 2005, pp. 1, 7)

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‘Flu viruses that caused the pandemics of 1957 and 1968 . . . were not bird viruses but were human viruses that picked up a few genetic elements of bird flu’ (http://www.iht.com, 6 October 2005). The virus responsible for the 1918 Spanish flu pandemic which killed an estimated 50 million people worldwide originated from a bird flu virus, preliminary studies have shown . . . The research . . . will help scientists find new treatments for the most dangerous types of flu . . . In 1957 and 1968 an existing human virus underwent genetic mixing with a bird flu to produce a new ‘reassorted’ strain in one step. In 1918, however, an entirely avian virus gradually adapted to function in humans through a sequence of mutations. (FT, 6 October 2005, p. 10) ‘Scientists have recreated the Spanish flu virus that killed up to 50 million people in 1918–19’ (The Times, 6 October 2005, p. 31). ‘The Spanish flu pandemic killed an estimated 40 million people’ (FT, 8 October 2005, p. 11). ‘The Spanish flu outbreaks of 1918 . . . killed between 20 million and 40 million’ (Independent, 10 October 2005, p. 20). More than sixty-five countries and international organizations are participating [in a meeting in Washington] . . . The meeting comes a day after two teams of scientists announced that they had reproduced the 1918 Spanish flu virus, the cause of one of history’s most deadly pandemics, and found it to be bird flu . . . Since 1997 bird flocks in eleven countries have been decimated by flu outbreaks. But so far nearly all the people infected [with bird flu] – more than 100, including more than sixty who died – contracted the sickness directly from birds. However, there has been little transmission between people . . . Indonesia lowered its official total of bird flu deaths from six to three in line with WHO’s records, the health minister said Thursday [6 October] . . . Investigations have produced no evidence that the virus is spreading from person to person. (http://www.iht.com, 6 October 2005) ‘So far sixty-two people have died from bird flu in the region’ (The Times, 7 October 2005, p. 43). Three cases of suspected bird flu have been reported in Romania, which if confirmed would be the first in Europe. Officials detected the cases in domestic birds in the Danube delta . . . [Romania] would not say whether the flu was believed to be the virulent H5N1 strain . . . In August Finland reported a suspected case of bird flu in a gull . . . Tests are believed to have proved negative . . . The H5N1 strain has killed at least sixty-two people, all in south-east Asia and led to the slaughter of about 140 million birds in more than ten countries. No human-to-

Political developments 67 human transmission has been proved but there has been one case in Thailand where a woman is thought to have caught it from her daughter. (Guardian, 8 October 2005, p. 16) The birds that tested positive for the disease were domestic ducks, meaning they probably contracted the disease from other birds that had migrated to the area. The WHO has confirmed 116 human cases of bird flu, all in Asia, and sixty-three deaths since the latest outbreak began in December 2003. (FT, 8 October 2005, p. 11) ‘The Turkish authorities began slaughtering poultry Sunday [9 October], one day after the agriculture minister confirmed the country’s first bird flu case at a turkey farm’ (http://www.iht.com, 9 October 2005). The Asian flu seemed to continue its westward march as two outbreaks of avian influenza were reported in Europe over the weekend. Romania reported its first cases on Saturday [8 October] and Turkey on Sunday [9 October], both presumed to be carried there by birds that migrate from Asia in the autumn. There was no confirmation that the birds had succumbed to the deadly Asian H5N1 strain . . . If the birds are infected with A(H5N1) it would be the first time that the virus has been seen in Europe . . . In Romania outbreaks were reported in the region of the Danube Delta, with both wild and domestic birds affected . . . The authorities took hundreds of birds from the farms and killed them and then declared a quarantine on the villages and six counties in the area . . . [Turkey] confirmed that an outbreak of bird flu had occurred on a farm in the western part of the country . . . The village was put under quarantine and all birds and street dogs killed as a precaution. (IHT, 10 October 2005, p. 3) [In Vietnam] the WHO has recorded ninety-one cases of avian flu, including forty-one that have resulted in death . . . The health organization has warned that a possible pandemic of avian influenza could kill as many as 7.4 million people . . . ‘At present there is no convincing evidence of sustained human-to-human transmission of the H5N1 virus’, the organization said in a statement. ‘However, there have been incidents, in Thailand, Vietnam and Cambodia, where limited transmission between humans was suspected’. (http://www.iht.com, 10 October 2005) ‘The Asian virus does not appear to spread among humans’ (IHT, 12 October 2005, p. 5). Bird flu has not been detected in Romania, EU veterinary experts said on Wednesday [12 October] . . . Officials stressed, however, that more

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Political developments tests were still being taken of birds in Romania . . . The authorities in Bucharest continued with plans to cull thousands of domestic birds in the Danube Delta. (IHT, 13 October 2005, p. 4) Experts have confirmed that a bird flu virus found in samples taken from dead birds in Romania’s Danube Delta is the H5 type, authorities said Thursday [13 October]. The samples are being sent to Britain to identify the specific strain of the virus. So far there are no indications it is the H5N1 strain. (http://www.iht.com, 13 October 2005)

‘The EU on Thursday said the bird flu virus found in Turkish poultry was the H5N1 strain that scientists fear might mutate into a human virus and spark a pandemic’ (http://www.iht.com, 13 October 2005). Thousands of birds that died in Turkey over the past week succumbed to . . . the H5N1 virus . . . medical tests . . . confirmed Thursday [13 October] . . . It is the first time that the disease has been reported in a European country . . . The United Nations Food and Agriculture Organization . . . predicted that tests completed in the next few days would probably show that recent bird deaths in Romania were also caused by the virus . . . The deadliest strain of all bird flu viruses, H5N1, has also infected 120 humans, generally people in close contact with sick birds. About half of them died. (IHT, 14 October 2005, p. 1) Researchers have identified a mutated form of H5N1 bird flu that is resistant to Tamiflu, the drug being stockpiled around the world to counter a feared influenza epidemic . . . The strain was found in a case in Vietnam, a fourteen-year-old girl who may have caught the flu from her brother rather than directly from infected birds . . . However, tests on lab animals showed that the resistant virus is sensitive to another drug. (IHT, 15 October 2005, p. 3) ‘[On 15 October] the European Commission said . . . that the virus detected in Romania was identical to the lethal strain that had hit Turkey and Asia’ (FT, 17 October 2005, p. 9). The first known case of the A(H5N1) strain of avian influenza was found in 1996 in a goose in China. While the Beijing authorities insist that no poultry in the country has the disease now, Hong Kong University scientists who have studied the genetic evolution of the virus wrote in Nature in July that infected migratory birds in western China appeared to have contracted the disease in southern China; the virus has since spread from western China to East Asia, Russia, Kazakhstan, Turkey and Romania . . . Beijing officials criticised the researchers last

Political developments 69 summer for writing that the disease was still present in poultry in southern China . . . Though no human cases of the disease have been reported in China, the size of China’s human and poultry populations makes it possible that the spark will happen there . . . A lingering concern is whether local and provincial authorities, fearing censure, are hiding cases from the central government. This occurred in the SARS outbreak in late 2002 and again during a flare-up last summer of a pig disease in central China . . . While China shared samples of the bird flu virus last year [2004] with international health agencies, it has not done so with migratory bird virus samples this year [2005], preferring to analyze them in Chinese laboratories and showing the results to officials . . . [like one from] the UN agriculture organization. (IHT, 17 October 2005, p. 2) Greece became the first member of the EU to report a case of bird flu yesterday [17 October], when the H5 virus was identified in a turkey from the Aegean island of Oinousa . . . [Greece said that tests] would determine whether the virus was from the deadly H5N1 strain. (FT, 18 October 2005, p. 10) ‘Bird culls to control probable new outbreaks of bird flu started on farms in Russia and Macedonia . . . The Chinese authorities reported another outbreak of H5N1 in the province of Outer Mongolia’ (IHT, 20 October 2005, pp. 1, 8). ‘Thailand announced its thirteenth fatal case of the disease . . . [The] man who died Wednesday [19 October] was the first in more than a year to die from the disease’ (IHT, 21 October 2005, p. 3). Taiwan reported its first case of avian flu Thursday [20 October], discovered in a smuggled cargo of exotic cage birds . . . Taiwan said it had encountered the H5N1 strain of bird flu in birds shipped in a container smuggled from China. (IHT, 21 October 2005, p. 3) [The H5N1] strain of bird flu . . . began circulating in South Korea in 2003 . . . Millions of birds have caught the disease and 150 million poultry have been culled. Despite this action the virus is now endemic in many parts of Indonesia and Vietnam, some parts of Cambodia, China and Thailand, and possibly Laos. Yet only 117 people have caught the virus . . . In the unlikely event it is caught it is lethal. More than half those infected, sixty people, have died. Those most at risk are poultry workers in these countries, their families and those working with wild birds . . . China’s handling of bird flu has been characteristically secretive . . . Outbreaks of H5N1 in Japan, North Korea and Malaysia were quickly brought under control and are now believed to have been eradicated . . . The virus can infect and kill a range of other animals . . . The less severe pandemics in the second

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Political developments half of the last century, in 1957 and 1968, were caused by a human flu virus that had swapped genes with a bird flu virus. The more serious 1918 pandemic was caused when a bird flu virus adapted on its own to become transmissible between humans. The mortality rate was about 2.5 per cent and 40 million to 50 million died. (The Economist, 22 October 2005, pp. 91–3) The H5N1 strain of bird flu . . . has killed sixty-seven people . . . Bird flu, a common ailment among fowl, is difficult for people to contract and most human cases have been linked to direct contact with sick birds . . . There was confirmation from Moscow on Wednesday [19 October] of an outbreak of the H5N1 virus in the Tula region, south of the Russian capital. (http://www.iht.com, 21 October 2005)

On 23 October it was confirmed that an imported parrot in quarantine in the United Kingdom had died of the H5N1 strain of bird flu. ‘[The] parrot imported from Surinam and under quarantine in Britain . . . [is] thought to have been infected by a consignment of birds from Taiwan’ (IHT, 25 October 2005, p. 3). [On 25 October]] Indonesia confirmed its fourth fatality from avian influenza [a man who died in September] . . . H5N1 infections have killed sixty-two people in Asia since 2003 – more than half in Vietnam . . . [China] reported an outbreak of the deadly H5N1 avian flu in the eastern province of Anhui . . . In contrast with the widespread criticism of China’s initial tardiness in tackling the 2003 SARS outbreak and sharing information with its neighbours, international public health experts have praised Beijing’s recent efforts to fight avian influenza . . . There is clear evidence that China is promptly sharing information about avian influenza with the international community . . . A bird flu pandemic . . . would have a devastating impact on Asian countries, the Asian Development Bank warned Tuesday [25 October] . . . The economic impact would dwarf the downturn following the 2003 SARS outbreak that led to estimated losses of between $30 billion and $50 billion. (http://www.iht.com, 25 October 2005; IHT, 26 October 2005, p. 3) [On 26 October] China reported another outbreak in poultry . . . In China’s latest case of H5N1 infection, the third since last week, hundreds of chickens and ducks died in a village in central Hunan province. China had notified the United Nations of the latest outbreak on [25 October] . . . In Europe Croatian officials said tests had confirmed that wild swans found dead in eastern Croatia last week were infected with the lethal H5N1 bird flu strain . . . The WHO says 121 people have been infected in four South-east Asian nations and sixtytwo have died. (http://www.iht.com, 26 October 2005)

Political developments 71 On the French island of Reunion in the Indian Ocean preliminary tests on a man who had returned to the island after a trip to Thailand showed he might have the H5N1 virus, the authorities said Wednesday [26 October] . . . [It was announced that] the number of suspected bird flu cases in Reunion had risen to three . . . The EU Commission announced Wednesday that the H5N1 virus strain, which has killed sixty-two people in Asia, had been found in dead swans in Croatia. It was detected earlier in birds in Romania, Russia and Turkey. (IHT, 27 October 2005, p. 3) The WHO on Friday [28 October] asked China to conduct further tests to determine whether a twelve-year-old girl died of avian influenza and cautioned that provincial health officials may have acted prematurely in declaring that her death was not linked to the fatal disease . . . The death of the girl quickly attracted attention because she lived in a village in Hunan province where the latest outbreaks had occurred. Reports in the Hong Kong and mainland media suggested that the girl and her brother had fallen ill after eating a sickened [sic] chicken. (http://www.iht.com, 28 October 2005) Romania announced Friday [28 October] that the virulent H5N1 strain of bird flu has spread to the country’s north-east from the Danube Delta region, after tests on a dead heron proved positive for the virus. The heron was found a week ago . . . near Romania’s border with Moldova. The announcement marks the first time the H5N1 virus has been reported outside the Danube Delta region. (IHT, 29 October 2005, p. 5) Vietnam said Monday [31 October] that it needed tens of millions of dollars to fight the spread of bird flu as disaster co-ordinators from Pacific Rim countries met in Australia . . . [Vietnam said it] needed $50 million and help building up its stockpile of bird flu drugs . . . Vietnam has been hardest hit by bird flu, which has killed more than forty people in the country and prompted the authorities to destroy tens of millions of birds. Vietnam . . . [a] country of 82 million . . . has enough viral drugs to treat 60,000 people . . . Officials said last week that they wanted enough to treat 30 per cent of the population. (http://www.iht.com, 31 October 2005) [On 4 November] China reported its fourth bird flu outbreak in three weeks . . . Vietnam also confirmed bird flu outbreaks in three northern villages . . . The Japanese authorities have detected signs of bird flu at a northern farm and plan to kill 180,000 chickens after they discovered anti-bodies in some for the H5 family of bird flu. The deadly H5N1 strain of bird flu, which is the only one that has spread to humans, has

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Political developments not yet been detected in Japan, but the less virulent H5N2 strain hit the country last year [2004]. (IHT, 5 November 2005, p. 3) China and Vietnam each confirmed new bird flu outbreaks [on 4 November] and warned of more infections to come, amid predictions that a flu pandemic could kill up to 3 million people in Asia . . . cost the region billions . . . and plunge the world into recession. The latest Chinese outbreak [is] the fourth in the past three weeks . . . In Vietnam more than 3,000 poultry died or were culled this week in three villages . . . Vietnam began vaccinating its 150 million poultry flock in early August, but a shortage of vaccine imported from China may delay the programme’s completion by two weeks. (http://www.iht.com, 4 November 2005) China and Vietnam have reported major bird flu outbreaks in poultry . . . [In China’s case this is] the fourth outbreak in a month . . . In Vietnam, where forty-one people have died of avian influenza, a . . . woman with a fever and respiratory problems is the latest suspected case after Indonesia said three children were being tested for bird flu . . . In Asia it has killed sixty-two people and infected 122 since late 2003. It is difficult for people to catch and is spread almost exclusively through human contact with birds. (Independent, 5 November 2005, p. 31) In a report released Thursday [4 November] the Asian Development Bank outlined a number of scenarios – some catastrophic – that could face Asian nations in the event of a global flu outbreak. In a worstcase scenario in which the psychological impact of a pandemic could last a year, the bank said Asia could lose almost $282.7 billion – or 6.5 per cent of its GDP – in consumption, trade and investment and another $14.2 billion due to workers’ incapacity and death. The report said ‘growth in Asia would virtually stop’ and the economic impact would likely force the world into recession. That scenario assumes about 20 per cent of Asia’s population would fall ill and 0.5 per cent would die. In a less pessimistic forecast, the bank said that if the psychological impact of an outbreak lasted six months the cost to Asia in lost consumption, trade and investment would be about $99 billion. China, Hong Kong, Singapore, Malaysia and Thailand would likely be hardest hit by the pandemic, the ban predicted. A separate report by the World Bank said a human pandemic triggered by bird flu could cost the world economy as much as $800 billion. (http://www.iht.com, 4 November 2005)

‘The deadly H5N1 strain of bird flu has killed at least sixty-two people – including forty-one in Vietnam – and resulted in the deaths of more than 100 million birds since 2004’ (http://www.iht.com, 4 November 2005).

Political developments 73 In the 1918 Spanish flu epidemic between 20 million and 40 million people worldwide died. There was about a 2 per cent mortality rate. In subsequent pandemics in 1957 and 1968, which killed far fewer people, it was about 0.45 per cent. (IHT, 5 November 2005, p. 3) The Chinese government said Sunday [6 November] it had asked for help from the WHO in determining whether the H5N1 bird flu virus killed a twelve-year-old last month [13 October] and sickened two others [who recovered]. If any of the cases are confirmed it would be China’s first reported case of bird flu in humans . . . Meanwhile Indonesian health officials said Saturday [5 November] that a nineteen-year-old woman had died of bird flu . . . Her death brings the number of people killed by the disease in Indonesia to five. (http://www.iht.com, 6 November 2005) ‘As yet the only human cases reported around the world have gotten the disease by direct contact with an infected bird’ (IHT, 7 November 2005, p. 7). The [H5N1] virus might infect someone already sick with a strain of human flu, and the two viruses could have sex, thus creating a new virus that contains some genes from each, Such viral hanky-panky is thought to have led to the flu pandemics of 1957 and 1968. Or the virus could mutate in such a way that it becomes able to travel between people. Mutations to an avian flu virus are thought to lie behind the 1918 pandemic. (IHT, 7 November 2005, p. 8) The World Bank announced the creation Monday [7 November] of a $500 million loan programme aimed at quickly getting money to poor South-east Asian countries that are struggling to combat an outbreak of avian flu among birds. It also warned that a global human pandemic, should it occur, could cause $800 billion in global economic losses . . . or 2 per cent of annual global output . . . So far sixty-three people have died from avian flu and 124 people have been infected, all residents of agricultural areas of South-east Asia that came into contact with infected birds. (IHT, 8 November 2005, p. 3) Vietnam confirmed on Tuesday [8 November] its forty-second death from bird flu, its first in more than three months . . . The H5N1 strain of bird flu in Asia, as of Tuesday, is known to have killed at least sixtythree people out of 125 known cases . . . Despite . . . the fact that those viruses have been circulating in China for more than a dozen years, almost no human-to-human spread has occurred. (http://www.iht.com, 8 November 2005)

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Political developments The World Bank said Wednesday [9 November] that up to $1 billion would be needed over the next three years to fund a global strategy to tackle the spread of the H5N1 bird flu. On the final day of a three-day meeting of the WHO, World Bank officials said it was crucial to stamp out the disease in poultry as well as prepare countries for a potential human flu pandemic . . . World Bank officials said the budget estimate did not cover funding for measures in the event of widespread humanto-human transmission leading to a global human pandemic . . . The Asian Development Bank said it was making an extra $300 million available to help fight bird flu in countries such as Vietnam, Laos and Cambodia . . . The bank has already announced $170 million in grants and loans. The extra $300 million will be focussed on worst-hit countries such as Vietnam, Laos and Cambodia . . . Many poor Asian countries lack adequate surveillance and reporting mechanisms and cannot compensate farmers for poultry culls. Africa, which many experts said is likely to be the next front line in the fight against bird flu, faces similar problems . . . The Chinese prime minister, Wen Jiabao, warned Wednesday that China faced a serious threat from bird flu, since the disease is still not under control despite massive nationwide efforts to stop its spread. (http://www.iht.com, 9 November 2005) China on Thursday [10 November] reported two new incidents of avian flu among chickens in its north-eastern province of Liaoning, bringing the total number of reported cases in the past month to six . . . Vietnam, the country worst hit by bird flu so far, said on Thursday that it would send soldiers and the police to help contain the spread of the virus as more outbreaks erupt and the sudden deaths of ducks in two provinces hint at the emergence of a more virulent strain. Bird flu has been spreading fast in Vietnam, but provincial authorities are not showing enough urgency, the agriculture minister said. (http://www.iht.com, 10 November 2005)

‘China reported two new bird flu outbreaks in poultry Thursday [10 November] and quarantined 116 people, while Kuwait confirmed the first known cases in the Gulf – in an imported peacock and a wild flamingo’ (IHT, 11 November 2005, p. 4). The first case of bird flu in the Gulf Arab region was reported in Kuwait yesterday [11 November]. A migrating flamingo . . . was carrying the lethal strain of the H5N1 virus . . . An earlier case found in a shipment of birds from Asia was found to be the less virulent H5N2 strain. (Independent, 12 November 2005, p. 35) On Saturday [12 November] China tested an ill poultry worker for bird flu and Vietnam reported two new outbreaks of the virus . . . The

Political developments 75 Indonesian authorities are investigating whether a twenty-year-old woman . . . died from bird flu . . . [She died] late Saturday . . . The H5N1 strain has devastated poultry flocks across Asia since 2003 and jumped to humans, killing at least sixty-four people. (http://www.iht.com, 13 November 2005) ‘Of the sixty-four people who have so far died of bird flu, forty-two were infected in Vietnam’ (http://www.economist.com, 11 November 2005). Scientists in Vietnam believe the H5N1 bird flu strain has mutated, allowing it to breed more effectively in mammals, though not necessarily in humans . . . Scientists found significant variations in twenty-four samples from humans and poultry. The findings corroborate the belief that H5N1 would not have to mix with a human flu strain to become a form causing a human pandemic. (Guardian, 14 November 2005, p. 18) [China] said Tuesday [15 November] that the government plans to vaccinate all the country’s 14 billion poultry against bird flu as two new outbreaks of the disease in the far west were announced . . . China has more than 14 billion farm poultry, accounting for almost 21 per cent of the world’s total . . . Also Tuesday the government confirmed the tenth and eleventh outbreaks in the past month . . . A total of 320,000 poultry have been slaughtered . . . Infections have been reported in almost every part of the country since 19 October . . . On Tuesday China said it would ship 45 tonnes of bird flu vaccine worth $780,000 to Vietnam, the country hardest hit by the disease . . . Bird flu has killed at least sixty-four people in Asia since 2003, mostly those who have come in contact with infected birds. (http://www.iht.com, 15 November 2005) [China said] said that it would try to vaccinate all of the nation’s chickens and other poultry against bird flu . . . China has stocks of 4.2 billion chickens and a billion ducks, geese and turkeys last year [2004] . . . Three-fifths of the poultry in China are kept by families, who let the birds and other domesticated animals wander around the neighbourhood, the yard and the house . . . Experts at the UN Food and Agriculture Organization . . . said that more information was needed to assess the wisdom of China’s decision to vaccinate all poultry . . . [China] said it was ‘highly probable’ that a boy and a girl who suffered high fevers last month [October] – the girl died – had been China’s first human cases of bird flu . . . There had been no sign of human-tohuman transmission of bird flu . . . China reported fifty outbreaks of bird flu in sixteen provinces last year, and reported eleven more to international health agencies this autumn, including two more small outbreaks Tuesday . . . [China] reported last week that a fake flu vaccine, possibly including active virus, may have actually spread the

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Political developments disease instead of preventing it . . . China has developed its own version of Tamiflu. (IHT, 16 November 2005, p. 7) [Experts] now believes that the disease was brought to Britain in a consignment of 1001 mesias, or finches, from Taiwan. It was previously thought that the first source of the virus was in a . . . parrot from Surinam . . . It is not certain how many [of the finches] died of the bird flu . . . Experts admitted that they could not be definite about the source of the virus because tissue from the parrot and a sick mesia were mixed for testing. However, ‘on the balance of probabilities’, they blamed the mesia . . . No evidence of the H5N1 strain was found in any of the other birds [in quarantine] . . . Crucially, there was no infection in four British chickens used as a ‘sentinel’ in the quarantine premises. (The Times, 16 November 2005, p. 8) China confirmed its first three bird flu cases Wednesday [16 November], including two fatalities . . . A twelve-year-old girl in central Hunan province and a twenty-four-year-old female poultry worker in Anhui province in the east died of the virus . . . The third confirmed infection was the Hunan girl’s nine-year-old brother who has since recovered . . . Chinese and WHO experts had been reviewing the children’s cases . . . The two children and a teacher who also fell ill in their village had tested negative for bird flu . . . Also Wednesday Vietnamese authorities reported bird flu outbreaks in three more provinces . . . bringing to twelve the number of cities and provinces affected in the latest wave, which began about a month ago. (http://www.iht.com, 16 November 2005) The Chinese government announced Wednesday that it had confirmed the country’s first three cases of bird flu . . . [China said] that bird flu had been confirmed in a nine-year-old boy and his twelveyear-old sister in central China’s Hunan province and a thirty-six-yearold woman in Anhui province in east-central China. The boy has recovered and was released from hospital last weekend while the girl and woman died. In confirming all three cases as infections with the H5N1 bird flu virus, the Chinese authorities went even further than the WHO was willing to go. The WHO agreed late Wednesday that the boy and the teacher had been infected with bird flu. But the sister’s body had been cremated before her case became the subject of medical attention, and the WHO concluded that samples drawn before she died were not adequate for concluding whether she had bird flu. Determining whether the boy and the girl both had the disease is important because scientists are watching to see if the disease develops the capacity to more easily from person to person,

Political developments 77 which could lead to a global epidemic in people. The WHO has concluded that most human infections so far have come directly from birds, but has acknowledged that it is very difficult to determine the sources of infection when multiple family members fall ill. The family members are likely to have been exposed to the same birds as well as to each other . . . The earliest cases of H5N1 virus were found in birds in south-eastern China in 1996 and researchers have been finding the virus practically every year since then. The widespread presence of the disease in Chinese poultry has prompted suspicions that human cases were also occurring in China but were not being reported to national authorities by local and provincial authorities leery of censure for failing to protect public health . . . China becomes the fifth country to confirm human cases of bird flu since the beginning of last year [2004], following Cambodia, Indonesia, Thailand and Vietnam, and bringing the total to 128 cases, of which sixty-five were fatal. Vietnam has had ninety-two cases of which forty-two were fatal, Thailand has had twenty-one cases and thirteen deaths, Indonesia has had nine cases and five deaths, and Cambodia has had four cases, all dead. (IHT, 17 November 2005, p. 4) The Food and Agriculture Organization estimates the economic impact [of bird flu] has been more than $10 billion . . . [The] director of its animal-production and health division says that a single large outbreak in 2004 cut GDP across South-east Asia by up to 1.5 per cent . . . The next influenza pandemic – an event that occurs about three times a century – it could last for up to a year . . . [The World Bank] suggests it might cost at least $800 billion. (The Economist, 19 November 2005, p. 95) Indonesian officials said yesterday [17 November] they had confirmed two more human fatalities from H5N1 . . . [bringing Indonesia’s confirmed fatalities to seven, with four other people having survived. Western health experts believe at least two other fatalities can be attributed to the virus and many more cases are probably not being detected. (FT, 18 November 2005, p. 11) Indonesia’s toll [rose] to seven out of eleven infections and the number of global fatalities [rose] to at least sixty-seven . . . In China the WHO ruled out human-to-human transmission in the case reported on Wednesday as two new outbreaks in poultry were reported. (Guardian, 18 November 2005, p. 18) China’s plan to vaccinate billions of chickens against avian flu could backfire and end up spreading the disease, according to poultry and vaccine experts. Vaccination teams could easily carry the virus from

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Political developments farm to farm on their shoes, clothes and equipment unless they changed or sterilized them each time . . . Also, experts said, the task is likely to be overwhelming because the Chinese eat about 14 billion chickens a year so mass vaccinations would have to be repeated again and again. (IHT, 21 November 2005, p. 10)

‘Beijing yesterday [21 November] issued new rules to combat bird flu, threatening to punish local authorities that delay or misreport findings’ (FT, 22 November 2005, p. 11). ‘[The] new rules require local Chinese officials to set up disease-warning networks and to stockpile disinfectant and other emergency supplies. Officials who fail to pinpoint and report outbreaks quickly face firing or jail’ (http://www.iht.com, 22 November 2005). On Monday [21 November] two new outbreaks among poultry, the sixteenth and seventeenth, were reported in China . . . A suspected human death from the virus was reported in Jakarta Tuesday [22 November], which, if confirmed, would bring Indonesia’s toll to eight . . . If confirmed it would be the sixty-eighth avian flu death worldwide. (http://www.iht.com, 22 November 2005) A study published this month [November] by scientists in a global network organized by the WHO pointed out that there was no evidence that the H5N1 virus had acquired human or any other avian influenza genes in the eight years since it had begun infecting humans. (FT, 24 November 2005, p. 21) ‘China is preparing to test a bird flu vaccine on people, state media said Thursday [24 November 2005] after officials confirmed the nation’s second human death from the virus . . . The vaccine trial will involve 100 people’ (http://www.iht.com, 24 November 2005). With China reporting its first two human deaths from bird flu, international health experts are warning that current tallies may greatly underestimate the problem, both in China and elsewhere. Scientists have long been mystified by the low number of cases in humans reported in China . . . The WHO . . . [believes] that systems to diagnose a virus like bird flu are often poorly developed and underfinanced in the rural areas that have suffered most . . . While Vietnam, Indonesia and Thailand have provided international experts with samples of the virus from each bird outbreak, China has been unwilling to share such material. It has provided only one sample . . . Vietnam has reported ninety-one cases of bird flu in humans, with forty-one people dead . . . [according to] new data [presented on 23 November]. (IHT, 25 November 2005, p. 5) Roche, the Swiss pharmaceutical company that controls the patent for Tamiflu . . . the antiviral drug used to treat bird flu . . . gave Indonesia

Political developments 79 permission Friday [25 November] to start producing it for the domestic market. The company said it did not have a patent there, so Indonesia does not have to obtain a licence . . . So far Indonesia and Vietnam are the only countries to have secured permission from Roche to produce Tamiflu on their own. Other countries are in talks with the company . . . Jakarta health officials confirmed an eighth . . . human death from the H5N1 virus . . . but are waiting for definitive tests to come back from Hong Kong. (http://www.iht.com, 27 November 2005) China reported two new outbreaks of bird flu in poultry on Tuesday [29 November] The outbreaks were China’s twenty-third and twentyfourth since 19 October . . . China has sent 3 million doses of bird flu vaccine to Indonesia, where H5N1 was found in twenty-three of thirty provinces. Unlike other countries, Indonesia does not routinely cull birds, citing a lack of funds. Indonesia has reported twelve human cases, seven of which have been fatal. China has also exported 43 tonnes of bird flu vaccine to Vietnam., the country hardest hit by the disease . . . At least sixty-eight people have died from the H5N1 bird flu virus since it emerged in Asia in 2003 . . . So far most human cases have been traced to contact with infected birds. (http://www.iht.com, 29 November 2005) China claims a domestic population of about 14.2 billion birds. The mass vaccinations illustrate . . . the immense challenges involved, including the possibility that the rural health workers themselves might spread the virus . . . China is estimated to have 640,000 to 1 million villages where birds are raised in close proximity with humans . . . International experts say Beijing’s official figure of only two human deaths from bird flu is suspicious. Some speculate that dozens or even hundreds may have died already. (IHT, 1 December 2005, p. 7) ‘China reported its twenty-fifth outbreak of H5N1 in poultry’ (The Times, 2 December 2005, p. 54). Ukraine yesterday [4 December] began combating what appeared to be the biggest outbreak yet in Europe of the deadly strain of bird flu, after more than 2,000 domestic birds died in a remote region of the Crimea. A state of emergency [was declared] in five villages on Saturday [3 December] after the agriculture ministry said it had identified the H5 subtype of bird flu virus . . . Confirmation that the outbreak was caused by the H5N1 strain that can kill humans was awaiting the results of tests in Britain and Italy. But officials left little doubt that they were dealing with the same deadly strain that has shown up in Romania and other parts of south-east Europe . . . The [Ukrainian] agriculture minister told a press conference he was alerted on Friday

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Political developments [2 December] after the villagers saw up to 20 per cent of their birds die overnight . . . Villagers told television reporters they were mystified by the disease that had been killing birds for more than a month . . . Romania said at the weekend it was dealing with what appeared to be a new H5N1 outbreak in the country’s south-east, its first outside the Danube delta. (FT, 5 December 2005, p. 6)

‘A state of emergency [was declared] Saturday after . . . Ukraine . . . recorded its first case of type H5N1 bird flu’ (IHT, 7 December 2005, p. 3). ‘President Viktor Yushchenko, angry over delays in reporting a virulent strain of bird flu, ordered the dismissal on Monday [5 December] of Ukraine’s top veterinarian officer’ (IHT, 6 December 2005, p. 10). ‘A five-year-old boy became Thailand’s second bird flu fatality . . . since October . . . China [reported] its fifth human case’ (http://www.iht.com, 9 December 2005). A five-year-old Thai boy became the seventieth person to die of bird flu, it was reported yesterday [9 December] . . . The boy’s death took Thailand’s bird flu death toll to fourteen out of twenty-two known cases . . . China has reported a new case of H5N1 . . . [but] the Chinese victim has since recovered. (Independent, 10 December 2005, p. 31) ‘The death of the five-year-old boy from Thailand took the country’s bird flu cases to fourteen out of twenty-two known cases since the virus broke out in Asia in late 2003’ (Guardian, 10 December 2005, p. 18). Roche, the Swiss drug maker, said Monday [12 December] that it had reached a sub-licensing agreement with China’s state-owned Shanghai Pharmaceutical Group to manufacture the influenza drug Tamiflu and is in talks with twelve other companies [in other countries] . . . The agreement with Shanghai Pharmaceutical is the first full sub-licence that Roche has awarded for Tamiflu . . . the anti-viral drug [that] has shown in clinical trials to work against the symptoms of the H5N1 strain of bird flu . . . The agreement with Shanghai Pharmaceutical comes after some Asian countries, including China’s, said they would allow local companies to produce a generic version of the drug – without Roche’s permission, if necessary . . . Tamiflu is not protected by patent in Thailand, the Philippines and Indonesia, meaning local companies there are free to produce the drug . . . In Vietnam Roche has agreed to allow local companies to put the finished ingredients of Tamiflu into capsules . . . So far seventy people in five Asian countries have died of the disease. (IHT, 13 December 2005, p. 16) Ukraine on Wednesday [14 December] announced that tests had confirmed that a potentially deadly strain of avian flu . . . H5N1 . . . had

Political developments 81 established itself in the Crimean Peninsula, and said that thousands of birds were being culled . . . [The] H5N1 [strain] has been responsible for the deaths of at least sixty-nine people in Asia since 2003. (IHT, 17 December 2005, p. 3) A thirty-five-year-old man in eastern China became infected with the . . . H5N1 virus . . . making him the country’s sixth human bird flu case, the state news media said Friday [16 December] . . . [He] fell ill on 4 December . . . [but is] recovering in hospital . . . The H5N1 strain of bird flu has killed at least seventy-one people since 2003 . . . On Friday Indonesia said a . . . man had died from the H5N1 strain. (http://www.iht.com, 16 December 2005) The first scientific study of humans with bird flu who have received the anti-viral drug Tamiflu has found that the bird flu virus can rapidly become vulnerable to the medicine . . . In the new study . . . colleagues at Vietnam’s Hospital for Tropical Diseases in Ho Chi Minh City treated eight patients with Tamiflu. Vietnam has had more human bird flu cases than any other country . . . In half of the patients Tamiflu worked brilliantly . . . In two patients the bird flu virus rapidly developed strong resistance to the drug. The patients died . . . The remaining two patients died despite treatment, although the drug may have been started too late in their illness to help them. From a public health perspective the development of resistance in even a quarter of cases is worrisome, since it means that such patients, before they die, can pass on a resistant form of virus that is even harder to treat. (IHT, 22 December 2005, pp. 1, 8) ‘The reports increase suggested levels of resistance to nearly 10 per cent, or three out of the thirty-one known human cases of H5N1 treated with Tamiflu . . . The virus has so far infected 139 people and killed seventyone’ (FT, 22 December 2005, p. 12). Roche, the Swiss pharmaceutical group, has signed a pioneering deal authorizing an Indian drugs company to manufacture and sell its antiviral flu medicine Tamiflu under licence in a number of developing countries. Hetero . . . becomes the second drug company after Shanghai Pharmaceutical Group to receive a sub-licence that will allow it to sell large volumes of Tamiflu at a price it chooses . . . The Indian deal is important because for the first time it authorizes a partner company to produce and sell Tamiflu not only in its home market – as is the case with Shanghai – but also in other less developed and developing countries . . . The deal, which initially lasts for two years, would allow Hetero to sell Tamiflu at whatever price it chooses in India and countries where there is no or poor intellectual property protection for the drug. (IHT, 24 December 2005, p.5)

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Political developments China confirmed a new outbreak of bird flu in the south-western province of Sichuan on Wednesday [4 January 2006], but the agriculture ministry said the situation there was under control. More than 1,800 birds were found dead on 22 December [2005] at a farm . . . On Tuesday [3 January] samples tested at a laboratory confirmed the birds had died from the H5N1 virus. (http://www.iht.com, 4 January 2006)

‘Turkey has confirmed two cases of bird flu, including a fourteen-year-old farm boy who died . . . His sister, who is in a serious condition in hospital, also tested positive. A third sibling is also suspected of having bird flu’ (Independent, 5 January 2006, p. 21). Two siblings who lived on a farm in rural Turkey have died of avian influenza, health officials there said Thursday [5 January], making them the first human victims of the disease outside of China and South-east Asia. Both children had close contact with sick poultry . . . It has not yet been confirmed that they succumbed to the virulent H5N1 strain virus, although everything points to that conclusion . . . [The girl was] fifteen and her [brother was] fourteen . . . Their elevenyear-old sister . . . and some neighbours have been hospitalized . . . All the children were involved in caring for poultry, although there are no officially reported outbreaks in the village where they live. (http://www.iht.com, 5 January 2006; IHT, 6 January 2006, pp. 1, 4) Two children [died] in a suspected outbreak of H5N1 . . . The brother and sister, who lived close to poultry at their farm in a village near the border with Armenia, were the first human victims of the disease in Europe. Seventy-four people have died of bird flu in Asia in the past three years . . . [The fifteen-year-old girl] died early yesterday [5 January]. Her brother [aged fourteen] . . . died on Sunday [1 January] . . . Their eleven-year-old sister is among the eighteen other patients who were in hospital yesterday with bird flu-like symptoms . . . Samples of the dead birds were due to arrive in . . . the UK and would be tested to show whether the birds died of the H5N1 strain. (FT, 6 January 2006, p. 7) An eleven-year-old girl died Friday [6 January] of suspected bird flu in eastern Turkey, days after her brother and sister succumbed to the disease . . . Their doctor said the youngsters most likely contracted the virus while playing with the heads of dead chickens infected with the disease . . . The Turkish agriculture minister . . . said the problem of containing bird flu in eastern Turkey was aggravated by the fact that almost every house has poultry and people keep the birds inside their homes at night when temperatures drop. Most of those who have died from the virus have been farm workers in Vietnam,

Political developments 83 Thailand and Indonesia, who came into close contact with poultry, said the WHO. (http:www.iht.com, 6 January 2006) Health officials in Europe said they were on ‘high alert’ Friday [6 January] as a third child in eastern Turkey was confirmed to have bird flu and more than two dozen people suspected of having the disease were in a local hospital . . . An international reference lab in England confirmed for the first time Friday that at least three children in the Turkish cluster had the H5N1 virus and further testing was under way . . . The full extent of the cluster is unclear, as tests for H5N1, which are difficult to perform, are still under way [in England] . . . On Friday the lab confirmed that . . . the two siblings who died . . . were infected with H5N1. So was another unrelated boy, who is severely ill in the same hospital in the city of Van . . . Even though their chickens were dying, there were no reports of H5N1 in the remote village when the children fell ill. (IHT, 7 January 2006, p. 3) A third child from the same family in Turkey died yesterday [6 January] after tests confirmed that two of the victims had been infected with the H5N1 virus . . . The children had all eaten infected chicken that had lived partly in their home. (FT, 7 January 2005, p. 6) Two young children were being treated for deadly bird flu at an eastern Turkish hospital Sunday [8 January], the day after health officials confirmed that at least two of the three siblings who died last week had been infected with the virus. A British laboratory has confirmed the virus in a five-year-old hospitalized in the Turkish town of Van, near the Iranian border, while tests in Turkey and Britain also found the strain in a eight-year-old girl . . . The British lab also confirmed [it in] a fourteen-year-old boy and his fifteen-year-old sister, who died Friday [6 January] . . . In all thirty-eight people were hospitalized with symptoms like those of bird flu . . . Dozens of people with flu-like symptoms, who had recently been in close contact with fowl, were hospitalized across Turkey . . . So far the lethal H5N1 strain of the bird flu has been capable in rare cases of passing from poultry to humans in close contact with them, but not from human to human. (http://www.iht.com, 8 January 2006) In the eastern town of Dogubayazit, in Van, three children from the same family died last week . . . A local hospital has been besieged by panicked residents seeking treatment for symptoms . . . Two children and an adult have tested positive for the deadly H5N1 bird flu strain in Turkey’s capital Ankara, the city’s governor has said. The results have not been confirmed by WHO labs . . . The three people who tested

