Indochina in Transition: Confrontation or Co-prosperity 4819302027

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4

Indochina in Transition Confrontation or Co-prosperity Edited

by MIO Tadashi

7 _ Japan Institute of International Affairs

Digitized by the Internet Archive in 2023 with funding from Kahle/Austin Foundation

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Indochina in Transition Confrontation or Co-prosperity Edited

by MIO Tadashi

Japan Institute of International Affairs

About the JIJA The Japan Institute of International Affairs (IIA), founded in 1959 by the late Prime Minister Yoshida Shigeru, is a private research institution specializing in

international affairs. The Institute’s main areas of research are the Southeast Asian countries, China, Korea, the United States, the Soviet Union and East European

countries, and Japan’s relations with these countries. The JIIA is involved in a wide

range of international cooperation activities, including, among others, the Pacific Economic Cooperation Conference (PECC), for which the Institute serves as the

national secretariat. Research output is published in the form of books and monographs or in articles in one of the Institute’s five periodicals, including the monthly Kokusai Mondai

(International Affairs), the semiannual Soren Kenkyu

(Soviet Studies),

and the Japan Review of International Affairs.

ISBN4-8193-0202-7 C3031 Copyright © 1989 by The Japan Institute of International Affairs Published by The Japan Institute of International Affairs 1-2-20 Toranomon, Minatoku, Tokyo 105, JAPAN

Indochina in Transition: Confrontation or Co-prosperity is a revised English version of Indoshina wo meguru Kokusai Kankei — Taiketu to Taiwa, published by The Japan Institute of International Affairs, 1988 English version produced by UMES Corporation Printed in Japan

¥3,000 2,913 plus 3% Tax)

Contents Page

Contributors

FOREWORD INTRODUCTION

NISEKI Kinya MIO Tadashi

i ii

Chapter 1 The 6th Congress of The Communist Party of Vietnam: A Turning Point in the History of . the Vietnamese Communist FURUTA Motoo I. II. III. IV. V.

Vietnam in Transition Regional Reform and Central Consensus The Path Leading to the 6th Congress The 6th Party Congress and “Renovation in Thinking” Conclusion

Chapter 2 Vietnamese Economic Reforms: A Period of Trial and Error And the Present Situation Introduction I. The Process of Implementing Economic Reforms II. Issues and Trends in the Economic Policy Debate II. Conclusion

Chapter 3 Relations Among the Three Indochinese Countries: A Decade of Rise and Fall of “Strategic Alliance” I. The Development of Vietnam’s Strategy for Indochina II. What Changed Vietnam’s Attitude Ill. The End of the “Strategic Alliance” Period Of the Three Indochinese Countries

Chapter 4 Soviet-Vietnamese Relations: An Uneasy Alliance Introduction I. USSR-SRV Relations During the Vietnam War II. USSR-SRV Relations After the Vietnam War II. Postscript

Chapter 5 The Soviet-Vietnam Alliance and Regional Security I.

Southern Vietnam as a Springboard For Great Powers’ Expansion

1 3 8 2, 16

MIO Tadashi 20 22, 46 50

MIO Tadashi 57 64 (al

MIO Tadashi 80 81 83 93

NISHIHARA Masashi 100

II. The Vietnamese Defense Strategy and The Alliance With the Soviet Union Ill. Soviet Strategy for Asia and the Pacific and the Alliance With Vietnam IV. Gorbachev’s “Peace Offensives” and The Soviet-Vietnam Alliance V. The Prospect of Regional Security

Chapter 6 Indochinese Nations and the Soviet Bloc

Chapter 7 The Transitions and Prospects of Sino-Vietnam Relations

109 110

114 116 119 120 123 126

MIO Tadashi

Introduction I. The Period Vietnam Joined With China Against “Modern Revisionism” II. The Period Vietnam Opposed Brezhnev’s Detente and Mao’s “Three Worlds,” “Soviet Socialist Imperialism” Theories III. The Emergence of Gorbachev and Changes in Vietnam’s Attitude Toward China IV. Conclusion

I. II. II. IV.

106

AKINO Yutaka

I. Joining the Soviet Bloc II. The Internal Relations of the Soviet Bloc Ill. Relations Between the Soviet Union and the Individual Indochinese Nations IV. The Solidarity of Socialist Indochina V. The Cambodia Problem for the Soviet Bloc VI. COMECON and the Indochinese Nations

