Download Vietnam Under Doi Moi

Vietnam Under Doi Moi
Susan Daly
When Vietnam was reunited under one
communist government in 1975, it
began a campaign of Stalinist type
economic changes. The communist
development phase turned out to be an
economic disaster. In 1986, the
government decided to change the
economy again to make it more
productive. These changes were called
Doi Moi which means change and
newness.
The major reason why the communist
government decided to try a new
economic approach was that they could
not grow enough rice to feed their own
people. Economic stagnation resulted
from the communist ideas adopted in
1975. In 1986 Vietnam had to import
1.5 million tons of rice and starvation
was a reality for many Vietnamese .
Doi Moi was started in 1986 and it was
a transition from a centrally planned
economy to a market economy with
socialist direction. This has also been
called market socialism.
The government in Vietnam wanted a
gradual change with political stability.
By admitting mistakes under their
previous policies, the communist
government in 1988 began some major
changes across the nation.
1. Payment of wage and salaries on a
cash basis.
2. Pricing of inputs to state enterprises
Based on costs.
3. Permission for private employers to
employ up to 10 workers.
4. Abolition of internal customs check points.
5. Revised Foreign Investment Law.
6. Virtual decollectivization of agriculture.
7. Elimination of virtually all direct subsidies
and price controls.
8. Increased autonomy for enterprise
managers.
9. Devaluation of currency to market
rates.
10. Elimination of the State’s monopoly
in foreign trade.
11. Provision for foreign participation in
banking.
12. Reduced restrictions on private
enterprise.
13. Creation of export processing
zones for 100% foreign owned
enterprises.
14. Legislation on shareholding
corporations.
15. Dismantling of major elements of
central planning and bureaucracy.
16. A 15% reduction in the government
workforce.
17. A return to former owners or their
heirs of businesses in the South that
were nationalized in 1975.
Not all measures were implemented.
Cooperative and private sectors
account for 2/3’s of the gross national
income due to these changes.
The Vietnamese government wants
foreign investment but has several
problems. They are unwilling to give up
their total political control. There is also
not a western rule of law so that foreign
investors can be at the mercy of party
officials without any way to stop
corruption.
Although there are still problems in
Vietnam, Doi Moi has significantly
changed their economy. Between 1995
and 2004, Vietnam grew at a rate of
7.5% per year- second only to the
growth of China in the same period.
Vietnam’s foreign trade is about $20
billion per year. In 2003, Vietnam took
in foreign investment equal to 8% of its
GDP.
Vietnam has been working on changes
necessary for it to become a member
of the World Trade Organization. Hanoi
has worked since 1995 to become a
member and it is expected that Vietnam
will be recommended for membership
in November,2006.
Coffee is a cash crop introduced to
Vietnam in 1857. They grow the
Robusta type which is lesser quality
than the Araibica beans. In 1997-98
they produced 355 thousand tons of
beans. The government forced
settlement in the Central Highlands.
Minorities lost out when Vietnamese
got the land. Many conflicts resulted
over this land policy.
In 1989, the Coffee Cartel collapsed. It
had kept coffee prices stable. Vietnam
produced so much coffee that many
small farmers in Latin America were
hurt. The Vietnamese caused a glut on
the market. In 2004, 10,000
Montagnards protested and many left
Vietnam. The government is now trying
to get them to return.