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Political developments positive in Ankara come from a town about one hour’s drive [sixty miles] from the city. (http://www.bbc.co, 8 January 2006) Four children from villages near Van in remote eastern Turkey have now been officially confirmed to have been infected with the H5N1 strain of the flu by the WHO, and at least thirty people are hospitalized in Van City as possible victims. Like many people in these poor villages, the four children – two of whom have died – had close contact with birds, health officials said, and probably became infected as a result. A sibling of the two victims has also died, although tests for the virus have so far been negative. In addition, Turkish officials announced Sunday [8 January] that tests had confirmed five more cases of H5N1, two in Van and three from around Ankara – two young brothers and an elderly man. The Ankara cases have the most alarming implications since bird flu has never been reported in that part of the country. It is a relatively well off area, where it is not the norm for humans and animals to live under one roof. The boys infected had contact with dead wild ducks . . . and the man a dead chicken . . . The United Nations Food and Animal Organization . . . said the organization now believed the outbreaks had been occurring for some time, staring perhaps as early as October or November [2005] . . . In one village near Van, Dogubayazit, four children from the same family have apparently come down with the disease. A third also perished, although the first test was negative . . . [The test is] being repeated because the test is complicated and is sometimes falsely negative . . . A total of fifty patients are in hospitals in Van and Ankara with possible bird flu . . . all of whom had close contact with birds . . . The cluster of cases in Turkey is extraordinary and concerning, scientists said. In all of East Asia, where the disease has been rampant in birds for years, only about 140 people have ever become infected and there has never been this kind of grouping. Scientists are exploring various theories to explain the Turkish clusters . . . When temperatures drop below zero – as they do frequently around Van in the winter – people may be more likely to bring chickens indoors and that could increase exposure. (IHT, 9 January 2006, pp. 1, 8) The Turkish health ministry said two children and an adult from near the capital, as well as two people in the eastern city of Van, had tested positive for the H5N1 strain of bird flu . . . Samples from them are expected to be sent to the UK for testing . . . Seven cases of the H5N1 strain [have been] confirmed in Turkey. (FT, 9 January 2006, p. 1) Preliminary tests showed that five more people have been infected with the deadly H5N1 strain of the bird flu in Turkey, a health min-

Political developments 85 istry official said Monday [9 January], indicating the disease was spreading. Turkish labs detected H5N1 in the five new cases, discovered in four separate provinces . . . The new cases raise the number of suspected and confirmed cases in Turkey to fifteen. Ten people had earlier tested positive for H5N1 in tests in Turkish labs, four of which have been confirmed by the WHO. Those four include two siblings who died last week in the eastern city of Van, the first confirmed fatalities caused by the virus outside eastern Asia, where seventy-four people have been killed by H5N1 since 2003. A third sibling died in Van of bird flu, but a WHO lab has yet to confirm H5N1 . . . The cases in Ankara included two young brothers and a sixty-five-year-old man, all of whom tested positive for H5N1 in preliminary tests by Turkish labs . . . Vietnam has not detected any bird flu outbreaks among its poultry in more than three weeks, but the country still faces a high risk of future flare-ups, an official said Monday . . . The northern provinces of Ha Giang and Cao Bag bordering China were the last two provinces where no outbreaks were reported in twenty-one days . . . The virus is considered to have been contained if no new outbreaks have been reported in that period, according to Vietnam’s animal health decree. Vietnam has been hit harder by the virus than any other country. Since early October [2005] nearly 4 million birds have died or been slaughtered in twenty-four affected provinces nationwide. All those areas have since gone at least twenty-one days without an outbreak . . . A thirty-nine-year-old man who died in Indonesia on 2 January had been infected with the bird flu, a senior health ministry official said Monday . . . If the results are confirmed by a WHO-sanctioned laboratory, the country’s human toll from the disease would climb to twelve. (http://www.iht.com, 9 January 2006) Five more children in Turkey tested positive in preliminary tests for the deadly H5N1 flu strain. The country now has fifteen suspected or confirmed cases of the strain and three children from the same family have died. The new cases were discovered in four provinces, indicating that the disease is spreading . . . The WHO said, however, that the Turkish victims appeared to have contracted the virus directly from infected birds, allying fears that it might now be passing from person to person. (IHT, 10 January 2006, p. 3) The WHO says fifteen people have been infected with bird flu in Turkey. Five of those – reported by the Turkish health ministry on Monday [9 January] – are considered ‘preliminary positive’ because the organization has not yet received enough information about them . . . A team that began investigating the cases has initially reported that they were caused by ‘direct contact with diseased poultry’ . . . The

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Political developments governor of Istanbul . . . announced Monday that birds in three districts of this city of 12 million had been diagnosed with the flu, although it was not yet clear if they carried the most dangerous H5N1 strain . . . In addition to the fifteen confirmed cases, the governor said that more than twenty people in Istanbul potentially had bird flu. (ibid., pp. 1, 8) [On 9 January] the [Turkish] health ministry announced that five more people had been infected with the deadliest strain of the virus, bringing the total to fourteen . . . Scores of suspected bird flu cases were reported across western and northern Turkey and a mass cull of poultry continued in the east. (FT, 10 January 2006, p. 8) The [Turkish] health ministry said fourteen people had tested positive for the virus, including the three dead children . . . A fourth child from the same family, aged six, was discharged from hospital after being confirmed as free of the disease . . . Worldwide seventy-six people have died of the H5N1 strain of avian influenza and the total number of confirmed cases has reached 146 in Vietnam, Thailand, Cambodia, China, Indonesia and now Turkey. Vietnam has the highest number, with ninety-three cases and forty-two deaths. China has reported seven cases and three deaths. (Independent, 10 January 2006, p. 18) New research offers some ground for optimism: it is likely that many people who contact the disease will not become seriously ill and will recover quickly. Although not definitive, a study published Monday [9 January] in Archives of Internal Medicine suggests the virus is more widespread than thought. But it also probably will not kill half its victims . . . Anna Thorson (of Karolinska University Hospital in Stockholm): ‘The results suggest that the symptoms most often are relatively mild and that close contact is needed for transmission to humans’ . . . The new study involved 45,476 randomly selected residents of a region [in Vietnam] where bird flu is rampant among poultry – Ha Tay province, west of Hanoi. More than 80 per cent lived in households that kept poultry, and one quarter lived in homes reporting sick or dead fowl. A total of 8,149 reportedly had flu-like symptoms, with a fever and cough. Residents who had direct contact with dead or sick poultry were 73 per cent more likely to have had those symptoms than residents without direct contact. The researchers said between 650 and 750 flu-like cases could be attributed to direct contact with sick or dead birds. While most patients said their symptoms had kept them out of work or school, the illnesses were mostly mild, lasting about three days. In contrast, most of the more than 140 human cases linked to bird flu and reported to the WHO since January 2004 have been

Political developments 87 severe – killing more than half the patients . . . The study’s authors said that without blood tests to prove the Vietnamese residents had bird flu the results were only suggestive and far from conclusive. (http://www.iht.com, 10 January 2006) ‘[The study] suggested that the H5N1 virus might cause a wide spectrum of disease, but that doctors in Asia might only detect the severest cases, the ones that went to hospital’ (IHT, 11 January 2006, p. 8). Swedish researchers said . . . there could be up to 750 cases of infection compared with the eighty-seven officially reported . . . Those infected did not seek hospital treatment and were not counted in official figures . . . The finding indicates the disease may be milder . . . but it also suggests it is more widespread in humans, increasing the chances of a mutation that could trigger a pandemic. (Independent, 10 January 2006, p. 18) Japan said Tuesday [10 January] that seventy-seven poultry workers had tested positive for bird flu in the first ever confirmed infections of humans involving the weaker strain of the virus . . . H5N2 . . . [But] developing countries hit hardest by bird flu rarely bother trying to confirm cases of the weaker strain . . . The farm workers . . . were infected at some point but . . . none of them showed signs of the disease . . . Japan has so far suffered one case of human infection of the more deadly virus, but no deaths . . . Most of the human infections in the world have been linked to direct contact with sick poultry . . . There is no known cure or vaccination for H5N1 in humans. (http://www.iht.com, 10 January 2006) ‘China on Tuesday [10 January] recorded its thirty-third outbreak of bird flu since early 2005, with the latest epidemic hitting the southern province of Guizhou’ (http://www.iht.com, 10 January 2006). The WHO said [on 10 January] that preliminarily it supported analyses from Turkish laboratories of fifteen cases of the H5N1 virus in humans, pending confirmation from a second foreign test abroad, which was in line with normal practice. Three siblings from eastern Turkey have died from the H5N1 strain but authorities said yesterday [10 January] that none of the remaining individuals suspected of infection was in a critical condition . . . The [Turkish] health ministry said another human case of the H5N1 strain had been found in a woman in Sivas. (FT, 11 January 2006, p. 11) The WHO said Wednesday [11 January] that two more people sickened by bird flu in China have died, bringing the total number of humans killed by the disease in that country to five and pushing the death toll worldwide to seventy-eight. (http;//www.iht.com, 11 January 2006)

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Political developments Fifteen people [in Turkey] have contracted the deadly strain H5N1 . . . and more than 100 people are in hospitals under observation . . . Massive bird deaths started in mid-December [2005] . . . In Dogubayazit . . . all four children in the Kocyigit family came down with the disease after helping their mother slaughter sick birds on 24 December . . . The government has announced it will provide compensation, but poultry owners must apply after the birds are killed and are only given money on the spot. (IHT, 12 January 2006, pp. 1, 4) All the human cases of avian influenza in Turkey – at least eighteen have been confirmed – have occurred after close contact with sick birds . . . The largest outbreak in Turkey, which has resulted in three human deaths, is in the border town of Dogubayazit. (IHT, 13 January 2006, p. 3) Turkish officials announce a rise yesterday [12 January], from fifteen to eighteen, in the number of human bird flu cases . . . Tests also showed that an eleven-year-old girl who died last week was suffering from H5N1 . . . [Her] brother . . . and sister . . . also died of the disease last week, bringing the number of confirmed bird flu fatalities in Turkey to three – all of them children. (Guardian, 13 January 2006, p. 28) A twenty-nine-year-old Indonesian woman has died of bird flu, health officials said Thursday [12 January] . . . The woman died Wednesday . . . Samples have been sent to a Hong Kong laboratory – accredited by the WHO – to confirm the diagnosis . . . Indonesia is awaiting results from tests in Hong Kong on a thirty-nine-year-old man who died last week. Local tests, usually reliable, confirmed he had died of bird flu. If tests confirm the two fatalities were caused by bird flu, Indonesia’s death toll from the H5N1 virus would rise to thirteen. (IHT, 13 January 2005, p. 3)

‘Indonesia: the WHO confirmed the country’s twelfth human death form the H5N1 strain’ (FT, 14 January 2006, p. 5). ‘The virus has killed a twelfth person in Indonesia, a twenty-nine-yearold woman. It brings the death toll worldwide from the disease since it struck Asia in 2003 to seventy-eight’ (Guardian, 14 January 2006, p. 18). The Turkish health ministry . . . confirmed three more cases of infection by the deadly H5N1 strain of bird flu in humans, bring the total to eighteen . . . A four-year-old girl died in hospital in Turkey yesterday [13 January] . . . The EU yesterday [13 January] pledged $97 million towards tackling bird flu, adding to contributions from Japan and the United States as leading countries geared up for an international donors’ conference in Beijing next week to help prevent a human pan-

Political developments 89 demic. At the close of a conference in Tokyo yesterday . . . The WHO . . . said $1.5 billion was needed to tackle the problem . . . Japan has pledged $155 million. (FT, 14 January 2006, p. 5) Health authorities in Turkey are investigating whether a four-year-old girl who died yesterday [13 January] has become the country’s fourth child fatality . . . Eighteen people have already been infected . . . Patients there [in Turkey] have been said to be responding well . . . to Tamiflu. (Guardian, 14 January 2006, p. 18) The Turkish authorities were trying to determine whether a twelveyear-old girl who died Sunday [15 January] was the country’s latest victim of bird flu after her seven-year-old brother tested positive for the virulent H5N1 virus The girl’s brother was in a serious condition, officials said . . . [They are] from Dogubayazit . . . The health ministry said the latest test results on the sick boy brought to at least nineteen the number of people in Turkey known to have contracted the H5N1 strain . . . Health authorities have said all those with confirmed H5N1 infections apparently had touched or played with sick birds and that there was no evidence of person-to-person infection . . . The virus is now confirmed in twenty-six of Turkey’s eighty-one provinces . . . The three fatalities in Turkey last week were the first known deaths from the virus outside East Asia and South-east Asia, where at least seventy-seven people have died from bird flu since the outbreak began, according to the WHO tally. (IHT, 16 January 2006, p. 3) ‘So far seventy-nine humans have died from the virus’ (FT, 16 January 2006, p. 9). This week . . . health ministers, leaders of UN agencies and top officials from the World Bank and other lending institutions gather in Beijing to raise as much as $1.5 billion to fight bird flu . . . For now much of the money being offered to poor countries to fight bird flu involves loans, not grants . . . The danger, even some managers of bird flu programmes are starting to say, is that donors focus so intently on a single disease that they unintentionally disrupt many other health programmes . . . In Laos . . . despite the apparent disappearance of bird flu . . . it has consumed the time and attention of Laos’s best doctors and veterinarians for the past two years . . . Not one human case of bird flu was ever confirmed in Laos . . . Laotian government officials reported to the UN agency within hours on a weekend last September [2005] the country’s only suspected human case of bird flu so far. A laboratory in Japan determined it was a false alarm . . . Unlike the situation in neighbouring Vietnam, Thailand and China, where live poultry is

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Political developments often transported large distances to markets, sometimes on bicycles, in sparsely populated Laos most chickens and ducks are raised in backyards and eaten by their owners. This limits the disease’s spread. (http://www.iht.com, 15 January 2006) Initial tests carried out by the Indonesian authorities indicate that a thirteen-year-old girl who died over the weekend was infected with bird flu, an Indonesian health ministry official said Monday [15 January] . . . The girl would be the thirteenth Indonesian fatality from the virus, which has killed nearly eighty people in Asia since 2003. Three people have also died in Turkey . . . The WHO confirmed Friday [13 January] that a twenty-nine-year-old Indonesian woman was the twelfth Indonesian death from bird flu. Indonesia is also awaiting results from tests in Hong Kong on a thirty-nine-year-old man who died earlier this month. Local tests, which are usually reliable, confirmed that he also had bird flu. (http://www.iht.com, 16 January 2006) Twenty people in Turkey, all of whom have had close contact with sick birds, have been confirmed as infected over the past two weeks. The most recent victim was a twelve-year-old girl, who . . . died Sunday [15 January] . . . It was determined Monday [16 January] that she had the virus . . . In South-east Asia, where bird flu first appeared in 1997, there have been about 140 cases over a period of three years . . . There are now nineteen confirmed outbreaks of bird flu in Turkey and the government announced Monday that it was culling birds in twenty-nine provinces where flu was ‘confirmed or suspected’. (IHT, 17 January 2006, p. 3) Top officials from around the world said here [Beijing] on Tuesday [17 January] that governments would have to spend heavily for years to prevent bird flu from spreading widely among humans, and cannot just rely on the many stopgap steps taken so far. A two-day conference that began here on Tuesday morning is expected to produce pledges of $1.2 billion to $1.5 billion in bird flu spending from the conference’s sponsors – the EU, the World Bank and China – and from other donors, including the United States. The recent spate of twenty human cases of bird flu on Europe’s doorstep in Turkey, including four deaths, has prompted criticism at the conference of Turkish officials for not having spotted the disease in local poultry sooner. This failure has led to calls for a broad international effort to build up many nations’ veterinary capacity to spot outbreaks early, when they can still be contained fairly easily through steps like culling or vaccinating nearly all chickens . . . [It was said that] the EU would announce on Wednesday [18 January] an increase in its previous pledge of $120 million . . . The predictions of a long and costly cam-

Political developments 91 paign came as Roche announced in Basel, Switzerland, that it would donate another 2 million treatment doses of its anti-viral medicine, Tamiflu, to the WHO . . . The director-general of the World Organization for Animal Health said it was crucial to catch an outbreak within the first forty-eight hours and that Turkey had failed to do so. (IHT, 18 January 2006, p. 2) The Roche donation . . . [of] another 2 million treatments of Tamiflu . . . would have a market value of about $36.2 million if sold at its usual commercial prices to western governments . . . [Tamiflu] is designed to both reduce the death and illness from bird flu and to prevent its spread . . . The latest Roche donation follows a previous 3 million treatment stockpile it provided for free. (FT, 18 January 2006, p. 7) Preliminary tests indicate that another Turkish child is infected with the H5N1 strain of bird flu, increasing the total number of human cases in the country to twenty-one . . . The child . . . was from Dogubayazit, the home town of all four of the other children who have died of H5N1 infection. (IHT, 18 January 2006, p. 2) ‘Bird flu has killed at least seventy-nine people since 2003 and nearly 150 people are known to have been infected in six countries’ (Guardian, 18 January 2006, p. 16). The international community yesterday [18 January] promised $1.9 billion to fight avian flu in the worst affected countries, with the largest commitments coming from the United States with $334 million and the EU pledging around $260 million . . . [Other promises included Japan’s $159 million, Russia’s $45 million, Australia’s $42 and China’s $10 million] . . . The funding, promised at an international conference in Beijing, was well in excess of an initial target set by the World Bank to raise at least $1.2 billion . . . Of the $1.9 billion, about $900 million would be in the form of loans and the rest in grants . . . David Nabarro, the United Nations flu envoy, said the funds were intended to fill a gap in flu-related financing in countries with serious outbreaks . . . There are widespread concerns that an unmanageable outbreak or virus mutation in a single country may quickly spread beyond borders. (FT, 19 January 2006, p. 10) Thirty-three countries and multilateral institutions pledged $1.9 billion Wednesday [18 January] to fight the disease. The pledges, at the conclusion of a two-day conference in Beijing, exceed the $1.2 billion to $1.4 billion that the World Bank said was needed over the next three years. The money will pay for such tasks as strengthening veterinary and medical surveillance for outbreaks, stockpiling of surgical masks

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Political developments and other protective equipment and expanding research . . . [The World Bank] said that the oversubscription would make it possible for poor countries to rely more on grants than loans in fighting the disease. The $1.9 billion includes $1 billion in grants and $900 million in loans, including $500 million in World Bank loans . . . Migratory birds have carried the virus out of southern China and South-east Asia to infect chickens around the Black Sea and the Caucasus, leading to illness in at least twenty-one people in Turkey. The oversubscription also makes it somewhat less likely that money would have to be taken from existing economic development programmes to pay for fighting bird flu [the World Bank said] . . . The United States pledged $334 million in grants, for example, of which $31.3 million is money transferred from funds previously earmarked for helping survivors of the tsunami on 26 December 2004. But $280 million comes from bird flurelated legislation passed by Congress just before Christmas [2005], while another $22.7 million comes mostly from money previously set aside for international health issues . . . Japan pledged $159, the EU pledged $120 million and the EU members separately promised $138 million . . . China pledged $10 million. (http://www.iht.com, 18 January 2005; IHT, 19 January 2006, p. 4)

‘Tests have confirmed that the H5N1 virus killed a teenage girl in Iraq and a thirty-five-year-old woman in China’ (Independent, 19 January 2006, p. 31). The near-total absence of adequate health care in much of the [Chinese] countryside has sown deep resentment among the peasantry while helping to spread infectious diseases like hepatitis and tuberculosis and making the country – and the world – more vulnerable to epidemics like SARS and possibly bird flu. (Howard French, IHT, 16 January 2006, p. 4) Two children from the same family died from bird flu, the WHO has confirmed, bringing Indonesia’s toll from the virus to fourteen, the government said Sunday [22 January] . . . The four-year-old boy and his thirteen-year-old sister died last week, but confirmation that bird flu was responsible was not known until Saturday . . . Like most of the other cases, the victims lived on Java, a densely populated island that is home to more than half of the country’s 220 million people . . . Doctors suspect a French woman who recently returned from Turkey could have contracted bird flu and are examining her, the health ministry reported Sunday. (http://www.iht.com, 22 January 2006) Initial tests . . . [on] a French woman . . . were negative . . . Hospitalization does not indicate likely infections and it is common when countries are on high alert concerning a disease. Two weeks ago a German

Political developments 93 who fell ill after being in Turkey was hospitalized . . . Only 150 people worldwide have fallen ill from . . . the H5N1 virus. (IHT, 23 January 2006, p. 3) On Friday [20 January] the Turkish government accused several of its neighbours of concealing bird flu outbreaks and hampering efforts to prevent the spread of the disease. Turkey did not name the countries it believes are covering up the infections. Turkey has reported possible H5N1 outbreaks of poultry in twenty-six provinces, including areas bordering Azerbaijan, Armenia, Iran, Iraq, Syria and Georgia . . . Since 2003 eighty-one people have died from bird flu in Turkey and eastern Asia. All the victims appear to have contracted the disease after close contact with infected poultry and health officials say that so far there is no evidence that the virus can be transmitted from human to human. (Guardian, 23 January 2006, p. 19) (Later developments are to be found in the postscript.)

2

The economy

Economic background ‘Before 1945 more than 90 per cent of the population lived in the countryside (the figure is still 80 per cent today). In 1989 the percentage distribution of the workforce was as follows: agriculture 70.9; industry 11.7; and trade 6.5’ (Vietnam Courier, 1990, no. 14, p. 6). The 311,620 square kilometres of Vietnam are poorly endowed in terms of soil and are periodically hit by typhoons. In the mid-1980s only about 21 per cent of the land area was usable for agriculture. There is only 0.094 ha of cultivated land per capita. (Vietnam Courier, 1990, no. 10, p. 11) ‘This is the third lowest in the world after Singapore and Japan’ (J. Esterline, Asian Survey, 1988, vol. XXVIII, no. 1, p. 88). ‘Of the total agricultural land, 80 per cent to 85 per cent is devoted to rice’ (Dellmo et al. 1990: 9) The forested area was at one time almost halved since the early 1940s, partly the result of enormous wartime damage caused by mass bombings, land clearances, and defoliation through the use of ‘Agent Orange’. The forested area, however, increased from 23.6 per cent in 1973 to 28.16 per cent in 1983. (Vietnam Courier, 1990, no. 10, p. 9) More recent figures are as follows: land used for agriculture, 21.13 per cent of the total area of ‘natural land’ (38.5 per cent of the total ‘land in use’) and ‘natural land’ used in forestry, 28.33 per cent (Vietnam Courier, 1991, no. 24, p. 11). The country is not generously endowed with raw materials (coal being the principal energy resource, accounting for about 90 per cent of energy output), but self-sufficiency in oil is expected by 1992 (crude oil output increased from 2.7 million tonnes in 1990 to 3.8 million tonnes in 1991. (Vietnam Courier, 1991, no. 26, p. 4)

Economic developments 95 ‘In 1954 the North’s economy was overwhelmingly agrarian and technologically backward, with only 1.5 per cent of material product originating in modern industry’ (Beresford 1988: 129, quoting Chau). Beresford points out the contrast between this and the economy of the South in 1975, where a third of the population was urbanized and there was a large, market-orientated farm sector, with a fairly egalitarian distribution of land ownership in the Mekong Delta, the main rice producing area, after the 1970–2 reforms. There was a flourishing tertiary sector and a small, importdependent manufacturing sector accounting for 11 per cent of GDP in 1960 and 6.5 per cent in 1972. When US aid was suddenly cut off there was immense dislocation (Beresford 1988: 147–55). By 1975 industry and mining accounted for 11 per cent of the workforce in the North (p. 60), with the same percentage of the population urbanized (p. 156). In 1987 the population was 80.3 per cent rural and agriculture employed 72.6 per cent of the workforce (Fforde and de Vylder 1988: 51). ‘One of the major tasks after reunification was to socialize the economy of the South’ (The Economist, 28 March 1992, p. 73).

The economic system prior to and after 1989 The general features of command planning and the general issues involved in economic transition are to be found in the companion book on North Korea. After the July 1954 Geneva agreement, early phases of reform involved the 1955–7 ‘reconstruction’ and creation of the ‘national economy’ and the 1958–60 Three-year Plan. During the period 1958–9 Ho Chi Minh was attracted by Maoist thought. Increased emphasis was given to mass mobilization methods (socialist emulation and political activation, consciousness raising and exhortation), and in October 1958 a new system of management was introduced: ‘Cadres take part in work, workers take part in management.’ This followed Ho’s September suggestions that leading officials do one day’s manual labour a week and the others half of each day, while workers should be trained in administration (Post 1988: 143–50). Doubts about the efficacy of mass mobilization techniques had set in by the end of 1959, and Post sees the September 1960 Third Congress of the Workers’ Party as marking a decisive shift, in that Vietnam definitely became caught up in the Soviet pattern. The following five-year plan laid emphasis on skills and firm managerial control as the means of increasing production (Post 1988: 150). During the 1970s there was a general shift towards the co-ordination of plans at the provincial level, which, in 1979, allowed provinces to retain a certain percentage of foreign exchange earnings for their own use (White 1985: 101). The Fifth Congress of March 1982 stressed the need to shift priorities away from heavy industry and towards agriculture and light industry

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(and their exports). The period 1982–5 saw criticism of ‘bureaucratic centralism in economic policy’ and the need for decentralization of decisionmaking to enterprises to free them from the day-to-day control of government agencies, to encourage more direct links between enterprises, to remove subsidies and introduce ‘socialist accounting’, and to tie pay to performance (Jeffries 1993: 212). On 9 April 1996 the party revealed the contents of a draft report to be presented at the 28 June–1 July 1996 congress. The goal was ‘to develop a multi-sector economy and apply the market mechanism to build socialism successfully’. ‘Economic renovation and building a multi-sector economy operating within a market mechanism must be accompanied by the strengthening of the role of state management along socialist lines.’ The Sixth Congress in December 1986 confirmed the new approach. The 1986–90 five-year plan stressed the importance of agriculture, consumer goods and exports. The lack of progress in implementing the reforms led to their reaffirmation by the August 1987 Central Committee Plenum, which outlined the programme of implementation, starting with enterprises jointly operating with Soviet enterprises and with those producing consumer goods in 1988 and, finally, covering all enterprises by 1990 (Murray Hiebert, FEER, 1 October 1987, p. 94). According to Porter (1990: 79), the starting enterprises were those dealing with other countries and those that received almost all their material supplies from the state; 1992 was later made the target year for shifting most enterprises to the new accounting system. A number of ministerial mergers were undertaken in 1987 (e.g. a new ministry of agriculture and food was set up), to reduce bureaucracy and overcome empire-building, and many ministers were changed. At the beginning of April 1990 a dozen ministries and state institutions were merged into only three, the new ministries of trade, education and heavy industry. Financial control was emphasized: strict controls over investment spending, reduced employment in the state sector to combat excessive bureaucracy, and state organizations to move towards ‘financial selfgovernment and the acceptance of responsibility for profits and losses’ (Jeffries 1993: 212). During the 1980s in Vietnam there were attacks on corruption, abuses of power, complacency and obstruction, together with numerous personnel changes. There was a growing realization that winning wars is not at all the same as winning the peace. In July 1986 Truong Chinh declared that ‘we have held on too long to the system of centralism, bureaucratism and subsidization’. There would be no more target dates for socialist transformation. After he became general secretary of the Communist Party in December 1986, Nguyen Van Linh talked about the ‘serious errors’ of the previous ten years and the need for a ‘complete and radical socioeconomic renovation’. This was needed in order to eliminate the managerial system characterized by a ‘subsidy-based bureaucratic centralism

Economic developments 97 mechanism’ and replace it with a planning mechanism based on socialist cost accounting and business activities, consonant with the principle of democratic centralism. (See Vietnam Courier, 1987, nos 1 and 2, and Nguyen Van Linh 1987 for his major speeches at the Sixth Congress of the CPV, 15–18 December 1986, and at the Second Plenum of the Central Committee, 1–9 April 1987. Linh was dropped from the politburo in 1982 for opposing the rapid socialization of South Vietnam after 1975, but he remained the party secretary for Ho Chi Minh City and his successful economic policies led to his reinstatement as a politburo member in June 1985.) Nguyen Van Linh (1987: 15) said that state purchases of farm produce for sale at low prices involved subsidies equalling nearly a third of the budget. In June 1988 he said: ‘The national economy has collapsed largely because the situation of faked profits and true losses has prevailed. We have been calculating the prices of equipment and materials too low for too long, compelling the state to make up for losses that were too big’ (IHT, 18–19 June 1988, p. 2). Renovation was needed in ‘economic thinking’ (economic laws having been ignored), production structure and economic management. While central planning should remain (there would be no return to chaotic capitalism), the plan had to be worked out from the bottom upwards, although, it was stressed, under the guidance and regulation of the centre in order to ensure balance. Greater use should be made of economic levers, the operational decisions of production units should not be interfered with, and branch and territorial planning should be closely combined. A notable event was the election, by secret ballot, of the manager of the Thanh Long Paper Mill by 133 representatives of cadres and workers, the provincial authorities subsequently officially confirming the appointment. Normally the provincial authorities or the competent ministry appointed managers on the basis of the local party committee and administration (Vietnam Courier, 1987, no. 8, p. 13). Carl Thayer (IHT, 15 April 1988, p. 4) saw the proponents of economic reform as a coalition of southerners (or officials with long experience in the South) and another group centred in the northern port of Haiphong. A municipal district in the port introduced an incentive-based contract system in agriculture in 1979 which was later adopted as a national model. ‘The reformers are at present in the ascendancy despite the 1986 figures, which show that 73 per cent of the 1.8 million party members are in the North’ (p. 4). From an ideological point of view it was seen as possible to progress directly towards socialism by bypassing the capitalist stage, but not to miss out on the development of the market production stage. Between 1954 and 1960 state industrial enterprises were not separate financial units, but came under the budget, with the state covering all investment and any losses and siphoning off any profits. The September 1979 reforms pointed in the direction of decentralization, under which

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enterprises were permitted to produce unplanned products and output above obligatory sales, which could be sold on the free market or to the state at negotiated prices. In order to widen wage differentials and thus increase incentives, a piece-rate system of wage payment started to be introduced in 1980, but not very successfully; there were also bonuses for improving product quality and reducing the use of raw materials (Beresford 1988: 160–3 and 1992: 240). The enterprise production plan, as of January 1981, consisted of three parts: state-assigned output manufactured with state-supplied inputs; above-plan output resulting from inputs procured by the enterprise itself; and unplanned secondary output (including by-products). In this so-called ‘three-plan’ system, the respective percentage profit splits between the state budget and the enterprise were as follows: 50–50, 40–60 and 10–90 (Le Trang 1990: 159). By-products may be sold on the free market, if the state is not interested (Spoor 1988a: 107; 1988b: 119). According to the EIU, workers themselves are now able to use enterprise facilities on their own account to make goods for sale on the free market or to the state (Country Profile, 1987–8, p. 190). Under ‘socialist cost accounting’ state enterprises were allegedly selffinancing and thus face the prospect of possible bankruptcy. It seemed as though few enterprises were actually closed down, however, thanks to bank credits, although a bankruptcy law was supposed to be enforced. It was not clear exactly how much authority management had to dismiss workers or to determine wages, although it was clear that a minimum wage had to be paid; payment beyond this was according to work input and management had a choice of piece or time rates. Dellmo et al. 1990: 38–9) listed the following constraints: enterprises had a social responsibility to keep unemployment low, e.g. they were not allowed to dismiss staff in order to increase profits and they were ‘encouraged’ to employ soldiers returning from Cambodia; managers had to ‘consult’ trade unions before dismissals. The intention was to switch gradually to a labour contract system, away from lifetime guarantees. The resolution of the Sixth Party Congress went through an experimental phase until the end of 1988, when a set of reasonably comprehensive policies was implemented (Tran Duc Nguyen 1991: 31). The ‘three-plan’ system was formally abandoned in early 1989 (Dellmo et al. 1990: 28). According to Le Trang (1990: 167–9), most enterprises were assigned only one target, namely ‘contribution to the state budget’. Some enterprises producing important products had to fulfil two or three targets: ‘value of output of products’, ‘output of principal products’ and ‘contribution to the state budget’. (Fforde and de Vylder, 1988: 84, cited the thirty-five key enterprises referred to in the 1988 decree continuing to receive quantitative targets; these then represented about 50 per cent of total output). The intention was to shift to a tax-based system for state enterprises from 1991 onwards, as is already the case with non-state enterprises (Le Duc Thuy et

Economic developments 99 al. 1991: 185). Input supply was largely the concern of the enterprise itself. Only especially important sectors (e.g. energy and railways) were able to buy fuel at controlled prices. Prices were mainly freed, the exceptions being vital materials such as iron and steel, cement, electric power, oil and petrol, timber, cotton and chemical fertilizers. An increasing number of enterprises were able to trade direct with foreign companies, but the state still controlled the issue of export and import licences. Import quotas also existed. Exporting enterprises were entitled to retain a portion of foreign exchange earnings. These measures amounted to a quite radical shift towards a marketbased economy. Even so, there were many areas where decision-making authority was blurred, as in bankruptcy and dismissal of labour. The state still exercised considerable direct influence, as reflected, for example, in the right to establish and close down state enterprises. How much authority enterprise management had to alter the production profile was not clear; this could only be done ‘within limits’ (Dellmo et al. 1990: 30). Large enterprise investments seemed to need some kind of state approval (p. 30). Indirectly, the state was able to lean on management in Hungarian NEM fashion: Ronnas and Sjöberg (1990: 150) noted the interfering tendencies of district authorities in this respect. Dollar describes the reforms in general as follows: Vietnam launched an ambitious reform programme that, within a short time, completely reoriented its economic system. At the heart of the ‘renovation’ (doi moi) introduced in 1989 were agricultural reforms and price liberalization . . . The removal of price controls in Vietnam was complete in the agricultural sector and nearly as comprehensive in industry and services . . . The regime for foreign trade and investment was liberalized. Restrictions on imports and exports of important products, such as rice, were relaxed. The exchange rate was unified and sharply devalued . . . Interest rates were raised to very high levels . . . The government also tried to curb credit financing of the budget. (Dollar 1994: 361) ‘The fiscal deficit was reduced sharply from 11.4 per cent of GDP in 1989 to 2.5 per cent in 1991. The deficit increased modestly to 3.8 per cent of GDP in 1992’ (p. 366). ‘Vietnam’s macroeconomic performance in the 1989–92 period compares very favourably with the experiences of other transition economies’ (p. 373). From early 1989 prices were substantially decontrolled; by the end of that year only the prices of electricity, oil and goods transport were still centrally controlled (Andreff 1993: 522). Some prices, including petroleum, are still determined by the government. Tariffs on utilities, public services and transport are still set administratively (Dinh 1993: 542). ‘The pace of reform in Vietnam from 1989 to 1991 was anything but

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gradual, and the stabilization programme adopted in 1989 was certainly as ambitious as anything described as “shock therapy” in other countries’ (Riedel and Comer 1997: 200). Under the pressure of an imminent crisis, the authorities boldly decided to accelerate the process of transition to a market economy with a combination of structural reforms and stabilization measures. The principal structural reform, adopted in early 1989, was the liberalization of prices and the elimination of the system of state procurement . . . The stabilization programme that Vietnam adopted in 1989 was pure IMF orthodoxy, albeit without the IMF behind it . . . The two key components of the 1989 programme were (1) raising interest rates and (2) devaluing and unifying the exchange rate. (p. 196) Subsidies to state enterprises were largely eliminated, the investment programme was severely cut, wage increases for civil servants were restrained below the inflation rate and about half a million soldiers were demobilized (p. 198). The Draft Platform for the Building of Socialism in the Transition Period (Socio-economic Strategy for Vietnam up to the Year 2000) emerged from the Tenth Plenary Session of the Central Committee (Sixth Congress) held 17–26 November 1990 in preparation for the June 1991 Seventh Party Congress (Vietnam Courier, 1990, no. 14, supplement, and 1991, no. 15, pp. 10–11). There was a renewed commitment to socialism. The regulated market-based economy was to be adhered to, policy being ‘to build a planned commodity economy, to put into operation a market economy with state management’. The ‘predominant role’ would continue to be played by the socialized sector. The aim was to at least double per capita income over the period 1990–2000. The Seventh Party Congress took place 24–27 June 1991. As has already been discussed there was a substantial change of personnel at the top (e.g. Do Muoi replacing Nguyen Van Linh as general secretary; Do Muoi was himself replaced as prime minister by Vo Van Kiet on 9 August). As expected, the need for political stability as an essential prerequisite for economic renewal was emphasized. Reference was made to a ‘socialist-orientated multi-sector commodity economy operating along a market mechanism under state management’ (Vietnam Courier, 1991, no. 21, p. 4). The state sector plays the ‘leading role’, but the other sectors also have positive roles to play (p. 3). The second plenum of the Central Committee (Seventh Congress) held 25 November–4 December 1991 adopted the guidelines for socioeconomic development 1992–5; the stress was on proceeding with economic reforms and curbing inflation (Vietnam Courier, 1992, no. 27, p. 5). A new constitution was ratified by the National Assembly on 15 April 1992. The economic system was described as a ‘socialist-orientated, multi-

Economic developments 101 sectoral commodity economy driven by the state-regulated market system’ (Jeffries 1993: 223). In interviews locals and foreign residents depict a Vietnam that has become hobbled by feuding among party officials and is slowly sliding into a deep economic mire. A key party meeting in mid-April [2000] highlighted the policy paralysis and confusion: drafting of documents for the 2001 party congress – the last congress was in 1996 – was put off until June. The gathering merely reiterated the frayed maxim that development will follow a ‘market-based, but socialism-driven structure of economic development’. There were no new ideas for rescuing the economy from its deepening stagnation. (Nayan Chanda, FEER, 4 May 2000, p. 20) In late December [2000] . . . for the first time . . . a senior team of Vietnamese economists sat down with Chinese economists to hash over past experiences and future plans for reform. The four-day summit at Hanoi’s state-run Institute of Economics covered a broad range of substantive issues, particularly on how to restructure state-owned firms, liberalize trade, attract foreign investment, revise rules on land ownership and spur village-level enterprises . . . While the 25–28 December meeting was ground-breaking, it did not yield any definitive blueprint for reform. That is still for the politburo to decide . . . Vietnam may follow China’s lead in allowing foreigners to purchase larger stakes of state-owned firms – 49 per cent in Vietnam’s case, instead of 30 per cent as presently permitted. (FEER, 18 January 2001, p. 28) (‘Trade unions . . . [are] relatively weak . . . [In the] private sector . . . just 30 per cent of the eligible two million workers are unionized’: FEER, 26 April 2001, p. 26.) Prior to the ninth congress the Vietnamese economy was described as a ‘multi-sector economy operating under the market mechanism with state management along the socialist line’. The Political Report revised this rather convoluted expression into the shorter ‘socialist-orientated market economy’. (Asian Survey, 2002, vol. XLII, no. 1, p. 83) Prior to the Ninth Congress [of the Communist Party held 19–23 April 2001] the Vietnamese economy was described as a ‘multi-sector commodity economy operating under the market mechanism with state management along the socialist line’. The Political Report revised this rather convoluted expression into the shorter ‘socialist orientated market economy’. (Asian Survey, 2002, vol. XLII, no. 1, p. 83)

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Financial and exchange rate policy The February 1959 reform involved a rate of exchange of one dong (the currency unit) for 1,000 old dong, with an upper limit of 2,000 new dong on the amount of money that could be exchanged (the remainder having to be held in accounts at the State Bank for a long period of time) (Jeffries 1993: 215). April 1985 saw a massive devaluation of the dong against the US dollar, from just below 12 to 100 dong to the dollar. In September a new dong replaced the old at a rate of one to ten, although immediate exchange was limited to 20,000 dong per family in order to penalize the free market traders. In fact, however, this penalized many state enterprises as well, since they used cash to purchase scarce inputs, thus further exacerbating the goods shortage (and ultimately increasing the inflation rate, as the state later refinanced the enterprises in order to keep them going by increasing the money supply). Two weeks’ advance warning, however, allowed black-marketeers to get rid of old dong and hoard hard currencies. Workers and cadres received extra cash to compensate for the loss of the coupon ration books (which were supplemented with some cash previously: J. Esterline, Asian Survey, 1987, vol. XXVII, no. 1, p. 93). Wage and price reforms thus meant that employees’ heavily subsidized ration certificates were replaced by pay increases to compensate for the rise in retail prices. Subsequent wage increases were to be dependent on merit and productivity increases. The ‘two price system’ (free market and state ration prices) was to be replaced by the ‘one price system’ in order to eliminate black markets. (This was largely achieved during 1989: Dellmo et al. 1990: 31.) Subsidies to state enterprises, too, were to be replaced by a system of wholesale prices that was to reflect costs, while there was to be some further decentralization of decision-making. The following results ensued: 1 2 3 4

soaring inflation; some reversal of policy (e.g. the reintroduction of rationing for some basic necessities in January 1986 and of subsidies for some low-income earners); the January 1986 sacking of Tran Phuong (vice premier for economic affairs) and the June 1986 replacement of To Huu (a vice premier of the Council of Ministers) by Vo Chi Cong; a wholesale replacement of ministers (e.g. of finance, transport and communications, foreign trade, coal and mining).