Chapter 8 The Cambodia Problem and China-Vietnam Relations

102

Si 132

134 143 147

OKABE Tatsumi

China in a Deadlock China’s Two Logic on the Cambodia Problem China in a Dilemma Tentative Conclusions

152 153 159 161

Chapter 9 The Cambodian International Civil War and ASEAN Nations: Long Prologue To A Political Settlement KUROYANAGI Yoneji Introduction I. The Development Process of the Cambodia Conflict II. Structure and Psychology of the Protracted Conflict

166 167 WZ

III. An Approach Run to “Post Cambodia” Conclusion

Chapter 10 U.S.-Vietnam Relations: The Long Journey to Rapprochement I. Il. II. IV. V.

177 180

184 OGASAWARA Takayuki

The Legacies of the War The “China Card” and the “Asian Cuba” Hanoi’s “MIA Card” “Neutralization of Cambodia” and Its Impact Conclusion

185 186 189 189 192

Chapter 11 Japan’s Aid Freeze to Vietnam: Historical Process And Its Diplomatic Implications INADA Juichi I. IJ. III. IV.

Introduction Charges in Japanese Policy on Aid to Vietnam Diplomatic Implications of (Freezing) Aid to Vietnam Prospects for Aid to Vietnam in a “Post-Cambodia” Era

Chapter 12 Australia’s Policy Toward Indochina: Focusing on the Cambodia Problem

195 196 204 209

KIKUCHI Tsutomu

I. The Indochina Policy of the Fraser Administration II. The Hawke Labor Party Administration and the Cambodia Problem III. Conclusion

Chapter 13 Southeast Asian Policy of Vietnam

215 222 228

NAKANO

Introduction: Vietnam’s Diplomatic Line After the Unification I. Vietnam’s Southeast Asian Policy At the Time of Unification Il. The Cambodia Problem and The Policy Toward Southeast Asia III. Improvement in China-Soviet Relation and Vietnam’s Policies Toward ASEAN and China Conclusion

Ari DESY, 233 236 239 243

Contributors MIO Tadashi Professor, Faculty of International Relations, Daito Bunka University, Saitama FURUTA Motoo Associate Professor, Faculty of Arts and Sciences, University of Tokyo, Tokyo

NISHIHARA Masashi Professor, Department of Social Science, National Defence Academy, Yokosuka AKINO Yutaka Associate Professor, Institute of Social Sciences, University of Tsukuba, Ibaraki

OKABE Tatsumi Professor, Faculty of Law, Tokyo Metropolitan University, Tokyo Senior Visiting Research Fellow, Japan Institute of International Affairs, Tokyo KUROYANAGI Yoneji Professor, Toyo Eiwa Junior College, Kanagawa Visiting Research Fellow, Japan Institute of International Affairs, Tokyo

OGASAWARA Takayuki Research Fellow, Japan Institute of International Affairs, Tokyo INADA Juichi Research Fellow, Japan Institute of International Affairs, Tokyo KIKUCHI Tsutomu Associate Professor, College of International Studies, Chubu University, Aichi

Visiting Research Fellow, Japan Institute of International Affairs, Tokyo

NAKANO Ari Research Fellow, Institute of World Economy, Tokyo

FOREWORD It has been forecast that the twenty-first century will be the “Pacific century” because of the growing international political and economic importance of the Asia-Pacific region in recent years. In view of this situation, it is essential that we have sufficient knowledge and understanding of the conditions within individual countries and the international relations of the entire region, in order to achieve greater cooperation and friendship in our relations with the countries of the Asia-

Pacific region, and to better carry out our international responsibilities. The Japan Institute of International Affairs, feeling a need for expanded study of the Asia-Pacific region, established the Center for Asia-Pacific Studies (CAPS) in June 1987. In addition to traditional studies on China and Korea, the Center has

also conducted research on the ASEAN nations, the Indochinese peninsula, and the South Pacific region including Oceania.

