Vietnam | Asia's other miracle

ed note: This article is Right-On, well written
Vietnam has developed at stunning speed by letting market forces do their work. It should free up its politics, too
NOT so long ago the word “Vietnamese” was almost inevitably accompanied in press reports by the phrase “boat people”. For two decades after the fall of Saigon in 1975, the defining image of Vietnam was the waves of bedraggled refugees washing up on its neighbours' shores, fleeing oppression and penury back home. How things have changed. Today, many former refugees are returning to seek new careers and start businesses in a transformed Vietnam. It is now one of Asia's fastest-developing countries, with annual growth averaging 7.5% over the past decade. Although this is less stellar than China's growth, our special report this week finds that Vietnam has made more impressive progress in cutting poverty than its vast northern neighbour. The government's initial hopes for 9% growth this year may be dashed, as the country struggles with double-digit inflation and a yawning trade gap. But the long-term outlook remains promising.
Shooting out of poverty
Vietnam's cities are bright and bustling and the countryside, where most of its 85m people still live, seems hardly less developed than that of officially much richer Thailand. A country once on the brink of famine has turned itself into one of the biggest exporters of farm produce. In a stark reversal of fortunes, the Philippines—once Asia's second-richest country—recently had to beg Vietnam to sell it rice for its hungry millions. Vietnam's social and economic progress has made it the poster-child of multilateral institutions such as the World Bank. It has become one of the fastest-growing destinations for multinational firms and holidaymakers. It is a rising diplomatic power: in July it will chair the UN Security Council, on which it holds a temporary seat.
There are many useful things Vietnam could do with its new-found prestige, through both example and active diplomacy. Other countries in transition could benefit from its advice on how to set aside old enmities, open up to the world and reform defunct economies. As a rare friend of North Korea and Myanmar, Vietnam could help coax those benighted places out of self-imposed isolation. As a country that has escaped deep poverty by embracing free trade, Vietnam could encourage developing countries to take a more constructive stance in the Doha round of world trade talks (and shame richer ones into doing the same).
Remarkable as its achievements are, Vietnam is still not satisfied. It wants to go all the way to become a rich, high-tech country and has set a target date of 2020 for getting there. As several foes have learnt over the past century, the intelligence and determination of the Vietnamese should not be underestimated. But if it wants to realise its dream, Vietnam must learn the right lessons from its own story so far, and from those neighbours who have got to where it wants to be.
Vietnam began to be a success only after its ruling Communists accepted that capitalism, free markets and free trade were the surest route to riches. They began in 1986 with a liberalisation programme called doi moi (renewal), though real reform came in fits and starts over the following 20 years. Collectivisation was scrapped, farmers were given their own land to till and agricultural prices were freed. In 2000, private business—until then strictly curbed—was legalised and a stockmarket created. Trade barriers were lowered, exports and imports soared, and Vietnam is now among the world's most open economies. There can probably be no going back: any attempt to reapply the dead hand of government will ensure that Vietnam's dream of riches by 2020 remains just a dream.
Like South Korea, Taiwan and now China, Vietnam has shown it is possible to escape poverty under an authoritarian system. But it is surely no coincidence that most of the world's richest countries by income per head are liberal democracies. Political freedom is a right in itself and it does not need to be justified by arguing that it has economic advantages. But it does have them. Vietnam's leaders are already discovering that it is hard to run a thriving market economy with the methods that suited a planned economy. Managing all the strains of a fast-developing society is easier if there is a free market in opinions as well as in goods and services. In particular, tough but necessary economic decisions are easier to sell if citizens feel they have had some say in them.
Now become a star
So far, the Communist Party seems determined to retain its monopoly on power. It calls pro-democracy campaigners “terrorists” and puts them in jail. But it should take special note of the experience of South Korea and Taiwan. Until the late 1980s they too were dictatorships. Their regimes, facing rising dissent, saw the writing on the wall and democratised. Now, though their politics are a bit rough, they have the sort of prosperous, technology-based economies that Vietnam aspires to. The Vietnamese Communist Party seems instead to have been taking more interest in the example offered by Singapore, another prosperous, high-tech neighbour. Singapore's tiny size makes it a bit of an exception but even its constrained democracy—with rivals to the ever-ruling People's Action Party allowed to compete within tight constraints—would be a good start for Vietnam.
It is true that Vietnam also has neighbours, such as the Philippines and Thailand, where democracy has been a bumpy ride. But what this demonstrates is that democracy is a necessary rather than sufficient condition for reaching the premier league. The present generation of Vietnamese leaders, children of the independence struggle who want the best for their people, should think about who might come after them. If the next generation is less principled and more corrupt but cannot be dislodged from power, the country will slide backwards.
So far there are few signs of revolt against one-party rule. But as the Vietnamese get used to their broad economic and social freedoms, they are bound to appear eventually. Why wait? How much better for Ho Chi Minh's heirs to go down in history as having led the way in bringing stability, prosperity and, at last, real freedom to the people of Vietnam.