Anti-inflation policies were very successful at first, but inflation began to climb again after August 1990. The official figures for inflation were 700 per cent in 1986, 400 per cent in 1987, over 300 per cent in 1989, and 60 per cent to 70 per cent in both 1990 and 1991 (Vietnam Courier, 1991, no. 26, p. 7). Curbing inflation once again became a key government aim in 1991

Economic developments 103 and 1992, the target for the latter year being 30 per cent (p. 7). Indeed, February 1989 saw the start of an austerity programme, monitored by the IMF: 1 2

3

In March 1989 the dong was devalued for the sixth time in four months, from 900 to the US dollar to close to the then free market rate of 4,500 (R. Cima, Asian Survey, 1990, vol. XXX, no. 1, p. 92). A strict fiscal policy involved expenditure cuts in, for example, subsidies (such as the end of the food subsidy system for state workers in 1989) and defence. Note that in 1988 the budget deficit had been as high as 10 per cent of national income (Dellmo et al. 1990: 24). Wood (1989) notes that the decline of inflation was accompanied by the liberalizing of almost all prices, making the achievement all the more remarkable. Van Arkadie (1991: 44), however, notes that the resurgence of inflation (after August 1990) was partly due to the weakness of a tax system heavily dependent on enterprises. In 1990 the budget deficit amounted to one-third of government expenditure (Murray Hiebert, FEER, 19 September 1991, p. 68); in July 1991 premier Vo Van Kiet announced that foreign aid would only account for 6 per cent to 7 per cent of the government’s revenue in 1991, compared with 25 per cent to 30 per cent the year before. A strict monetary policy included high and positive real interest rates in order to encourage savings and discourage spending. Neil Wilson (The Banker, April 1990, p. 27) reports that in early 1989 interest rates were raised to 12 per cent a month on three-month time deposits in dong and to 9 per cent a month on demand deposits (local Vietnamese also being allowed to open foreign currency accounts). The ratio of the budget deficit to revenue was reduced from 33.7 per cent in 1988 to 19.1 per cent in the first half of 1989 (Tran Ngoc Vinh 1990: 95). The Economist (24 February 1990, p. 68) reports a modest budget surplus for the whole of 1989.

The banking reform (the new law going into operation on 1 October 1990) involved the division between the central bank (concentrating on credit regulation and the control of the money supply) and commercial banks (Agricultural Development Bank, Industry and Trade Bank, Bank for Investment and Development, and the Foreign Trade Bank), giving preference to profitable projects and those serving the priority sectors. Monetary control included minimum reserve requirements. The participation of foreign banks was to be allowed. The first joint venture was Indovin, set up in January 1991 between the Industry and Trade Bank and the Suma Bank of Indonesia; its activities were restricted to foreign currency operations and the financing of foreign trade. The central bank had discretion whether to allow dealings in the domestic currency. The first foreign bank to be allowed to set up a branch was the French-owned Banque Indosuez; it was opened in Ho Chi Minh City on 14 July 1992 and was able to deal in

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dong. Private and co-operative credit institutions had already been set up (these running into trouble in the spring of 1990 as private enterprises went out of business and lax control was exercised by the authorities: Vietnam Courier, 1991, no. 16, p. 7). In December 1991 the first shareholder-owned (all the shareholders being business executives) commercial bank was established; this was the Saigon Commercial Shareholders Bank (IHT, 3 January 1992, p. 13). An income tax system was introduced on 1 April 1991. Vietnamese citizens were to start paying tax on reaching 400,000 dong a month. The tax rate was between 10 per cent and 50 per cent on monthly income in the range 400,000 to 3 million dong, while a 30 per cent supplementary tax of 30 per cent was levied on incomes over 5 million dong a month. Foreigners had a higher tax-free limit of 800,000 a month, while tax in the range 10 per cent to 50 per cent was imposed on monthly earnings between 800,000 and 16 million dong. In July 1987 the Ho Chi Minh City Industrial and Commercial Bank was opened, the first commercial bank, with part (55 per cent) of the stock sold to private citizens for the first time. (Keith Richburg reports the Haiphong Shipping Company’s experiment in selling up to 49 per cent of its shares to private individuals and co-operatives, compensated by dividend checks; the purchase of five shares is accompanied by the entitlement to a company job: IHT, 13–14 August 1988, p. 14.) The central government budget deficit as a percentage of GDP was 8.0 per cent in 1990, 3.7 per cent in 1991, 3.7 per cent in 1992, 6.2 per cent in 1993, 2.4 per cent in 1994 and 5.5 per cent in 1995 (Asian Development Outlook 1996 and 1997, Asian Development Bank, 1996, p. 245). Since 1992 the State Bank of Vietnam no longer officially issues money to cover government budget deficits, and instead organizes Treasury bill auctions to mobilize capital. In practice, however, the State Bank usually has to provide credit for the central government when deficits arise, and the late repayments of this credit contribute to growth in the money supply. (p. 111) ‘The government continues to set interest rate floors and ceilings for commercial banks; different interest rates are set for each project, and credit constraints are increasingly binding, especially for the rapidly growing private sector’ (p. 112). On 23 July 1993 the first interbank money market started trading in dong. The main aim is to provide financial institutions with short-term credit from banks with surplus dong (Murray Hiebert, FEER, 5 August 1993, p. 57). A foreign exchange centre was set up in Ho Chi Minh City on 30 August 1991 and a second one in Hanoi in November. The IHT (29 November 1991, p. 14) reported intervention in the foreign exchanges to

Economic developments 105 stabilize the dong; reserves were accumulated by requiring all commercial banks licensed to deal in foreign exchange to resell 30 per cent of the gold and dollars they buy to the central bank. (Vietnamese enterprises earning hard currency had to deposit their earnings in banks so that controls might be placed upon them.) ‘The dong is not convertible on international exchanges. The dollar is rapidly becoming an accepted means of payment for goods and services in Vietnam as well as the only way foreign investors can take profits out’ (IHT, 11 June 1994, p. 17). On 9 August 1994 it was announced that restrictions were to be placed on the use of the US dollar and companies would be required to deposit foreign currency in bank accounts (as of 1 October). Businesses that charged for their services in dollars would be required to accept dong, with only duty-free shops at the airports and others authorized by the central bank taking foreign currency (IHT, 10 August 1994, p. 13; FEER, 18 August 1994, p. 55). In early August the government decreed that as of 1 October 1994 all domestic transactions had to be conducted in dong. The decree failed to distinguish between foreign and domestic enterprises when requiring them to convert all foreign currency not being used for import and export purposes into dong. But the best guess is that a clarifying circular will be issued to differentiate between accounts held by foreigners and those held by Vietnamese. Under the foreign investment law foreigners are granted the right to hold foreign exchange accounts. (Michael Vatikliotis, FEER, 6 October 1994, p. 54) Since 1 October 1994 hotels, airlines, taxis and shops have not been allowed to advertise prices in dollars and have only been able to accept payment in dong. Vietnamese organizations now have to channel their hard currency earnings through banks, rather than holding cash. Foreign investors, especially in the hotels sector, were thought likely to be keen to seek exemptions so that they could convert their dong earnings into dollars. It was understood that the State Bank had set a deadline (the end of October) by which applications had to be made. (FT, 12 October 1994, p. 7) It subsequently turned out that the August decree appeared to affect only domestic transactions and that it was being enforced only gradually (FT, Survey, 8 December 1994, p. 38). In February 1995 the central bank announced that efforts would be made to gain stricter control over foreign exchange transactions, e.g. joint ventures would only be able to open an account at one bank. ‘Some foreign-invested companies, primarily those involved in import

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substitution, are allowed to buy foreign currency with dong if they obtain permits from the central bank and the investment approval agency’ (Adam Schwarz, FEER, 27 April 1995, p. 68). The State Bank ordered privately operated foreign exchange outlets to close from 30 June 1995, because they did not transfer sufficient amounts of foreign currency to the State Bank (FEER, 6 July 1995, p. 71). ‘A dong–dollar rate is set each day before trading begins. Fluctuations of up to 5 per cent either side of the rate are allowed’ (FT, 9 October 1997, p. 4). On 14 October 1997 the central bank widened the range in which the currency is allowed to deviate from a daily central rate to 10 per cent from the 5 per cent fixed in March 1997. Before that the dong rate had been fixed each day. The value of the dong immediately fell. Foreign banks in Vietnam buy dollars from state-run commercial banks on the interbank market, using dong to meet daily needs. But the dollar market had been at a standstill since the end of July 1997 because Vietnamese commercial banks had been hoarding dollars in anticipation of a dong devaluation. (IHT, 15 October 1997, p. 21) The first currency swap market has been introduced in an apparent attempt to prise dollar holdings away from foreign banks and help local banks meet short-term trade debts, most of which are owed to South Korean companies. (South Korea has been one of the countries worst affected by the financial crisis in Asia which started in July 1997 with an attack on the Thai currency.) ‘Any downward adjustment of the exchange rate for the dong has been ruled out despite continuing damage to exports from an overvalued currency’ (FT, 29 December 1997, p. 3). On 16 February 1998 the dong was devalued by 5.3 per cent. The new central rate was 11,800 to the US dollar, compared with the old rate of 11,175 (IHT, 17 February 1998, p. 15; FT, 17 February 1998, p. 8; FEER, 26 February 1998, p. 60). On 7 August 1998 the dong was devalued by 7 per cent and the trading band was narrowed from 10 per cent to 7 per cent. The official target rate for the dong was moved to 12,988 to the US dollar from 11,815 dong the previous day. As a result the floor of the new trading band became 13,907 dong. This was the third devaluation since October 1997 (IHT, 8 August 1998, p. 13). This was the third staged devaluation of the dong since the beginning of the Asian financial crisis in mid-1997 (FT, 8 August 1998, p. 3). On 25 February 1999 it was announced that the dong would be allowed to depreciate daily by up to 0.1 per cent against the US dollar. The new system will allow the dong to trade against the dollar on the interbank market in a band of plus or minus 0.1 per cent of the official

Economic developments 107 daily target rate set by the central bank. The target rate for each day will be set by the prevailing interbank rate from the previous day, in effect letting the dong depreciate 0.1 per cent daily. The central bank had previously followed a strategy of stepped devaluations. Three such reductions in the official rate since June 1997 have brought the value of the dong down by about 18 per cent against the dollar, with the last such devaluation in August 1998. But the dong has still appreciated by about 25 per cent over the same period against other southeast Asian countries. Retail black market rates are currently near those official rates available in banks. (FT, 26 February 1999, p. 4) ‘The dong has remained very stable at about 14,075 to the US dollar so far this year’ (FEER, 8 June 2000, p. 76). Tax reforms were introduced on 1 January 1999: 1

2

3

VAT replaced a business turnover tax, which had yielded about 17 per cent of budgetary revenues and had been applied through eleven separate tax rates. There are four levels of VAT, with a standard rate of 10 per cent, preferential rates of zero and 5 per cent, and a special high-band rate of 20 per cent. The structure is additionally complicated by some twenty-five separate exemption conditions. The new tax is extended to a wide range of small household businesses that do not maintain detailed records. A 32 per cent corporate income tax replaced a more complex profits tax. Most companies with foreign investment, however, would continue to benefit from exemptions granted under the foreign investment law. The introduction of a new, broader special consumption tax on luxury items and services, including a 25 per cent tax on karaoke bars, massage parlours and discotheques, and a 20 per cent tax on golf (FT, 31 December 1998, p. 4). Vietnam said yesterday [31 May 2002] that it was liberalizing commercial bank lending rates . . . From today [1 June 2002] commercial banks would be allowed to negotiate their own lending rates with clients instead of following the instructions of the central bank. Until now Vietnam’s central bank fixed lending rates at about 10 per cent to 12 per cent a year, though banks are allowed to set their own deposit rates . . . State-owned banks . . . account for about 80 per cent of the total banking sector. (IHT, 1 June 2002, p. 7) Prime minister Phan Van Khai . . . appears to have a better shot this time at slimming down the nation’s 5,650 state enterprises, a prerequisite to recapitalizing the overburdened state-owned banks. In August [2002] the government will begin to dole out more generous cash

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Economic developments payments to workers who volunteer to leave their jobs, as part of a new ‘social safety net’ programme. (FEER, 8 August 2002, p. 20) In mid-August [2003] a consortium led by the Dutch ING Group entered into a two-year ‘twinning’ agreement with the Bank for Foreign Trade of Vietnam, known as Vietcombank. Propelled by a Euro 3.2 million ($3.6 million) grant from the Dutch government, the project aims for a top-to-toe overhaul . . . Vietcombank is one of the country’s four big state-owned commercial banks, which together account for 70 per cent of lending . . . By giving the green light to Vietcombank’s makeover, the State Bank of Vietnam – the country’s central bank – has signalled its desire to accelerate bank modernization in line with international standards. That process is being largely driven by commitments under the United States–Vietnam bilateral trade agreement and the country’s bid to join the WTO by 2005 . . . In recent months the central bank has issued a host of new regulations and draft laws to ensure compliance with the bilateral trade pact, which gradually phases in fully fledged competition from American banks from now until 2010. The prospect of WTO accession could shorten the deadline for a more transparent, streamlined system. The twenty-eight foreign bank branches in Vietnam are following these developments closely, with foreign banks other than US ones lobbying for equal treatment. Also juggling for position are the thirty-three private domestic banks – with a handful moving aggressively to identify promising private creditors, diversify their banking products and move beyond their current 12 per cent share of lending . . . In June [2003] the central bank issued a fresh road map for banking reforms and in August brought a second round of recapitalization for the big four state-owned commercial banks. Another twinning arrangement is also slated to begin soon. The Agence Française de Developpement will provide 1.3 million Euros for a one-year project to upgrade operations at the Industrial and Commercial Bank of Vietnam, another one of the big four . . . Despite the central bank’s latest rhetoric regarding the importance of objective risk appraisals, it seems that state-owned banks are still under considerable pressure to follow orders in lending to state-owned enterprises . . . At the central level there is palpable resistance to outside scrutiny. The IMF programme launched in April 2001 has been formally suspended since early this year [2003], due to a dispute over auditing. (FEER, 25 September 2003, p. 53–4)

The dangers of racking up another load of bad debt loom large: Standard and Poor’s [the US credit rating agency] said that ‘due to past directed lending, more than 50 per cent of Vietnam’s banking

Economic developments 109 system loans will eventually have to be written off or restructured at concessional rates’ . . . Standard and Poor’s estimates that SOE debt totalled . . . $12 billion or 35 per cent of GDP in 2002, half of which is in default. The task of reinventing Vietnam’s banks is closely tied to restructuring some of the SOEs and revitalizing them . . . The government’s programme to partially privatize SOEs is hardly racing along. So far only 337 out of the 1,500 SOEs due to be restructured this year have completed the process. (ibid.) State-owned commercial banks, which account for 70 per cent of banking assets, have yet to stop channelling funds to state enterprises regardless of their creditworthiness or viability. Hanoi has begun a $1 billion recapitalization programme to deal with state banks’ bad debts, but the much-needed operational restructuring has become bogged down, fuelling fears that the new non-performing loans will continue to accumulate. (FT, 29 October 2003, p. 11) The IMF has ended a $400 million structural reform programme after it was stalled for nearly two years by a dispute over the transparency of Vietnam’s central bank. About $173 million of the IMF’s intended $400 million multi-instalment loan facility, which began in 2001, was disbursed before the programme was derailed by the IMF’s request for an independent audit of the central bank’s foreign exchange reserves . . . The IMF said it was a routine safeguard required of all borrowers . . . Hanoi’s unyielding opposition to the audit was also fortified by its doubts about fulfilling the ambitious pace of financial sector and state enterprise reforms mandated by the IMF loan programme . . . The IMF said that the three-year loan arrangement ‘would expire without additional disbursements’. But the IMF will maintain a presence in Vietnam and provide continuing technical support and training. The loss of the IMF loan – used to bolster foreign exchange reserves – is not expected to cause any immediate difficulty . . . Hanoi receives up to $2 billion in assistance each year from the World Bank, the Asian Development Bank and other bilateral donors . . . Vietnam’s foreign reserves are now estimated at about $5.5 billion . . . But the end of the IMF programme raises questions about how Vietnam will proceed with the much-needed overhaul of its state banks, bogged down in bad debts, mostly owed by money-losing state enterprises. The IMF says state banks must resolve their large nonperforming loan problem to lay a solid foundation for future economic growth. But that will require cutting off the lifeline of state bank credit to unviable state enterprises. (FT, 14 April 2004, p. 5)

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Economic developments On 12 April [2004] Vietnam stopped borrowing from the IMF rather than cede to independent auditing of its central bank’s books, including its foreign exchange reserves . . . [But] no one is particularly worried. Since 2001 Vietnam has drawn down $157.5 million from a $368 million loan package. With more than $2 billion in annual development funds the country cannot spend its aid fast enough . . . [In addition in 2003] the central bank ordered state banks to shift some of their overseas deposits back home. (FEER, 29 April 2004, p. 56) Vietcombank – like all state-owned banks still faces old-fashioned political interference: from nudges to hire the scions of loyal party cadres to pressure for loans to state enterprises, regardless of creditworthiness . . . Lending to state enterprises is encouraged because Hanoi and provincial authorities fear worker unrest if ailing companies lose their financial lifelines . . . The extent of the bad debt burden is unknown. Under the loose old loan classification, systemwide non-performing loans were under 3 per cent . . . [But the deputy governor of the State Bank of Vietnam, the central bank] says adopting a stricter classification system will lead to an increase in official bad debt levels – up to about 20 per cent for the weakest banks . . . Vietcombank is slated to be the first state bank to be transformed from a government arm into a publicly held company run on purely commercial principles . . . [Vietcombank will be subject to] ‘equitization’ – Hanoi’s term for partial privatization . . . Vietnam’s big four state commercial banks account for about 70 per cent of total lending in an underdeveloped banking system. Of that roughly 60 per cent of loans are to state enterprises, some of questionable financial viability . . . Transforming the banks’ corporate structures and accountability is expected to reduce, if not eliminate, political meddling, though the state will remain a major shareholder. That will leave banks free to improve their internal processes. As the first in this process Vietcombank has been given approval in principle to take a foreign bank as a strategic partner . . . [Vietcombank has] pared its state enterprise lending to just 50 per cent of its portfolio, down from 90 per cent in 2000. (FT, 9 August 2005, p. 26)

The state sector ‘The failure to develop a heavy industrial base may now turn out to be something of an advantage . . . Vietnam has few of the large, inefficient industrial plants that plague other socialist economies’ (Dollar 1994: 359). ‘Vietnam . . . relies on a few hundred large firms, all state-owned, to provide most government revenue’ (p. 367).

Economic developments 111 Between 2,500 and 3,000 state enterprises have been dissolved in the past two years. Of the remaining 9,000–9,500 state enterprises, 46 per cent at the provincial level and 20 per cent at the national level face serious problems (FEER, 25 March 1993, p. 71). A Vietnamese minister claims that the government has shut down 2,000 state enterprises and may close another 800 (FEER, 3 June 1993, p. 71). According to official statistics, the number of state enterprises has been reduced by mergers and liquidations in the last eighteen months from 12,000 to 7,000 (FT, Survey, 24 September 1993, p. xx). In 1990 there were 12,000 state enterprises, but in 1993 there were only 7,000 (Shada Islam, FEER, 1 December 1994, p. 77). The state sector employs only 8 per cent of the work force. Restructuring has reduced the number of state enterprises from about 12,000 in mid-1992 to around 7,000. Most of those that disappeared were small, loss-making enterprises belonging to provincial governments. Just over half were integrated into larger, more efficient enterprises, while the rest were either leased to private businessmen or sold to pay off their debts. The National Assembly approved a bankruptcy law in December 1993. (Murray Hiebert, FEER, 3 February 1994, p. 45) Some 4,000 out of 12,000 state enterprises have been closed down (The Economist, 5 November 1994, p. 74). State enterprises number around 7,000 and the government claims that the proportion making losses fell from over 50 per cent in 1990 to 8 per cent in 1994. They provide about 40 per cent of government revenue (The Economist, 2 December 1995, p. 86). The number of state enterprises has fallen from 12,296 to fewer than 6,000. ‘The reduction of state enterprises was in part achieved by merging smaller ones’ (The Economist, 17 May 1997, p. 81). Direct subsidies to state enterprises have been abolished, but indirect support remains in the form of low-interest loans. Since 1990 some 2,000 state enterprises have been closed and 3,000 have been merged, reducing state enterprise employment to 1.7 million people (Nayan Chanda, FEER, 23 February 1995, pp. 49–50). State enterprises now account for less than a quarter of GDP (IHT, 30 November 1993, p. 6). In 1989 the state sector accounted for only 23.7 per cent of GDP and 7.7 per cent of the work force. Moreover, state employees have never enjoyed a system of extensive welfare benefits like China’s ‘iron rice bowl’. The number of state enterprises has shrunk from about 12,300 in 1989 to around 6,000, with as many as 2,000 businesses liquidated and the rest merged with healthier companies (IHT, 9 June 1994, p. 9). The government says that Vietnam has some 7,000 state-owned enterprises, down from 12,000 in 1990. Most of the enterprises that the government has merged or closed down had fewer than 500

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Economic developments employees. Total employment in state enterprises fell from 2.7 million in 1988 to 1.7 million in 1993. The remaining state enterprises have been given greater freedom to hire and fire and to market their goods. They must seek their own financing, because the government has slashed their subsidies. Furthermore, a new bankruptcy law passed in 1994 should make it easier for banks to seize the assets of insolvent state enterprises and shut them down. Officially 76 per cent of state enterprises make a profit and 15 per cent break even. The National Assembly was to consider a new law on state enterprises in April 1995. (Adam Schwarz, FEER, 2 March 1995, p. 56) State enterprises employ just 7 per cent of the work force but account for some 24 per cent of GDP and supply more than half budgetary receipts. State enterprises dominate the industrial sector. Most direct subsidies have been removed, but it is acknowledged that important state enterprises in difficulty are granted ‘favourable conditions’. In an effort to separate enterprises from the ministries that nominally own them, the government is in the process of transferring ownership of most state enterprises to a new department in the ministry of finance. In order to improve international competitiveness, the government is also attempting to assemble several dozen conglomerates, known as general corporations, in areas such as steel, coal, power, rice, coffee and textiles. (Adam Schwarz, FEER, 26 October 1995, p. 57)

‘Many of the roughly 6,000 state enterprises remain overstaffed, inefficient and heavily indebted’ (Adam Schwarz, FEER, 29 August 1996, p. 61). Although state enterprises account for less than 10 per cent of employment, they dominate industry, banking, trade and transport. The roughly 6,000 state enterprises, only a third of which are thought to be profitable, represent a quarter of economic output and provide more than half of the government’s budget revenues. Although most direct subsidies to state enterprises have been abolished, the state enterprises still enjoy considerable advantages in gaining access to land and commercial credit. Ahead of its congress in June 1996 the communist party pledged to raise the state sector’s share of the economy to 60 per cent by 2020 (from the current 40 to 45 per cent). The plan was criticized by international donors. In its final report to the congress the party dropped the controversial 60 per cent target but stuck to its promise to maintain the state sector’s ‘leading role’ in the economy. The government appears determined to carry on with the policy of creating new general corporations. So far nineteen have been set up in areas such as electricity, coffee, rice and textiles. The early experience with general corporations is not encouraging. The Southern Food Corporation, which handles most of Vietnam’s rice exports,

Economic developments 113 has come under severe criticism from traders. They say that attempts to monopolize the rice trade have reduced the incentives for distributors to enforce quality control. (Adam Schwarz, FEER, 24 October 1996, p. 51) ‘Vietnam has more than 6,000 state enterprises . . . Most of those state firms operate with major losses, and many are technically bankrupt, kept afloat by huge government support’ (IHT, 15 September 1997, p. 10). Official figures show that in 1996 22 per cent of state enterprises made a loss. In 1997 the figure was 30 per cent to 50 per cent (IHT, 20 January 1998, p. 15; FEER, 29 January 1998, p. 55). According to the finance ministry, more than half the 6,000 state enterprises are unprofitable (IHT, 23 February 1998, p. 13). ‘More than one-third of the 6,000 state-owned enterprises are losing money, and another third are breaking even thanks to subsidized credit and preferential access to land and trade quotas’ (FEER, Asia 2000 Yearbook, p. 215). The number of state enterprises in 1991 was 12,084, of which 1,695 were managed by ministries and 10,389 were managed by local authorities. The state sector contributed 33.4 per cent on average to GDP in the period 1986–90. The state enterprise sector employed 12 per cent of total social labour. About 40 per cent of state enterprises were breaking even, 30 per cent were operating at a loss and only 30 per cent were profitable (Tai and Hare 1995: 1–2). The number of existing state enterprises is about 7,000 at present (p. 4). Only about 6 per cent of the labour force is employed by state enterprises in industry (p. 11). ‘The state sector’s share [of economic activity] has risen since 1989, but many enterprises counted as state firms are in fact joint ventures with private (mainly foreign) partners’ (World Bank 1996: 13). Vietnam’s state enterprises are still profitable. Indeed, in recent years the share of state enterprises in overall economic output has been rising – to 28.5 per cent in 1994 from just 22.9 per cent in 1990 – and their net contribution amounts to around 11 per cent of the state budget. Admittedly these figures are distorted by the inclusion of joint ventures including private foreign capital. (FT, Survey, 27 September 1996, p. viii) The state’s share of GDP increased from 32.5 per cent in 1990 to 42 per cent in 1996, thanks largely to joint ventures with foreign firms. Economists say that the corporate sector still accounts for only 1 per cent of total output (Faith Keenan, FEER, 12 March 1998, p. 52). State enterprises account for 70 per cent of industrial output (Asian Survey, January 1998, vol. XXXVIII, no. 1, p. 85). Every Vietnamese ministry has been ordered to start businesses to support itself . . . I fear this short cut to capitalism will haunt the

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Economic developments Vietnamese. When ministries become the biggest entrepreneurs, it means that there is no civil service upholding the public interest. That is why bridges collapse in Seoul and why twelve-year-old girls are trapped in factory fires in China. It was Asian capitalist talent, harnessed by a professional civil service, that made Japan rich and stable. (Thomas Friedman, IHT, 16 January 1995, p. 6)

On 1 July 1994 a state-owned cement producer became the first Vietnamese enterprise to issue a corporate bond (IHT, 1 July 1994, p. 17). ‘As of late 1999 . . . [Vietnam had] 5,300 state-owned enterprises’ (FEER, 28 December 2000, p. 12). The state’s share of industrial output fell to 42 per cent last year [2000] from 62 per cent in 1990. Eleven years ago 2.5 million people were employed by state firms; today it is 1.6 million. State-owned firms . . . continue to absorb roughly half of all bank credit. State bank officials estimate that 75 per cent to 80 per cent of the 5,400 state firms are operating in the red . . . The economy is largely agricultural – state firms employ only 4 per cent of the work force. (FEER, 22 March 2001, p. 24) [The] executive vice-president of the Vietnam Chamber of Commerce and Industry . . . estimated that the local and foreign private sector accounted for 60 per cent of Vietnam’s economic output in 2001 and the state sector 40 per cent, reversing the ratio of a decade ago. The private sector also accounted for some 52 per cent of the country’s farm and manufactured exports last year [2001], the first time it took the majority position that traditionally has been held by state firms. (IHT, 4 April 2002, p. 14) State-owned banks account for some 70 per cent of total lending (and funnel more than half their loans to state firms) . . . Private banks . . . [are] still pipsqueaks . . . Still, these small banks – known locally as joint stock banks – are playing an increasingly important role in lending to the private sector . . . They are vying for new business among the 58,700 private firms launched since early 2000 and the 1,070 state companies that have been partially privatized over the past decade. (FEER, 17 July 2003, p. 42) ‘The nation [has] 5,650 state enterprises’ (FEER, 8 August 2002, p. 20). Troubled by the inertia and inefficiency of many state-owned conglomerates, Vietnam has embarked on a major corporate overhaul to help these companies face increasing regional and global competition. The priority is to transform debt-laden corporate behemoths into streamlined parents with well-managed and profitable subsidiaries . . . Nearly 100 conglomerates in every major sector – from oil to garments

Economic developments 115 to telecommunications – have been told to dismantle their old management systems, clean up their accounting and retool their corporate frameworks. The overhaul is just getting under way as dozens of conglomerates scramble detailed business plans to prime minister Phan Van Khai by November [2004], following an August government decree . . . In their current guise Vietnam’s so-called ‘general corporations’ are highly politicized, murky entities that do not own equity in the myriad companies under their umbrella and thus exert little control over them. Each general corporation contains roughly fifty member companies that tend to engage in divergent lines of business or display vast discrepancies in profitability. Some of these groups report directly to the prime minister, while others answer to ministries or local governments. Historically, some corporations have dwindled into mere bureaucratic shells, while others are actively engaged in marketing – even to the point of underselling their own member companies . . . [With] restructuring . . . the fledgling parent companies are slated to own majority or minority shares in most of their subsidiaries, supervise cash flow, provide market updates and help introduce new technology . . . Party policy calls for keeping the biggest and most profitable companies in state hands . . . As the conglomerates restructure parent companies are expected to take charge of privatizing subsidiaries . . . [There is a spur for] the government to create new parent companies for scattered state enterprises that previously operated independently of any general corporation . . . Hanoi Transport Corporation [was] launched in June [2004] as a pilot enterprise hewing to the parent-subsidiary model . . . [The] chairman is bent on modernizing seventeen subsidiaries . . . [and] has already altered the salary structure to reward performance. Top employees now make twelve times more than those on the lowest rung, compared to the previous multiple of four . . . The impending shake-up has fuelled an unprecedented spate of publicized arrests, dismissals and investigations at some of Vietnam’s top conglomerates, including Petrovietnam and Vietnam Airlines . . . The state conglomerates still generate more than half of the $12 billion state budget and account for a third of non-oil exports. (FEER, 7 October 2004, pp. 16–17)

The non-state, non-agricultural sector Handicrafts began to be converted into co-operatives in 1958. Twenty years later a ‘socialist transformation’ campaign was launched against large private traders in the South. This and the attempt to transfer private businessmen to the new economic zones led to the flight of the ‘boat people’. Particularly affected were the Hoa people of Chinese descent. (D. Finkelstein, Asian Survey, 1987, vol. XXVII, no. 9, p. 980)

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Ungar (1987–8: 609) lists a number of reasons, in addition to the restrictions on private enterprise and the impact of the new economic zones, to explain the exodus of the Hoa people, including fear of a war between China and the Soviet Union and the prospect of military service. There was a legal limit on private employment of one to two people, although family labour was largely unregulated (Fforde 1987: 25). Over time there has generally been a more relaxed attitude to the private sector. By mid-1989 the employment limit on private enterprises had been removed (Wood 1989: 565). In contrast, in 1978 private trade had been formally abolished (although the black market survived), in 1983 taxes were increased on private establishments such as restaurants, and a further attack was made in 1985 via taxation and the occasional forcing through of ‘joint ventures’ with the state. In 1986 attitudes began to change and by the following year licences were no longer required for small businesses (such as bicycle repairs, coffee shops and hairdressers), while workers and civil servants (including teachers and doctors) were openly encouraged to take a second job during off-duty hours. Family businesses and co-operatives were encouraged by a whole series of measures. These included tax holidays and exemptions for exporters; availability of state credit and inputs on equal terms with the state sector and even foreign exchange; those producing exports allowed to retain some of the foreign exchange for imports of materials and equipment; freely set prices; trademarks; sale of patents allowed; inventors to be entitled to 15–20 per cent of the profits resulting from applications of their ideas (Vietnam Courier, 1987, no. 7, p. 5). In August 1987 private vehicles were allowed to carry passengers and freight, with fares regulated for established routes, but free for special services. In 1986 the Hanoi Party Committee permitted registered individuals to have up to five employees (L. Stern, Asian Survey, 1987, vol. XXVII, no. 4, p. 480). ‘There are, however, still problems with credit allocation. Up to now only 5 per cent of lending by state governed banks has gone to the collective and private sectors, which account for two-thirds of gross domestic income’ (Phan Van Tiem 1991: 154). By late 1985 the ‘private and individual sector’ (including craftsmen, peasants who had not yet joined co-operatives, small traders, individual suppliers of services, and self-employed people) produced one-third of the gross domestic product and accounted for 32.7 per cent of national income; the sector provided a living for about one-third of the population (Vietnam Courier, 1987, no. 4, p. 14). Tran Duc Nguyen (1991: 42) provides a percentage breakdown of gross domestic product by sector: state/joint state–private 1976 (35.9), 1986 (29.5) and 1989 (26.9); collective 1976 (19.5); and private 1976 (44.6). Because the leasehold system in agriculture makes it impossible to differentiate between the collective and private sectors, the combined

Economic developments 117 figure for 1986 is 70.5 per cent and for 1989 is 73.1 per cent. The state and collective sectors have accounted for more than 80 per cent of total industrial output, while the private and individual sectors have accounted for more than 50 per cent of trade activity. (Vietnam Courier, 1990, no. 14, p. 6) ‘The non-state sector (private and co-operative) accounts for 50 per cent of industrial output (60 per cent of consumer goods) and 68 per cent of retail trade’ (Vietnam Courier, 1990, no. 10, p. 6). ‘The private sector transacted 64 per cent of retail trade in 1990 and 70 per cent in the first half of 1991’ (Vietnam Courier, 1991, no. 24, p. 7). The private sector accounted for 17.6 per cent of industrial output in 1985 and 19.6 per cent in 1988 (Beresford 1992: 247). ‘Since 1985 there have been joint state–private stores’ (L. Stern, Asian Survey, 1987, vol. XXVII, no. 4, p. 487). Murray Hiebert reports on a Hanoi workshop with thirty employees, an example of the private firms stemming from the relaxation of controls there (FEER, 28 July 1988, p. 20). The Rising Sun Torch enterprise, producing battery-free torches, is a family firm that contracts out to some 1,000 people working in their own homes the inputs needed to produce the final product (reports by David Watts in The Times, 11 November 1987, p. 8, and Murray Hiebert, FEER, 17 March 1988, p. 20). ‘Only a handful of private companies employ more than 1,000 workers’ (Murray Hiebert, FEER, 20 February 1992, p. 51). A recent decree ensures that: ‘All commercial and service activities undertaken by economic institutions in the country are protected according to state law . . . Individuals are entitled to pool their capital and set up their own business organizations or privately run corporations, which, however, must be registered.’ All individuals and businesses are entitled to loans and accounts at the state bank, and all products produced by legitimate businesses can be distributed freely around the country. (IHT, 3 January 1989, p. 2) The National Assembly passed a Law on Private Enterprise at the end of 1990, effective 15 April 1991 (Vietnam Courier, 1991, no. 16, p. 7). The state recognizes the long-term existence and development of private business and its equal rights before the law among other businesses. Those in state administration and army officers on active service, however, are debarred, to combat corruption. Managers and workers can be hired according to the owner’s requirements and learning. Licences have to be granted within a period not exceeding thirty days from the day of application, but the chairman of the Council of Ministers must approve applications in the following sectors: explosives and toxic chemicals; the extraction of precious minerals; water and electricity on a large scale;

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broadcasting means; telecommunications, radio and television; publishing; sea and air transport; foreign trade; international travel. The private sector was spoken of positively at the Seventh Party Congress held 24–27 June 1991. The private sector is still seen as playing a subordinate role. Although privatization along East European lines was not envisaged, the National Assembly session held 10–26 December 1991 thought that: ‘It is urgent to turn a number of state enterprises into joint stock enterprises, a form of joint ownership between the state and individuals. This can be done with existing as well as newly built enterprises’ (Vietnam Courier, 1992, no. 27, p. 7). The experiment seemed to involve the sale of shares in a number of enterprises at the provincial or local level in, for example, light manufacturing, meat processing and seafood production. Employees have priority. The state would retain total control of strategic enterprises, such as steelworks, power plants and the railways, and majority control in other important areas. Credit Lyonnais Securities (Asia) Ltd (a subsidiary of a French bank advising the government of Vietnam) has first refusal on up to 20 per cent of the shares in each of the enterprises to be affected. On 8 June 1992 seven enterprises to issue shares on an experimental basis were named. The non-state sector comprises private and co-operative (collective) enterprises. There are more recent estimates of its importance. In 1993 the non-state sector accounted for approximately 75 per cent of GDP (Survey, Foreign Affairs, 1994, vol. 73, no. 3, p. 6). In 1993 small family businesses produced 23 per cent of total industrial output and probably employ over 30 per cent of the active labour force today (Small Enterprise Development, 1994, vol. 5, no. 3, p. 59). The private sector’s share of GDP has risen to 45 per cent. There are still only a few substantial Vietnamese private companies (FT, Survey, 8 December 1994, p. 37). The formal private sector remains tiny, contributing only 8 per cent of GDP compared to 30 per cent kicked in by the state sector . . . While Vietnam’s thirty-four private domestic banks (known as ‘joint stock’ banks) are focussed on lending to SMEs [small and medium-sized enterprises], they control just 15 per cent of all lending to Vietnamese companies. In contrast, state banks rule 74 per cent of the market and lend mostly to state firms. (FEER, 9 May 2002, p. 44) ‘The number of private firms has almost doubled in the two years since the enterprise law was passed’ (The Economist, 16 March 2002, p. 70). Private enterprise has a newfound respectability in Vietnam . . . Vietnam’s constitution was recently amended to guarantee equal treatment for state and private companies . . . The registration of private companies has also been made automatic, allowing the cre-

Economic developments 119 ation of more than 40,000 private companies – and some 750,000 new jobs – in the past two years . . . Hanoi is even allowing party members to engage in commercial activities . . . Vietnam’s economy is still dominated by bloated state companies, agriculture and informal household businesses, with registered Vietnamese-owned private companies contributing only about 8 per cent of GDP . . . The importance of local private business is rising rapidly . . . [but] still faces obstacles such as red tape, pervasive corruption and severe shortages of credit . . . State-owned banks still remain reluctant to lend to private companies. Bankers sometimes face criminal prosecution if their loans go sour. So entrepreneurs tend to rely on personal savings and funds from family and friends . . . Personal income taxes are high and punitive taxes are imposed if a company’s profits exceed a 25 per cent return on capital, a rule that has encouraged many small companies to distort their accounts. (FT, 28 August 2002, p. 15) Prime minister Phan Van Khai announced in a New Year message that he wanted a ‘resolute commitment to the abolition of state subsidies’. The enterprise law, which allows private investment, must be ‘strictly enforced’, he said . . . Officials, he said, should declare their assets. (http://www.iht.com, 18 February 2004) ‘State enterprises take up over half of the available bank credit, though they employ just 5 per cent of the work force’ (FT, 17 May 2001, p. 12). ‘The private sector’s share of GDP rose from 23.8 per cent in 2002 to 26.7 per cent in 2003’ (Adam Fforde, Asian Survey, 2004, vol. XLIV, no. 1, p. 123). ‘Private firms comprise less than 10 per cent of industrial output’ (Asian Survey, 2003, vol. XLIII, no. 1, p. 92). ‘Vietnam’s vibrant private sector has 60 per cent of the economy’ (The Economist, 5 November 2005, p. 104). Foreign banks operate under severe restrictions . . . Stock and band markets are also in their infancy . . . All this makes it difficult for small businesses to raise money, Most family firms rely on personal savings or remittances from relatives abroad, amounting to $3.2 billion last year [2004]. Economists complain that Vietnam has plenty of tiny mom-and-pop outfits and big state-owned or foreign-invested firms, but nothing in between . . . [But] tens of thousands of family firms have also sprung up since 2001, when the government eased restrictions on small businesses. (The Economist, 26 November 2005, pp. 71–2) Since late December [2005] wildcat strikes have swept through Ho Chi Minh City. Tens of thousands of workers joined the protest over wages

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Economic developments and conditions . . . The government issued a decree earlier this month [January 2006] raising the minimum wage in foreign-owned factories . . . by up to 40 per cent . . . starting 1 February [2006] . . . [This is] the first mandated rise in several years . . . Most strikers have now returned to work, but some have not . . . Workers in Vietnam have staged walkouts before, particularly over alleged mistreatments by foreign managers, but the scale and coordinated nature of the latest strikes are, well, striking . . . Most of the affected factories are owned by East Asian companies, the biggest investors in Vietnam. At Song Than industrial zone, on the outskirts of Ho Chi Minh City, 80 per cent of the factories are owned by Taiwanese, producing clothing, shoes, furniture and bicycles for export . . . On 15 December [2005] Taiwan said it was building a landing strip on one of the [Spratly] islands’. (The Economist, 28 January 2006, p. 66)