This center is closely related to and

carried out in active coordination with the activities of the Japan National Committee for Pacific Economic Cooperation (ANCPAC) and the Pacific Economic Cooperation Conference (PECC), both organizations having their secretariats in the

institute. The fruits of the institute’s series of research projects have been made public in both Japanese and English. In English, two volumes, namely North Korea at the Crossroads

ASEAN:

(1988), edited by Professor Okonogi

Its Survival and Development

Masao

and Twenty Years of

(1989), edited by Professor Okabe

Tatsumi, have been published by the institute. As the third volume in the series, this book is being published at a time when great changes are about to take place in the Indochinese peninsula. We believe

that this book will be welcomed by experts and interested individuals concerned with the problem as a timely and useful discussion of the issues. We would like to take this opportunity to express our deep appreciation to Sato Seizaburo, professor at the University of Tokyo, who directed this research project in its early stages, Mio Tadashi, professor at Daito Bunka University, who edited the original Japanese version (1988) of this book and has since coordinated

ensuing researches, and the authors of the individual chapters for their contributions. We wish them every success in their continued research efforts. Spring 1989 Kinya Niiseki

President Japan Institute of International Affairs

INTRODUCTION The group of articles collected in this book developed out of the work done in the Indochina research project initiated by the Japan Institute of International Affairs in May 1985 with an emphasis on the Cambodian problem. The most significant feature of this book is that it is a joint study of the problems of Indochina by highly specialized researchers on the regions involved.

Past studies, especially of the Vietnam War but also of Cambodia, have generally been made by students of international politics or international relations, and they have treated the difficulties of Indochina chiefly as proxy conflicts involving the China, the Soviet Union, and the United States. With this

great powers —

approach, the viewpoint of Indochina area specialists is given less attention than

that of specialists in international politics and diplomacy. This book, however, was produced with the participation of a variety of regional specialists, scholars with expert knowledge

of Indochina, the United States, China, the Soviet Union,

ASEAN, and Australia, as well as experts on military issues and international economic cooperation.

In this joint project, specialists in various regions and disciplines approached the problems of Indochina from the vantage point of their own specialty, although they dealt with common themes and shared a sensitive awareness of issues. Their

research was chiefly based on primary sources published in the country being studied or taken from the literature of their discipline. The result can be compared to a joint diagnosis of an unusual or particularly intractable illness by a team of medical specialists in myriad disciplines.

An analysis limited to the work of

Indochina specialists might have contained oversights and omissions due to a

shortage of data and the limitations of specialized knowledge, so additional input from other regions and specialties was included for more minute and accurate

overall results. This kind of joint research has often been carried out in other fields, as dem-

onstrated by many examples in other research projects at our Institute. However,

this project is the first of its kind that I know of in the field of Indochina. It has been made possible because Indochina studies in Japan, particularly political and eco-

nomic studies of Vietnam, have finally come at least within hailing distance of other area studies.

If the articles by Vietnam scholars here prove to be of any

benefit to the reader, it is due to the tremendous progress in research on Vietnam made in Japan in recent years. Since the summer of 1987, great changes have taken place on the Indochinese

iii

peninsula, as indicated by the title of this book. I believe that the articles collected here will fully meet the expectations of readers desiring to understand the domestic and international factors involved in these changes and perceive coming trends.

But of course, our confidence and pride in our achievement cannot be

taken for an objective evaluation. In our Institute, a second round of the Indochina project is underway, and we would like to receive the frank criticism and suggestions of readers everywhere in order to achieve the best possible results. There are two apparent shortcomings in the book which I should explain here.

The first at being article on but were

is the omission of an article on Laos and Cambodia in a book that aims a complete study of Indochina. Originally, we planned to include an the political and economic situation of these countries in the first section, unable to find a suitable author for the article. We regret having to

publish this study of Indochina without a treatment of the two countries, and as

editor, I must take responsibility for this. Second, the marks used to denote the five different tones used in pronunciation of Vietnamese are omitted, because of printing difficulties where Vietnamese words are shown in the text or footnotes. I would like to thank Niiseki Kinya, President of the Japan Institute of International Affairs, and Amano Yukiya, Director of Research Cordination, for the gracious and valuable assistance and suggestions they have continuously provided

from the start of the Indochina research project through the publication of this book. Iam grateful also to Messrs. Tanaka Tasuku and Kato Tsugio for their contribution to the compilation of this English edition.

Spring, 1989 Mio Tadashi

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The 6th Congress of the Communist Party of Vietnam

1

CHAPTER 1.

The 6th Congress of The Communist Party of Vietnam: A Turning Point in the History of the Vietnamese Communists FURUTA Motoo The 6th Congress of the Communist Party of Vietnam held in December 1986 will

be recorded as one that marked a great turningpoint in the history of Communism in Vietnam.

