by Nick Cumming-Bruce, James Popkin, Greg Ferguson, Joseph L. Galloway
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Already exploding with firecrackers in anticipation of Tet, the Lunar New Year that begins this week, Vietnam's capital city was jolted awake last Friday morning by the news that President Clinton had ended America's 19-year old economic embargo of Vietnam. On the streets, shop owners and local entrepreneurs celebrated the prospect that Hanoi will soon be even more of a magnet for American businessmen and tourists. But official Hanoi, full of old warriors and faceless apparatchiks, responded in more stoic fashion.
Foreign Ministry spokeswoman Ho The Lan said she "applauded" Clinton's decision, which she said corresponds "to the aspirations of the peoples of the two countries." "It's considered good news for everybody," said another Vietnamese official.
First imposed on the North in 1964 and expanded to the whole country after Hanoi triumphed in 1975, the American embargo kept Vietnam out of the mainstream of booming Southeast Asia for two decades. But Taiwan, Hong Kong and nearly all the other countries that once joined in the embargo could not ignore Vietnam's 71 million or so potential consumers forever, and foreign investment contracts have soared to $7.5 billion in recent years. "The embargo is only hurting the Americans," said one American banker just before Clinton's announcement. "It's not hurting the Vietnamese whatsoever."
Even if an infusion of Yankee capital has only a modest impact on the Vietnamese economy -- now growing at a healthy 7 percent to 8 percent annually -- the Vietnamese recognize the symbolic importance of the decision. Ending the embargo will help erase lingering fears that Vietnam is still the target of a U.S. establishment that longs to avenge its wartime defeat. "We had two long wars with the Americans, a hot war and a cold war, which have left some bad feelings," sighs economist Do Duc Dinh. "Lifting the embargo will heal these feelings. Everything will be better."
The broad range of American goods already pouring into Vietnam, courtesy of local traders and Hong Kong, Singapore or Bangkok suppliers, attests to the local taste for what the United States has to offer. Shoppers can buy anything from Marlboro cigarettes to IBM and Apple computers, Kodak film to Hewlett Packard laser printers. American firms may receive as much as $2.6 billion in Vietnamese business in the next two years, according to a recent survey of 110 American firms by the U.S.-ASEAN Council, a business group. Telecommunications and gas and oil firms stand to benefit first.
Still, some economists doubt that Vietnam is the gold mine many U.S. firms think it is. "Nearly all of Asia is more prosperous and offers better opportunities for U.S. business than Vietnam," says Linda Lim, director of the Southeast Asian Studies Program at the University of Michigan business school. Lim accuses U.S.-based Vietnam trade consultants of hyping Vietnam's business potential and ignoring the huge head start that Japan and other foreign competitors have in the country.
David Jacobson, 47, a Los Angeles fashion photographer who designed Saigon's hip Q Bar and helped open it in September 1992, warns that doing business in Vietnam is not easy. Jacobson says foreigners setting up businesses have two options: They can form a joint venture with the government and split the profits, or they can become a silent partner with a local Vietnamese who will legally own the business.
But Jacobson says that if local landlords or construction workers learn a foreigner has anything to do with a business, "the prices are immediately doubled or tripled." Corruption plagues small and large business owners despite crackdowns that have helped jail or discipline nearly 20,000 state employees since the early 1980s. "Shakedowns happen all the time here," Jacobson says, adding that palm-greasing requests usually increase around holidays such as Tet.
Still, Hanoi's aging Communist leaders can point to the success of market reforms they launched eight years ago in a bid to resuscitate their country's moribund economy. Doi moi, Vietnam's version of perestroika, has encouraged the creation of private businesses, ended most price controls, decentralized economic decision making and devalued the Vietnamese currency, the dong.
One result: Nightmarish inflation, which soared into triple digits in the mid 1980s, dropped to 6 percent last year. A once hungry Vietnam surpassed its food production targets for 1995 and now ranks as the world's third-largest exporter of rice -- after the United States and Thailand. Rising oil exports have helped balance the growing bill for imports to satisfy a new breed of entrepreneurs and a new class of consumers.
In Ho Chi Minh City, once again known as Saigon, workers are building a Mercedes-Benz showroom in the compound of the prime minister's southern office. Entrepreneurs discuss million-dollar land deals on cellular phones and head home to mansions in a new quarter of Saigon called "Beverly Hills." (Two story California modern is the style, with marble floors and Olympic-size swimming pools.)
In once puritanical Hanoi, a luxury $45 million twin-tower hotel and office complex will soon rise on the site of the Hoa Lo prison, which American prisoners of war called the Hanoi Hilton. And Club Med is negotiating to open a new beach resort. Local rumormongers say it will be built near Nha Trang, close to the big base the Americans once maintained at Cam Ranh Bay.
But Vietnam has not yet lived up to claims that it is the latest Asian "tiger." The average per capita income is still $200 to $300, or between 55 cents and 82 cents a day. Farmers and their families make up nearly 80 percent of the population, and many are suffering from low crop prices. Millions of urbanites live in blighted warrens in Hanoi and Saigon that resemble those in Calcutta; malnutrition and disease are common.
Power outages are less frequent and phone service is becoming more reliable as foreign investment grows, but Vietnam's war-ravaged highways still need billions of dollars in improvements. Just 10 percent of the country's roads are paved. On Vietnam's main north-south link, Highway 1, buses, creaky bicycles and ancient, Soviet-made trucks fight for space on the potholed, two-lane and ancient, Soviet-made trucks fight for space on the potholed, two-lane strip. In the flood-prone Mekong Delta, reports a World Bank official, "one routinely finds standing water in classrooms, yet kids are still in school."
Vietnam is now looking for some $40 billion in capital investment, half of it from overseas, to help double its standard of living by the end of the decade. A U.S. decision last year to end its vetoof World Bank and International Monetary Fund lending has helped: To Hanoi's delight, a conference of aid donor countries in Paris in November pledged $1.86 billion.
Hard road. Vietnamese officials, however, harbor no illusions that the relationship with the United States will be smooth. The two governments "will have to contact each other many times to achieve normal diplomatic ties," says the Foreign Ministry's Lan.
That may not be enough. Along with the unanswered questions about American POWs and MIAs, human rights issues will help determine how fast America warms up to Vietnam. The State Department's annual human rights report, released last week, says Hanoi severely limits freedom of speech, the press, assembly and association, and tolerates no dissent. Hanoi has agreed in principle to receive an Australian human rights delegation and to discuss the issue with U.S. officials. Yet Hanoi's bottom line, Lan noted tersely last week, is "to ensure human rights in one country is the responsibility of that country."
Lowering the trade barriers between the United States and Vietnam, in fact, may bring the two nations' differences into even sharper view. Lifti