The ‘equitization’ programme Although privatization along East European lines was not envisaged, the National Assembly session held 10–26 December 1991 thought that: ‘It is urgent to turn a number of state enterprises into joint stock enterprises, a form of joint ownership between the state and individuals. This can be done with existing as well as newly built enterprises’ (Vietnam Courier, 1992, no. 27, p. 7). The experiment seemed to involve the sale of shares in a number of enterprises at the provincial or local level in, for example, light manufacturing, meat processing and seafood production. Employees have priority. The state would retain total control of strategic enterprises, such as steelworks, power plants and the railways, and majority control in other important areas. Credit Lyonnais Securities (Asia) Ltd (a subsidiary of a French bank advising the government of Vietnam) has first refusal on up to 20 per cent of the shares in each of the enterprises to be affected. On 8 June 1992 seven enterprises to issue shares on an experimental basis were named. Four of the original seven enterprises selected to issue shares on an experimental basis were dropped, but a further nine were added to the list in late July 1992. The number now on the list is thus twelve. The experiment includes the sale of some shares to employees and to foreigners. The government is to retain 30 per cent control of ‘corporatized’ enterprises. (Murray Hiebert, FEER, 20 August 1992, pp. 50–1) ‘An experimental “equitization” plan to privatize some state enterprises has been stalled for a year’ (FEER, 3 June 1993, p. 71). Vietnam has so far failed to begin the privatization process. Six of the seven enterprises listed in June 1992 for partial privatization have either withdrawn because of resistance from managers and workers or

Economic developments 121 were struck off the list because of valuation difficulties. During the previous year eleven new enterprises had been added to the list, but only two had received approval to begin selling shares. (Murray Hiebert (FEER, 1 July 1993, p. 64) ‘The first partially privatized enterprise, the Legamex garment producer, has sold some shares’ (FEER, 12 August 1993, p. 79). (In April 1994 the director and deputy director of Legamex were dismissed for alleged corruption. The sale of shares to the public was subsequently suspended: The Economist, 4 June 1994, p. 79.) The second state enterprise (Hiep An Footwear) began offering shares in mid-October 1993 (FEER, 25 November 1993, p. 61). A detailed update is provided by Murray Hiebert (FEER, 3 February 1994, p. 45). In October 1993 a small shipping enterprise (General Forwarding & Agency Company) became the first state enterprise to be ‘equitized’. The transport ministry retained 18 per cent of the shares, while 42 per cent were sold to employees of the enterprise and 40 per cent were sold to ministry staff. The only other to complete the process is Refrigeration Electrical Engineering Company, in December 1993: the authorities in Ho Chi Minh City retained 30 per cent of the shares, while the employees of the enterprise bought 50 per cent of the shares and 20 per cent of the shares were sold to the public. Legamex has sold about 8 per cent of the enterprise, while Hiep An Footwear has also sold some shares. The finance ministry has approved sale plans by seven other enterprises and is considering eight more. Ten state enterprises have applied to privatize, e.g. Vietnam Airlines is awaiting government approval to sell a 30 per cent equity stake to a foreign partner (IHT (11 June 1994, p. 17). ‘The privatization of state enterprises has stalled. Of the more than 6,000 state enterprises that survive only three (in transport, shoes and refrigeration) have so far successfully prepared for privatization’ (FT, Survey, 8 December 1994, pp. 37–8.) Since 1992 the government has run a pilot ‘equitization programme’ in which it has sought to issue shares for twenty-one small state enterprises. The government typically keeps about 30 per cent of the shares and sells the rest to employees and outside buyers. To date only three of the enterprises have been sold off. About ten have dropped out of the programme, mostly because employees see ‘equitization’ as the first step towards losing their jobs. Employees have bought most of the shares and their purchases have been financed by government loans and the enterprises’ own welfare funds. But privatization of a quieter sort continues unchecked: state-owned firms are selling off assets to joint ventures controlled by foreigners. Just under a thousand foreign-investment projects have been approved since 1988. (Adam Schwarz, FEER, 2 March 1995, p. 58)

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In the pilot ‘equitization’ programme a minority of shares are sold off, usually to employees. To date only four enterprises have actually sold shares (Adam Schwarz, FEER, 26 October 1995, p. 53). In July 1996 REE Corporation (a small air-conditioning firm employing just under 600 workers, originally known as Refrigeration Electrical Engineering Company) sold $5 million of convertible bonds to four institutional investors in North America and Europe. The bonds automatically convert to equity in two years. It was the first Vietnamese security marketed abroad and the first opportunity for foreigners to make a portfolio investment in a Vietnamese manufacturing concern. (In 1995 several country funds were allowed to buy stakes in a partly state-owned bank.) REE Corporation was the second state enterprise to be privatized. In 1993 it sold 50 per cent of its shares to management and workers and 20 per cent to outside Vietnamese investors. (Conditions stipulated that foreign shareholders would not be represented on the board and could not vote on its members. Total foreign shareholding would be limited to 25 per cent.) The original owner, the People’s Committee of Ho Chi Minh City, retained 30 per cent of shares. REE remains one of only six state enterprises to pass through the privatization programme (Adam Schwarz, FEER, 29 August 1996, p. 61). ‘Fewer than a dozen enterprises have been “equitized”’ (Adam Schwarz, IHT, 23 September 1997, p. 8). ‘Less than a dozen state enterprises have been “equitized”. Equitization means that state assets are reduced but control is not relinquished’ (IHT, 15 September 1997, p. 10.) Tai and Hare (1995) tackle the question of why the ‘equitization’ process has stalled. State enterprise equitization entails the transformation of state enterprises into equity companies (limited liability companies which are allowed to issue shares). This measure was introduced by a 10 May 1990 resolution of the Council of Ministers. A ‘movement for the “equitization” of state-owned enterprises’ began in the latter half of 1992. As an experiment seven state enterprises were put forward. In early 1993 four of them withdrew from the programme without official explanation. The government took action in March and May 1993 to encourage the process. Eighteen others joined the experiment, raising the total number to twentyone. But at the end of 1993 only two had converted themselves into equity companies, most of the rest being quietly withdrawn (p. 4). The General Maritime Transport Company is a small enterprise (fifty employees) in which the managers and workers have bought 33.1 per cent of the shares for cash, others (mostly officers and staff employees of the ministry of transport) purchased 48.9 per cent and the state retained 18 per cent. The Electric Equipment Enterprise had 174 workers. The managers and employees bought 50 per cent of the shares, others purchased 20 per cent and the state retained 30 per cent (p. 5). Legamex is a large and relatively modern state enterprise in the footwear and garment sector employing

Economic developments 123 around 7,000 people. The first issue involved cash from the workers, the management and outside borrowers (including foreign companies and organizations). But after three months only a quarter of the shares had been sold and the experiment had to be suspended because of allegations of malpractices such as insider dealing (p. 5). Factors hindering the process of ‘equitization’ include (1) the problems of land use (all land belongs to the state, so land use rights must be bought or rented) and (2) disputes about asset ownership (many state enterprises have had to mobilize capital from different sources, including loans from the informal market and stakes from managers and workers; this capital is referred to as ‘own capital’ and directors think that it should be taken into account in the enterprise evaluation process). Although the private sector is now being encouraged, the official orientation that ‘the state enterprise must be dominant’ is giving rise to serious uncertainty in the minds of many individual investors (p. 9). The food processing enterprise Long An Export (employing 1,200 people) announced that shares were to be sold on 19 June 1995. The state was to retain 30 per cent of the capital, 40 per cent would be offered to employees and the remainder was to go to domestic enterprises. Foreigners would not be allowed to invest in the enterprise. There are 6,240 state enterprises in Vietnam, but only five have become stock-issuing enterprises since 1992 (IHT, 16 June 1995, p. 15). Fourteen small enterprises have been ‘equitized’ since 1992 (five by mid-1995), out of a total of 6,000 state enterprises. The state has kept a 30 per cent to 40 per cent stake in ‘equitized’ enterprises and most of the rest has gone to managers and employees. Employees borrow from the state to buy most of their shares and they cannot sell until they have fully paid for their allotments. Managers, who own large stakes, cannot sell until two years after they have left the company. Only 10 per cent of the stock of ‘equitized’ enterprises has been made available to the ‘public’, usually employees’ relatives. (Faith Keenan, FEER, 13 November 1997, pp. 64–5) ‘Only eighteen enterprises have sold shares to their workers and outsiders’ (Faith Keenan, FEER, 12 March 1998, p. 52). On 22 February 1998 it was announced that between 150 and 200 state enterprises would be ‘equitized’ in 1998. Only twenty-one have been ‘equitized’ since 1992 (IHT, 25 February 1998, p. 13). Shares in only eleven state enterprises were offered in the first half of 1998 (compared with a government target to privatize 150 state enterprises for the whole year). This brought the number of enterprises involved in the programme to twenty-nine in total (IHT, 13 July 1998, p. 15; FEER, 23 July 1998, p. 67). ‘As the fourth quarter [of 1998] began only thirty-nine of the 6,000 state enterprises had been privatized – far below the 150 targeted by the government for the year [1998]’ (FEER, Asia 1999 Yearbook, p. 215).

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‘Since the programme was launched in 1992 only 150 state firms have been selected for selling shares to the public’ (FEER, Asia 2000 Yearbook, p. 215). ‘Progress has been slow, with only 440 of the more than 5,000 stateowned companies dividing up their shares among the government, management and employees. The state still holds a monopoly in airlines, oil and other key industries’ (IHT, 20 July 2000, p. 15). More than 400 former state enterprises have been ‘equitized’. They have been ‘transferred to the hands of the workers, managers and the general public’ (FT, 21 July 2000, p. 12). ‘In the first half of 2000 the government sold its majority stake in over 200 firms, more than it had in the previous four years combined’ (The Economist, 29 July 2000, p. 86). Generally the state retains 20 per cent to 30 per cent of the shares, the management and employees get 30 to 40 per cent and the rest is offered to outside buyers in a scheduled sale . . . Foreigners can purchase up to 30 per cent of the shares . . . There are 5,800 state-owned firms . . . No more than 440 companies have been ‘equitized’ since 1993, seventy of those this year [2000]. It seems unlikely that this year’s target of 560 additional firms will be met . . . Vietnam’s new stock exchange [is] slated for a July [2000 opening] . . . Vietnam first announced the launch of a stock market eight years ago. Hopes that a market will finally get off the ground were stoked in late June [2000], when the authorities in Ho Chi Minh City tested an electronic trading board obtained from Taiwan and modified software from the stock exchange of Thailand . . . The State Securities Commission (SSS) prefers the term ‘stock trading centre’ for this embryonic, thriceweekly market where just a handful of companies – between two and seven – will be listed, along with an unspecified volume of government bonds. And although companies will be permitted to raise fresh capital, for the moment no new shares will be issued – only existing shares of ‘equitized’ firms will be traded . . . Some discrepancies remain. For example, foreign investors can purchase 30 per cent of an equitized firm, but only 20 per cent of a firm once it is listed on the exchange . . . In the case of air-conditioner contractor REE Corp., one of the two firms approved for listing, foreigners already hold 25 per cent. But [SSS director Bui Nguyen] Hoan says foreign investors will not be compelled to sell the extra 5 per cent; they will simply be prevented from acquiring any additional shares. (Margot Cohen, FEER, 6 July 2000, pp. 69–71) With equitization of six enterprises in the first half, there have only been thirty-four subsidiaries of major state enterprises equitized in 2000. Nearly 400 were originally to be privatized . . . In September the government announced that state-enterprises would have the right to

Economic developments 125 hire and fire and decide salaries. It warned that if any of these firms suffered losses for two consecutive years the director, deputy director and chief accountant would lose their jobs . . . Small and medium-sized enterprises, especially private businesses, lack space for production, while many state enterprises have excessive acres of land . . . A recent decree permits loans without collateral, but banks are still reluctant to make such loans to private businesses. (FEER, Asia 2001 Yearbook, December 2000, p. 216) Vietnam opens the Ho Chi Minh stock trading centre on Thursday [20 July] . . . [with] two companies selling $2 million in stock . . . Eight years after the plan was announced just forty-seven companies are eligible to list, and only three of those said they were interested. The government will be the chief beneficiary, offering $22 million of its own bonds for trading on the first day and $140 million more in a year . . . It will trade only three days a week . . . Foreign-owned companies are not yet allowed to issue shares on the market. Foreign investors are allowed to own a total of 30 per cent of a company’s stock, although ownership by a foreign individual is limited to 3 per cent, and 7 per cent for a foreign investment firm. (Dao Thu Hien, IHT, 20 July 2000, p. 15) ‘Trading was scheduled to begin on 28 July (The Economist, 29 July 2000, pp. 85–6). Vietnam has opened its first stock exchange [on 28 July] . . . with just two stocks . . . Refrigeration Electrical Engineering Co. and Cables and Telecommunications Material Co. . . . Minutes before the Ho Chi Minh City Securities Trading Centre opened for business the government imposed a ceiling on bids . . . Shares are only traded three days a week. Prices can rise or fall no more than 5 per cent a day . . . Two more companies should be listed within the next two weeks . . . and about fifty others now meet the criteria for listing . . . Vietnam has been promising to open a stock market since 1992 . . . In the absence of an authorized market company shares have been trading on the gray market for years. (IHT, 31 July 2000, p. 15) ‘So far only two companies have been listed to trade . . . Trading won’t begin until at least the end of July’ (FEER, 3 August 2000, p. 15). So far just four companies . . . have been given permission to list on the exchange . . . Six fledgling companies [have been] licensed as brokers . . . Ho Chi Minh City . . . has had an active kerb market for shares in so-called ‘equitized’ companies . . . Since September 1999 much of that trade has gone through Indexx House, a restaurant with computers and a trading board that acted as a central clearing house for share trading. (FT, 21 July 2000, p. 12)

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The trading of shares in the two existing companies was augmented on 4 August 2000 by trading in the shares of two more companies, Transforwarding Warehousing (Transimex) and Haiphong Paper (Hapco) (FT, 5 August 2000, p. 6). ‘The new stock market . . . will initially list shares in only four companies’ (The Economist, 29 July 2000, pp. 85–6). ‘Foreign brokers won’t be able to do business at Vietnam’s new stock market’ (FEER, 27 July 2000, p. 23). There are four listed companies (FT, 13 October 2000, p. 12). ‘A fifth . . . [a] food processing company . . . has been given permission to list on the bourse and is expected to begin trading on 15 December [2000’ (FT, 8 December 2000,p. 54). ‘Initially there were just two firms . . . listed on the exchange . . . but now there are five, all state-owned, plus a bond issued by a state bank’ (The Economist, 17 March 2001, p. 104). On 13 June 2001 the state securities commission widened the daily trading band for shares in the five listed companies from 2 per cent to 7 per cent up or down (FT, 14 June 2001, p. 42). [There is] a grey market with more than ninety companies on offer – compared to just five firms listed on the tightly controlled official exchange . . . The grey market emerged prior to the official exchange. Back in the early 1990s, when Vietnam began transferring some shares of state-owned firms into private hands under the so-called ‘equitization’ process, a few savvy investors began dabbling in them. But the real action revved up over the past year . . . Only six out of some 700 equitized firms have listed . . . Saigon Hotel, a tourism firm . . . listed on 16 July [2001] . . . Many companies remain reluctant to list, due to the prerequisite financial disclosure and the anticipated pressure on management. And the state securities commission [SSC] remains highly cautious in handing out licences . . . SSC officials fret that grey market prices are spiralling beyond real asset values, though they are not prepared to clamp down just yet. (FEER, 2 August 2001, p. 48) ‘Investors escape the tightly controlled, official market of just seven stocks by trading freely in more than ninety companies on the unofficial exchange’ (FEER, 8 November 2001, p. 61). ‘Last year [2001] the government promised foreign donors it would sell some 300 state outfits. It only managed half that number’ (The Economist, 16 March 2002, p. 70). By mid-October [2002] . . . the first batch of state employees will opt for voluntary redundancy under the government’s new scheme to speed up reforms at over-staffed state-owned firms. The $400 million scheme, backed by the World Bank and other donors, aims to lift the

Economic developments 127 burden of surplus workers from heavily indebted state firms; this, in turn, will accelerate privatisation that will help resolve all the bad debts weighing on Vietnam’s state banks . . . To tempt workers to quit the government is offering an incentive-laden package. Compared to the late 1980s and early 1990s, when workers were laid off with a tiny lump sum and no pension, the new package is generous: two months of basic salary per year of service, a lump sum of 5 million dong, an additional six months of full salary and, at retirement age (sixty for men, fifty-five for women), a monthly pension payment . . . The exit package includes a stipend for six months of vocational training in the worker’s field of vocational training. But . . . workers won’t be free to enrol in private training institutes [the World Bank’s preference] – they must sign up at state-run vocational centres With the first tranche of $100 million from the World Bank, the scheme will be launched by mid-October at seven pilot firms . . . Studies have shown that the overstaffing rate at state firms hovers around 20 per cent . . . Workers must pay back 50 per cent of their package if they return to a state firm [but there are differing interpretations as to what this means] . . . The scheme could also boost Vietnam’s private sector if these workers use part of their cash payouts to start private businesses or expand existing household enterprises. (FEER, 3 October 2002, p. 10) Compared with China, Vietnam has relatively few state workers to make redundant. With about 80 per cent of Vietnamese earning their living from agriculture, only 1.6 million work in the country’s 5,650 state firms, of whom up to 400,000 will be laid off over the next five years, according to official estimates . . . Vietnam’s communist leaders are loath to appear insensitive to the plight of state workers or the party faithful who run state enterprises. Neither could the leadership ignore the glacial progress of privatization, or ‘equitization’, as the government prefers to call it, whereby selected state enterprises transfer most of their shares into private hands, with the state typically retaining a 20 per cent stake. Of 1,800 state firms targeted for privatisation by 2002, only seventy-nine companies made the grade in the first half of 2002. Many managers said they lacked the confidence to make the transition partly because there was no consensus on how to shed unproductive workers. (FEER, 3 October 2002, p. 21) There are 5,228 state enterprises and 91,743 private companies. There are nineteen companies listed on the Ho Chi Minh stock exchange, while more than 800 companies are listed on Vietnam’s shadowy grey economy. Since launching operations in July 2000 the Ho Chi Minh exchange has not come close to fulfilling its promise. The companies themselves

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Economic developments [however] are not bad – fifteen of the nineteen listed are routinely profitable . . . [There are] plans . . . to add as many as twenty companies by the end of next year [2003] . . . Another reform will allow share prices to move each day within a 5 per cent band as opposed to a 3 per cent band . . . The vast majority of Vietnam’s 91,743 private companies are simply too small to list. (FEER, 28 November 2002, pp. 22–3) In the period from the launch of the government’s equitization programme in 1992 until February 1998 just seventeen enterprises completed equitization formalities. Equitization picked up momentum in 1999 and 2000 so that by September 2001 some 700 state enterprises had reportedly completed equitization proceedings. However, even by that date equitization had involved just 12 per cent of state firms by number and just 2 per cent in terms of capital, highlighting the way in which it has so far largely involved small and medium enterprises. (Gainsborough 2003: 50) [The] reason why equitization suddenly speeded up . . . [is] primarily to do with a changed calculation on the part of largely anonymous state business interests concerning where the best place to do business was. By the end of the 1990s many of the reasons for staying in the state sector had disappeared while life in the private sector was no longer regarded with the trepidation it once was. (p. 61)

‘[For example] conditions in the state sector were no longer so hospitable in terms of access to budget subsidies’ (p. 53). ‘By 1999–2000 the climate for the private sector had improved . . . [For example] the Enterprise Law, which came into effect in 2000, resulted in the abolition of large amounts of red tape’ (p. 54). ‘[Around] 1,070 state companies have been partially privatized over the past decade’ (FEER, 17 July 2003, p. 42). ‘The government’s programme to partially privatize SOEs is hardly racing along. So far only 337 out of the 1,500 SOEs due to be restructured this year have completed the process’ (FEER, 25 September 2003, p. 54). Petroleum Mechanical Joint Stock Company on Tuesday [4 November] became the second company to list of Vietnam’s stock exchange this year [2003] . . . It is now the country’s twenty-second publicly traded company . . . Petroleum Mechanical, which was wholly owned by the government until 1999 and is still 35 per cent owned by Vietnam National Petroleum . . . The bourse, which opened in July 2000, had said it aims to have forty companies listed by the end of this year . . . VTC Telecommunications [was] listed in February [2003]. (http://www.iht.com, 4 November 2003)

Economic developments 129 ‘[There are] twenty-two companies [listed on the stock exchange] . . . Overseas investment in the market [is] limited to a maximum of 30 per cent in any one company’ (http://www.iht.com, 25 November 2003). Vietnam’s plan to keep control of more than 40 per cent of its remaining state-owned companies is ‘a step backward’ US officials said Tuesday [2 December] at a meeting of nations and agencies that give aid to Vietnam . . . Vietnam has 4,900 government-owned companies, accounting for about 38 per cent of economic production, down from 12,000 in 1990, according to the World Bank. The government proposes selling shares in no more than 2,900 of the remaining stateowned companies, the US delegation said. (http://www.iht.com, 2 December 2003) The bourse, called the Ho Chi Minh City Stock Trading Centre, began with a tiny capitalization – only two listed issues – and has grown to twenty-three listings only recently . . . Last summer [2003] Dragon Capital obtained a licence from the state to operate the first mutual fund in Vietnam, in a joint venture with Saigon Commercial Bank. The fund, which will be introduced in April [2004], will take stakes in an array of listed and unlisted shares as well as bonds. (IHT, 11 March 2004, p. 14) [Vietnam has had] half-hearted stabs at privatizing state companies in recent years . . . [Vietnam has a] lacklustre privatization record. Although the number of wholly-state owned enterprises has shrunk from 5,861 companies in 1998 to the current 3,807, Hanoi perennially falls short of its privatization targets. In the first eight months of this year [2004], for example, just 358 companies were privatized out of a total of 1,000 targeted for the year. Generally privatization has been stymied by state mangers reluctant to assume new responsibilities, and complicated by disputes over how to value state assets and cope with massive debts. The debt of state-owned enterprises now tops $13 billion. (FEER, 7 October 2004, pp. 16–17) Although the government continues to ‘equitize’ . . . state-owned firms, the pace is agonizingly slow. It recently announced that it would start selling shares in one of its four banks – but not a controlling stake, and only in small instalments spread over five years. The ultimate goal seems to be a web of partially privatized companies, subject to a certain degree of competition and market discipline. (The Economist, 26 November 2005, p. 72) Vietnam’s stock market more than doubled in value yesterday – pushing it past the $1 billion mark – when Vinamilk, the country’s top dairy products company, was listed on the exchange. The listing of

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Economic developments Vinamilk, which had been traded on the unregulated, over-thecounter market, marks a milestone for Vietnam’s five-and-half-yearold bourse, which still has just thirty-four listed companies and has been struggling to gain the attention of global investors . . . After a lacklustre first half, Vietnam’s stock market rallied late in the year [2005]. In October stock market regulators raised the foreign equity limit for listed companies from 30 per cent to 49 per cent. The move helped the market to finish the year up 27 per cent against the end of 2004. In the year ahead market participants expect other larger companies, including several banks, to be listed, though regulatory issues must still be sorted out since the current banking law limits foreign equity holdings in banks to just 30 per cent. Vietnam’s newest listed company, Vinamilk, is a state-owned enterprise turned publicly held company, which produces a range of dairy and food products . . . Vinamilk has just announced a joint venture with the international brewer SABMiller to enter Vietnam’s crowded beer market by establishing a factory [to produce beer] . . . [The] government began selling off its stake in Vinamilk in late 2003, with the disposal of 4 per cent of its holdings. In February last year [2005] the state sold off an 11.5 per cent stake through a transparent Dutch auction, raising $34 million. In November the state sold off a third tranche of its shares – another 10 per cent of Vinamilk’s total equity – raising $53 million. The government holding is now just over 51 per cent, the minimum required for a licence to operate such a large brewery. (FT, 20 January 2006, p. 7)

Further aspects of privatization The government has recently announced a series of ‘intermediate’ measures, including the selling or leasing of state-owned premises or machinery to workers and managers (IHT, 3 July 1993, p. 13). Members of the Communist Party are formally not allowed to hire nonfamily labour, but examples are to be found in real life (Murray Hiebert, FEER, 30 September 1993, p. 64). In late January 1993 an experimental stock trading centre was authorized to deal in government bonds and shares in state-owned enterprises (FEER, 18 February 1993, p. 9). The Ho Chi Minh City stock exchange was expected to open in 1994 (initially dealing only in government bonds) and one was also planned for Hanoi later on (IHT, 7 December 1993, p. 13). Foreign companies are not yet allowed to buy shares in the roughly twenty state enterprises currently being privatized. But under new banking rules joint stock commercial banks and finance companies are to be allowed to raise up to 30 per cent of capital from foreign shareholders. A single foreign shareholder will be limited to 10 per cent of a company’s total capital (FEER, 23 December 1993, p. 55).

Economic developments 131 Vietnam plans to grant state enterprises the right to issue stock and bonds. A law due to take effect on 1 October 1994 would enable state enterprises to sell securities to Vietnamese individuals and companies, as well as to foreign joint ventures (FEER, 6 October 1994, p. 89). A decree has been issued allowing foreign residents and companies to buy bonds and shares issued by state enterprises (Transition, September 1994, vol. 5, no. 7, p. 18). In March 1996 the minister responsible for state enterprise reforms said that Vietnam planned to allow foreigners for the first time to buy stakes in 150 to 200 state enterprises, aimed at revitalizing the privatization drive. The minister believed that the original programme failed because it had not included enough incentives and could not satisfy employees or employers (IHT, 14 March 1996, p. 15). On 9 April 1996 the party revealed the contents of a draft report to be presented at the 28 June–1 July 1996 congress. One goal was ‘to develop a multi-sector economy and apply the market mechanism to build socialism successfully’. The private sector would be encouraged but the state and cooperative sectors’ share of GDP would rise from 40 per cent to 60 per cent of GDP. ‘Economic renovation and building a multi-sector economy operating within a market mechanism must be accompanied by the strengthening of the role of state management along socialist lines.’ Insurance, trading and infrastructure would remain reserved for the state. The ‘equitization’ programme would go ahead, but majority stakes would be held by the state. The Eighth National Congress of the Communist Party took place on 28 June–1 July 1996. But there was no mention of the aim, mentioned in the April 1996 draft report, of increasing the state and co-operative sectors’ share of GDP to 60 per cent. (According to Adam Schwarz, the 60 per cent target was to have been reached by the year 2020: FEER, 24 October 1996, p. 51.) The state sector’s ‘leading role’ (‘foundation of the economy’) was stressed. Wholesale privatization was rejected. The congress decided that party members could engage in small, household businesses but not ‘private economic activities’ (FEER, 11 July 1996, p. 16). The ‘private capitalist economy’ was considered as being ‘capable of contributing to national construction’ (The Economist, 17 May 1997, p. 81). To date no foreigner has been allowed to own a stake in the country’s 6,000-odd state firms, although many have formed joint ventures with state enterprises . . . Currently the law forbids foreigners from buying into Vietnamese private or state companies, with some exceptions, like joint stock banks such as Asia Commercial Bank. (Faith Keenan, FEER, 19 March 1998, pp. 49–50) The National Assembly has passed a law aimed at promoting investment. Among other things it allows foreigners to take stakes of up to 30 per cent in local companies. But investors will have to wait until the details

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are spelled out in regulations implementing the law (FEER, 21 May 1998, p. 17). Vietnam will allow foreign investors to hold up to a 30 per cent stake in some domestic companies . . . The new ruling would take effect next week . . . According to the decree, foreigners who sit on the management board must hold their shares a minimum of three years, while non-management holdings must be held a minimum of twelve months . . . The 30 per cent has to be issued through an underwriter. That prevents small people from selling to foreigners . . . To date only four ‘equitized’ companies – those formed by selling shares in state-owned companies – have been authorized for foreign ownership under the pilot project. Otherwise foreign investment in Vietnam is restricted to wholly foreign-owned and joint venture companies that are governed by a separate foreign investment law. (IHT, Tuesday 6 July 1999, p. 14) But it was not until 14 July 1998 that a decree was made public establishing the framework for the first public securities market. The decree allowed for the opening of two ‘securities trading centres’ in Ho Chi Minh City (on 1 October 1998) and Hanoi (no specified date), which were to be allowed to trade bonds and shares. Joint ventures were to be allowed to participate but there were to be limits on foreign shareholdings. Under existing law foreigners are allowed to own up to 30 per cent of Vietnamese registered companies (FT, 15 July 1998, p. 3). The decree stated that at least 20 per cent of share capital of the issuing organization must be sold to more than 100 investors outside that organization (IHT, 15 July 1998, p. 17). Local securities firms and foreign joint ventures were to be licensed to buy and sell shares and bonds in listed companies. Foreigners were to be allowed to own shares in listed companies, subject to limits not then announced (The Economist, 18 July 1998, p. 95). (See Margot Cohen and Dao Thu Hien above, in the section on equitization.) The National Assembly meeting started on 4 May 1999. Nguyen Tan Dung, deputy prime minister [and governor of the central bank] . . . painted a gloomy picture of the country’s economic prospects . . . [He did not] say whether Vietnam would lower its 1999 target of 5 per cent to 6 per cent growth of GDP . . . During the current session delegates are expected to approve four new laws, including a landmark text aimed at ending discrimination against the private sector. (IHT, 5 May 1999, p. 19) ‘Earlier this year [1999] the People’s Assembly passed a law according the private sector equal standing with state-owned companies’ (FEER, 23 September 1999, p. 30).

Economic developments 133 The Enterprise Law . . . which took effect on 1 January [2000], allows private firms to register without waiting for onerous government approvals . . . [But] various ministries have been reluctant to eliminate licences – eighty-four types of licences have been dropped but at least 300 remain on the books. (FEER, 8 June 2000, p. 76) ‘A new enterprise law, which would allow more private businesses, has yet to be implemented’ (The Economist, 10 June 2000, p. 90). The National Assembly passed a law according the private sector equal standing with state-owned companies (FEER, 23 September 1999, p. 30). A new enterprise law, which took effect in January [2000], makes it easier for private companies to register and to engage in whatever businesses they want. According to the World Bank, more than 5,000 new companies were created in the first five months of this year [2000]; and, although comparisons are difficult in some sectors, more new manufacturing firms have been created than in 1995–8 combined. (The Economist, 29 July 2000, p. 86) ‘The Communist Party of Vietnam . . . [announced] recently that the state sector will retain the “leading role” in the economy’ (FEER, 5 April 2001, p. 25). ‘[At the Ninth Communist Party Congress held 19–23 April 2001] the party stuck to a broad platform that assigned a vague “leading role” to the state sector, but also encouraged the growth of the private sector and foreign investment’ (FEER, 3 May 2001, pp. 19–20). In the port of Haiphong members of the local People’s Committee are gearing up for a revolutionary experiment to auction a state enterprise to the public . . . The Agricultural Engineering Company . . . has just sixty-eight employees . . . If the auction goes ahead it will be the first time that Vietnam puts a state company into private hands by a bidding process . . . State enterprises take up over half of the available bank credit, though they employ just 5 per cent of the work force . . . Hanoi has promised the IMF and the World Bank that it will restructure around 1,800 state enterprises over the next three years, a sharp increase over the 450 businesses Vietnam has part or wholly privatized since 1998. Most will be sold, while a few will be liquidated . . . Vietnam . . . [imposes] equity caps that limit the stake a single individual or entity can buy in a single company . . . So far . . . only small, relatively strong enterprises have been sold. (FT, 17 May 2001, p. 12) Vietnam’s National Assembly yesterday [11 December 2001] adopted a constitutional amendment that calls for the private sector to be treated equally to the state sector . . . Yesterday’s amendment affirmed

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Economic developments that ‘all economic sectors are important, integral parts of the socialistoriented market economy’. It said private enterprises would have the right to compete on equal terms with state-owned enterprises in any business where the private sector was not prohibited by law . . . Vietnam adopted an enterprises law last year [2000]. (FT, 12 December 2001, p. 12) Private firms are barred from ‘sensitive’ businesses, including infrastructure and defence . . . Private firms have a terrible time finding finance . . . The government places a cap on the interest rates private banks can charge, in effect preventing them from lending to risky start-ups. (The Economist, 16 March 2002, p. 70) The [Communist Party] Central Committee . . . has decided that party members can engage in private business. Members of the ruling party have always been officially barred from engaging in private business, but many have retained positions in state firms that have been partially or fully privatized while others have run small businesses for years. (FEER, 14 March 2002, p. 12) Insiders say that the party has not yet reached consensus on the definition of ‘private capitalism’ – leaving party members in the dark over exactly what is permissible and what is forbidden . . . In a bid for clarity top communist theoreticians . . . will meet on 21 March to thrash out the limits of acceptable capitalist behaviour. (FEER, 28 March 2002, p. 8)

‘[The] Central Committee [has announced] that the bosses of restructured state-sector companies will be allowed to remain party members’ (IHT, 4 April 2002, p. 14). ‘Thanks to a recent law 2,000 new companies are being launched each month’ (FEER, 8 August 2002, p. 20). The [Communist Party] Central Committee . . . has decided that party members can engage in private business. Members of the ruling party have always been officially barred from engaging in private business, but many have retained positions in state firms that have been partially or fully privatised while others have run small businesses for years. (FEER, 14 March 2002, p. 12) Insiders say that the party has not yet reached consensus on the definition of ‘private capitalism’ – leaving party members in the dark over exactly what is permissible and what is forbidden . . . In a bid for clarity top communist theoreticians . . . will meet on 21 March to thrash out the limits of acceptable capitalist behaviour. (FEER, 28 March 2002, p. 8)

Economic developments 135 ‘Unlike in China, private Vietnamese entrepreneurs are not welcome to join the Communist Party, but party members can do business’ (Transition, 2003, vol. 14, nos 4–6, p. 35). Prime minister Phan Van Khai: Party members in Vietnam are still allowed to run their own businesses, but I do not think to the same extent as capitalists. For example, in rural areas our party members still have their own farms, they run their own businesses. The successful party member/entrepreneur will be in a better position to help the poor. (Transition, 2003, vol. 14, nos 4–6, p. 35) ‘[The] Central Committee [has announced] that the bosses of restructured state-sector companies will be allowed to remain party members’ (IHT, 4 April 2002, p. 14). Prime minister Phan Van Khai . . . appears to have a better shot this time at slimming down the nation’s 5,650 state enterprises, a prerequisite to recapitalizing the overburdened state-owned banks. In August [2002] the government will begin to dole out more generous cash payments to workers who volunteer to leave their state jobs, as part of a new ‘social safety net’ programme . . . Thanks to a recent law 2,000 new companies are being launched each month. (FEER, 8 August 2002, p. 20)

Foreign trade Comecon once dominated Vietnam’s foreign trade, the Soviet Union alone around 65 per cent in the early 1980s. Japan, however, which also offered long-term loans, was actually second to the Soviet Union as a trade partner. In 1989 the foreign trade commodity structure was as follows: exports: raw and processed agricultural products (e.g. rice) 39.8 per cent; smallscale industry and handicrafts 27.5 per cent; products of heavy industry and mining (e.g. coal) 19.2 per cent; sea products (e.g. shrimps) 9.9 per cent; forest products 3.6 per cent; imports: raw materials and fuels 56.8 per cent; complete equipment and oil industry equipment 20.3 per cent; finished consumer goods 10.2; sundry equipment 7.4 per cent; spares and accessories 5.3 per cent. The socialist countries accounted for 46.4 per cent of exports and 73.6 per cent of imports (Vietnam Courier, 1990, no. 7, p. 10). Imports were 13 per cent of GNP in 1984 (Beresford 1988: xiv). Within Comecon during the 1980s there was a shift towards greater specialization in tropical products and light manufactures (p. 175). In February 1987 a commission for economic relations with foreign countries was set up to develop links with Third World and Western

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nations. There were already assembly plants operating with licences from, for example, Japanese companies. A 70 per cent increase in exports was planned for 1986–90 (Jeffries 1993: 219). A US embargo was imposed in May 1975 (1964 in the case of North Vietnam). (Note that the US embargo had wider implications, deterring both foreign investment from other countries not wishing to offend the United States, for example Japan, and lending by international bodies. Nevertheless, December 1991 saw the first visit by a US trade mission since April 1975, while in mid-January 1992 a Japanese aid delegation paid an exploratory visit to Vietnam. Countries like Australia, Italy, Finland and the Netherlands offered aid in late 1991 and early 1992.) On 22 October 1990 Vietnam was granted diplomatic relations with the European Community (thus permitting EC aid) and is a member of the IMF, the World Bank and the Asian Development Bank. The upheaval in Eastern Europe produced a number of broken contracts to import Vietnamese products. Current world prices and hard currency trading were generally used after the start of 1991 (an agreement with the Soviet Union being reached on 31 January). Trade with the Soviet Union fell by 15 per cent in the first six months of 1991 (Murray Hiebert, FEER, 19 September 1991, p. 18). The September 1979 reforms allowed exporting enterprises, with the approval of the ministry of foreign trade, to sign contracts direct with foreign companies. ‘Today producers not yet allowed to export direct are able to sell to any trade corporation’ (Adam Fforde, FEER, 14 September 1989, p. 76). In 1981 Ho Chi Minh City, Hanoi, Haiphong and Da Nang were allowed to set up their own foreign trade corporations. The 1979 reforms allowed enterprises to use 10 per cent of planned and 50 per cent of aboveplan foreign exchange earnings for the import of raw materials and spare parts, while in late 1981 all localities were permitted to export direct and to retain 70 per cent to 90 per cent of foreign exchange earnings for the import of raw materials, machinery and consumer goods for their own use (Spoor 1988b: 121–2). Managers of state enterprises in Ho Chi Minh City were allowed, in 1987, to borrow funds from abroad in order to import modern equipment and technology, to enter into joint ventures with overseas companies and to employ ‘overseas Vietnamese and technical advisers and managers’. Relatives of exiled Vietnamese were promised the facility of foreign currency accounts and a favourable rate of exchange, and the tourist door was opened to all foreigners and expatriates in 1986. Tighter import controls were introduced on 15 November 1991, foreign currency being made available only for ‘essentials’ until the end of the year. Hard currency can only be used for authorized imports; hoarding and speculation are illegal. (Jeffries 1993: 220). The state monopoly of foreign trade was eliminated in 1988, allowing

Economic developments 137 the establishment of foreign trade organizations and permitting some enterprises to engage directly in foreign trade. Following a law promulgated in December 1997 most quotas were eliminated and replaced by import duties (Riedel and Comer 1997: 194). Whereas in the past, in order to be granted permission to export, firms had to meet certain minimum size requirements, currently any enterprise with prospects of export orders is given the certificate that is required to engage in trade. Importing is, of course, more closely regulated, with certificates, permits and licences being required on terms that vary from one product category to another. Aside from these administrative obstacles, the main barrier to imports in Vietnam is tariffs . . . [There has developed] an increasingly complex tariff schedule. (ibid.: 204) ‘The number of enterprises allowed to engage in direct foreign trade has increased from around 300 in 1991 to nearly 500, including six private firms’ (Murray Hiebert, FEER, 14 May 1992, p. 56). Vietnam is now a highly open economy. In 1992 the share of trade in output was 55 per cent (Irvin 1995: 732). ‘Total trade is equivalent to more than 100 per cent of its modest $50 billion GDP’ (FT, 15 July 2005, p. 9). On 7 January 1997 it was announced that the state’s monopoly on rice trade was to be relaxed by allowing private companies to sell the grain abroad for the first time (FT, 8 January 1997, p. 24). In 1997 the allocation of some export quotas were devolved to rice-growing provinces. A February 1998 decree set the 1998 rice export quota at 4 million tonnes, up from 1997’s 3.6 million tonnes. Vietnam is to allow private companies (about five of them) to export rice directly, on a trial basis, for the first time. The decree also increased the number of companies allowed to export (including foreign rice production joint ventures) and abolished permits for fertilizer imports (FT, 5 February 1998, p. 41). ‘The ban on private firms exporting directly [has been lifted]’ (Gainsborough 2003: 54). Vietnam is the third largest rice exporter after Thailand and the USA (The Economist, 20 March 1993, p. 26). ‘Today it is the world’s largest exporter of rice after Thailand’ (The Economist, 10 June 2000, p. 90). ‘Vietnam . . . is the largest producer of black pepper and robusta coffee, which is used in instant blends. And it is the second largest exporter of rice, after Thailand, and a key source of seafood, cashews and bauxite’ (IHT, 28 August 2000, p. 15). In 1991 exports of crude oil accounted for nearly one-third of total exports. Rice exports fell to about 1 million tonnes. Singapore, Japan and Hong Kong together accounted for half of Vietnam’s foreign trade and the former Soviet Union for 13 per cent. (Murray Hiebert, FEER, 14 May 1992, p. 56)