This chapter will examine the meaning of the tuming point that was

addressed at that Congress, by analyzing the political process of economic reform by the Vietnamese Communists, from the time such reform was initiated in 1979 up to and including the 6th Congress.

I. Vietnam in Transition In his article elsewhere in this book, Mio Tadashi examines the background of

how the Communist Party of Vietnam was forced to begin major economic reform

in 1979. Here I would simply like to confirm that the initiation of economic reform meant the arrival of a true turning point for the party. Faced with mounting difficulties, the leaders of the party came to an assessment that, though improved international situation was essential to overcome the difficulties, a quick improvement could not be achieved. The party leaders de-

cided, instead, to cope with the difficulties by internal reform centering around economic changes that would mobilize as much domestic resources as possible under the worsening international situation. This resulted in a series of reform movements with the focus on the improvement of economic management, for which the 4th Central Committee voted at its 6th Plenum in September 1979, and

seriously intended to implement.

At this plenum, it was acknowledged that the

wartime economic management that had taken root during the Vietnam War was no longer adequate in peacetime, now that the conditions for obtaining foreign aid were more strict, and the workers’ main concern was improvement in their own

lives. A proposal was then made in which a new direction of economic manage-

2

Furuta Motoo

ment would be sought by introducing a degree of liberalization and a policy of giving incentives to workers in order to revitalize production. This quest was tried

out mainly in the form of regional experiments in the late 1970s and early 1980s. The 6th Plenum of the Central Committee in 1979 was significant, not so much for the proposal of the specific ideas about reform that it presented, but for its approval of probing regional initiatives as an alternative to the monolithic imposition of the kind of socialism as it had taken root in North Vietnam during the war! Asense of crisis that, “compared with any stage of our history, this is the most difficult time we have ever had in terms of economy and living,” was shared widely, and thence the awareness that the Vietnamese had to cope with the situation in a realistic manner. However, the problem of breaking away from the wartime economic management pattern was not an easy one for the Communist Party of Vietnam, which did not have real experience in economic management other than distributing foreign aid it had obtained without cost. It took considerable time to reach a consensus on the specifics of reform due, first, to a lack of

experience on the part of the party, including the top leaders; second, to a resistance from the bureaucratic structure that was established during the war; and third, to the ideological opposition that considered the wartime system as the “desired socialism.” Repeatedly the Central Committee took unusually long time before reaching a consensus, which often was not translated into action, or its

implementation yielded unintended results. A reform that necessitated parting with past experience and doctrines was inevitable, and trial and error was in order. This is the primary reason I consider

Vietnam of the late 1970s and early 1980s as having been in a period of transition. In this worsening economic situation, the corruption among cadres called the

“negative phenomenon” was prominent, and the party was losing the trust of the public. In addition to the difficulty of the reform itself, these factors sharpened the sense of crisis at the party leadership level. During this period, the party faced the problem of how to rejuvenate the aging top leaders headed by Le Duan. The problem was not one of simple rejuvenation, but one of transforming cadres from “universal warriors of the liberation struggle” to specialists with the ability to manage the economy. The Communist Party of Vietnam maintained a very stable

collective leadership system throughout the war with France and the United States. There had been no drastic change in the top leaders of the party for more than 30 years since 1945, which contributed significantly to the victory in the wars. However, the other side of this was stagnant personnel management, and as a consequence, negative effects began to surface as the leaders became progressively older. The Vietnamese Communists had to tackle squarely with this organizational legacy beginning in the late 1970s? At about the same time that economic reform was proposed, this problem of

The 6th Congress of the Communist Party of Vietnam

3

change of party cadres, extending to the top party leaders, came to be regarded

as urgent mission necessitated by the requirement to build an organization to respond to “new revolutionary tasks.”

This materialized in the retirement of

Truong Chinh, Pham Van Dong and Le Duc Tho, who together had provided the core of party leadership, and upon the death of the Communist Party General Secretary Le Duan, in the election of Nguyen Van Linh as the new General Secretary at the 6th Congress.

II. Regional Reform and Central Consensus One characteristic of the political process from the 6th Plenum of the 4th Central Committee in 1979 to the 6th Congress in 1986 was that, after regional experimen-

tation, a specific model of reform would build up a policy consensus at the party headquarters and get propelled as a national policy.