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Rice exports total 1.9 million tonnes (Murray Hiebert, FEER, 27 May 1993, p. 59). In 1992 unprocessed farm products accounted for 40 per cent of exports and crude oil for 32 per cent (5.4 million tonnes) (Murray Hiebert, FEER, 28 January 1993, p. 43). (Rice exports were 2.9 million tonnes in 1996: FEER, 28 August 1997, p. 19. In 1998 they amounted to 3.8 million tonnes: FEER, Asia 2000 Yearbook, p. 216.) The oil industry now accounts for two-thirds of exports (FT, Survey, 24 September 1993, p. xx). Oil is the largest earner of foreign currency (FT, Survey, 8 December 1994, p. 39). ‘Vietnam, Asia’s largest coffee producer, will join a fourteen-nation global group of coffee growers to stockpile a fifth of their coffee to raise prices, now near a six-year low’ (IHT, 23 September 2000, p. 10). Japan accounts for 35 per cent of exports, the EU for 17.1 per cent and Hong Kong for 6 per cent. The respective figures for imports are 14.8 per cent, 12.6 per cent and 30.8 per cent (FT, Survey 1993, p. 33). According to Dorothy Avery (Asian Survey, 1993, vol. XXXIII, no. 1, p. 71), in 1992 Vietnam achieved a balance of trade surplus for the first time since independence. But there were trade deficits of $200 million in 1993 and $900 million in 1994 (Transition, January–February 1995, p. 20). The trade deficit in 1994 was later put at $1.4 billion (FT, 30 March 1995, p. 8). On 25 July 1999 the USA and Vietnam reached an agreement in principle on trade after more than three years of talks. The agreement addressed trade in goods and services, protection of intellectual property and investment. Under the terms the USA would confer normal trading status (the US term for MFN status) on Vietnam. Vietnam would immediately get a cut in tariffs The accord, which required Vietnam to open its economy in phases, would allow US companies to compete on an even footing, particularly in telecommunications, financial services and distribution. In 1998 the USA accounted for 5.9 per cent of Vietnam’s exports. The USA is ninth among foreign investors, with sixty-eight projects worth $1.37 billion, licensed since 1994 (IHT, 26 July 1999, p. 13). Hanoi was to have five to eight years to phase in market-opening measures like tariff cuts and more local-currency business for foreign banks. Vietnam explained the extended timetable in terms of the need to reform the state sector first (FEER, 5 August 1999, p. 51). The USA and Vietnam failed to sign the trade deal during the 12–13 September 1999 Apec summit (FEER, 23 September 1999, p. 51). ‘The deal . . . has stalled since Vietnamese negotiators began quibbling over various provisions . . . including a requirement that Hanoi disclose government procurement contracts. Vietnamese officials protest that no other country has been asked to do this’ (IHT, 29 April 2000, p. 5). Vietnam’s draconian investment licensing system . . . will be abolished. Many services sectors, including telecommunications, banking and

Economic developments 139 insurance, will be opened to US investment. Americans will be allowed to import and export freely and eventually establish and control their own distribution systems . . . Estimates are that the MFN status will boost Vietnam’s exports to the USA by more than $1 billion a year . . . Some changes will be difficult; these will be phased in over five or more years to give local firms a chance to adjust to new market realities. (Andrew Durant, FEER, 23 September 1999, p. 30) It took until 13 July 2000 for Vietnam to sign the trade agreement with the USA. Some analysts see the agreement as an indication that Vietnam’s top leaders are willing to push the economic changes started in the 1980s to a new level, perhaps because neighbouring China has accelerated the economic overhaul in preparation to join the World Trade Organization [WTO] . . . The agreement would require sharp reductions in US tariffs on sensitive Vietnamese goods like textiles, shoes and electronics . . . The agreement would grant Vietnam the same trading rights here [in the USA] that most other countries have, including reductions in up to 90 per cent in tariffs . . . American companies, in turn, could crack open areas that are essentially off limits today, including telecommunications, financial services, retail and distribution . . . Vietnam would also agree to protect foreign intellectual property . . . But [the US] Congress would still have to approve the agreement and extend normal trade privileges to Vietnam . . . The two countries have miniscule trade flows of less than $1 billion. America ranks ninth among foreign investors. (IHT, 14 July 2000, pp. 1, 8) The government has recently relaxed regulations on private enterprise and foreign investment, and, in the most significant step toward economic liberalization, the country Thursday [13 July] signed a landmark trade agreement with the United States that requires Vietnam to fundamentally overhaul its economy, reducing tariffs on a broad range of goods and allowing foreign firms to participate in key sectors, including telecommunications and banking. In exchange Vietnam will be able to export clothing, shoes, toys and a host of other products on the same low-tariff terms granted to most other countries . . . Under the agreement tariffs on running shoes [imported into the USA], for instance, fall from about 35 per cent to about 10 per cent . . . Vietnamese negotiators . . . obtained delays for the implementation of certain provisions. Although US banks will be allowed to issue credit cards, for instance, they can only do so eight years after the agreement takes effect. Life insurance can only be offered by a company involved in a joint venture and only after three years. With phone and internet

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Economic developments services, foreign companies will have to wait at least three years before they can enter into joint venture agreements and those investments will be limited to minority equity positions . . . The deal must be approved by the [US] Congress and Vietnam’s National Assembly. (IHT, 15 July 2000, p. 14)

‘The consensus is that the agreement is the most significant business development in Vietnam since the county reopened to foreign investment almost fifteen years ago.’ The average tariff on goods from Vietnam falls to 3 per cent from almost 40 per cent. The fall in tariffs on individual goods is as follows: apparel, 68.9 per cent to 13.4 per cent; leather goods, 33.0 per cent to 5.6 per cent; chemicals, rubber and plastics, 30.3 per cent to 4.3 per cent; fruit, vegetables and nuts, 20.8 per cent to 5.4 per cent; other food products, 19.2 per cent to 5.5 per cent. The World Bank estimates that Vietnamese exports to the USA would rise to $768 million a year, compared with $504 million in 1999. As regards changes to the rules on foreign investment, ‘economists say these would not only force the country to adopt international norms on accounting and corporate governance but accelerate economic changes under way, especially the transfer of state-owned industry to individuals’ (IHT, 29 July 2000, p. 13). For US companies looking at Vietnam’s market of 77 million people, the accord offers important concessions. It phases out quotas on a range of US products . . . and gradually cuts tariffs . . . It establishes the right of US accounting and law firms to establish wholly-owned subsidiaries in Vietnam and over time opens the country to US banks, insurers and health care companies. The agreement also protects intellectual property rights, including software and semiconductor designs, and prohibits Vietnam from applying different product standards on US importers or from charging foreign business higher fees for telephone calls, utilities and airfares . . . It seeks to eliminate the regulatory caprice that is the subject of so many foreign investor complaints. The agreement would oblige Vietnam to end arbitrary application of rules on foreign companies. Any rule would have to be promulgated well in advance. Even so, the accord stops short in many areas. Hanoi retained restrictions on trade in economically critical products like oil, rice and gold, as well as politically sensitive products such as publications and films . . . It limits foreign involvement in telecommunications. (ibid.) A senior official in President Clinton’s administration . . . said US exports to Vietnam could grow to between $800 million and $1 billion a year within two years of the deal’s ratification [by the US Congress]. That would compare with $291 million last year [1999] and only $4 million in 1993, the year before Mr Clinton lifted the trade embargo on Vietnam . . . The Vietnam government is already starting to imple-

Economic developments 141 ment the provisions of the agreement. Hanoi, for example, recently issued a licence to . . . a US-based insurer to sell life insurance in Vietnam. Under the terms of the deal it did not have to allow in wholly foreign-owned insurance companies for five years. (IHT, 22 August 2000, p. 16) Tariffs on Vietnamese goods would drop immediately, while Vietnamese tariffs and quotas would fall only gradually, in some cases enduring as long as seven years . . . France was the top investor last year [1999]. The United States is still only Vietnam’s seventh-largest foreign investor and trading partner. (IHT, 28 August 2000, p. 15) Vietnam baulked at concluding an agreement with the USA last year [1999], but has since become worried that it is losing ground to Asian competitors such as China, set to enter the WTO following bilateral trade agreements with the USA and the EU earlier this year . . . The pact is expected to boost Vietnamese exports of textiles, garments, shoes and handicrafts . . . The deal will cut US duties on Vietnamese goods to the same rate charged to other trading partners . . . Hanoi had hoped to persuade the USA to grant Vietnam permanent normal trading relations, but instead its trade status must still be reviewed by Congress each year . . . The trade agreement will also require approval from Congress. (FT, 14 July 2000, p. 11) US tariffs on imported products from Vietnam will drop from an average of 40 per cent to an average of just 3 per cent . . . The trade deal bars foreign investment in internet ventures for three years. Foreign investment in telecoms ventures will also be limited to 50 per cent, rather than the 51 per cent proposed. (FT, 27 July 2000, p. 12) The pact provides a boost for Vietnam’s credibility – signalling a willingness to push ahead with urgently needed reforms and clear the way toward membership of the WTO . . . Analysts believe Vietnam’s leaders were torn between their desires to maintain political, economic and social stability and at the same time not fall too far behind regional economic rivals . . . Starting in 2002 export business in many sectors will be granted automatic licences, rather than being subject to approval by provincial officials . . . Foreign managers and specialists are now entitled to three-year permits to stay, rather than having to renew visas every six months . . . Discriminatory dual-pricing schemes in electricity, air travel and other areas will be phased out after four years . . . The pact also heralds the gradual liberalization of operations involving foreign banks, which have been severely restricted in collecting dong deposits . . . But . . . [there is an] eight-year phase-in schedule

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Economic developments for dong deposits . . . [There are] new rules on joint ventures in advertising and tourism . . . [There is a] section on intellectual property rights . . . The agreement restricts foreign auditing and tax firms to advising foreign-invested clients . . . Foreign brokers won’t be able to do business at Vietnam’s new stock market . . . [The agreement allows] investors no more than a 50 per cent stake in telecoms ventures and no independent access to international gateways. Vietnam will also retain tight control over the media, mining, ports and rice-growing land . . . A 1999 World Bank study predicts a fifteen-fold increase in clothing exports. Garment and textile firms . . . could realize immediate benefits. Footwear may also be a big-ticket item. The World Bank expects Vietnam’s total exports to the USA to rise to $750 million a year; last year [1999] they amounted to $504 million. (By comparison exports to Japan, Vietnam’s biggest trading partner, came to $1.8 billion.) No gains will be derived from main agricultural exports like coffee and shrimps, because tariffs are already zero. (Margot Cohen and Murray Hiebert, FEER, 27 July 2000, pp. 22–3) The trade deal . . . secures normal-trade-relations status for Vietnam, lowering tariffs on its exports to America from an average of 40 per cent to less than 3 per cent. Analysts reckon this could double exports to America, which last year [1999] were worth about $600 million. (The Economist, 29 July 2000, p. 86) Vietnam has been careful to balance any openings to the USA with overtures to China . . . The Vietnamese delayed the signing of their bilateral deal with the USA until after the Chinese and Americans concluded their own trade deal . . . The Vietnamese military is quite unwilling to relinquish its military-run enterprises, which supplement the defence budget to the tune of some $600 million annually. (Chris Leck, Rusi Newsbrief, 2001, vol. 21, no. 1, p. 6)

The US House of Representatives ratified the trade agreement in September 2001 and the US Senate approved it on 3 October 2001. Vietnam welcomed the approval (IHT, 5 October 2001, p. 13). (President George W. Bush signed the agreement on 16 October.) Vietnam’s National Assembly yesterday [28 November 2001] . . . by a margin of 278 to eighty-five . . . ratified a historic trade agreement with the USA . . . The trade deal . . . also lays out a seven-year plan for the fundamental reform of Vietnam’s state economy to pave the way for greater private foreign investment in sectors like telecommunications, banking and energy . . . President Tran Duc Luong is expected to sign the deal within a week. It will formally go into effect when the two countries exchange diplomatic notes. (FT, 29 November 2001, p. 16)

Economic developments 143 ‘A long-awaited bilateral trade agreement between Vietnam and the USA took effect [on 10 December 2001]’ (FT, 12 December 2001, p. 12). The US Senate this week . . . voted overwhelmingly that the only catfish good enough for an American table was a genuine American catfish . . . Southern legislators last month slipped into an appropriations bill an amendment that directs the US Food and Drug Administration to block imports of any species of catfish except six that are native to the US south. Vietnamese farmers can still sell their fish in the USA: they just cannot call it catfish. (FT, 20 December 2001, p. 8) In mid-November [2001] the Senate approved a last-minute amendment tacked on by southern senators to the agricultural appropriations bill, effectively prohibiting the US Food and Drug Administration from facilitating the admission into the United States of fish labelled catfish unless it comes from the Ictaluridae family . . . Senator John McCain, a former prisoner of war in Hanoi [said]: ‘With a clever trick of Latin phraseology and without any mention of Vietnam, these southern senators single-handedly undercut American trade policy in a troubling example of the very parochialism we have urged the Vietnamese to abandon’ . . . Vietnam will still be free to export catfish to the United States as long as it is called something other than catfish . . . Like most trade disputes the catfish brawl broke out over declining prices, which have hurt producers in both countries . . . Aquaculture is a rising star in Vietnam’s economy and 90 per cent of the catfish imported by the United States comes from Vietnam . . . The United States is the leading market for Vietnamese catfish, followed by Hong Kong, the EU and Australia . . . [In 2000] Vietnam provided just 3.7 million kilograms of the total 283 million kilogramme US catfish market, although in the frozen fillet category they have won an estimated 20 per cent, according to US catfish farmers. (FEER, 6 December 2001, pp. 67–9) John McCain: ‘Whether you are a free trader or an opponent of harmful special interest riders hidden in big spending bills, you can’t help but find this sort of behaviour to be a scandalous abrogation of our duty to the national interest’ (IHT, 17 January 2002, p. 2). ‘On 27 January [2003] the United States Department of Commerce announced a preliminary decision to impose tariffs of up to 64 per cent on frozen catfish imported from Vietnam . . . pending a final decision in June’ (FEER, 6 February 2003, p. 11). ‘Tariffs ranging from 37 per cent to 64 per cent were slapped on Vietnamese catfish . . . [by] the [US] Commerce Department’ (IHT, 23 July 2003, p. 8). ‘The Vietnamese . . . have been declared trade violators deserving permanent, prohibitive tariffs by the US International Trade

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Commission . . . [The US Congress has said that] Vietnamese catfish can be called only “basa” or “tra” in [the United States]’ (IHT, 26 July 2003, p. 6). From January to October 2003 roughly 55 per cent of Vietnam’s worldwide garment and textile exports went to the United States; during that period Vietnam shipped $1.7 billion worth of goods to the United States, a 155 per cent increase over the same period in 2002. But a textile-and-apparel pact signed in Washington last April [2003] has put the brakes on unrestricted growth in the sector . . . A new quota regime came into force . . . US domestic manufacturers had . . . lobbied hard for immediate application of Vietnam quotas in order to shield apparel-makers in Mexico, the Caribbean and Central America that rely on US fabrics and enjoy quota-free and duty-free access to the United States. Their pleas drowned out arguments from US retailers that it made sense to help Vietnam get a bigger market share to build up sourcing alternatives to China . . . The pact called for thirtyeight categories of garments with an estimated value of $1.7 billion for 2003; for coming years the quotas allow for annual increases of 7 per cent for cotton items and 2 per cent for wool items. (FEER, 5 February 2004, pp. 40–1) ‘Exports grew at a double digit rate throughout the past decade and today the country is the number two exporter of seafood, rice and coffee’ (IHT, 11 March 2004, p. 14). ‘Vietnam’s exports to America doubled in 2002 . . . and again in 2003’ (The Economist, 8 May 2004, p. 63). ‘[Bilateral trade between Vietnam and the United States] rose from $451 million in 1995 to $6.4 billion in 2004’ (The Economist, 25 June 2005, p. 60). ‘The United States has become Vietnam’s top trading partner’ (IHT, 22 June 2005, p. 7). On 6 July [2004] the US commerce department slapped duties of 12 per cent to 93 per cent on Vietnam’s frozen and canned shrimps . . . [Vietnam] vowed to fight the decision, which won’t be finalized until January 2005 . . . [In 2003] the United States imported $588 million in Vietnam shrimp products, nearly half of the country’s total shrimp exports. (FEER, 22 July 2004, p. 50) [On 13 December it was announced that] European companies in industries including pharmaceuticals, telecommunications and insurance will get better market access in Vietnam under a pact in which the EU will drop garment quotas at the end of the year [2004]. The EU agreed this month [December] to eliminate quotas on Vietnamese garment shipments to the twenty-five-nation bloc, provided Vietnam extends some commitments contained in a Vietnam-EU agreement in October on the nation’s accession to the WTO. Those commitments

Economic developments 145 had been scheduled to take effect only when Vietnam joined the WTO – at the end of 2005, according to government targets. Vietnam exported about $550 million worth of garments and textiles to the EU in 2003, second only to its shipments to the United States, which are also restricted by quotas. Garments and textiles are Vietnam’s secondbiggest export after crude oil. In return for the end of quotas Vietnam will open some industries and expand access to others . . . Vietnam will lower tariffs on EU beverages and textiles and improve market access for EU pharmaceutical products, easing restrictions in areas including imports and the ownership structure of manufacturing plants in Vietnam . . . European-made scooters will also be imported at preferential rates. ‘In services we gained concessions for our current operators in the telecom sector and opened new sectors for EU companies in construction services, computer services, engineering and architectural services,’ the EU statement said. ‘Additional licences will be awarded to EU companies in life insurance and distributional sectors’ . . . Some European distributors will be permitted to open new stores in Vietnam. EU companies will be allowed to get licences in previously closed areas like providing computer reservation system services and environmental services. The EU will suspend its textile and clothing quotas on 1 January [2005]. (http://www.iht.com, 13 December 2004) Moody’s Investor Services on Thursday [7 July] raised Vietnam’s debt rating, citing prospects for increased exports after the nation’s bid to join the WTO this year won US and European support . . . Vietnam is seeking to be admitted to the . . . WTO . . . in December [2005] . . . Vietnam, which has a population of 81 million people, has already concluded an accord with the EU on the terms of its WTO entry. Vietnam wants to join the trade body this year to break free from US quotas on shipments of garments, its second biggest export. The United States has become Vietnam’s top export market . . . Vietnam has pledged to make tax rates more uniform, to drop some export subsidies and to expand trading rights for foreign companies as part of its bid to join [the WTO] . . . Prime minister Phan Van Khai, visiting the United States in June . . . That visit had firmed up support from the Bush administration for Vietnam’s WTO accession. (http://www.iht.com, 7 July 2005) ‘Moody’s Investor Services, the rating agency, yesterday [7 July] raised Vietnam’s sovereign credit rating for the first time in seven years . . . The move reverses a July 1998 downgrade’ (FT, 8 July 2005, p. 10). The EU widened an investigation into Asian footwear imports Thursday [7 July 2005], saying Chinese and Vietnamese producers may be undercutting European rivals in the leather shoe market . . . China’s

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Economic developments share of total EU imports of leather shoes by volume is 22 per cent, up from 6 per cent in 2002, and Vietnam accounts for 15 per cent, compared with 11 per cent three years ago. (IHT, 8 July 2005, p. 19) Vietnamese farmers, who caused world coffee prices to collapse after they doubled production in five years, are now increasing cultivation of cocoa, backed by chocolate makers like Mars. Mars and the US and Vietnamese governments are supporting a $4.5 million, four-year programme to quadruple the country’s cocoa growing area . . . Vietnam went from being a net food importer to one of the top five suppliers of coffee, rubber, pepper and cashew nuts in two decades, as the government encouraged farmers to grow crops for export. Producer groups are concerned that cocoa expansion may repeat the mistakes made with coffee between 1998 and 2003, when a jump in output of lower quality beans slashed global prices 61 per cent . . . Candy makers are looking for new sources of cocoa as civil unrest reduces crops in Ivory Coast, which supplies 40 per cent of the chocolate ingredient. Vietnamese farmers are trying alternative crops after the coffee glut caused their incomes to slump . . . A US-sponsored programme . . . is working with traders in teaching Vietnamese farmers to grow cocoa, as well as cashew nuts and pepper, to reduce their dependence on coffee . . . The second biggest supplier [of cocoa is] Ghana . . . Indonesia [is] the world’s third largest cocoa producer. (http://www.iht.com, 4 August 2005) Thanks to tariff reductions in the [December 2001] trade deal Vietnam’s exports of garments, footwear, wood furniture and other products to the United States, a mere $800,000 in 2000, are forecast this year [2005] to hit about $6 billion – far surpassing expectations in Hanoi . . . [But] US trading companies that want to distribute and sell imported products in Vietnam’s fast growing but tightly controlled domestic market have hit unexpected obstacles as Hanoi balks over letting foreign companies engage in the wholesale or retail trade . . . In the 1990s Hanoi gave the exclusive right to import and distribute foreign goods to ailing state enterprises and favoured supporters of the regime. Though today any Vietnamese can import products, many big wholesalers remain politically well connected . . . Yet the US–Vietnam trade deal committed Hanoi to gradually give US companies the right to import and sell goods through their own networks – rather than through Vietnamese trading companies. By last year [2004] Hanoi was supposed to let foreigners hold 49 per cent of local trade and distribution companies, rising to 51 per cent in 2007 and 100 per cent in 2008 . . . US exports to Vietnam are sluggish – a mere $1.1 billion last year – which some blame on companies’ inability to set up networks that offer crucial back-up services and technical support,

Economic developments 147 especially for capital goods and industrial products. (FT, 22 August 2005, p. 7) Vietnamese exporters seem remarkably adaptable. Shrimp and textiles that are being taxed by America have been diverted to Europe instead. Farmers who suffered when the international coffee price fell (thanks largely to a huge leap in Vietnam’s output) are shifting to cocoa and pepper . . . Foreign banks operate under severe restrictions – one of the main bones of contention in Vietnam’s bid for WTO membership. (The Economist, 26 November 2005, p. 71) The Asian financial crisis Vietnam remains far more economically isolated than some of its neighbours. At first glance that has appeared to carry some benefits as much of Asia has plunged into crisis. There was no stock market to plunge and there were no short-term foreign loans to recall. And the dong, which is not a convertible currency, was gradually devalued at a pace determined by the central bank. Vietnam is one of the few southeast Asian economies that is expected to continue growing this year [1998] (4 per cent, according to private economists). These benefits, however, have been offset by a collapse of foreign investment, manufactured exports and tourism, all of which rely heavily on crisis-hit Asian partners. (Thomas Crampton, IHT, 9 November 1998, p. 19) While Vietnam’s economic growth rate has fallen substantially – to 3.5 per cent last year [1998] compared with 9 per cent or more for the past several years – the country is hardly on the verge of collapse . . . The central bank has managed a phased devaluation of almost 20 per cent over the past eighteen months without undermining the public’s shortterm confidence in the currency . . . Foreign currency reserves have remained stable at about ten weeks of imports. Vietnam’s leaders also point to continued social and political stability – partly reflecting the fact that 80 per cent of the population is involved in the rural economy which has been barely touched by the economic turmoil of the region . . . Vietnam has largely avoided the worst by falling back on what it knows best: state control. Pressure on the balance of payments has been eased by a drastic reduction in imports . . . At the same time inefficient and heavily indebted state-owned companies have been bailed out by the state-owned banks. But there is also evidence that this short-term response might have longer-term drawbacks. Since the start of the crisis the government has clamped down on imports of items such as steel and cement, while strengthening controls on letters of credit for imports and requiring exporters to convert their hard

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Economic developments currency earning immediately into dong . . . Most of Vietnam’s imports are intermediate goods used either for export processing or by domestic industry and agriculture . . . The government’s unwillingness over the past two years to take the political risks associated with reform has resulted in an erosion of Vietnam’s regional competitiveness, particularly as an investment destination. As a result, future growth will be slower, threatening the country’s impressive gains in poverty reduction. (Ted Bardecke and Jonathan Birchall, FT, 3 August 1999, p. 6) The trade agreement with the United States is a major achievement for Vietnamese reformers [see above] . . . In the ten years through 1997 Vietnam’s biggest problem was not attracting capital: it was keeping growth below 10 per cent and capping inflation. Although Vietnam has continued to grow in the past two years, the Asian financial crisis has fundamentally altered the landscape. But as Vietnam’s neighbours went about making themselves more efficient in response to this, Hanoi dithered. As a result foreign direct investment virtually ceased. Vietnam now has begun to respond to changed circumstances. Earlier this year the People’s Assembly passed a law according the private sector equal standing with state-owned companies. (Andrew Durant, FEER, 23 September 1999, p. 30) The main effect of the Asian crisis was to confirm the leadership’s suspicion that opening to the West invites disaster. After all, Indonesia and South Korea were knocked sideways, whereas isolated Vietnam was not much affected. Its leaders decided that slow economic growth was a price worth paying for stability . . . Reforms have been slow and modest. (The Economist, 8 January 2000, pp. 74, 77)

Foreign debt and aid During the period 1955–64 China and the Soviet Union were roughly equally important aid donors. China cut off aid altogether after the 1978 invasion of Cambodia, but between 1979 and the mid-1980s Soviet aid ran at an average of about $2 billion annually, roughly equally divided between economic and military aid. [Yegor] Ligachev (the Soviet representative at the December 1986 congress) promised to double economic aid, mostly loans repayable over thirty years, over the next five years. This was despite open admission by the Vietnamese that much had been squandered on poorly chosen projects, delayed commissioning of plant, and so on, and despite Western pressure to use aid as a lever for troop withdrawal from Kampuchea. In his 1 July 1990 report to the National Assembly, prime minister Do Muoi noted that over the past five years the Soviet Union had given

Economic developments 149 Vietnam about 10 billion roubles in assistance, credits, commodity aid, technical assistance and written-off loans; he said that the Soviet Union had indicated that aid would no longer continue on this scale. (Douglas Pike, Asian Survey, 1991, vol. XXXI, no. 1, p. 83) ‘“Foreign aid and debts” made up 22 per cent of GNP 1976–80 and 10 per cent 1981–8, but there was a substantial reduction after 1989’ (Vietnam Courier, 1991, no. 26, p. 4). ‘Annually Vietnam received from the Soviet Union some $2 billion in materials, equipment and goods from aid funds and loans; in 1990 these aids were reduced to negligible amounts’ (p. 7). In 1981 foreign debt was $3 billion, the debt-service ratio was 77 per cent of total exports and 218 per cent of exports to the convertible currency area (Spoor 1988a: 109). The IMF cut off loans in January 1985 because of Vietnam’s inability to pay off its debts, which then amounted to $34 million. The United States imposed a trade embargo in May 1975; the only exception permitted was deliveries of humanitarian aid. In 1987 the United States agreed to urge private charities to help the war disabled, e.g. with artificial limbs. In April 1991 the US agreed to provide $1 million in the form of artificial limbs through various humanitarian groups; a temporary US office was also set up in Hanoi to investigate servicemen still missing in action in South East Asia. The UN World Food Programme has contributed only modest amounts. By early 1987 gold and foreign exchange reserves had fallen to $15 million (about two weeks’ imports) (J. Esterline, Asian Survey, 1988, vol. XXVIII, no. 1, p. 88). Vietnam failed to meet its repayments to the IMF in 1985 and became ineligible for further loans; Vietnam started to make interest payments in 1989, but one estimate put the debt arrears at $140.6 million (IHT, 17 October 1991, p. 13). ‘By the end of 1987 non-convertible debt to the socialist countries, especially the Soviet Union, amounted to $6.5 billion, which is partly being repaid by sending workers to Eastern Europe’ (J. Esterline, Asian Survey, 1988, vol. XXVIII, no. 1, p. 91). Moreover, debts of $2.7 billion were owed to about thirty countries and international organizations (p. 105). R. Cima (Asian Survey, 1990, vol. XXX, no. 1, p. 93) cites 1989 debt to the non-convertible area at over $6 billion and to the convertible area at $2.2 billion. As of 1 November 1989 the Soviet Union claimed that Vietnam owed it 9.1 billion roubles (CDSP, 1990, vol. XLII, no. 9, p. 9). ‘The Soviet Union has agreed to write off at least a third of this’ (Douglas Pike, Asian Survey, 1991, vol. XXXI, no. 1, p. 84). In 1989 Vietnam’s outstanding debt to the former Soviet Union was $11 billion, ‘which at the current rouble exchange rate is almost negligible’ (Irvin 1995: 734).

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‘Since January 1989 the $40 million owed to the IMF has been repaid’: The Economist, 8 December 1990, p. 74.) Elliott (1992: 131) reported an official estimate that in the past Soviet loans had amounted to 25 per cent to 30 per cent of budgetary revenue, but in 1991 this had fallen to 6 per cent to 7 per cent. Aid dried up when the Soviet Union ceased to exist. Soviet economic aid was estimated to average $1.1 billion annually between 1981 and 1985, while aid from other Comecon countries averaged $500 million a year (Andreff 1993: 517). In 1991 the foreign debt amounted to $8.63 billion, of which the convertible area accounted for $3.94 billion (Dinh 1993: 535, 537). On 6 November 1992 Japan approved a thirty-year 45.5 billion yen ($370 million) commodity loan (1 per cent interest and a ten-year grace period). Japanese commercial banks had to provide bridging finance worth an extra 23.5 billion yen in order that Vietnam could pay off debt arrears to Japan. The commodity loan was to be used to import goods for resale on the domestic market in order to finance mainly public works projects. Since 1978 Japan had provided only small amounts of humanitarian and cultural aid (Jeffries 1993: 500). At the end of 1992 the hard currency debt was over $3 billion. In addition Vietnam had borrowed 10 billion transferable roubles from the Soviet Union (Dollar 1994: 359, 372). Apart from its debt to multilateral lenders, Vietnam owes about $4 billion to other governments (plus 11 billion roubles to former Comecon countries) and about $500 million to commercial banks (IHT, 10 December 1993, p. 17). Some $10 billion of Vietnam’s debt is still outstanding from the Soviet era (Moscow News, 17–23 June 1994, p. 1). The total external debt, including the rouble component, was $15.4 billion in 1992 (FT, Survey, 30 November 1993, p. 33). The total external debt was $14.6 billion in 1990, $15.3 billion in 1991, $15.4 billion in 1992 and $17.7 billion in 1993 (FT, Survey, 24 September 1993, p. xx, and 8 December 1994, p. 40). Vietnam initiated a homegrown reform programme in the late 1980s and, with fits and starts, instituted policy innovations that improved incentives for growth. While donors provided very little money in this period, they helped on the ‘ideas’ side. Sweden and the United Nations Development Programme provided training and technical assistance; the World Bank gave policy advice. By 1992 Vietnam’s policy environment had improved dramatically and large-scale financial assistance from donors began to flow in. (Joseph Stiglitz, IHT, 13 November 1998, p. 10) ‘The Russians say Moscow granted Vietnam 15 billion roubles in military aid. The remaining 10 billion roubles, primarily project funding and traded goods, was lent’ (Nayan Chanda, FEER, 16 March 1995, p. 21).

Economic developments 151 Russia has said that Vietnam is the only Soviet debtor that has made payments, albeit on a very modest scale. A Western diplomat said that for several years Vietnam had been paying Russia $100 million a year, mostly in goods like rice and clothing. Vietnam does not wish Russia’s rent for the use of Cam Ranh Bay to be taken out of the debt owed to Russia (under the terms of the 1978 friendship treaty Moscow is entitled to use the facilities there until 2003). (p. 22) On 1 December 1995 the donors’ conference in Paris, comprising twenty countries and sixteen international groups, pledged $2.3 billion in grants and loans for the coming twelve months (FEER, 14 December 1995, p. 79). On 6 December 1996 the conference pledged $2.4 billion in soft loans and grants. Japan pledged $850 million, compared with $805 million in 1995. On 7 April 1997 the United States and Vietnam signed a debt rescheduling agreement, repayment of the $145 million owed by the former South Vietnam being spread over the period up to 2019. Vietnam and Russia yesterday [14 September 2000] unexpectedly settled a decade-long debt dispute, with Hanoi agreeing to pay back Moscow $1.7 billion in Soviet-era debt over twenty-three years . . . The two countries had been at loggerheads over how to value the roughly 11 billion [transferable] roubles owed Moscow . . . The debt agreement appears to have been a victory for Hanoi as it is much closer to the Vietnamese position on exchange rates. The Vietnam News Agency said 90 per cent of the repayment would be made by allowing Russia business concessions and access to goods and services in Vietnam. (FT, 15 September 2000, p. 13) Vietnam agreed in September [2000] to pay $1.7 billion to Russia in variable amounts over the next twenty-three years. Just 10 per cent will be paid in cash; Vietnam will supply the rest in commodities and investment opportunities, details of which are due to be finalized by year-end . . . Moscow had originally claimed $11 billion . . . For Hanoi the deal conserves hard currency . . . If deals cannot be struck Hanoi will have to pay the entire debt in hard currency . . . Roughly 50,000 Vietnamese still live in Russia. Apart form an estimated 5,000 scientists and students, most of them are traders. They have banded together in some 200 companies, including joint ventures. (FEER, 9 November 2000, pp. 64–5) ‘A senior Vietnamese official says [that] Moscow wrote off up to 85 per cent of the debt. Russia had initially claimed $11 billion based on Sovietera valuations’ (FEER, 28 December 2000, p. 21).

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Economic developments The question of Vietnam’s Soviet-era debt of $11 billion was finally put to rest Thursday [1 March] . . . Last September Moscow agreed to forgive 85 per cent of the war-era credits and Mr Putin’s aides Thursday said the debt had been further reduced to $1.5 billion, which is to be paid back over twenty-three years, although most of the amount is expected to be repaid in barter shipments of coffee and rice. (IHT, 2 March 2001, p. 8) The trip [was] the first to Vietnam by a Kremlin chief . . . President Vladimir Putin declared a new strategic partnership – covering military, trade and economic co-operation – with . . . Vietnam. Russia said the issue of Vietnam’s debt of some $1.7 billion had been resolved under a restructuring deal that would see Hanoi pay $100 million a year. (FEER, 15 March 2001, p. 14)

Donor countries and international organizations met in Tokyo on 11–12 December 1997. At this fifth meeting they pledged $2.4 billion in aid but urged Vietnam to push forward with economic reform, e.g. the liberalization of trade, the reform of state enterprises and making the financial system transparent (IHT, 13 December 1997, p. 13). The consultative group for Vietnam pledged $2.7 billion in aid for 1999. Vietnam said that it would set timetables and targets for reforming and privatizing state enterprises and debt-laden banks (FEER, 17 December 1998, p. 55). On 15 December 1999 international donors at their annual meeting pledged aid and soft loans to the tune of $2.1 billion, slightly lower than the previous year’s total. An additional $700 million would be available if the government implemented an ‘accelerated reform programme’. The ‘incentive bonus’ in 1998 was $500 million (FT, 16 December 1999, p. 10). Many observers had expected a sharp drop in the aid promise because stuttering reforms have prevented the dispersement of much of last year’s offering. The question not answered yesterday [15 December] was whether the government will now follow up on its assurances of urgent action with practical moves. (ibid.) ‘International donors pledged $2.4 billion in development aid to Vietnam’ (FEER, 28 December 2000, p. 15). The $370 million three-year IMF loan package, approved by the fund board on 6 April, obliges Vietnam to strengthen ailing state banks, discipline state enterprises, foster the private sector and liberalize trade. Vietnam has made similar commitments to the World Bank to secure a $250 million loan. (FT, 19 April 2001, p. 9)

Economic developments 153 A deal struck by the government in April [2001] with the IMF . . . released the first $53 million tranche in a three-year loan. The $268 million facility is the first since the fund suspended lending to Vietnam five years ago. The IMF programme will recapitalize the country’s four largest state banks on condition of improved performance, including better discipline and transparency. Ceilings have been set on lending to state-owned firms . . . The programme also mandates international standard audits at 200 of the largest, most troubled state firms. (FEER, 31 May 2001, p. 56) ‘The UN World Food Programme yesterday [15 October 2003] welcomed Vietnam’s first-ever donation to it of food aid, as a ship carrying a consignment of its rice arrived in the Iraqi port of Um Qasr’ (FT, 16 October 2003, p. 8). [On 2 December 2003 there began a] meeting of nations and agencies that give aid to Vietnam . . . The Consultative Group began an annual two-day meeting in Hanoi. Last year [2002] members pledged $2.5 billion of loans and grants, bringing the total since the first conference in 1993 to $22 billion. Japan and the World Bank are the largest providers. (http://www.iht.com, 2 December 2003) Vietnam’s aid donors on Wednesday [3 December] pledged $2.8 billion in grants and low-interest loans . . . up from $2.5 billion last year [2002]. Donors have pledged a total of $25 billion since the annual meetings started in 1993. Japan, the World Bank and the Asian Development Bank [are] Vietnam’s top three donors . . . Of $22.5 billion pledged between 1993 and 2002 only about $12 billion has been disbursed, according to the United Nations Development programme. (http://www.iht.com, 3 December 2003) [Vietnam] has given the go-ahead for the country’s first dollardenominated sovereign bond, ending nearly ten years of internal debate . . . The cabinet’s decision [was announced on 6 October [2005] . . . Hanoi has long toyed with borrowing commercially to create a benchmark for itself despite relatively easy access to low interest loans from multi-national financial institutions. Several years ago a prospectus for a potential issue was drawn up but Hanoi’s Politburo – unsure whether it could spend the money – called off the move . . . Vietnam requires vast sums of capital to overcome worsening infrastructure bottlenecks. Prospects for the issue received a boost in July, when Moody’s Investors Services raised Vietnam’s credit rating for the first time in seven years from Ba3 to B1 . . . Money raised from the sovereign bond is planned for capital investment by state enterprises. (FT, 7 October 2005, p. 10)

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Economic developments The government plans to sell $500 million of bonds in its first overseas debt sale, betting that it can attract investors to an economy that doubled in size in the past decade . . . Vietnam, which may join the WTO by June, this month [October] will offer dollar-denominated bonds maturing in ten years . . . Vietnam has been considering a bond sale since clearing its defaulted bank debt seven years ago. Vietnam gave creditor banks Brady bonds in 1998 in return for the cancellation of $553 million of its defaulted loans from international banks. Brady bonds were created in the 1980s as part of a debt restructuring plan for developing countries that had defaulted on their bank loans. The plan forgives part of a country’s debt while restructuring the rest into bonds. (http://www.iht.com, 17 October 2005) Vietnam’s government has increased its first overseas bond sale by 50 per cent to $750 million . . . The ten-year bond will be priced on 27 October . . . The government has been considering a bond sale since clearing its defaulted bank debt seven years ago. Vietnam gave creditor banks Brady bonds in 1998 in return for cancellation of $553 million of loans that went into default. Brady bonds were created in the 1980s as part of a debt restructuring plan for developing countries that defaulted on bank loans. The plan forgave part of a country’s debt while restructuring the rest. (http://www.iht.com, 25 October 2005) The country’s first overseas government bond issue, on 27 October, met such strong demand that its size was increased from $500 million to $750 million and the yield tightened from 7.25 per cent to 7.125 per cent – a mere 2.5 percentage points above that on ten-year American Treasuries and a tighter spread than on comparable bonds from Indonesia and the Philippines . . . Vietnam does not really need the money. Its public sector debt is relatively modest at 54 per cent of GDP . . . which is why the fresh funds are being spent on new ships for the state shipping company and aircraft for the national airline, rather than anything more urgent. The bond’s real significance is that it diversifies Vietnam’s sources of financing and establishes a benchmark for future capital raisings . . . The hope is that the country’s big corporations, such as Petrovietnam, an oil and gas group, Vietnam Airlines and EVN, the state electricity company, will follow the government and raise funds on international markets. Eventually private companies could too. There is great need for this given the shallowness of the country’s domestic capital markets . . . Although Vietnam has two stock markets and a domestic bond market, its companies are still too reliant on a ramshackle state banking sector . . . As recently as 1998 $850 million of distressed commercial loans from Vietnam were repackaged into socalled Brady bonds because it could not repay them. (The Economist, 5 November 2005, p. 104)

Economic developments 155 ‘The proceeds from the bond issue will be put towards assorted business ventures’ (The Economist, 26 November 2005, p. 72). China has agreed to lend Vietnam more than $1 billion for a series of projects . . . projects that will help link the two countries more tightly together . . . The deal was signed during the first visit to Vietnam by Hu Jintao, the Chinese president . . . China had offered only small amounts of money prior to this . . . The Chinese loans will finance three power plants in northern Vietnam, including a coal-fuelled plant in the border province of Quang Ninh, as well as modernization of Vietnam’s railway and construction of a new police academy. The economic ties have been further bolstered by an upgraded security relationship in the past week, with an agreement between the two countries to conduct joint naval patrols in the seas off Vietnam. China and Vietnam fought a brief but bloody border war in 1979 after Vietnam angered Beijing by invading Cambodia and dislodging China’s Khmer Rouge allies. But the two countries normalized relations in 1991. (FT, 2 November 2005, p. 10)

Foreign direct investment North Vietnam was critically short of advanced technology and know-how. The volume of foreign direct investment is below that desired, and actually utilized investment is well below that contracted for. The 1977 law failed to attract very much foreign capital, because of the imposition of such restrictions as 49 per cent maximum foreign ownership and the necessity of local management. Power shortages acted as a deterrent. The last four Western companies exploring for oil left in 1981. Negotiations resumed in the mid-1980s and in 1988–9 offshore exploration agreements were signed with Shell and Petrofina, Total and BP (oil drilling ventures also being signed with Indian companies), with productionsharing the basis. In 1990 oil agreements were signed with Canadian, Kuwaiti, Australian and Belgian companies. There was little success. Exploration continued during the hiatus through Vietexopetro (founded November 1981), the Vietnamese–Soviet oil and gas company. A new law, which became operational on 1 January 1988, permitted the setting up of solely foreign-owned companies and allowed foreign companies to own up to 99 per cent of the equity of joint ventures; foreigners could be managing directors, but a Vietnamese had to be at least deputy chief executive; profits and capital could be repatriated and nationalization was ruled out. Expatriates could be employed if local skills were lacking; profits tax was normally charged at 15 per cent to 25 per cent, but concessions were possible in remote areas or in special sectors such as timber.

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A two-year tax exemption from the first profit-making year was possible. Subject to Vietnamese law (including a minimum wage and hiring through local labour bureaus) and an arbitration process, foreign employers were able to hire and fire employees (FT, 19 January 1988, p. 4). After June 1990 private Vietnamese enterprises were able to set up joint ventures with foreign companies. Murray Hiebert noted only three (FEER, 20 February 1992, p. 52). Examples of joint ventures were to be found in small-scale oil refining, tourism, telecommunications, coal and gemstone mining, edible oil refining, electronic telephone switchboards, television set assembly, and aluminium windows. During 1988–9, 105 licences were granted and in seventy cases operations had begun (Vietnam Courier, 1990, no. 7, p. 10). By 31 May 1990, 157 joint venture contracts had been signed (Vietnam Courier, 1990, no. 10, p. 10). By the end of May 1991, 259 licences had been granted with an aggregate capital investment of almost $2 billion: oil and natural gas ($520 million); manufacturing and food-processing 166 ($783 million); hotels 54 ($463 million) (Vietnam Courier, 1991, no. 21, p. 8). By November 1991 the number of licences had gone up to 330 and capital investment to $2.5 billion (IHT, 27 November 1991, p. 19) and by the end of January 1992 to 383 and $2.8 billion (three-quarters going to Ho Chi Minh City and its hinterland) (The Economist, 4 April 1992, p. 70). ‘Some 80 per cent of non-oil foreign investment has gone to the South’ (Independent, 5 February 1992, p. 23). The first foreign investment forum was held in Ho Chi Minh City 11–15 March 1991; there were 623 foreign guests from thirty-one countries representing over 400 major companies. On 18 October 1991 the Council of Ministers promulgated the rules for ‘export processing zones’ (Vietnam Courier, 1991, no. 26, p. 13 and 1992, no. 27, p. 11). For example, the profits tax was to be 10 per cent for a manufacturer and 15 per cent for a supplier of services, with tax holidays of four and two years after profits have been made respectively. Both exports and the imported inputs used in them were to be duty-free. On 25 November the Council of Ministers signed the order to set up the first zone on the outskirts of Ho Chi Minh City. Work on the six-year Tan Thuan project began on 6 February 1992 in collaboration with two firms from Taiwan. ‘On 23 December 1992 the National Assembly approved a new investment law’ (IHT, 23 December 1992, p. 15). The duration of joint ventures was extended from twenty to fifty years (up to seventy years in ‘necessary cases’). In ‘special cases’ joint ventures would be allowed to open overseas bank accounts. Tax breaks already given to joint ventures would be extended to selected wholly foreign-owned investment projects. Joint ventures in priority sectors were exempt from paying a 15 per cent to 25 per cent tax on profits for the first two years and were eligible for a 50 per cent tax reduction for another two years.

Economic developments 157 In December 1992 the prime minister revealed that foreign investment approvals had increased by 73 per cent in 1992 to about $2.1 billion. Over the past five years Taiwan had headed the list of licensed projects with over $800 million, followed by Hong Kong with $600 million and France with $475 million (IHT, 23 December 1992, p. 15). There were 416 joint ventures in operation at the end of August 1992, involving capital investment of $3.35 billion (of which $1.69 billion had been raised). Of the 416 projects, 233 (with a capital investment of $1.11 billion) were in industry, eighteen ($900 million) in oil and gas, forty-one ($660 million) in hotels and tourism, and fifty-five ($166 million) in services. (FT, 11 September 1992, p. 4) ‘Official statistics released on 1 January 1993 revealed that Vietnam had licensed 555 projects over the previous five years, with a registered capital of more than $4.5 billion; in 1992; in 1992 nearly 200 projects involving $2 billion had been licensed’ (IHT, 2 January 1993, p. 9). ‘Foreign investment commitments since 1988 have totalled $4.6 billion, with Taiwan in first place and Hong Kong a close second’ (Dorothy Avery, Asian Survey, January 1993, vol. XXXIII, no. 1, pp. 71–2). Since 1986 foreign companies, led by those from Taiwan and Hong Kong, have invested $5.2 billion (IHT, 15 May 1993, p. 13). By early April 1993 Vietnam had granted 626 licences valued at $5.3 billion (Murray Hiebert, FEER, 27 May 1993, p. 59). By May 1993 foreign companies had been granted licences for $6.05 billion worth of projects (i.e. registered investment capital) (FT, 16 September 1993, p. 26). The 671 investment licences issued so far are valued at $6.3 billion, but only $1.6 billion has actually been disbursed (Murray Hiebert, FEER, 23 September 1993, p. 92). As of June 1993, 695 projects had been approved, involving $6.214 billion in approved investment and $1.4 billion in implemented investment. By the time the survey had been published the respective figures were 780 (only seven of these concerned private Vietnamese enterprises, of which three were later revoked), $6.8 billion and $2 billion. Ten foreign banks have been licensed to open branches, two joint ventures between foreign and state-owned banks have been established and more than twenty ‘shareholding’ banks have been created (most of these are majority-owned by state institutions, but all have mixed ownership including private enterprises, co-operatives and individuals) (FT Survey, 30 November 1993, pp. 32–3). Approved foreign investment amounted to $2.86 billion in 1992. Since 1987 the total sum approved has amounted to $7.5 billion (Taiwan accounting for $1.5 billion), although only about $2 billion has actually been spent (oil exploration accounting for much of this) (FT, 13 January 1994, p. 4). The state committee on co-operation and investment has licensed 863

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foreign investment projects with a total approved capital of nearly $7.46 billion over the six years from 1987 to 1993. In 1992 alone 260 projects were licensed with total approved capital of $2.8 billion. Initially most foreign investment went into oil exploration and hotel construction, but in 1992 investment in industrial production, including cement and steel, rose to 45 per cent of the total registered capital (IHT, 24 January 1994, p. 9). In 1994 foreign companies pledged $3.7 billion to projects, taking the total pledged since 1988 to $10.9 billion (IHT, 3 January 1994, p. 11). According to official figures, between 1988 and the end of February 1997 $28 billion was pledged, involving 1,696 projects (IHT, 4 February 1997, p. 8). Approved investment in 1993 amounted to $2.86 billion (The Economist, 4 June 1994, p. 79). By September 1994 contracted investment amounted to $10 billion (FT, 20 October 1994, p. 6). In 1994 actual disbursements of foreign investment did not appear to have been more than $400 million (FT, 7 February 1995, p. 18). Some $19 billion has been committed, but only about a quarter of this sum has actually been absorbed (FT, 15 April 1996, p. 16). ‘Only about a quarter of the total investment pledged, about $20 billion, is at work in Vietnam’ (FT, 27 June 1996, p. 4). Actual investment in 1993 amounted to something over $700 million (Murray Hiebert, FEER, 3 February 1994, p. 44). Between 1988 and the end of May 1994 the total value of licences amounted to $8.9 billion, but actual investment reached only $2.1 billion by the end of 1993 (Murray Hiebert, FEER, 23 June 1994, p. 53). Since the beginning of 1988, 948 foreign-invested projects have been approved, with a combined value of just over $10 billion. But less than one-third of the $10 billion has been implemented and almost 10 per cent of approved projects have been cancelled (Adam Schwarz, FEER, 29 December 1994, p. 96). Since 1988 foreigners have pledged investment in projects valued at $17.3 billion (IHT, 18 September 1995, p. 13). Although $17 billion of foreign investment has been committed since 1987, only $4.8 billion has been invested (FEER, 5 October 1995, p. 31). Of the $17 billion in investment contracts only about $5 billion has actually been invested (FEER, 26 October 1995, p. 7). Since 1988 Vietnam has recorded over $17 billion in approved foreign investment for more than 1,400 projects. The official estimate is that almost $6 billion will have been disbursed by the end of 1995 (FEER, 26 October 1995, p. 57). Disbursed foreign investment amounts to only about a third of all approved projects since 1988 (FEER, 24 October 1996, p. 49). In 1995 approved FDI was $7 billion compared with actual FDI of $1.4 billion (Asian Development Bank, Asian Development Outlook 1996–97, 1996, p. 113). In 1996 approved FDI was $8.5 billion while actual FDI was only $2.3 billion (FEER, 16 January 1997, p. 51). In 1997 new approved foreign investment plunged by 50 per cent to $5.1

Economic developments 159 billion (IHT, 3 April 1998, p. 8). Licensed FDI in 1997 was $4.4 billion (FEER, 15 January 1998, p. 57). Actual FDI in 1997 fell by nearly 50 per cent (FEER, 19 February 1998, p. 60). During the first six months of 1999 a total of $826 million in new foreign direct investment projects were licensed, down 42 per cent from a year earlier (IHT, 6 July 1999, p. 14). ‘Foreign investment inflows plummeted to about $1.5 billion in 1999 from roughly $3.3 billion in 1997’ (IHT, 28 August 2000, p. 15). Since opening its economy fourteen years ago Vietnam has attracted total foreign investment pledges of $24 billion, with less than half of that actually being spent. China attracted the same amount of commitments in the first half of this year [2000] alone. (IHT, 20 July 2000, p. 15) ‘Foreign investment in Vietnam plunged to just $500 million last year [1999] from a peak of $2.8 billion in the mid-1990s as investors became frustrated with the slow pace of economic reform in the country’ (FT, 14 July 2000, p. 11). (See Landler, below.) ‘Total approved foreign direct investment pledges in 1999 fell to $1.48 billion from $4.06 billion in 1998, $4.5 billion in 1997 and $8.6 billion in 1996. For the first eight months of 2000 FDI approvals reached only $666 million’ (FEER, Asia 2001 Yearbook, December 2000, p. 215). [In 1996] pledged foreign direct investment, or FDI, topped $8.6 billion . . . [although] actual investment reached only $2.6 billion. By 1999 FDI pledges had plunged to $1.5 billion, recovering slightly in 2000 to $2.3 billion . . . Singapore is currently the top source for foreign investment in Vietnam, with FDI pledges of $6.75 billion. (FEER, 5 April 2001, p. 25) In 1997 foreign direct investment was $2.7 billion, a peak The figure was only $600 million in 1998. In 2001 around $1 billion is expected (FT, 6 December 2001, p. 10). ‘The stock of foreign investment grew from $230 million in 1990 to $18 billion in 2002’ (The Economist, 16 March 2002, p. 70). ‘Disbursed foreign investment . . . [grew] to $2.34 billion in 2002 from $2.1 billion in 1999. During the peak year of 1996 foreign investors committed capital of $8.6 billion, but only $2.9 billion actually arrived due to unfulfilled plans and bureaucratic wrangling’ (FEER, 30 January 2003, p. 15). ‘Disbursed foreign investment reached $2.05 billion in the first three quarters [of 2003], up 5 per cent over the same period last year [2002] . . . The national frenzy to build industrial parks has far exceeded demand from investors’ (FEER, 23 October 2003, p. 52). ‘Foreign investment [was] running at $5.8 billion last year [2005]’ (The Economist, 28 January 2006, p. 66).

160 Economic developments The problems of attracting foreign direct investment and measures taken to tackle these problems Problems facing foreign investors range from lengthy bureaucratic delays in getting licences, to higher than expected costs for labour, power and telecommunications services . . . Adding to the licensing morass are confusing policies on land-use rights, the shortage of local financing options, the absence of an effective dispute settlement mechanism, corruption and what one European investor called ‘terminal shortsightedness’ of local partners. (Adam Schwarz, FEER, 26 October 1995, p. 57) Access to credit is a major sore spot with Vietnamese private business people . . . State enterprises, by contrast, can often secure loans on nothing but guarantee letters from their sponsoring ministry . . . Because state enterprises can provide cheaper land and better government access, foreign companies have chosen them for 97 per cent of their joint ventures in Vietnam. (Adam Schwarz, FEER, 29 February 1996, p. 45) A much criticized requirement is that key decisions at joint ventures be approved by a unanimous vote among shareholders. ‘In effect, the rule gives minority local partners veto power over joint-venture management.’ One hundred per cent foreign ownership in areas such as telecommunications and electricity generation is ruled out (Adam Schwarz, FEER, 24 October 1996, p. 49). ‘Even when a foreign company holds a 70 per cent share in a joint venture, Vietnam’s foreign investment laws allow the local partner to veto spending decisions’ (Faith Keenan, FEER, 19 March 1998, p. 50). Under Vietnamese law, decisions by a joint venture’s management – such as budget, business plans and the appointment of personnel – are subject to unanimous consent. This gives the minority Vietnamese partner veto power even if the foreign side has management control under the contract. The problem is made worse by capricious decisionmaking by local authorities, often acting in contravention of laws issued by Hanoi. (Jeremy Grant, FT, 27 June 1996, p. 4) ‘Multiple licences are usually needed before foreign projects can start, creating an environment where bureaucrats have repeated opportunities to demand kickbacks. The incentive for corrupt practice is high as government salaries have not kept pace with rapidly rising urban incomes’ (Jeremy Grant, FT, 22 October 1996, p. 4). Joint venture companies with foreigners do not have the right to get mortgages on land (The Economist, 22 October 1994, p. 91). Amended rules specify that new foreign joint ventures in garments and

Economic developments 161 shoes must export at least 80 per cent of production, with the figure rising to 90 per cent for wholly owned foreign businesses. New hotels in Ho Chi Minh City that involve foreign investors must have at least 150 rooms and $8 million in investment capital; the respective figures for Hanoi are 100 rooms and $5 million (FEER, 29 December 1994, p. 99). A decree took effect on 1 January 1995 that speeded up approval of foreign investments: (1) the State Committee on Co-operation and Investment would have a maximum of forty-five days to consider applications; (2) unless ministries or provinces came up with written objections to a project proposal sent to them by the committee within twenty days, the project would be automatically approved (IHT, 2 January 1995, p. 7). In February 1995 the central bank announced that efforts would be made to gain stricter control over foreign exchange transactions, e.g. joint ventures would only be able to open an account at one bank. Some foreign-invested companies, primarily those involved in import substitution, are allowed to buy foreign currency with dong if they obtain permits from the central bank and the investment approval agency (Adam Schwarz, FEER, 27 April 1995, p. 68). It has been announced that Vietnamese partners must hold more than 30 per cent of construction enterprises (IHT, 18 October 1995, p. 24). On 9 October 1996 new employment regulations were published. Most foreigners (including overseas Vietnamese) would need work permits from March 1997 onwards (i.e. in addition to their existing business visas). Those exempt from the new regulations included diplomats, employees of the government, employees of non-governmental organizations, the foreign media and company directors. The others could be hired only if their skills were not available locally and even then for a maximum of three years (IHT, 10 October 1996, p. 4; FT, 10 October 1996, p. 6). Vietnam has banned most foreigners at joint ventures and wholly foreign-owned companies from working more than three years in the country under a law which also requires foreign companies to train local replacements for their foreign staff . . . The new regulation is likely to irk many foreign companies. They already find it difficult to replace foreign with local staff because of a severe shortage of skilled Vietnamese workers. A punitive income tax regime which makes the hiring of skilled locals expensive will also not help, they say. (Jeremy Grant, FT, 10 October 1996, p. 6) A mining law was passed by the National Assembly in March 1996, establishing the ground rules for foreigners interested in developing mineral reserves. The law said that foreign companies that already had an exploration permit had a ‘special right’ to apply for a mining permit. The permit allowed the investor to mine, process and explore an area and is valid for up to thirty years (extendable for another twenty years). The

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government was given the right to ban the export of certain minerals on a list to be issued ‘from time to time’ (FT, 30 May 1996, p. 33). ‘The complaints from business executives have not changed in a halfdecade: the lack of a legal framework for doing business, corrupt bureaucracy and government fiats that can vary from week to week’ (Michael Zielenziger, IHT, 3 April 1998, p. 8). A new foreign investment decree explicitly bars 100 per cent foreignowned projects in telecoms, oil and mineral exploration and tourism. But the decree eases licensing and export rules for export-orientated firms. Another provision protects foreign investors already operating from future rules that may harm their business (FEER, 5 February 1998, p. 57). The new decree promises that government bodies will provide simple and prompt procedures for foreign investment. Preferential profit-tax rates for investment in encouraged areas will apply for the duration of the project (having previously applied for only ten to fifteen years). Deferred payment of import duties on raw materials for one year will be allowed, with direct and indirect exporters benefiting from this. In 1997 foreign direct investment accounted for 8.6 per cent of GDP and 19 per cent of exports. A new issue worrying foreign investors involves salaries paid to Vietnamese workers. Contracts state salaries in dollars but workers are paid in dong. A depreciating dong means that workers are pushed into higher tax brackets, this being a problem since foreign firms typically pay employees’ taxes (Faith Keenan, FEER, 19 February 1998, p. 60). To date no foreigner has been allowed to own a stake in the country’s 6,000-odd state firms, although many have formed joint ventures with state enterprises . . . Currently the law forbids foreigners from buying into Vietnamese private or state companies, with some exceptions, like joint stock banks such as Asia Commercial Bank. (Faith Keenan, FEER, 19 March 1998, pp. 49–50) The National Assembly has passed a law aimed at promoting investment. It includes tax breaks and easier access to land and allows foreigners to take stakes of up to 30 per cent in local companies. But investors will have to wait until the details are spelled out in regulations implementing the law (FEER, 21 May 1998, p. 17). On 24 December 1998 the US–Vietnam copyright agreement went into force, some eighteen months after it had been signed (FT, 6 January 1999, p. 6). Vietnam will allow foreign investors to hold up to a 30 per cent stake in some domestic companies . . . The new ruling would take effect next week . . . According to the decree, foreigners who sit on the management board must hold their shares a minimum of three years, while non-management holdings must be held a minimum of twelve months . . . The 30 per cent has to be issued through an underwriter. That pre-

Economic developments 163 vents small people from selling to foreigners . . . To date only four ‘equitized’ companies – those formed by selling shares in state-owned companies – have been authorized for foreign ownership under the pilot project. Otherwise foreign investment in Vietnam is restricted to wholly foreign-owned and joint venture companies that are governed by a separate foreign investment law . . . During the first six months of 1999 a total of $826 million in new foreign direct investment projects were licensed, down 42 per cent from a year earlier. (IHT, Tuesday 6 July 1999, p. 14) This month [July 1999] the government has introduced new incentives aimed at cutting the cost of doing business. International phone charges will be cut by 10 per cent. The government says it is starting to abolish the ‘dual pricing’ system, under which foreigners pay more than locals for a range of services. As a result, foreign companies will pay slightly less for power, for example. In response to complaints from companies such as Fujitsu, the minimum wage will be calculated in the steadily depreciating local currency, the dong, rather than in dollars . . . Exxon has pulled out altogether from talks on future oil exploration talks with Petrovietnam, following the example of the UK’s Enterprise Oil, and Mobil is expected to follow. Cable and Wireless, the UK telecommunications group, is withdrawing from a $207 million contract to install telephone lines in Hanoi that took more than five years to negotiate . . . The foreign business community had drawn up fifty-one separate complaints, ranging from restrictions on the use of foreign exchange to the lack of enforceable arbitration . . . Last month [June] Chinfon-Manulife became the first foreign group to set up a wholly foreign-owned life insurance company. (FT, 13 July 1999, p. 31) Measures that took effect on 1 July included a 10 per cent drop in astronomical overseas telecom charges and permission for foreigners to state local-staff salaries in the Vietnamese currency, the dong, rather than in US dollars to avoid automatic salary and tax increases if the dong falls in value. (FEER, 5 August 1999, p. 51) On 1 July 1999 the government eliminated some dual pricing schemes that discriminated against foreign businesses and allowed foreign companies to fix wages in local currency, helping to protect labour costs against devaluations (FEER, Asia 2000 Yearbook, p. 215). By 1996 foreign direct investment had reached $8.3 billion a year, accounting for more than a third of Vietnam’s GDP. The foreigners are now pulling back, almost as quickly as they piled in. Over the past three years new investment has plunged, firms have slashed existing ventures and sent many of their expats back . . . Today foreign direct investment

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Economic developments has fallen below 1992 levels and is shrinking by around half each year . . . The rhetoric of doi moi [‘renewal’] turned out to be mostly that – rhetoric. Vietnam is still communist. It is closer to Cuba than to today’s market-orientated China and it is still one of the poorest countries in Asia, with a GDP per head less than half that of China’s . . . The main effect of the Asian crisis was to confirm the leadership’s suspicion that opening to the West invites disaster. After all, Indonesia and South Korea were knocked sideways, whereas isolated Vietnam was not much affected. Its leaders decided that slow economic growth was a price worth paying for stability . . . Reforms have been slow and modest. They are often accompanied by capricious new rules. The years needed to negotiate and gain approval for new products make India seem eager; corruption and inefficiency are as bad as in China. But whereas investors feel they need to be in China, they know they can avoid Vietnam . . . Foreign companies are charged a premium for everything, including their water and housing. Advertising rates are six times those of their local competitors. Last year [1999] the labour ministry cut the working week by eight hours, to forty hours . . . Most of Vietnam’s sixty industrial zones have failed to attract investors. (The Economist, 8 January 2000, pp. 74, 77) The bureaucratic underbrush makes Vietnam a deeply frustrating place to do business . . . Foreign direct investment, which used to pour into Vietnam at a rate of more than $4 billion a year, slowed to $1.4 billion in 1999 and is likely to fall further this year. Even those numbers overstate the actual dollars flowing into Vietnam as the government approves many more projects than are actually built. Analysts and others estimate that the country attracted no more than $600 million in hard dollars last year [1999]. Some of the decline is due to the Asian economic crisis . . . But much of it can be attributed to Vietnam’s stifling bureaucracy. Companies such as Oracle Corp. have folded their tents, while others, such as Proctor & Gamble Co., have fallen into bitter disputes with their Vietnamese partners. (Mark Landler, IHT, 22 April 2000, pp. 13, 15)

The south attracts far more foreign direct investment than the north. Vietnamese officials are well aware of the north’s poor reputation among foreign investors . . . Over time, they insist, northern officials will shed old habits and learn to be more flexible and responsive . . . Geographical disparities in growth are not necessarily harmful . . . In Vietnam, however, the imbalance could eventually damage the south. The Vietnamese government steers more foreign aid money and tax dollars to northern provinces. It also spends more on public works projects. (ibid.)

Economic developments 165 The [July 2000 trade] agreement [with the USA, see above] is expected to reverse a steep decline in foreign investment, which fell to $1.4 billion last year [1999] after peaking in 1996, largely on fears that economic reform was stagnating . . . After the United States lifted its postwar trade embargo in 1994 and normalized diplomatic relations a year later, dozens of US corporations invested millions in the country . . . But by the late 1990s those hopes were dashed. Vietnam slowed its pace of economic reform . . . which led many companies to pull out of the country or dramatically scale back their operations. (Rajiv Chandrasekaran, IHT, 15 July 2000, p. 14) Amendments to the foreign investment law were passed by the National Assembly on 16 May 2000. ‘Foreign-invested businesses can now use their land-use rights as collateral to borrow from foreign bank branches in Vietnam. Foreign businesses can also purchase foreign currency to make payments on current transactions’ (FEER, 8 June 2000, p. 76). The signing, on 13 July 2000, of the trade and investment agreement with the USA will boost foreign direct investment. Long submerged beneath a tide of investor malaise dating from late 1996, Vietnam is finally resurfacing with fresh appeal . . . Disbursed foreign investment . . . [grew] to $2.34 billion in 2002 from $2.1 billion in 1999 . . . In a late-2001 survey . . . 61.9 per cent of Japanese companies in Vietnam said they were profitable, approaching the 70 per cent recorded in China . . . Wages [are low] . . . The newfound lustre is not only due to woes elsewhere in South-east Asia such as fears of terrorism, political discord and sluggish growth. The country has also won points for dramatic improvements in foreign investment laws and sustained spending on infrastructure. In one significant shift the government in Hanoi has turned more decision-making on foreign investment over to the provinces. Local officials, competing to attract companies and local employment, are creating new investment incentives and issuing licences more quickly than before . . . In Hanoi and Ho Chi Minh City officials can approve investments of up to $10 million independently of the central government; elsewhere the cap is $5 million. For investments exceeding that amount provincial officials must submit forms to ministries concerned in Hanoi. If Hanoi fails to respond within a week the local officials have a green light to issue the licence . . . In the past Hanoi bureaucrats tried to push potential investors into certain locations and make them shell out big bucks for development [such as roads] . . . One fundamental difference lies in the increased freedom given to foreign investors to set up wholly foreign-owned firms. In the past the Vietnamese government saddled foreigners with recalcitrant state-owned firms as joint venture partners. Now many sectors, notably manufacturing and processing, can

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Economic developments go in on their own. (Foreign companies are still restricted to joint ventures in the telecoms industry, oil and gas, mining, forestry, tourism, ‘culture’, and air, rail and sea transport.) . . . Vietnam has yet to unravel many knotty problems, including steep taxes, a shallow management pool and a dearth of feeder industries . . . Foreign investors hankering for a piece of the action in infrastructure, including water, power and telecommunications, still face major bottlenecks. And foreign firms are still better off inside industrial zones to avoid the legal and political headaches of getting land outside them. The best bets for foreign investors in Vietnam have been export-orientated manufacturing and processing in industrial parks, and the sale of consumer goods and services viewed as affordable to Vietnamese . . . [There are] seventy-one industrial zones and three export-processing zones scattered across thirty provinces . . . Bad memories of the troubled 1990s remain, compounded by more recent controversies. Japanese motorcycle assemblers howled in protest last September [2002] when Vietnam suddenly imposed stricter quotas on imported parts. Then in December [2002] foreign car makers were shocked when Vietnam announced it would double tariffs on imported parts to 40 per cent. Although both decisions were subsequently rescinded, they reinforced the image of an unpredictable investment climate. (FEER, 30 January 2003, pp. 12–15) Higher taxes and [disappointing] new quotas [on exports to the United States of garments and textiles, the industry being the second biggest earner of foreign exchange after crude oil] spell trouble for foreign investors in Vietnam. Car assemblers and garment makers stand to be the biggest losers in the short term . . . On 27 May legislators at Vietnam’s National Assembly delivered a body blow to the fledgling car industry by hiking the special consumption tax on passenger cars with up to five seats. The tax, previously set at 5 per cent, will rise to 24 per cent next year [2004] and to 80 per cent by 2007 . . . Responding to requests by domestic Vietnamese firms for equal treatment with foreign firms, the National Assembly recently equalized income tax rates, to take effect in January 2004. That means a decline from 32 per cent to 28 per cent for domestic firms, but a rise from a maximum 25 per cent to 28 per cent for foreign firms, which were already complaining about high taxes. As a sweetener, however, the National Assembly abolished 7 per cent withholding tax on profits remitted abroad. Still, that is cold comfort for foreign firms that have yet to see a healthy return on their investment. Since foreign investment is already sluggish, such developments could bode ill. (FEER, 19 June 2003, p. 44)

Prime minister Phan Van Khai (on the biggest problems facing foreign investors):

Economic developments 167 Number one, our administrative procedures are still cumbersome. You can get approval at the central level, but you still have problems at the local level with issues like land . . . The second major complaint we receive from investors is about unequal services [dual pricing services]. Telephone tariffs are still high, with discrimination between foreign and domestic firms. Airfares and electricity rates are also different for foreigners. Reductions have been made several times, but . . . we have to take it step by step. (Transition, 2003, vol. 14 nos 4–6, p. 35) Foreign businesses in Vietnam have expressed dismay at a decision to limit the number of expatriates employed by local companies to 3 per cent of an operation’s total work force. The decree, intended to force foreign companies to employ more Vietnamese managers, comes as the National Assembly rebuffed a proposal to ease tax that businesses say makes hiring educated Vietnamese too expensive . . . Vietnam’s foreign business community has long called for a cut in heavy income tax on high-earning Vietnamese, which they say has deterred them from hiring more local white-collar workers . . . The result is that a Vietnamese employee who takes home $2,000 each month can cost a company nearly $6,000, an expense has prompted many multinational companies in Vietnam to fill management ranks with foreigners, who are not liable for so many taxes. (FT, 30 September 2003, p. 14) ‘The economy seems to have benefited from jitters about terrorism, since the same repressive regime that props up the country’s communist leaders also instils investors and tourists with a sense of security’ (The Economist, 26 November 2005, p. 71). Further aspects of foreign direct investment Around three-quarters of foreign investment commitments have gone to the South (The Economist, 20 March 1993, p. 28). ‘Provinces in the South have pulled in almost twice as much foreign investment as their northern counterparts since the late 1980s, according to government statistics’ (IHT, 18 November 2000, p. 17). In 1997 foreign direct investment accounted for 8.6 per cent of GDP and 19 per cent of exports (Faith Keenan, FEER, 19 February 1998, p. 60). In late March 1993 the ministry of finance said that foreigners would be allowed to buy shares in Vietnamese enterprises on an experimental basis (FEER, 15 April 1993, p. 67). On 26 April 1993 the Vietnam America Trade and Investment Company opened for business in Hanoi. What is significant about this consultancy firm is that it was the first US company to operate officially in Vietnam since 1975.

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A late 1993 state bank edict permitted the establishment of joint stock domestic banks with foreign partners. Joint stock banks are able to sell up to 30 per cent of their capital to foreign investors, although a single foreign shareholder is limited to 10 per cent (FEER, 23 December 1993, p. 55; 6 October 1994, p. 54). In January 1994 foreign insurance companies were allowed to set up branches or joint ventures with local enterprises (FEER, 3 February 1994, p. 57). On 8 January 1996 a British insurance company announced that it would team up with a Japanese insurance company to set up the first joint insurance venture with a state-owned Vietnamese enterprise. The Vietnamese enterprise would hold a 51 per cent stake and the remaining 49 per cent stake would be split equally between the other two companies (IHT, 9 January 1996, p. 15; FT, 9 January 1996, p. 6). The minister of labour estimates that only 20 per cent of foreigninvested enterprises have trade unions. The General Confederation of Labour has 4.2 million members and is the only trade union allowed in Vietnam (Adam Schwarz, FEER, 25 January 1996, pp. 21–2). Vietnam has started granting licences for ‘concentrated industrial zones’ to complement the six export processing zones already approved. The former will be permitted to sell some output on the domestic market, while the latter are obliged to export all production (FT, Survey, 8 December 1994, p. 39). The approved export processing zones are in Ho Chi Minh City (two), Hanoi, Haiphong, Danang and Can Tho in the Mekong Delta (FT, 14 February 1995, p. 5). The six approved export processing zones are manufacturing areas where imports and exports are tax-free (IHT, 3 January 1995, p. 11). Industrial zones have been approved in the northern port of Haiphong and near Ho Chi Minh City (FEER, 19 January 1995, p. 55). The government has cancelled an export processing zone project in Haiphong owing to slow progress. The main shareholder, based in Hong Kong, failed to meet the state’s target for ‘capital contribution and infrastructure construction’ (FEER, 19 October 1995, p. 91). The Vietnam–Singapore Industrial Park, 20 km outside Ho Chi Minh City, was established in February 1996 and was expected to open in 1997. It is a partnership owned 51 per cent by Singaporean interests and 49 per cent by the Vietnamese (FEER, 25 April 1996, p. 62). In December 1994 the prime minister approved a project (commonly termed ‘Saigon South’) to build a new city of more than 500,000 south of Ho Chi Minh City. The new city is to become an international business and financial centre. The majority partner (with a 70 per cent stake) in the project is a Taiwanese company. The Ho Chi Minh City People’s Committee (the local authority) has a 30 per cent stake (FT, 3 January 1995, p. 4; FT, 14 February 1995, p. 5). On 13 August 1996 approval was given for the first joint venture insurance company, although the Vietnamese partner had a 51 per cent stake (IHT, 14 August 1996, p. 4).

Economic developments 169 A joint venture between a Taiwan and a Canadian company was granted a licence on 21 June 1999. ‘This will make it the first foreign company to be allowed to sell life insurance in Vietnam’(FT, 22 June 1999, p. 6). In addition, the European insurer Allianz-AGF has been granted a licence to set up the first 100 per cent foreign-owned non-life insurance operation in Vietnam [but the] company will be restricted to selling insurance to non-Vietnamese clients . . . Earlier foreign companies had only been allowed to operate through minority stakes in joint ventures with the two largest state-owned companies . . . which together control 85 per cent of existing business. (ibid.) Australia and New Zealand Banking Group said Thursday [24 March 2005] that it would buy up 10 per cent of Sacombank for $27 million, the first investment by a foreign lender in a privately owned Vietnamese bank . . . Sacombank is one of about thirty private lenders in Vietnam that account for 12 per cent of the nation’s lending . . . Vietnam’s banking system is dominated by four state-owned commercial banks, which hold about 70 per cent of the financial system’s assets . . . Joint stock banks like Sacombank account for 12 per cent of total lending and foreign banks about 15 per cent. Financial liberalization in the early 1990s resulted in the establishment of private sector banks known as joint stock banks in which the government typically holds a minority stake . . . Limits on foreign investment currently [stand] at 30 per cent . . . International Finance Corp., the investment arm of the World Bank, and Dragon Capital holdings each own 10 per cent of Sacombank. (http://www.iht.com, 24 March 2005) HSBC is to pay $17.3 million for a 10 per cent stake in Techcombank . . . the third biggest of Vietnam’s joint stock banks . . . HSBC . . . the world’s third biggest bank . . . already has a presence in Vietnam with two branches in Hanoi and Ho Chi Minh City . . . The Vietnamese market is gradually opening up its banking system to outsiders. Foreign banks are permitted to operate in Vietnam, but Hanoi’s authorities limit them to just two branches, and these tend to be restricted to serving multinational clients. As a result, some foreign banks have opted to take stakes in domestic banks . . . Vietnam limits total foreign ownership in local banks to just 30 per cent of total equity and has a 10 per cent cap on the stake that can be held by any one owner. HSBC . . . was seen as a potential contender for strategic stakes in Vietnam’s two largest private banks earlier this year [2005]. However, HSBC was edged out by rivals Australia and New Zealand Banking Group, which paid

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Significant later developments in oil and gas Note that Vietnam’s total oil output in 1993 was 6.3 million tonnes. In April 1993 a twenty-three-year production-sharing agreement was signed with a consortium led by Australia’s Broken Hill Proprietary Company to explore the Dai Hung (Big Bear) oilfield off the south-east coast. In October 1993 commercial quantities of oil were found. The oil started flowing on 15 October 1994. (Broken Hill pulled out in late 1996. In February 1997 it was announced that its 43.75 per cent stake had been bought by Petronas, the Malaysian state-run oil group which already had a 20 per cent stake: FT, 5 February 1997, p. 26.) In August 1993 BP announced a big gas find. On 20 June 1994 the Mitsubishi Oil Company announced a significant offshore oil find. On 15 September 1994 BP announced a big gas find. Adam Schwarz (FEER, 16 March 1995, p. 54) stated that ‘a few recent oil and gas finds have renewed interest in the country’s mostly untapped offshore fields’. But ‘none of the discoveries announced last year have yet proved to be commercially viable’ (p. 55). On 18 July 1995 BP/Statoil announced a significant offshore gas discovery. Recent oil and gas discoveries in the South China Sea have sharply increased foreign companies’ interest. Oil companies have said that six new finds, the most recent in April 1995, have led to a major upgrading of Vietnam’s oil prospects and added gas to the list of potential exports (IHT, 25 May 1995, p. 17). On 9 May 1996 Shell announced that it had abandoned exploration at an oil field off the Vietnamese coast, becoming the first oil major to pull out of the offshore energy sector (although Total of France assumed Shell’s share). Shell first started prospecting off the coast in 1986 and still has small interests in three other offshore blocks. Only two companies have made significant discoveries, Petronas of Malaysia and Japan’s Mitsubishi Oil (FT, 10 May 1996, p. 6). On 19 November 1998 Vietnam’s state-owned oil company (Petrovietnam) and Russia’s state-run Zarubezhneft signed an $800 million agreement to establish Vietnam’s first big oil refinery at Dung Quat in an isolated and impoverished central province devoid of infrastructure. The project had been surrounded by controversy for more than three years: two groups of potential foreign investors had withdrawn (FT, 20 November 1998, p. 5).

Economic developments 171 Vietnam has agreed to provide wide-ranging guarantees to a multilateral consortium led by BP Amoco for a $1.5 billion project to exploit natural gas off the country’s south-eastern coast. An undertaking initialled last week guarantees that consortium members, including BP Amoco, Norway’s state-owned Statoil and India’s Oil and Natural Gas Company, will have access to US dollars to repatriate profits generated from the massive infrastructure project in the Nam Con Son gas field. The project is the largest foreign investment of its kind in Vietnam, though it has been stalled by bureaucratic wrangling since the field was discovered in 1993. The three-part project involves development of the gas field, the construction of a 370 kilometre gas pipeline from the field to the Vietnamese coast and the creation of a power and fertilizer complex. The new agreement commits the government to act as guarantor of payments by Petrovietnam, Vietnam’s state-owned monopoly gas supplier. The company will buy the gas from the foreign consortium . . . BP officials said the government had agreed that any future changes to Vietnam’s tax structure, or other laws affecting foreign investment, would not be applied to the project. They hope the deal will be formally signed within two months so work on the long-delayed project can start by November [2000]. Gas from the Nam Com Son field is also supposed to supply a second, nearly completed power plant that has been built with Japanese development loans. BP Amoco officials said their target was to have the field supplying gas ‘as early as possible’ in 2002. (FT, Wednesday 6 September 2000, p. 10) Terms for building a $450 million gas pipeline were reached on 15 September 2000. The pipeline will be 51 per cent owned by Petrovietnam, with BP holding 33 per cent and Statoil the balance. Investors hoped to complete negotiations with Petrovietnam in October. The gas transport agreement, between the pipeline owners and Petrovietnam, was expected to be completed at the same time (FT, 16 September 2000, p. 7). ‘Vietnam’s minister of planning and investment . . . said agreements with a foreign consortium led by BP Amoco PLC on a $1.5 billion project involving gas from fields in the Nam Con Son basin would be signed next week’ (IHT, Saturday 2 December 2000, p. 14). On 6 December 2000 Vietnam and a multinational consortium led by BP Amoco signed two key documents, including a wide-ranging government guarantee, which would help pave the way for work to begin on a $1.5 billion integrated gas project. There have been complex and longrunning negotiations on plans to exploit gas from the Nam Con Son gas field, which was discovered in 1993 off south-eastern Vietnam. The three-stage project, which would be Vietnam’s largest single foreign investment, involves the development of the gas field, the construction of a

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370-kilometre pipeline from the field to the coast, and the creation of a power and fertilizer complex. Further negotiations are needed, including the gas sales agreement between the consortium and Petrovietnam (FT, 5 December 2000, p. 16). [On 15 December 2000] Vietnam and a multinational consortium led by BP Amoco signed three long-awaited agreements for a $1.5 billion integrated gas project . . . The three agreements – reached after six years of exhaustive negotiations – included a guarantee by Vietnam that the investors will have access to foreign currency for repatriation of profits, a business co-operation contract on the project’s $580 million pipeline and a deal on gas sales and purchases . . . The documents . . . will pave the way for what will be Vietnam’s single largest foreign investment project, which aims to exploit . . . offshore gas in the Nam Con Son basin, south of Vietnam. A leading component of the project – an agreement on gas transportation – must still be completed before work can begin. (FT, 18 December 2000, p. 10) Conoco Inc., the fifth largest US oil company, has said that it and its partners are considering more than $1 billion to develop two oil fields and raise production by 45 per cent in Vietnam. Conoco said Wednesday [23 May] that a test well in the Setu Den field in the Cuu Long Basin . . . produced 11,032 barrels of oil a day. Commercial production of the field . . . will begin in late 2003 or early 2004 . . . Last month Conoco said it had increased production 22 per cent in the adjacent Rang Dong field to 55,000 barrels a day, from 45,000. (IHT, 26 May 2001, p. 13) Conoco, the oil exploration group, said yesterday [13 August 2001] that the Sutu Den discovery of the shore of Vietnam had been declared commercial . . . Houston-based Conoco, which holds a 23.5 per cent interest in the discovery at offshore bloc 15–1, said first production was targeted for less than three years. (FT, 14 August 2001, p. 22) Russia and Vietnam agreed [on 26 December 2002] to disband a venture to build Vietnam’s first oil refinery because of delays in the project, leaving Petrovietnam to build the $1.4 billion facility alone . . . Petrovietnam and Zarubezhneft RVO, both state-owned, signed a contract in 1998 to build the plant . . . Both sides had a 50 per cent stake in the Vietross venture. The latest date for full operation of the refinery is 2006, after the project was delayed by disagreements among the refinery contractors . . . Zarubezhneft will still play a minor role . . . In 1995 the French company Total SA, now part of TotalFinaElf SA, pulled out of the project, saying that the location chosen by Vietnam’s government was too far from the site of Vietnam’s offshore crude oil.