Here, in order to give an

overview of the unfolding reform in Vietnam from 1979 to 1986, I will take up the attempt to abolish rationing in Long An Province in the Mekong Delta and examine the process of how such a regional experiment would eventually bring about the consensus at the party headquarters. The most basic characteristic of wartime economic management was the “subsidies system,” in which the government supplied necessary goods for production

and living regardless of the cost. At the 6th Plenum of the 4th Central Committee, proposals were made that this system be changed.*

A typical example of this

system was the rationing system that was firmly established in wartime North Vietnam, under which goods necessary for living were provided at very low prices. Its beneficiaries were public servants, workers in nationalized businesses, and

military personnel.

Those people were paid very low wages, but as long as the

rationing system supported them, their minimum living needs were guaranteed.

This system functioned relatively effectively in a society where a consensus existed for “sharing poverty” in order to achieve the national goal of “resisting the United States and saving the country,” and the system worked as a material foundation of the war of resistance. Such a system was possible in North Vietnam, which was normally a food-importing country, only because of the free food aid sent from other socialist countries. However, after 1975 when it became no longer possible to obtain free food from foreign countries and people started to seek means of increasing their income rather than “sharing poverty,” the drawbacks of this system began conspicuously to outweigh its merits. The ill effects of the rationing system were probably recognized to a certain extent at the Central Committee Plenum of 1979, because it pointed out the need to switch from the subsidies system to that of “socialist management.”

The com-

4

Furuta Motoo

mittee, however, had no intention of abolishing the subsidies system immediately.

During this period in Vietnam, the official price set by the state was a double price consisting of the “supply price” and the “management price.” The supply price

included ration prices that were maintained below cost with state subsidies from the national treasury; the treasury would disregard profitability and absorb the deficits.

The management price took profitability into consideration.

The 26th

resolution on improving distribution and circulation mechanism, which was adopted

by the party political bureau (Politburo) in June 1980, proposed a three-stage method to solve the problem: The party would support the double-pricing system for the time being, while stimulating production by utilizing the management pricing effectively; in the second stage, the supply price would be abolished and a single-price system would be established; in the final stage, a wage system that would guarantee improvement in living, and a pricing system that would safe-

guard the management of production units would be established. I speculate that the dominant argument in the party would have been “production first.” Although

the party recognized problems with the rationing system, the members decided that the prerequisite of the radical price/wage reform was to resolve the imbalance of supply and demand by improving production, as production would help

break through the difficulties then confronting the country.° The party leaders of Long An Province examined this 26th resolution of the Politburo and decided that they move directly on to the second step.

They

believed that abolishing the rationing system immediately and moving to a single-

price system

would improve the overall economy including productivity®

In

support of this decision, in October 1980, the People’s Committee of the province made a resolution to abolish the rationing system and to implement a method that would supplement wages with the money necessary to purchase at the management price the formerly rationed essentials for living.’ The Long An experiment came out of the examination of the decision made by the 6th Plenum of the Central Committee and the resolution made by the Politburo. However, controversy immediately arose about whether this was a “creative application” of the central policy or an “deviationist mistake.” People with opposing views spread malicious rumors such as “The party in Long An could do this because they had hidden gold.”

It was early in 1981 that the party headquarters began to clearly endorse regional experiments and encourage nationwide application of them, which actually led to a fuller implementation of reform. The most important example would be the contract production system in agricultural production cooperatives, which the party Secretariat in January 1981 encouraged for the first time in a directive. This contract production system proved to be a fruitful regional experiment in increasing production by motivating farmers, and the party headquarters endorsed

The 6th Congress of the Communist Party of Vietnam

5

it relatively early, given that there was no alternative for quickly improving food production, which was in a dire condition.

In contrast, the abolition of the

rationing system in Long An could not obtain endorsement from the party head-

quarters; the party members had not answered the question of whether it was a legitimate experiment, before they decided whether to tryit on a nationwide scale. The fact that the production-first theory was dominant in the party headquar-

ters does not necessarily mean that the Long An experiment was viewed as heathen.

The Long An experiment was initiated with the consent of the party

Secretariat. At the very least, reform-oriented people — the majority in the party

nucleus such as the Politburo and Secretariat — strongly supported the idea of approving the Long An experiment as a “regional experiment,” even though these people were of a production-first mind. Also, there was a minority of people who supported the Long An party leaders and maintained that this experiment should be put into nationwide use.