Economic developments 173 A group including the Malaysian company Petroliam Nasional Bhd. later also decided not to participate in the project. (http://www.iht.com, 26 December 2004)

Agriculture Rice and equivalent output fell in 1977 and 1978 (Vietnam Courier, 1987, no. 2, p. 18). Agricultural production declined in 1979 and 1980 (Vietnam Courier, 1987, no. 1, p. 4). In 1987 food production fell by 2 per cent, available grain per capita declining from 304 kg in 1985 to 280 kg in 1987 (Murray Hiebert, FEER, 14 January 1988, p. 48). Vu Khoan, Assistant Minister of Economic Affairs in the Foreign Ministry, said on 6 April 1988 that annual food production per capita was 620 lb (280 kg), compared with 748 lb in 1985. Farms were being divided into smaller units because of the lack of mechanized farm machinery such as tractors; the situation was aggravated by a fuel shortage (IHT, 7 April 1988, p. 6). In May 1988 there was official recognition that more than 3 million people in twelve northern provinces were living ‘at the edge of starvation’, while nearly 8 million in the North would be ‘seriously short of food’ until the next harvest (Murray Hiebert, FEER, 26 May 1988, p. 18). Hiebert listed the causes of the stagnation in food production over the previous three years as natural disasters, shortages of fertilizers and pesticides and poor farm prices. The Daily Telegraph (12 July 1988, p. 9) quoted a Vietnamese source as saying that about 10 million people faced hunger, 4 million faced serious hunger and twenty-one people had died of starvation in various northern provinces. Conditions eased in early June when the new harvest began. ‘Up to 1989 grain production remained below 300 kg per capita, considered the minimum subsistence level, with periodic food deficiency resulting’ (Ronnas and Sjöberg 1991b: 4). ‘About 80 per cent of the population [of 80 million] lives in rural areas and farmers make up about two-thirds of the work force’ (IHT, 4 April 2002, p. 14). ‘More than two-thirds of Vietnamese live in the countryside’ (FEER, 13 March 2003, p. 51). ‘More than 70 per cent of Vietnamese rely on agriculture to make a living’ (FEER, 13 November 2003, p. 26). Fforde and de Vylder (1988: 21–4) point out that Vietnam has a history in which almost all peasants belonged to a commune, although this system began to break down during the French colonial period. Land reform in North Korea was implemented as early as 1953–4, involving land appropriation and redistribution, the colonial legacy having left most peasants as tenant farmers. Collectivization did not begin in the North until 1959, but

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Economic developments

by 1968 more than 90 per cent of peasants formally belonged to higherlevel co-operatives. Beresford (1988: 130) points out Chinese influence in the staged process. ‘Mutual aid’ teams or ‘production solidarity’ groups were first set up, building on the existing wet rice practices of joint transplanting and harvesting and the lending of tools and draft animals. There next followed ‘lower-level co-operatives’ (‘production collectives’), in which individual income depended on both labour and contributed land and means of production, and, finally, ‘higher-level co-operatives’, in which labour was the sole source of remuneration. The Chinese commune, however, was not emulated. Five per cent of the collective’s land was devoted to private plots (this figure being sometimes exceeded), while agriculture was largely left alone during the war and a de facto reversion to family farming was permitted in many areas (Beresford 1988: 134). Co-operatives dominated agricultural output, state farms contributing only a small percentage (specifically 0.5 per cent of gross agricultural output in 1960 and 1.1 per cent in 1963; Spoor 1987: 347); state farms concentrated on export crops such as tea and coffee. (In 1990 state farms occupied 16.5 per cent of the cultivated area: Vietnam Courier, 1990, no. 13, p. 6.) In 1963 quotas were fixed for a given period, initially three years, on the basis of the average results for 1961–2, as an incentive to increase output. As far as the South is concerned, the decision to collectivize was taken in early 1977, the aim, stated the following year, being to complete the process by 1980. (By 1980, however, only 50 per cent of agricultural households were in any form of collective: Beresford 1992: 246.) By the start of 1986, 87.2 per cent of peasants and 85.5 per cent of tilled land had been collectivized (Wädekin 1990: 9). But there is some dispute about the degree to which these were ‘paper’ as opposed to actual figures. Pryor (1991: 99) says that collectivization in the South was about 75 per cent complete by 1986, although most farms really resembled the Chinese mutual aid teams of the early 1950s. In pre-1979 co-operatives there were compulsory procurement quotas for rice and pork, with a dual system of quotas and above-quota prices, while other products were subject to contract. During the 1970s the trend was towards locally negotiated procurements (White 1985: 100–1), and in June 1982 stress was laid on district and provincial self-provision of food (p. 101). From the late 1970s onwards the role of the district (between province and village) increased as regards transactions with the state, and integrating agricultural and industrial development at the local level (Werner 1988: 158). In 1976 the farm tax was based on the estimated gross output of the normal average crop, but this was changed nine years later to average yield per hectare in various geographical situations, tax rates being fixed for a three-year period (Spoor 1988a: 111).

Economic developments 175 In January 1981, after experiments starting in Haiphong in 1978, a ‘production contract’ system was introduced in the North, but this was not widespread in the South until the following year. (Note that land still belongs to the state.) In this system individual peasant households, or sometimes work teams, lease land from the co-operative and take over most stages of production in exchange for contracted deliveries, keeping produce over the contracted amount (fixed on the basis of the average productivity of land over the preceding three years and set for a two- to three-year period) to be consumed by themselves or sold on the free market. Any shortfall in contracted deliveries must be made good the following year. (The remaining private farms sign contracts with the state.) Collectives provide inputs and communal services such as irrigation, pest control and ploughing (White 1985: 97; Beresford 1988: 162; Vo Nhan Tri 1988: 80). Decrees issued April–November 1988 included the following amendments (Crosnier and Lhomel 1990: 3–4; Porter 1990: 80; Beresford 1990: 475–6): leases of up to twenty years were to be available (rather than the previous three years; up to fifty years in the case of some perennial crops). Tran Duc Nguyen (1991: 29) talks of a minimum fifteen years for leases: leases can be inherited or transferred (ceded) to other peasants, although renting land to others is not permitted; land allocations are to be in compact parcels rather than scattered strips; land allocation is to take account of efficiency and the fulfilment of commitments rather than simply family size or number of workers per family; supplies delivered to the state cannot exceed 60 per cent of output; a single tax was introduced, on average 10 per cent of the harvest, with the exact rate depending on land fertility; state purchase prices are negotiable (rather than fixed by the state); the hiring of seasonal labour is possible. Land is attributed to farming households on a long-term (fifteen-year) contractual basis; the farmers can freely sell their produce after paying the agricultural taxes (Vietnam Courier, 1991, no. 25, p. 8). Agriculture was affected by the decisions taken in December 1986. The reforms went beyond the contract system to confirm the household as the basic production unit and to limit further the role of cooperatives. [Their role had been reduced by earlier reforms to allocating land, supplying inputs and providing technical assistance: Riedel and Comer 1997: 191.] Farmers were no longer required to sell contracted amounts of output to the state but could instead sell their products in the market after paying taxes and commissions. In addition, in 1988 households were given land tenure for at least fifteen years and land was transferable under certain circumstances. (Riedel and Comer 1997: 193) Ronnas and Sjöberg (1990: 150) note that, in reality, district authorities still often try to impose directives on co-operatives, although they are not

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Economic developments

formally entitled to do so. The formal position as regards ownership and use is as follows: ‘Land, resources and environment still belong to the entire people . . . But . . . the state hands over on a long-term basis the right to use them to the producers. This right of use may be bequeathed and transferred’ (Vietnam Courier, 1991, no. 26, p. 15). Under the production contract system the user may not on his own turn agricultural land to non-agricultural purposes and he cannot let it lie fallow or reduce the fertility of the soil. If necessary the state can take land back after paying some appropriate compensation to the user. (Andreff 1993: 527) The new system has been a major reason for the transformation in Vietnam’s agricultural performance. In 1989, for example, 1.45 million tonnes of rice were exported (making Vietnam the third largest exporter after the United States and Thailand), in 1990, 1.4 million tonnes (FEER, 23 January 1992, p. 49) and in 1991, 1 million tonnes (Vietnam Courier, 1992, no. 27, p. 1) According to official figures for 1989, the private and individual sectors accounted for more than 90 per cent of total agricultural production (Vietnam Courier, 1990, no. 14, p. 6). ‘State-sector farms now account for only about 4 per cent of the agricultural sector’ (FT, Survey, 8 December 1994, p. 39. Pingali and Vo-Tong Xuan (1992: 715) point out that rice productivity is adversely affected by factors such as inadequate infrastructural investments in irrigation, water control, soil conservation, transport and research. In 1987 further measures were taken to combat problems with the supply and distribution of foodstuffs. In March the government removed checkpoints on roads, originally designed to prevent illegal private trading, and later formally authorized private individuals to form transport businesses in order to convey foodstuffs to market; thus controls on crossprovincial movement of goods were removed, especially facilitating the flow of rice from South to North (Jeffries 1993: 218). Large-scale migration to the cities caused the ‘redistribution’ of the work force in 1986, which uprooted 1.3 million people in five years. Workers, mainly young people, were sent to the new economic zones (J. Esterline, Asian Survey, 1987, vol. XXVII, no. 1, pp. 93–4). Later the aim was to resettle up to 250,000 people annually, mostly from the North, in zones in central and southern Vietnam. Farmers were able to market that proportion of the crop remaining after the state extracted its share (Barbara Crossette, IHT, 28 April 1988, p. 6). Beresford (1988: 70, 151–2) sees the aims as increasing cultivated land area and transferring people from overcrowded cities and densely populated deltas in the North. Between 1975 and 1985 around 2 million people had moved to the zones

Economic developments 177 (p. 152). The Vietnam Courier (1991, no. 24, p. 8) traces the population movements back to 1961; over the past thirty years 4,820,000 have resettled in the new economic zones. Murray Hiebert (FEER, 25 May 1989, p. 42) notes that pressure tactics were especially used 1975–80, but later on propaganda and incentives were favoured. An interesting innovation that sprang from the food problems of the late 1970s was the establishment in 1980 of a food supply organization, the Food Company of Ho Chi Minh City, under Madam Nguyen Thi Thi, outside the existing procurement and distribution system. Bank credits were used to purchase agricultural inputs and industrial consumer goods, which were then traded for food in the countryside. In 1983 the organization became an independent state enterprise, rather than a subdivision of the city’s food department, and henceforth processed foodstuffs and feedstuffs. It had a monopoly of the city’s rice trade; it ran rice mills, noodle factories, bakeries and its own retail outlets; it had a small oil refinery, trading oil products for agricultural goods. It planned to build a solar power station to ensure electricity supply: piece rates provide an incentive to hard work. It went on to run 7,000 retail stores. Plans were submitted to central authorities for incorporation into national economic plans (Jeffries 1993: 218–19). A new law was passed by the National Assembly on 14 July 1993 and was planned to come into force on 15 October 1993 (IHT, 16 July 1993, p. 17; FT, 6 August 1993, p. 5). Land still belongs to the state, but farmers are allowed to buy, sell, transfer, mortgage, rent and inherit the right to use land: ‘Land belongs to the people . . . [which] . . . the state allots to land users to till on a long-term basis.’ Farmers are entitled to use farmland for up to twenty years for annual crops such as rice and fifty years for perennial crops such as fruits. Each household is allotted a maximum of 3 ha (7.4 acres). Land rentals to subtenants are permitted for up to three years, with exceptions in special cases. The tax on farmers was also reduced. Until then farmers had to reserve 10 per cent of their harvest for the state, but henceforth the rate was to be reduced to 5 per cent. In addition the levy was to be based on local output criteria and the state of the soil and not just on the size of the harvest. (According to FEER, Asia 1994 Yearbook, 1994, p. 224, peasants would no longer be taxed on production but on the quality of land and its proximity to markets.) Murray Hiebert (FEER, 30 September 1993, p. 64) talks of a formal limit of 3 ha per person. But some private land holdings are, in reality, much larger than this and one Vietnamese source suggests that the restriction is on ‘farming fields’ rather than total land. In 1994 the length of leases was extended to ninety-nine years (Irvin 1995: 730). A decree was issued on 1 January 1995 which reaffirmed the state’s ownership and control over land – strictly speaking land belongs to the people and is administered by the state. The decree converted land use

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rights to leases for which rents must be paid to the government. For some types of land use a tax has been charged, but in most cases fees have been nominal and collection has been poorly enforced (Adam Schwarz, FEER, 27 April 1995, p. 68). There has been peasant unrest in northern provinces. The authorities say that rural protests that began in May 1997, concentrated in Thai Binh province south of Hanoi, have subsided. But the problems that caused them remain, namely corruption, rising taxes and falling rice prices (FEER, 2 October 1997, p. 16). Vietnam’s normally compliant legislature rarely contradicts the nation’s senior leadership. But when the powerful Communist Party central committee approved sweeping, liberal changes in the land law designed to open the economy to large-scale commercial farming, the national assembly put its foot down. The legislature refused to approve changes to the 1993 law that would have increased farm sizes and extended rural leases . . . The politburo debate at a meeting in early October sharpened differences between ideologues and so-called reformers. Conservatives, led by former party chief Do Muoi and head of ideology Nguyen Duc Binh, were concerned that farmers would be exploited by large landowners if they lifted the three-hectare cap on farm size and extended all leases to fifty years from twenty. The reform position, meanwhile, saw the benefits of economies of scale. Phan Dien, a new politburo member and head of the party’s economics commission, argued that farmers who worked land for others actually made more than when they had owned their own plots . . . A divided politburo sent the 170-member central committee a rare choice . . . The committee did not agree until . . . [17 October] that it favoured extending land leases and increasing farm size . . . The 450 national assembly [on 24 November] . . . voted against extending leases, but it did allow for some larger farms – subject to conditions. (Faith Keenan, FEER, 10 December 1998, p. 26) Protests over land could become the most serious flashpoint in Vietnam. In both the cities and the countryside the rules are unclear as to who owns what. Some minorities in the central highlands can own and sell their land, and may even pass it on to their children. But most Vietnamese are given only leases on their land – which the government may reassess and share out at a later date. Demonstrations over land claims and corruption . . . have erupted in the poorer northern provinces and elsewhere . . . In mid-October farmers from the north staged a process in central Hanoi against corruption. (The Economist, 11 November 2000, p. 34) Two-thirds of the nation’s labour force of almost 40 million are engaged in farming and most poor people reside in rural areas . . .

Economic developments 179 Vietnam has noted some isolated success stories in the five years since the new-style co-operatives were launched . . . [There are] 10,853 existing co-operatives . . . A residue of distrust clogs the official efforts to promote new-style agricultural co-operatives – tasked with coordinating irrigation, supplying fertilizer and other inputs, and even helping farmers market produce . . . The organization is technically voluntary but villagers [in one village] signed up because they wanted to get irrigation services . . . Millions of farmers have opted out of cooperatives, preferring smaller, more flexible units that perform some communal tasks without seeking legal status . . . At their best co-operatives provide important economies of scale for discounted inputs and stronger bargaining muscle. In helping to market commodities the co-operatives aim to deliver more profit directly to farmers, instead of being siphoned off by a long line of intermediary traders. Cooperatives can also ease technology transfer and spread new ideas for crop diversification . . . [But] management and negligible collateral make most co-operatives a bad credit risk . . . While most co-operative leaders can take out personal loans for the use of the group, most fear risking their own assets . . . In October [2001] officials announced they would write off 525 billion dong ($35 million) in pre-1997 debts accumulated by the old subsidized and semi-subsidized co-operatives. (Margot Cohen, FEER, 22 November 2001, pp. 28–9) Officially, of course, no one in Vietnam owns any land. It all belongs to the state. In the 1990s . . . the government began handing out longterm land-use rights. By the end of the decade formal, tradable title had been granted for over 90 per cent of Vietnam’s lowland farms. At the same time . . . the government imposed tight restrictions on the right to build on farming land. In the cities, meantime, the government had no similar incentive to hand out formal property rights. Most urbanites continued to live in apartments originally assigned to them by the veterans’ association, their workplace or some other government agency. The past decade of market reforms, however, has made many people rich enough to buy their own houses . . . There is a desperate shortage of urban housing. Town-dwellers have to deal in the unregulated and easily-manipulated ‘informal’ market – without the benefits of legal title . . . Reform-minded officials in Ho Chi Minh City have started public auctions of government land. (The Economist, 15 June 2002, p. 66) [Vietnam’s] rapid growth . . . [according to] the United Nations Development Programme . . . derives chiefly from the steady shift of millions of inefficient subsistence farmers into marginally more productive pursuits. Many have begun growing coffee or farming prawns, while others now work in textile plants or shoe factories. Tens of thousands of family firms have also sprung up since 2001, when the government

180

Economic developments eased restrictions on small businesses. Since some 74 per cent of Vietnam’s 84 million inhabitants still live in the countryside, and most of those remain rice farmers, there is plenty more scope for growth. (The Economist, 26 November 2005, p. 71)

Economic performance Output and output per head Despite sustained economic growth since the post-1989 reforms Vietnam is still a very poor country. (See Table 2.1.) The country’s economy is accelerating even as the rest of South-East Asia slows . . . The economy seems to have benefited from jitters about terrorism, since the same repressive regime that props up the country’s communist leaders also instils investors and tourists with a sense of security. (The Economist, 26 November 2005, p. 71) Estimates of per capita income are as follows: T. Kimura (Asian Survey, 1986, vol. XXVI, no. 10, pp. 1043–4) presents a range of Western estimates, varying between $125 and $200 in 1983–4; p. 1040). D. Finkelstein (Asian Survey, 1987, vol. XXVII, no. 9, p. 982) quotes the US Department of State’s 1984 figure of $160. The official figure for per capita income in 1983 was $101 (Fforde and de Vylder 1988: 48). In 1990 per capita GDP was $210 (Vietnam Courier, 1991, no. 18, p. 4). ‘The party’s aim is to double GDP per person by the year 2000’ (The Economist, 28 March 1992, p. 73). ‘The World Bank puts per capita GDP at about $250. Although in purchasing-power parity terms it might be as high as $750, this still leaves Vietnam as one of the world’s poorest countries’ (Riedel and Comer 1997: 206). ‘The World Bank estimates that per capita income in 1998 was $300 (Nguyen Manh Hung 2000: 109). In 1999 per capita GDP was $362 (IHT, 14 April 2000, p. 2). ‘[Vietnam has a] per capita GDP of $568’ (FT, 3 August 2005, p. 40). ‘Per capita income has almost doubled since 1995’ (http://www.iht.com, 3 October 2005). Natural disasters have taken their toll. The year [1999] began with a drought that caused serious damage . . . [in the north and the south] . . . It ended with two major floods in central Vietnam that killed over 700 people . . . and left millions of people in need of emergency aid. (Nguyen Manh Hung 2000: 101)

1988 6.0

1989 2.3

1983 55.0

1985 160.0

Convertible area 2.2

1984 50.0

1987 400.0

1988 310.0

1989 34.0

1988 –

1989 –

1990 21.4

1991 21.7

Source: Various issues of United Nations Economic and Social Commission for Asia and the Pacific, Economic and Social Survey of Asia and the Pacific; Asian Development Bank, Asian Development Outlook; Vietnam Courier; EIU Country Profile; IMF, World Economic Outlook; FEER; Asian Survey; The Economist; FT; IHT; and Transition; Dellmo et al. (1990: 9); Dollar (1994: 362, 368); Fforde and de Vylder (1988: 28, 32, 50, 135); Irvin (1995: 730–8); Porter (1990: 80); Tran Duc Nguyen (1991: 8, 30)

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 8.6 8.1 8.8 9.5 9.3 8.2 5.8 4.5 6.8 6.9 7.1 7.3 7.7 8.45 12.6 10.5 12.9 14.2 14.5 12.6 10.2 7.7 – 10.4 9.5 10.5 10.2 – 6.3 3.0 3.9 4.7 4.6 5.0 2.8 4.4 – 3.0 4.2 3.6 3.5 – 17.5 5.2 14.4 17.0 4.5 3.6 9.2 2.5
1.7 0.8 4.0 3.0 9.5 –
3.8
6.2
3.5 –
3.0
4.0
3.3
3.6 – – – – – –

1986 700.0

Vietnam: selected economic indicators 1990–2005 Economic indicator 1990 1991 Rate of growth of GDP (%) 4.9 6.0 Rate of growth of industrial output (%) 2.5 9.9 Rate of growth of agricultural output (%) 1.5 2.2 Inflation rate (consumer) (%) 67.0 68.1 Budget surplus or deficit (%)
8.0
2.5

Foreign debt, 1989 ($billion) Non-convertible area 6.5

Inflation (%) 1980 1982 25.2 80.0

Paddy and paddy equivalent (rice and equivalent, i.e. food production) (million tonnes) 1976–80 (average) 1975 1982 1983 1984 1985 1986 1987 11.5 11.6 16.6 17.0 17.3 18.2 18.5 17.6

Average annual rate of growth of agricultural output (%) 1960–5 1965–75 1976–80 1980–5 1986 1987 4.2 0.6 2.0 6.2 4.4 1.6

Average annual rate of growth of national income (%) 1955–65 1966–75 1976–80 1981–5 1986 1987 6.5 6.0 0.4 6.4 4.6 –

Table 2.1 Vietnam: selected economic indicators 1955–89

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‘The worst flooding in decades has hit half the country and killed at least 473 people . . . In the Mekong Delta 368 people have been killed, including 264 children’ (IHT, 18 October 2000, p. 6). ‘More than 350 people have died in Vietnam’s worst floods for seventy years . . . In central Vietnam heavy monsoon rains have caused devastating floods for the last three years’ (Guardian, 18 October 2000, p. 19). Inflation Inflation in the 1980s peaked at 700 per cent in 1986. It peaked in the 1990s at 68.1 per cent in 1991. Since 1996 the inflation rate has been in single figures. The reason for the dramatic improvement on the inflation front are discussed below in the section on financial reforms. Unemployment Unemployment is a considerable problem. The Economist (28 July 1990, p. 49) put the urban unemployment rate at 20 per cent. In prime minister Do Muoi’s 1 July 1990 speech to the National Assembly, an unemployment figure of 6 million out of a workforce of 30 million was quoted (Douglas Pike, Asian Survey, 1991, vol. XXXI, no. 1, p. 82). Nguyen Tuong Lai and Nguyen Thanh Bang (1991: 85) cite a figure of 34 million being of working age. According to the April 1989 census, the urban unemployment rate was 9.1 per cent, while in the countryside ‘useful working time’ is now only 50 per cent; there is no unemployment pay (Vietnam Courier, 1991, no. 22, p. 5). The Vietnam Courier (1990, no. 10, p. 11) talked about a million more young people reaching working age every year without being able to find jobs. A later edition (1991, no. 24, p. 8) estimated that out of the 34 million people of working age 1.7 million are jobless, while underemployment amounts to the equivalent of an extra 6 million unemployed. The situation was aggravated by demobilization and by the return of Vietnamese workers from Eastern Europe as their contracts were amended. The first contracts were signed in the early 1980s, one reason being to help Vietnam pay off its foreign debt. At the peak there were over 200,000 workers in the Soviet Union and Eastern Europe (e.g. 103,000 in the Soviet Union, 71,000 in the GDR, 37,000 in Czechoslovakia and 27,000 in Bulgaria: Vietnam Courier, 1990, no. 10, p. 7). ‘Over the last ten years more than 250,000 young people have been sent; the current contracts with the former GDR, Czechoslovakia and Bulgaria expired on 31 December 1990’ (Vietnam Courier, 1990, no. 12, p. 4). There are various more recent estimates of unemployment: 1

Murray Hiebert provides a number of figures for unemployment: a 22 per cent of the urban work force have no job and 28 per cent of the rural work force are underemployed (FEER, 28 January 1993, p. 43);

Economic developments 183 b c d

2

3 4

More than 70 per cent of the population live in the countryside. About 20 per cent of peasants are unemployed and an additional 20 per cent are underemployed (IHT, 4 April 1995, p. 8). The population is split 77 per cent rural and 23 per cent urban (IHT, 14 April 2000, p. 2). Nearly 800,000 workers, about one-third of the 1988 total, have been laid off from state enterprises (Dollar 1994: 369). A United Nations study by the International Labour Office was published in May 1995 (IHT, 12 May 1995, p. 19). The report estimated that over 2 million workers are unemployed and a million new entrants have to be absorbed each year into the work force of 40 million. An annual growth rate of around 10 per cent is needed simply to absorb the new entrants. Although agriculture absorbs over 70 per cent of the work force it accounts for only about one-third of GDP. Since the first labour code came into effect in January 1995 stoppages have become common, particularly at foreign-run enterprises in the south of the country. The report found that: a b

c d

5

there are 3.5 million urban jobless and 5 million lack jobs in the countryside (FEER, 4 February 1993, p. 27); urban unemployment is about 20 per cent (FEER, 27 May 1993, p. 60); official statistics put the unemployment rate at 6 per cent of the work force of 34 million (in urban areas the rate is 9 to 12 per cent), but the Asian Development Bank puts the unemployment rate at 20 per cent, more than three times the government’s figure; loss-making state enterprises have laid off roughly 800,000 workers in the past three years (FEER, 2 September 1993, p. 16).

Since 1988 about 1.5 million workers have lost their jobs in state industries and the government bureaucracy, a number equivalent to one-fifth of the urban work force. Since 1988 over 1 million soldiers have been demobilized, 200,000 workers have returned home from former Soviet bloc countries and 65,000 refugees and asylum-seekers have been repatriated from camps in Hong Kong and South East Asia. Official unemployment has risen to 6 per cent nationally from ‘almost negligible levels’ in the late 1980s. The unemployment rate reaches 25 per cent or more in cities and towns. In the last decade wages have generally lagged behind the rate of inflation and in the state sector have fallen by one-third in real terms.

Vietnam has had a compulsory labour programme for many years under which young people are required to devote ten days a year to work for the state (or pay a fee for exemption). Under proposals to go before a National Assembly committee, the programme was to be amended to increase the numbers involved by widening the age range

184

6 7 8

Economic developments of participants. Individual provinces and cities would set their own new exemption charges. The media in Vietnam have been discussing plans for the compulsory involvement of millions of people in construction projects, including a North–South motorway along parts of the wartime Ho Chi Minh Trail (used to transport supplies and troops during the Vietnam War) (IHT, 23 January 1997, p. 4). A project is underway to build a 1,600-kilometre (1,000-mile) highway through the mountains along the route of the former Ho Chi Minh Trail. ‘It is cumbersome, expensive, controversial and, say its critics, wrongheaded. It diverts scarce resources into a monumental project that is more in tune with the past than the future, benefiting entrenched interests and offering questionable benefits . . . Particularly controversial has been plan, apparently modified this month in the face of bad publicity, to mobilize unpaid labour on a grand communist scale reminiscent of Soviet and Chinese projects. Vietnam has a history of mass labour projects for irrigation, flood control and national defence . . . This time, according to the official press, up to 1 million people living along the route were to be drafted to contribute ten days each of free labour or pay a fee to be exempted. Planners say the project will involve 60 million working days . . . Prime minister Vo Van Kiet . . . asserted that no intellectuals or professionals would be drafted . . . With the project just getting under way this fall, the government appeared to back off the plan, saying workers would be paid a minimum of about $1 a day’ (Seth Mydans, IHT, 13 November 2000, p. 4). In 1998 the official figure for unemployment was 6.6 per cent (FEER, 18 February 1999, p. 57). ‘The unemployment rate in Vietnam is 7.4 per cent and every year 1.2 million new workers enter the job market’ (Transition, 2000, vol. 11, nos 3–4, p. 40). ‘Vietnam needs to create 1.5 million jobs a year just to absorb new entrants into its labour market. Urban unemployment is estimated at over 7 per cent, while in rural areas people only work around 60 per cent to 70 per cent of the time they have available for labour’ (The Economist, 14 May 2005, p. 64).

Poverty Poverty, although much reduced, is still a serious problem: 1 The UN calculates that 51 per cent of the population live below the most basic poverty line, although that figure is down from 70 per cent a decade ago (FT, Survey, 8 December 1994, p. 37). Most are in rural areas (p. 39). 2 The World Bank has calculated that 51 per cent of the population live in poverty, compared with only 9 per cent in China. Rural poverty in

Economic developments 185

3 4

5 6

7 8 9 10

Vietnam runs at 57 per cent, compared with just 27 per cent in the towns (The Economist, 4 March 1995, p. 78). ‘The poverty rate has fallen by half in the past ten years, one of the sharpest declines for any country’ (The Economist, 10 June 2000, p. 90). ‘Vietnam’s poverty rate fell from 55 per cent of households in 1992–3 to just 30 per cent of households in 1998’ (Joseph Stiglitz, IHT, 13 November 1998, p. 10). ‘The proportion of people living in poverty fell sharply from three out of four in the late 1980s to one out of three in the late 1990s. Trade reforms that opened the way for Vietnam to become a major exporter of rice, garments and footwear are an important part of the explanation’ (Nicholas Stern, chief economist and senior vice-president of the World Bank, IHT, 25 January 2001, p. 8). ‘Absolute poverty dropped . . . from 75 per cent of the population in 1988 to 37 per cent in 1998’ (Paul Collier and David Dollar, Transition, 2001, vol. 12, no. 3, p. 5). ‘More than a third of Vietnamese children under the age of five are malnourished and suffer stunted growth, Unicef said Wednesday [13 December]. Many children lack access to safe drinking water, sanitary facilities and day care services’ (IHT, 14 December 2000, p. 5). ‘Vietnam has doubled the size of its economy and cut poverty in half in a decade’ (http://www.iht.com, 3 December 2003). ‘As recently as 1993 the World Bank considered 58 per cent of the population poor. By 2002 that had fallen to 29 per cent’ (The Economist, 8 May 2004, p. 63). ‘The proportion of the population living in poverty has declined . . . to 15 per cent today’ (Guardian, 30 April 2005, p. 3). ‘The country’s economy is accelerating even as the rest of South-East Asia slows . . . Better yet, Vietnam’s poverty rate is falling almost as fast as the economy grows. The proportion of the population that the government deems poor fell from 58 per cent in 1993 to 20 per cent last year [2004]’ (The Economist, 26 November 2005, p. 71).

Postscript

Narcotics Great strides have been made in reducing and even eradicating production of opium and coca in key countries. Laos, long part of the infamous Golden Triangle, will be declared virtually opium-free this month, following Thailand in 1992 and Vietnam in 1997. Within a few years Afghanistan is likely to be the world’s only major producer of the drug. (IHT, 3 February 2006, p. 6)

Bird flu The costs of the [H5N1] virus cannot be ignored. Already millions of dollars have been lost to economies in Asia where widespread culling has taken place. The World Bank estimates the damage in a country such as Vietnam at up to 0.2 per cent of GDP . . . Even SARS . . . cost east Asia an estimated 2 per cent of GDP in the second quarter of 2004. (FT, Survey on the World in 2006, 25 January 2006, p. 6) The EU authorities have confirmed the presence of the deadly H5N1 strain of avian flu in a sample of poultry taken from northern Cyprus, the European Commission said Sunday [29 January] . . . Turkey has reported twenty-one human cases of H5N1, including four deaths, although the WHO has not confirmed the figures. (www.iht.com, 29 January 2006). ‘Bird flu has been detected in northern Cyprus . . . Tests on dead birds showed they were carrying the lethal H5N1 strain’ (FT, 30 January 2006, p. 12). ‘Test showed a bird in northern Cyprus . . . the Turkish-Cypriot enclave . . . was carrying the H5N1 strain’ (Independent, 30 January 2006, p. 23). A fifteen-year-old Iraqi girl has died of the H5N1 virus, Iraqi and international health officials confirmed Monday [30 January], indicating the arrival of disease in yet another country . . . More alarming still, offi-

Postscript 187 cials said, the finding suggests that the disease may be spreading widely – and undetected – among birds in countries of Central Asia that are poorly equipped to pick up or report infections. Bird flu has never been reported in animas in Iraq. As in Turkey earlier this month [January] the spread of bird flu to a new part of the world was heralded by a human death. The girl . . . died earlier this month [17 January] in Sulaimaniya, in the Kurdish region of northern Iraq, three days after touching dead birds . . . Her uncle, who died last week, is also presumed to have succumbed to the disease, although test are pending . . . Two other people in distant parts of Iraq have also been tested for bird flu . . . As serious bird flu outbreak has killed four people and hundreds of thousands of birds in the Kurdish part of neighbouring Turkey over the past six weeks . . . A large ethnic Kurdish area includes portions of several different countries . . . A slow start in Turkey allowed the disease to spread throughout the country and the government is now struggling to contain fifty-five outbreaks in fifteen provinces. (IHT, 31 January 2006, pp. 1, 8) ‘The WHO is carrying out test to confirm the first human case of bird flu in Iraq, following the death of a fourteen-year-old girl . . . Preliminary results . . . showed the deadly H5N1 bird flu virus, but it [the WHO] was seeking further test’ (FT, 31 January 2006, p. 8). Bird flu has spread from South-east Asia to the borders of Europe, killing at least eighty-five people in six countries. A girl in Iraq also apparently died from the virus, though the WHO has not confirmed the cause of that death and included it in its tally . . . [Roche’s] Tamiflu and GlaxoSmithKline’s Relenza are the only two drugs currently being sold that studies say may help people infected with bird flu. (www.iht.com, 1 February 2006) Bird flu appears to be taking root in Hong Kong now that it has surfaced in local wild birds and chickens . . . York Chow (Hong Kong’s health secretary): ‘Since different kinds of wild birds and chickens have this virus we can be quite sure that this virus is endemic in our birds . . . [The virus] will exist in neighbouring areas, southern China as well as Hong Kong’ . . . Later a health bureau spokesman said Chow meant that bird flu is endemic in Asia, not Hong Kong specifically. The UN Food and Agriculture Organization says an area is considered endemic after tests determine a cycle of disease recurrence within a given area, and that the virus has not simply been imported from another place. (IHT, 4 February 2006, p. 5) [The Hong Kong health secretary] said that positive tests for H5N1 in a bird brought to Hong Kong from China indicated that the virus was endemic . . . The chicken was one of four bids that have died from the virus in Hong Kong this year [2006] . . . [His comments] raises

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Postscript concerns about detection within the Guangdong region of China, which has not reported any cases of bird flu . . . The H5N1 strain was first detected in 1997, in Hong Kong. It has infected 161 people and killed eighty-six since 2003 . . . Indonesian officials confirmed yesterday [3 February] that a fifteen-year-old boy had died of the disease. (The Times, 4 February 2006, p. 47) The bird flu virus continued its alarming global march, confirmed Wednesday [8 February] for the first time in birds in Africa, a continent that is ill-prepared to contain its spread, international health authorities said. The Nigerian health authorities reported the continent’s first outbreak to the World Organization for Animal Health in Paris . . . In an outbreak that began on 10 January, more than 40,000 chickens have died at a commercial laying farm in Kaduna state in northern Nigeria . . . A UN laboratory in Italy confirmed late Tuesday that the culprit was H5N1 . . . UN veterinary officials said Wednesday that they were investigating similar rumours of bird deaths in a number of other African countries . . . In Nigeria . . . home to about 140 million poultry . . . the outbreak began with bird deaths on 10 January but was not reported until Wednesday . . . Nigerian samples were only sent to the UN reference laboratory in Italy last week . . . The food and agriculture agency has been tracking rumours of bird deaths in Nigeria for several weeks . . . and is investigating similar rumours in a handful of other African nations, including Mali, Egypt, Malawi and Libya . . . Worldwide about 160 people have become infected with bird flu, almost all of whom have had extremely close contact with sick birds. About half of them have died. (www.iht.com, 9 February 2006) The World Organization for Animal Health confirmed yesterday that the first recorded case of H5N1 bird flu in Africa had been found in the northern state of Kaduna [in Nigeria], on a farm of 46,000 chickens, geese and ostriches . . . The Italian health ministry confirmed that the ‘highly pathological strain’ of H5N1 found in Nigeria was similar to those discovered in Siberia and Mongolia. (Independent, 9 February 2006, p. 25) Many people [in Africa] live in close proximity to poultry, just as in South-east Asia . . . [There are] fears that bird flu is now spreading through Iraq . . . Worldwide eighty-eight of the 165 people confirmed as having been infected with the avian virus have died . . . Samples from wild waterfowl in Malawi, Sudan and Kenya will soon be tested . . . in South Africa. (Guardian, 9 February 2006, p. 17)

‘The H5N1 strain of bird flu has been detected in two more northern states [in Nigeria]’ (Independent, 10 February 2006, p. 38).

Postscript 189 Nigeria struggled Friday [10 February] to contain the first known outbreak in Africa of bird flu, as officials warned it is spreading rapidly through flocks in the north of the country. Overnight the police and agricultural workers moved into a farm at the centre of the outbreak of avian influenza. They shot ostriches and bulldozed the charred remains of 45,000 chickens into the ground . . . Azerbaijani officials said Friday that a British laboratory had confirmed the presence of bird flu in dead birds found along the Caspian Sea coast . . . Azerbaijan shares a short border with eastern Turkey, where four children died after becoming infected with bird flu. (www.iht.com, 10 February 2006) Azerbaijan on Friday became the latest country to report the discovery of the H5N1 strain of avian flu, when migratory birds were found dead on its Caspian Sea coats. The health ministry said Friday that a British laboratory had confirmed the presence of the H5N1 strain in wild ducks and swans on the Absheron Peninsula, which includes the capital, Baku, and surrounding villages. (IHT, 11 February 2006, p. 6) The Chinese government said Wednesday [8 February] that a twentysix-year-old woman in an area with no reported outbreaks in poultry of the virulent flu strain was the latest person to become infected with bird flu in China . . . Researchers looking into why many of the eleven people infected with bird flu in China came from areas without outbreaks in birds suspect it might be a result of contamination spread by dead poultry, the Chinese health ministry said Friday [10 February] . . . China has reported twenty-nine bird flu outbreaks in poultry since October [2005] in areas throughout the country. The government has destroyed millions of chickens, ducks and other poultry to contain the virus. Seven of the people infected have died. (www.iht.com, 10 February 2006) ‘China announced Friday the death of a twenty-year-old woman, bringing the death toll from the virus to eight’ (IHT, 11 February 2006, p. 6). Italian veterinary and health officials gathered Sunday [12 January] to plan a response to the country’s first confirmed cases of the deadly H5N1 bird flu virus, which was discovered in wild swans in southern Italy. The cases in Italy and others confirmed in northern Greece on Saturday [11 February] marked the first time the highly infectious strain of the H5N1 virus had been detected within the EU. The virus was detected in five swans in the three southern Italian states of Puglia, Calabria and Sicily . . . The swans had arrived from the Balkans, likely pushed south by cold weather . . . Bird flu has killed at

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Postscript least eighty-eight people in Asia and Turkey since 2003, according to the WHO in a 9 February update. On Sunday a WHO-sanctioned laboratory confirmed another two deaths in Indonesia. It has been ravaging poultry stocks across Asia since 2003, killing or forcing the slaughter of more than 140 million birds. (www.iht.com, 12 February 2006) Indonesia said that two women died last week from bird flu, pushing the death toll from the disease there to eighteen . . . European officials announced Saturday that bird flu had been detected in wild birds in Italy, Greece and Bulgaria, the first time its presence had been detected in the EU . . . The Italian health minister . . . announced that seventeen swans had been found dead in three southern regions. (www.iht.com, 12 February 2006) The H5N1 bird flu virus has been detected in wild birds in Italy and Greece . . . It was also detected in Bulgaria . . . [Italy] confirmed H5N1 in five of the dead swans and test on others were continuing . . . In Greece health officials announced that three swans in the northern part of the country had tested positive for the virus. Hours later EU officials said that some swans in Bulgaria, near the Danube Delta, had as well . . . The variant strain of H5N1 found in Turkey and confirmed in Africa last week is identical to one found in a nature reserve in northern China and later in Siberia. It is different from strains circulating among poultry in South-east Asia and Indonesia. (IHT, 13 February 2006, p. 4) Slovenia imposed controls yesterday [12 February] after a suspect case . . . a dead swan . . . was discovered near the Austrian border . . . Samples have been sent to . . . the UK . . . to test if it is the strain that can infect humans . . . The H5N1 variant of bird flu has killed at least ninety people in seven countries since 2003, according to the WHO. (FT, 13 February 2006, p. 10) Concerns grew over the weekend after bird flu appeared for the first time in the EU, in swans in Greece and Italy, while Nigeria waited for test results on two children suspected of being the first Africans to be infected . . . The virus has killed at least ninety people in Asia and the Middle East . . . since late 2003. (www.iht.com, 13 February 2006) Iraqi doctors are investigating six suspected cases of bird flu in southern Iraq, including one in which a twenty-five-year-old fisherman died after contact with birds he was keeping in his yard, Iraqi and US health officials said Sunday [12 February] . . . Test are being performed to determine whether the fisherman, who died in hospital . . . was infected with the H5N1 strain of the virus. (www.iht.com, 13 February 2006)

Postscript 191 Scores of government workers search rural areas of Hong Kong for poultry on Monday [13 February] to enforce a ban on backyard fowl . . . Hong Kong [is] already on edge following eight deaths from bird flu in mainland China, after six wild birds and two chickens in the city were killed by the H5N1 strain of avian influenza in the past three weeks . . . Hong Kong has not had any bird flu infections in people since the outbreak began in Asia in late 2003 . . . The government wants to wipe out bird flu from the city where the virus made its first known jump to humans in 1997, killing six people. (www.iht.com, 13 February 2006) Twelve people died from bird flu in Thailand in 2004 but only two died last year [2005]. In Vietnam, by contrast, fatalities have continued apace, with twenty deaths in 2004 and nineteen last year . . . Thailand has mobilized about 750,000 volunteers, one for every fifteen rural households . . . The disease first struck Thailand in late 2003 . . . [A] six-year-old [boy] . . . was Thailand’s first confirmed human case of avian influenza . . . In Vietnam the government has urged the media too uncover cases and encouraged the general public to report sick or dead poultry, but there is no network of volunteers, according to . . . the WHO . . . In China surveillance efforts are haphazard [according to the WHO]. (www.iht.com, 13 February 2006; IHT, 14 February 2006, p. 8) ‘A fourth bird sample . . . a wild goose . . . has tested positive for the deadly H5N1 strain in Greece’ (Independent, 14 February 2006, p. 18). [On 14 February] H5N1 was identified in two dead swans in Germany and at least two swans in Austria . . . The swans [in Germany] found on the Baltic Sea island of Rügen registered positive in an initial test for the virus . . . Iran also indicated for the first time yesterday [14 February] that it had identified the virus in wild swans . . . Morocco was also conducting tests . . . To date ninety-one people [in Asia and Turkey] have been confirmed dead as a result of the virus, from 169 identified as infected . . . according to the WHO. (FT, 15 February 2006, p. 8) ‘Slovenia confirmed six new cases of bid flu near the Austrian border yesterday [15 February]’ (The Independent, 15 February 2006, p. 18). ‘The Italian press reported Wednesday [15 February] that two swans that died in southern Italy had tested positive for the virus, bringing to eight the number of birds to have died from H5N1 in Italy’ (www.iht.com, 15 February 2006). ‘H5N1 was confirmed in a type of migratory swan in Greece, Bulgaria and Italy on Saturday [11 February] and in Germany on Wednesday [15 February]. Probable cases were detected in the same species in Slovenia and Croatia on Sunday, in Austria on Monday and in Denmark on Tuesday’ (IHT, 16 February 2006, p. 1).

192

Postscript

‘Germany and Austria became the latest countries to confirm cases of avian influenza . . . German officials said yesterday [15 February] that the two swans found on a beach on the Baltic island of Rügen had died from H5N1’ (Guardian, 16 February 2006, p. 24). ‘The bird flu that reached western Europe this week seems to have been carried by swans fleeing a Balkan cold snap’ (The Economist, 18 February 2006, p. 41). France yesterday [17 February] confirmed that it had found a dead wild duck carrying the H5 virus, joining Italy, Greece, Slovenia, Germany, Hungary and Austria on the list of EU countries that have found cases of bird flu . . . The Dutch government . . . announced last night that two dead swans had tested negative. (FT, 18 February 2006, p. 9) On the German island of Rügen tests on Friday [17 February] confirmed that ten wild birds had the H5N1 flu strain. France said a dead duck in the south-east tested positive for an H5 subtype and that more testing was being conducted. In Egypt official confirmed that country’s first cases . . . in and around Cairo. (IHT, 18 February 2006, p. 3) ‘[France said] a duck found dead in the east had tested positive for the virus and that it was likely to be the H5N1 strain . . . The bird was found dead on Monday [13 February] near Lyon . . . The disease has infected chickens in Egypt for the first time and there were cases reported in Azerbaijan and Slovenia’ (Guardian, 18 February 2006, p. 16). France . . . confirmed over the weekend that a duck had died from the virus . . . France was the seventh European country discovered to have been infected by the H5N1 strain over the past week . . . India began the slaughter of . . . chickens Sunday [19 February] as health ministry officials investigated the death of a poultry farm owner from the country’s first suspected case of bird flu . . . . . . The first reports from New Delhi of suspected infections came on Friday [17 February] . . . India is a major poultry producer, with an estimated 500 million birds. (www.iht.com, 19 February 2006) First reports of bird flu cropped up this weekend in widely separated countries – India, Egypt and France – highlighting the disease’s accelerating spread to new territories . . . The recent acceleration has perplexed many experts, who had watched the H5N1 virus stick to its native ground in Asia for nearly five years . . . In Egypt the authorities on Sunday [19 February] closed the Cairo zoo and seven other staterun zoos around the country after eighty-three birds died there, some from the H5N1 strain of flu . . . Since Friday [17 February], when the first announcement was made about bird flu outbreaks, the Egyptian

Postscript 193 authorities have reported cases of bird flu among poultry in at least eight provinces. (IHT, 20 February 2006, pp. 1, 4) ‘Bird flu was detected for the first time on the German mainland yesterday [19 February] . . . Bird flu has killed a twenty-three-year-old worker in Indonesia, a government official said on Saturday [18 February] . . . The country’s nineteen victim of the H5N1 virus died on 10 February’ (FT, 20 February 2006, p. 6). Vietnam, the worst affected country in the world with ninety-three human cases and forty-two deaths, has become the first to successfully contain the disease . . . according to the WHO. No new cases of avian flu have been reported in humans since last November [2005] and in birds since last December, Hans Troedsson, director of the WHO in Hanoi said. Vietnam’s breakthrough in containing the disease comes as the worldwide outbreak was confirmed in India, France and Iran . . . Under WHO guidelines a country is designated disease-free when no new cases have been reported for twenty-one days. Thailand has also recorded no new cases since last November but has been less severely affected than Vietnam with twenty-two human cases and fourteen deaths . . . The success curbing the disease in Vietnam and Thailand . . . are especially encouraging . . . [because] it has been achieved in a part of the world where there are tens of thousands of peasant farmers keeping small flocks of chickens. Dr Troedsson said that a combination of vaccination, culling and public communication had proved the disease could be halted, even in a less developed country such as Vietnam. Almost 200 million birds have been vaccinated and up to 5 million culled . . . [Places] like Hong Kong, Vietnam and Thailand have been able to contain [the disease] . . . But Dr Troedsson warned that the H5N1 virus was almost certainly still in Vietnam and vigilance was essential. (Independent, 20 February 2006, pp. 1––2) There have been a total of 169 cases of avian flu in humans and ninety-two deaths. The respective figures for countries are as follows: Cambodia, four and four; China, twelve and eight; Indonesia, twenty-five and nineteen; Iraq, one and one; Thailand, twenty-two and fourteen; Turkey, twelve and four; Vietnam, ninety-three and fortytwo. (Independent, 20 February 2006, p. 2) ‘Hungary has reported five cases of suspected H5N1 and sent samples to an EU laboratory for testing . . . Two dead swans found in central Bosnia have tested positive for an H5 strain of bird flu and samples were sent to the laboratory in Britain to determine the exact strain’ (www.iht.com, 20 February 2006).

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‘Nigeria confirmed Monday [20 February] that Africa’s first bird flu epidemic had spread to three new states and the capital, Abuja, but underlined there had been no human infections . . . To date [there are in total] six states . . . where bird flu has been confirmed’ (IHT, 21 February 2006, p. 4). Niger has become the second sub-Saharan country with confirmed cases of the deadly H5N1 bird flu strain . . . The tests were confirmed Monday [27 February] . . . H5N1 had earlier been confirmed in Nigeria, Niger’s southern neighbour, and officials had said in midFebruary they were investigating whether it had surfaced in Niger. It has also been confirmed in Egypt . . . Bosnia, meanwhile, confirmed its first case [of H5N1] . . . The two migrating [wild] swans had died in mid-February . . . [The WHO] on Monday raised its tally of officially confirmed human cases of bird flu by three to 173. It said ninety-three of those were fatal, raising the number by one. The new cases of the WHO’s list are two people in China reported in critical condition and a twenty-seven-year-old woman from Indonesia who died last week. WHO figures usually lag behind reports in individual countries, because it considers a person to have bird flu only after samples have been sent abroad and confirmed in a foreign laboratory. Almost all human deaths from bird flu have been linked to contact with infected birds. (IHT, 28 February 2006, p. 4) ‘Georgia found the H5N1 strain in wild swans’ (Independent, 28 February 2006, p. 24). Health workers in western India wrapping up a massive slaughter of chickens Tuesday [21 February] to contain the H5N1 bird flu virus, while Malaysia began killing birds after reporting its first case of the disease in more than a year . . . The Hong Kong government said a dead magpie . . . was infected with bird flu . . . On Tuesday bird flu was confirmed [in three dead wild swans] in Hungary, the seventh country in the EU to be affected by the disease. (www.iht.com, 21 February 2006) The spread of the H5N1 strain of bird flu into Hungary and Croatia was confirmed Tuesday [21 February] . . . At least fifteen nations have reported outbreaks in birds this month [February], an indication that the virus . . . is spreading faster. Migratory birds are thought to be at least one transporter of the disease. More than thirty countries have reported cases since 2003. Seven have recorded human infections. Hungary said Tuesday that tests had showed the virus in three dead swans found last week. Croatia confirmed that H5 N1 had been found in a dead swan on an island in the Adriatic Sea. (IHT, 22 February 2006, p. 3)

Postscript 195 ‘Avian flu can be controlled. In the past three years bird flu broke out in Malaysia, Korea and Japan and all three countries have eradicated it’ (IHT, 22 February 2006, p. 8). ‘China and Vietnam have used widespread vaccination of poultry with great success. Vietnam, which has vaccinated 120 million birds since last year [2005], had the highest human death toll from bird flu in 2004. It has had neither a new outbreak nor a human case in more than four months’ (IHT, 23 February 2006, p. 8). Indonesia said Wednesday [22 February] that a twenty-seven-year-old woman had died of bird flu [on 20 February] . . . in the capital, Jakarta, after coming into contact with sick chickens . . . Indonesia has now recorded nineteen human bird flu fatalities . . . The announcement came as international health experts expressed concern over the unprecedented spread of bird flu from Asia to Europe and Africa . . . The virus has been detected in birds in fourteen countries since early February . . . [and has] killed at least ninety-two people. (www.iht.com, 22 February 2006) ‘About 170 people have become infected with bird flu . . . For the first time on Wednesday [22 February] the deadly H5N1 bird flu virus was detected in poultry in the twenty-five-country EU. Two chickens in Graz, Austria, were contaminated in an animal compound . . . where an injured swan had been housed’ (IHT, 23 February 2006, p. 8). The WHO has confirmed twenty-six cases of human bird flu in Indonesia, nineteen of them fatal. Eight of those deaths have occurred in 2006, more than in any other country this year [2006] . . . The more than 12 million residents of Jakarta, where the majority of Indonesia’s bird flu deaths have occurred, live in close proximity to chickens and ducks, often with birds running freely on their property. Local tests this week revealed another possible fatality in a twenty-seven-year-old woman from Jakarta, but the WHO-sanctioned Hong Kong lab has yet to confirm the results. (www.iht.com, 23 February 2006) France suspects that an outbreak of the H5N1 bird flu virus has hit a turkey farm in the east of the country, the agriculture ministry said Thursday [23 February]. If confirmed it would be the first case of the virus spreading to domestic birds in the EU . . . The farm is in the Ain region, where two wild ducks had already been found to have the virus . . . The H5N1 version of avian influenza was also reported for the first time in Slovakia . . . in a duck and a falcon . . . bringing to eight on Thursday the number of EU countries in which the virus has been found . . . More than 100 wild birds in Germany have been infected . . . The H5N1 virus has killed ninety-two people since 2003, mostly in South-east Asia, China and

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Postscript Turkey. The victims were all in close contact with birds infected with the virus. (IHT, 24 February 2006, p. 3)

‘[The] case of bird flu detected at a turkey farm . . . raises concerns for the poultry industry because the French turkeys were infected despite being kept indoors . . . The French government last week ordered all poultry farmers to move birds indoors’ (IHT, 25 February 2006, p. 3). ‘The owner of the turkey farm [in France] where the flu was confirmed . . . [said] he thought the virus was carried on bales of straw that he had put into his indoors pens’ (IHT, 27 February 2006, p. 3). It is increasingly apparent that the real and most immediate issue is to what extent wild birds, or humans themselves, are responsible for the inspection’s spread in poultry. A research paper in Proceedings of the National Academy of Sciences, published online on 10 February, shows that the H5N1 virus has persisted in its birthplace, southern Russia, for almost ten years and has been introduced into Vietnam on at least three occasions, and to Indonesia. The authors suggest that such transmissions are perpetuated mainly by the movement of poultry and poultry products, rather than by migrating birds . . . In Nigeria there is the suggestion that it was trade, and not migratory birds, that caused the outbreak . . . In Nigeria, Egypt and India the virus has been discovered to be widely distributed across the poultry flocks. (The Economist, 25 February 2006, p. 89) A definitive report in the 28 January issue of the medical journal The Lancet concludes: ‘We could find no credible data on the effects [of Tamiflu] on avian influenza . . . Over-reliance on a pharmaceutical solution to the ravages of influenza may impede the development and implementation of broader intervention strategies based on public health measures’ . . . Influenza is naturally an aquatic migratory bird virus that is carried by ducks, geese and a small list of other waterfowl. Influenza infection is usually harmless to these world travellers, but can kill other types of birds, such as chickens, domestic ducks and swans . . . For at least a decade H5N1 has circulated among a small pool of migrating birds, mostly inside China, and occasionally broken out in other animals and people. Last May [2005], however, more than 6,000 avian carcasses piled up along the shores of Lake Qinghai in central China, one of the world’s most important bird breeding sites. Most of the dead included species that had not previously evidenced influenza infection. The Lake Qinghai moment was the tipping point in the bird flu pandemic. The virus mutated, evidently becoming more contagious and deadly to a broader range of bird species, some of which continued their northern migration to central Siberia. By June

Postscript 197 [2005] Russia’s tundra was, for the fist time, teeming with H5N1––infected birds, intermingling with southern European species that became infected before flying home, via the Black Sea. Not surprisingly, by October countries from Ukraine to Greece were rumoured to have H5N1, but only the Romanian government responded with swift transparency, culling tens of thousands of chickens and ducks. Most of the governments in the region did not confirm their H5N1 contaminations until Turkey, after at least three months of denial, was forced on 6 January [2006] to admit that the virus had infected birds in a third of the country’s provinces, and had caused several human infections and deaths. Since then we have learned of confirmed bird and/or human H5N1 cases in Iraq, Azerbaijan, Iran, Greece, Spain, Italy, Croatia, Austria, Hungary, Slovenia, France, Germany, Denmark, Bulgaria and, most disturbingly, Nigeria, Egypt and India. Not a single one of these countries’ outbreaks ought to have been surprises. Each of them is located along either the Black Sea/Mediterranean migratory bird flyway, which starts in Siberia and, at its southernmost point, ends in Nigeria and Cameroon, or the European flyway, which overlaps the former, and stretches from northernmost Siberia to Nigeria . . . Several countries along the flyway between Saudi Arabia (which has confirmed H5N1 infections in falcons) and Nigeria have not reported H5N1 cases, but much of the region is North Africa’s sparsely populated Sahara Desert. Egypt reported widespread bird infection last week, and it is likely that infected birds have landed along the few waterways in the area, such as the Nile, Lake Chad and the Red Sea. (Laurie Garrett, IHT, 27 February 2006, p. 8) Experts are realizing that they do not fully understand how migrating birds disseminate the H5N1 virus, leaving the continents vulnerable to unexpected outbreaks. Just after new scientific research clarified the role of wild birds in spreading H5N1 out of its original territory in southern China, the virus promptly moved into dozens of locations in Europe and Africa, following no apparent pattern and underlining how little scientists actually know . . . While they [scientists] are convinced that the virus can be carried on trucks, shoes and fertiliser, they are not sure how important that route is . . . In February new research provided crucial clues about how the H5N1 virus broke out of its original stalking grounds in South-east Asia, moving to western China and on to the edges of Europe late last year [2005]. Bird flu was discovered in Hong Kong in 1997. The critical viral transfer took place in China’s southern Guangdong province, new genetic analysis suggests, when wild ducks or geese acquired the virus from domestic poultry in rice paddies where they co-existed . . . From there . . . China’s remote west and Mongolia . . . H5N1 predictably moved to Russia, Ukraine,

198

Postscript Turkey, Romania and the Balkans. But the recent pattern of spread, into European and African nations, has been far more confusing . . . While ornithologists are convinced that most of Europe’s cases are tied to migration, they are also quick to note that wild birds are sometimes unfairly blamed. Officials in Turkey and Nigeria said that migrating birds were responsible for H5N1 outbreaks, though scientists said the distribution made that unlikely . . . In Croatia . . . the Food and Agriculture Organization in Rome . . . fertiliser made of manure from infected poultry probably spread H5N1. Manure from farms is commonly used to fertilise fish ponds, which are frequent stopovers points for migrating birds that probably contracted the virus there . . . Nigeria’s problem was probably caused by the transport of sick birds or bird products infected with H5N1 from another country or even Asia. (Elisabeth Rosenthal, IHT, 1 March 2006, pp. 1, 8) There are many indications that migratory birds are not the only – or even the primary – reason the virus has moved beyond Asia. Experts have noticed that the pattern of infections marching westward follows railway lines more closely than the birds’ predominantly north-west flyways. Exported chicken manure, used in everything from fishponds to poultry feed to fertiliser spread on fields, may have contributed to the spread. But the French outbreak provides the strongest suggestion yet that migration is part of the problem and that wild birds carried the virus to this poultry-breeding region . . . The turkeys . . . [had] the same strain of the virus as the wild ducks . . . [according to] the World Organization for Animal Health . . . Investigators have descended on . . . [the French turkey] farm to check everything from fertiliser to feed, trying to determine how the virus got into the sheds. One theory is that the bales of hay he [the farmer] used were contaminated with the virus, possibly from pigeon droppings. Another theory is that journalists who came to interview . . . [the farmer] after the dead duck was found carried the virus with them from the edge of the pond . . . Poultry have been infected with the virus in Nigeria and Niger, though illegally imported chicks are suspected of being to blame. (Craig Smith, IHT, 2 March 2006, p. 2) [On 25 February] the Chinese agriculture minister warned of a possible ‘massive bird flu outbreak’ as China announced two new human cases of the H5N1 flu strain, raising to fourteen the number of human cases reported in China since October [2005] China has reported eight deaths among its fourteen human cases . . . Outbreaks in poultry occurred last year [2005] in thirty-two areas throughout China, killing 163,100 chickens, ducks and other fowl, and the authorities destroyed 22.6 million more birds to keep the virus from spreading . . . Outbreaks in China have continued despite a mass inoculation effort. The

Postscript 199 government says it has vaccinated all of the country’s vast flocks of chickens, ducks and other birds. Chinese farmers raised about 15 billion poultry – 21 per cent of the world’s total – in 2005 . . . China has about 5.2 billion poultry at any one time . . . Health officials say the virus is being spread by migratory wild birds . . . [In total] the H5N1 virus has devastated poultry stocks and killed at least ninety-two people since 2003, mostly in Asia. Fresh outbreaks have been reported in fourteen countries since early February [2006] . . . Most human infections have been linked to direct contact with sick poultry. (www.iht.com, 26 February 2006; IHT, 27 February 2006, p. 8) ‘Recent avian influenza outbreaks in Europe, the Middle East and Africa have caused dramatic swings in poultry consumption, increased trade bans and sharp price declines’, the United Nations Food and Agriculture Organization said Tuesday [28 February] in a report . . . Bird flu has a devastating effect on the poultry industry because in addition to the birds it kills outright many more must be slaughtered preventively in the surrounding area. More than 200 million birds have been killed or culled as a result of bird flu outbreaks with the variant strain H5N1 in the past seven years. Even as the experts convened in Paris . . . [for] a two-day [27––8 February] conference . . . there were new reports of bird flu from Russia, Germany, Sweden, Hungary, Greece and Ethiopia on Tuesday. In addition, the German health authorities confirmed the first report of a death in a mammal, a cat on Rügen Island, where dozens of wild birds have perished from the disease. A number of species – including humans and cats – can in rare cases acquire the bird flu from close contact with sick birds, and it is often deadly. There have been previous reports of cats sickened from H5N1 in Asia. (IHT, 1 March 2006, p. 8) ‘Mammals can contract the disease from eating the raw carcasses of infected birds and studies have shown that cats can transmit the virus to other cats’ (IHT, 2 March 2006, p. 2). ‘Avian flu was yesterday [28 February] discovered in two wild ducks found dead in southern Sweden . . . Initial tests suggested the virus could be H5N1’ (FT, 1 March 2006, p. 8). In Geneva the United Nations health agency said Thursday [2 March] that the death of a second person in Iraq has raised to 174 the number of officially confirmed human cases of bird flu and to ninety-four the number of people who have died worldwide from the disease since 2003 . . . The man’s fifteen-year-old niece, who died earlier, is the only other confirmed human case of H5N1 in Iraq . . . The World Organization for Animal Health lists thirty-eight countries and territories from East Asia to Europe and Africa as having confirmed cases of

200 Postscript bird flu infections – almost all of the H5N1 – in birds since the strain reemerged in Hong Kong three years ago. (IHT, 3 March 2006, p. 3) [It was announced on 5 March that] a thirty-two-year-old man in Guangdong province [in China] is confirmed to have died of the H5N1 strain of bird flu . . . The man, who lived in Guangzhou, less than a two-hour train ride from Hong Kong . . . died Thursday [2 March] . . . [He] had repeatedly visited a local market to carry out a survey and spent a long time near where chickens were slaughtered . . . [Previously] mainland China had reported fourteen human bird flu infections since October [2005], including eight deaths . . . Hong Kong has not reported any human infections since early 2003 . . . The H5N1 virus first appeared in Hong Kong in 1997, when it jumped to humans and killed six people, prompting the government to slaughter the entire poultry population of about 1.5 million birds. (www.iht.com, 5 March 2006) ‘The thirty-two-year-old man was the fifteenth bird flu case in [mainland] China . . . [and] the ninth death from the H5N1 virus. He died in Guangdong province, which borders Hong Kong’ (IHT, 6 March 2006, p. 3). Indonesia said it believed a three-year-old boy who died this week may have succumbed to bird flu. Local tests suggested the presence of the H5N1 strain . . . If confirmed the boy would be Indonesia’s twentyfirst bird flu death . . . Last week China said it feared it could suffer a ‘massive’ outbreak of bird flu this spring [2006], if wild birds returning from their winter migration infect farm poultry. (www.bbc.com, 5 March 2006) ‘A lethal strain of bird flu has spread to a region on France’s Mediterranean coast, with confirmation Sunday [5 March] that a [wild] swan had died of the H5N1 strain of the virus. Earlier all of France’s bird flu cases had been confined to the south-east Ain region’ (IHT, 6 March 2006, p. 3). Two wild swans in Poland have tested positive for the H5N1 strain of bird flu, the first cases to be found in the country, an official said Monday [6 March] . . . Samples were being sent to Britain for further tests. The swans were found dead on Thursday [2 March] . . . Among the other European countries that have confirmed cases of the deadly H5N1 strain are Poland’s western eastern neighbours, Germany and Ukraine. (www.iht.com, 6 March 2006) Three cats from an animal shelter [near Graz] that took in birds infected with bird flu have tested positive for the H5N1 strain of the disease, Austrian state authorities said Monday [6 March], confirming the first case here of the disease’s spread to an animal other than birds

Postscript 201 . . . A pattern of disease transmission [has been] seen in wild cats in Asia, where the WHO said several tigers and snow leopards in a zoo, as well as several house cats, had been infected with H5N1 since 2003 . . . Serbia’s health authorities confirmed on Monday the country’s first cases of the H5N1 virus in at least two swans found dead in northern and western parts of the country. The H5N1 virus has been detected in a number of countries neighbouring Serbia, including Croatia and Hungary. (IHT, 7 March 2006, p. 3) ‘Serbia has confirmed its first case of the deadly H5N1 strain of bird flu, following a UK laboratory test on a swan found dead . . . near the Croatian border . . . [Serbia] said a second swan was also assumed to be infected with H5N1 . . . Albania on Wednesday [8 March] confirmed H5N1 in a domestic chicken’ (FT, 10 March 2006, p. 6). ‘The H5N1 bird flu virus has been found in a stone marten . . . on the Baltic island of Rügen . . . a German laboratory said, indicating the disease has spread to another species of mammal’ (Independent, 10 March 2006, p. 23). Cameroon has become the fourth African country to be struck by fatal bird flu. The government announced its first confirmed case on Sunday [12 March]. The bird flu strain H5N1 was detected on a duck on a farm . . . near the border with Nigeria . . . Experts have expressed concern that bird flu is likely to be spreading undetected in Africa, which is ill prepared to deal with the virus and lacks laboratories to detect it. (IHT, 13 March 2006, p. 5) ‘Burma has detected the deadly H5N1 strain of bird flu in chickens, pledging to handle the country’s first outbreak with vigilance and transparency, while Afghanistan’s discovery of the H5 strain of bird flu could prove to be the deadly H5N1 virus, government officials and the UN aid yesterday [13 March]’ (FT, 14 March 2006, p. 5). The bird flu deaths of five people in Azerbaijan have pushed the world total human deaths from H5N1 past 100, the WHO said Tuesday [22 March]. The UN health agency said that seven of the eleven patients from Azerbaijan had tested positive for the deadly strain of bird flu in samples checked at a major laboratory in Britain. Five of the cases were fatal. The new global total of confirmed deaths from H5N1 is 103. There have been a total of 184 confirmed human cases of H5N1 since 2003. (IHT, 22 March 2006, p. 4)

202

Postscript

The economy After a nine month investigation . . . [the EU] is set to introduce antidumping duties of almost 20 per cent on shoes from China and Vietnam . . . The duties will affect exports that already represent 8 per cent of shoes sold in the EU . . . Peter Mandelson, the EU trade commissioner . . . is confident his proposal will be backed by a majority of the twenty-five EU member states as early as this week, with a view to introducing the duties on 7 April. But he is demanding that the duties be raised progressively over six months . . . As with textiles, the issue has split the EU . . . Vietnam has invested heavily to boost its shoe production in recent years and is now exporting 120 million pairs of shoes a year to the EU. Mr Mandelson hopes the temporary sanctions will persuade China and Vietnam to negotiate and offer a solution . . . Failing a settlement by October, the EU could decide to keep the duties in place for another five years. China is already subject to about fifty EU anti-dumping measures. (FT, 20 February 2006, p. 4) ‘Peter Mandelson is recommending that advanced sports shoes and children’s shoes be exempt’ (FT, 8 March 2006, p. 13). Countries like Italy want greater protection . . . [while] countries in Scandinavia look askance at tariff plans . . . Imports of leather shoes to the EU from China amounted to 95 million pairs in the eleven months ended March 2005. Over the same period imports to the EU from Vietnam totalled 120 million pairs . . . Imports from China rose 300 per cent from January to October 2005, compared with the like period in 2004 . . . Under the EU suggestions, if a majority of member state governments agree, tariffs could start as low as about 4 per cent by early April. That temporary level could rise to just below 20 per cent by early October. But Peter Mandelson would aim to ratchet any duties lower if China and Vietnam later show signs of making changes . . . To meet a 7 April deadline Mandelson must send proposals to EU member states this week or next. (IHT, 21 February 2006, p. 15) Even tougher measures are demanded by European shoe manufacturers, but opposed by retailers and importers who warn that they will push up prices in stores . . . The EU said this week that its imports of leather shoes from China soared 320 per cent in the twelve months up to March 2005, to 950 million pairs. Vietnamese imports grew 700 per cent to 120 million over the same period, the EU said. A nine-month EU investigation into the market found evidence of state support to the footwear industry in China and Vietnam, including cheap finance, non-market land rents, tax breaks and improper asset evaluation. Brussels says that this allows it to introduce anti-dumping measures

Postscript 203 under international trade rules . . . If approved, provisional measures could come into force on 7 April for six months while the EU continues its investigations. They could be extended for five years if the situation does not change. (www.iht.com, 23 February 2006) Peter Mandelson announced on Thursday [23 February] tariffs to slow the flow of leather shoes into Europe from China and Vietnam, while calling on European retailers to absorb the extra charges so consumers can continue paying for brands like Puma and Adidas . . . [It is estimated that] 40 per cent of Puma shoes would be hit by tariffs . . . Mandelson is preparing to phase in import duties of 19.4 per cent on some Chinese-made footwear and duties of nearly 16.8 per cent on some Vietnamese-made shoes beginning in early April . . . starting at 4 per cent . . . although EU governments must still approve the measures . . . Mandelson said the measures would affect only nine of every 100 pairs of shoes in Europe, and just 2 per cent of total trade between the EU and China. They would also exclude shoes under size thirty-sevenand-a-half, or children’s sizes. (IHT, 24 February 2006, p. 15) The EU, which imported shoes worth $5.9 billion from China and Vietnam in the past year, will impose tariffs starting at 4 per cent on some imports from the two countries on 7 April . . . The EU duties will rise to a maximum 19.4 per cent on Chinese shoes after five months and 16.8 per cent on Vietnamese imports. The phase-in is designed to ensure that European retailers with goods in transit are not faced with sudden changes in tariffs. The duties will cover 9 per cent of shoes sold on the EU market and exclude children’s shoes and some sports footwear . . . China’s clothing and textile exports increased 21 per cent to $115 billion in 2004 . . . The country exported 95 million pairs of shoes to the EU in the past year. (www.iht.com, 24 February 2006) Workers in southern Vietnam have staged a series of strikes at foreign-owned factories over the past three months, the most serious and widespread industrial action in a decade. Outside Vietnam little has been written about the strikes, which are continuing at some factories . . . For now the strikes have been limited to subcontracting factories owned by Asian firms . . . [But] the strikes are relevant to a trade dispute between the EU and Asian countries over shoes . . . Many of the factories where the strikes have occurred produce the footwear on which Europe is now threatening to impose tariffs. The EU’s trade office in Brussels says the shoes are being sold below cost or ‘dumped’ in Europe. Yet low cost is precisely what the Vietnamese workers are protesting. The strikers are angry at low pay, bad working conditions

204

Postscript and forced overtime. . . [Vietnam’s] deputy minister of labour . . . told European countries that the strikes had happened because laws governing salaries, working hours and working conditions had not been followed . . . The chairman of the European chamber of commerce in Vietnam wrote a letter to [Vietnam’s prime minister] . . . saying he was worried that the strikes could spread to European-owned companies in the future . . . [The chairman] expressed regret that European companies had not been consulted over a rise in the minimum wage that the government announced after the strikes took hold . . . In addition to a 40 per cent rise in the minimum wage announced in January [2006], the government dispatched a supreme court judge to lead an investigation into working conditions and to study a possible overhaul of the labour code . . . Can Europe and the West in general have it both ways? Can European companies demand low wages and a docile work force inside Vietnam while European authorities in Brussels complain that the products they are making are too cheap? (Thomas Fuller, IHT, March 2006, p. 16) The EU imported $6 billion worth of shoes from China and Vietnam in the past year. On Wednesday [22 March] it agreed to impose tariffs starting at 4 per cent, rising to a maximum 19.4 per cent after five months, on some imports from the two nations starting on 7 April. The duties, which will cover 9 per cent of the shoes sold in the EU, exclude children’s shoes and some sportswear. (IHT, 23 March 2006, p. 12)

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Periodicals and reports The Vietnam Courier was published in Hanoi until it ceased publication in 1992. Periodicals and reports mentioned in the text are abbreviated as follows: CDSP EIU FEER FT IHT

Current Digest of the Soviet Press (since 5 February 1992 Post-Soviet) Economist Intelligence Unit Far Eastern Economic Review Financial Times International Herald Tribune

Note the following changes of title: Soviet Economy to Post-Soviet Studies; Soviet Studies to Europe-Asia Studies.

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Index

Agent Orange 23, 31, 94 aid and debt 16–18, 109–10, 148–55 AIDS 43–4 Albright, M. 14 Andreff, W. 95, 176 Asean (Association of South-east Asian Nations) 8–9, 11, 21 Asia-Pacific Economic Co-operation Forum 16 Asian financial crisis 15, 29, 106, 147–8 Avery, D. 138, 157 Baker, J. 8 Bardecke, T. 148 Beresford, M. 4, 95, 98, 117, 174–6 big bang/shock therapy 1, 100 Birchall, J. 148 bird flu (avian influenza) 2, 45–93 black market 116 boat people 32–5, 115 Bowring, P. 5 Brady bonds 154 Bullion, A. 60 bureaucratic centralism 96 Bush, G.W. 28–9, 43, 63, 142 cadres take part in work, workers take part in management 95 Cam Ranh Bay 21, 23, 151 Cambodian peace settlement (23 October 1991) 8 Castro, F. 27 Castro, R. 27 Chanda, N. 101, 111, 150 Chandrasekaran, R. 165 Chau 95 China: border war with Vietnam 5, 151; as an economic model 1–2, 101 Cima, R. 103, 149 Clinton, B. 13, 16, 19, 140

Club of Former Resistance Fighters 7 Cohen, M. 22, 124, 132, 142, 179 Cohen, W. 15 collectives see co-operatives collectivization 173 Collier, P. 185 Comecon 1, 135, 150 Comer, B. 100, 137, 175, 180 commune (China) 174 co-operatives (agriculture) 174–80 Crampton, T. 147 Crosnier, M.-A. 175 Crossette, B. 176 Dao Thu Hien 125, 132 de Vylder, S. 95, 98, 173, 180 debt see aid and debt Dega people 37–8 Dellmo, H. 94, 98–9, 102–3 Dien Bien Phu 4, 27 Dinh, Q. 99, 150 Do Muoi 5–14, 21, 100, 148, 178, 182 doi moi (renovation) 1, 5, 7, 96–100, 164 Dollar, D. 99, 110, 150, 183, 185 dual pricing 141 Duiker, W. 27 Durant, A. 139, 148 Ede (ethnic group) 36 Elliott, J. 150 equitization 1, 120–30, 132, 163 Esterline, J. 102, 149, 176 EU–Vietnam trade relations 145–6 export processing zones 168 FAO (UN Food and Agriculture Organization) 50, 56, 58, 64–5, 77, 84 Fforde, A. 95, 98, 116, 119, 135, 173, 180 Finkelstein, D. 115, 180 foreign direct investment 7–8, 155–73

Index 211 French, H. 92 Friedman, T. 114 Fuller, T. 204 Fulro (United Front for the Liberation of Oppressed Races) 36–7 Gainsborough, M. 128, 137 Garrett, L. 197 general corporations 115 Geneva Accords 4, 95 German reunification 3 Giarai (ethnic group) 36 gradualism 1 Grant, J. 160–1 grey market 126–7 Hare, P. 113, 122 Hiebert, M. 42, 96, 103–4, 111, 117, 120–1, 130, 136–8, 142, 156–8, 173, 177, 182 Ho Chi Minh 2, 4–5, 20, 25, 27, 95 Ho Chi Minh City (autonomy) 22 Hoa people 116 Household Responsibility System (China) 1–2 Hu Jintao 29, 155 IMF 19, 100, 103, 109, 136, 149, 152–3 Iraq War 28 iron rice bowl (China) 111 Irvin, G. 147, 149, 177 Islam, S. 111 Jackson–Vanik Amendment 13 Jeffries, I. 7–8, 96, 101–2, 136, 150, 176–7 Jiang Zemin 9, 17 Kampuchea (December 1978 invasion by Vietnam) 5, 155 Keenan, F. 113, 123, 131, 160, 162, 167, 178 Khmer Rouge 6–8, 155 Kimura, T. 180 Kinh (ethnic group) 35–7 Kok K’sor 39 Korea (North Korea and South Korea) 3 land reform 173 Landler, M. 159, 164 Le Duan 5 Le Duc Anh 8–14, 21 Le Duc Tho 5

Le Duc Thuy 98 Le Kha Phieu 11–20 Le Trang 98 Leck, C. 142 Lhomel, E. 175 Li Peng 8, 10 Ligachev, Y. 148 McCain, J. 143 Mallet, V. 29 MFN status (normal trading status) 138–9 Montagnards 37–40 mutual aid teams 174 Mydans, S. 31, 184 Nabarro, D. 64 NEM (New Economic Mechanism in Hungary) 99 new economic zones 115 Nguyen Co Thach 7–8, 13 Nguyen Duc Binh 178 Nguyen Ha Phan 10 Nguyen Manh Cam 8 Nguyen Manh Hung 15, 180 Nguyen Tan Dung 11, 14, 132 Nguyen Thanh Bang 42, 182 Nguyen Thi Thi 177 Nguyen Tuong Lai 42, 182 Nguyen Van Linh 5, 7, 8, 13, 96–7, 100 Nguyen Vu Binh 26–7 Nixon, R. 16 Nong Duc Manh 13, 18–22 Omi, S. 56 Paracel Islands 9 Petersen, D. 11 Pham Duc Kham 12 Pham Hung 5 Pham The Duyet 13 Pham Van Dong 5, 8, 15 Pham Van Khai 12–13, 18, 20, 22, 24, 28–9, 42, 107, 115, 119, 135, 145, 166 Pham Van Tra 25–6 Phan Dien 178 Phan Van Tiem 116 pig disease (China) 69 Pike, D. 149, 182 Pingali, P. 176 Pocha, J. 6 Pol Pot 5–6 Porter, G. 96, 175 Post, K. 95

212

Index

Powell, C. 21 private sector (including privatization) 10–11, 14, 19–20, 23, 100, 115–20, 130–5 production contract system (agriculture) 175–6 production solidarity groups 174 Pryor, F. 174 Putin, V. 17, 23, 152 remittances 34–5 renovation see doi moi Richburg, K. 104 Riedel, J. 100, 137, 175, 180 Ronnas, P. 99, 173, 175 Rosenthal, E. 198 SARS 2, 44–6, 52, 69 Schwarz, A. 11, 32, 106, 112–13, 121–2, 131, 158, 160–1, 168, 170, 178 seventeenth (17th) parallel 4 Sherry, A. 10 shock therapy see big bang/shock therapy Sidel, M. 14 Sjöberg, Ö. 99, 173, 175 Smith, C. 198 social and cultural poisons (campaign against) 9 socialist cost accounting 98 socialist orientated market economy 21, 101 socialist-orientated, multi-sectoral commodity economy driven by the state-regulated market system 7, 21, 96, 100–1, 131 Spanish flu 59–60, 64–6, 70, 73 Spoor, M. 4, 98, 136, 149, 174 Spratly Islands 19, 120 state farms 174 Stern, L. 116–17 Stern, N. 185 Stiglitz, J. 150, 185 Tai, N. 113, 122 terrorist attacks on the United States (on 11 September 2001) 22–3 Thayer, C. 97 Thompson, D. 65 Thorson, A. 86 three-plan system 98 To Huu 102

Tonkin 17 trade agreement with the United States 26, 138–47 Tran Do 14, 24–5 Tran Duc Luong 12–13, 17, 20, 142 Tran Duc Nguyen 98, 116, 175 Tran Ngoc Vinh 103 Tran Phuong 102 Tran Xuan Bach 7 Truong Chi Truong Chinh 5, 96 Truong Tan Sang 15 Truong Van Cam 24–7 Ungar 116 UNHCR 32 Van Arkadie, B. 103 Vatikliotis, M. 105 Viet Cong 10, 30 Viet Kieu 2 Vietnam Veterans’ Association 7 Vietnam War 1, 4, 10, 16–17, 23, 30–1 Vo Chi 5 Vo Chi Cong 102 Vo Khoan 173 Vo Nguyen Giap 8, 24, 27 Vo Nhan Tri 175 Vo-Tong Xuan 176 Vo Van Kiet 5, 8–14, 21, 35, 100, 103, 184 Vu Ky 27 Wädekin, K-E. 174 Waldron, A. 23 Watts, J. 28, 117 Wen Jiabao 74 White, C. 174–5 WHO (World Health Organization) 2, 46–93 Wilson, N. 103 Wood, A. 116 World Food Programme 149, 153 WTO (World Trade Organization) 2, 108, 139–47 Yardies 40 Yushchenko, V. 80 Zhou Enlai 8 Zielenziger, M. 162