The above speculations are supported by reports from two inspection teams that were sent out from the party headquarters to Long An at an early period. First, the inspection team (Hoang Huu Nhan, director) sent out by the party Secretariat at the end of 1980 concluded that the Long An experiment was “in the right direction and creative.” Secondly, the inspection team of the Standing Committee of the Cabinet Ministers Council (Phan Van Huu, director, deputy minister of

labor) reported its appraisal that this experiment was bringing about positive changes in overall economic activities, and that the experiment should be extended at least to areas that had similar conditions (especially in the provinces in the Mekong Delta) .° It appears that the strongest opposition to the Long An experiment came from

those antagonists who were inside the central bureaucracy, rather than a few top party leaders who were “conservative.”

The report prepared by the inspection

team from the Standing Committee of the Cabinet Ministers Council was favorable toward the Long An experiment, and it recommended that the experiment be extended to other areas.

However, it has been reported that while being

examined in government ministries and agencies in Hanoi, the report was rewritten to a great extent to discount the significance of the Long An experiment.'? In the meantime, the top leaders of the party decided to leave the experiment as a

“regional experiment” and not seek immediate party consensus at the central

level. The 5th Congress held in March 1982 was a half-baked effort from the standpoint of reform, when many of the regional attempts including the Long An experiment were still at an experimental stage.!! In this Congress, it was clearly

pointed out that the economic difficulties of the nation stemmed mainly from the fact that the members had set as their immediate goal the achievement of an

Furuta Motoo

6

unrealistic and over-demanding economic plan. Instead, they proclaimed that they were at “the first stage of transition,” that “agriculture is the primary front line” and that a limited immediate goal would be “to stabilize, one step at a time,

and to improve to a certain degree, the material and cultural life of the people.” '” This definition, that they were at “the first stage of transition,” presupposed a quest for economic management closely fitted to the reality of Vietnam. In this regard, it argued for advancement of reform.

The Congress, though only very

generally, acknowledged that regional initiative was contributing to the construc-

tion of the economy, and encouraged regional experiments. However, at this time, there was no consensus as to how long the transition period would last. Of those who regarded it to be a short period, some thought they could get on with the

doctrinaire socialist construction, once they got over this difficult “first stage.”!° In summary, the 5th Congress opened a path for the advancement of realistic reform,

leaving still some room for old-fashioned ideology to block the path. As far as the Long An experiment was concerned, the Congress decided that it was necessary to maintain double pricing temporarily, and that there was to be no immediate plan to promote the Long An experiment nationwide. As for personnel management, a big shuffle of Central Committee members took place, in which 43 percent of them were replaced with new members in an effort to rejuvenate and strengthen the economic staff. The problem of aging top

party leaders was discussed at the convention, but it was decided that changeover would not take place until the next Congress.

It appears that this was due to the

fact that the specifics of the reform were not yet clear, and that the top party leaders felt that they needed more time, before a consensus was reached within

the party.! Since the 5th Congress, two prominent trends have emerged in the economic situation in Vietnam. First, food and light industrial production began to increase visibly due to a series of realistic reforms such as the contract production system.

By 1983 Vietnam’s production economy had reached the point where it was out of the rock-bottom production levels of 1980. Aggravated crises in the state finance

and advancing inflation were the other trend.

Government purchasing prices

were raised in order to stimulate worker motivation, while changes in the ration price were deferred. This resulted in a rapid increase in the national deficit; the state subsidy for maintaining the ration price amounted to one-fourth of the 1984 current expenditure, or 67 percent of the national deficit.!° This further accelerated virulent inflation, and the living standard of the salary and wage earners in urban centers was worse than it was in the early 1980s.!7 The increase in production and worsening of national finance brought a new phase in the debate on economic reform within the party. First, the reform and

regional experiments that had brought about increases in production gained

The 6th Congress of the Communist Party of Vietnam

fl

tremendous validity. Pro-reform people were now able to persuade others on the basis of reality.!* The worsening of state finances despite production increases resulted in a worsening of the living standards of public servants and workers of state-run businesses who were the backbone of the system. This made the party headquarters focus their attention on problems of distribution and circulation. As the party clearly saw that a series of sporadic re-adjustments concerning problems was not very efficient, it began to recognize that the Long An experiment pre-

sented an effective alternative. It appears to be late in 1983 that some changes emerged in the atmosphere

surrounding Long An, which had been conducting an “isolated experiment” for several years.

At this time Nguyen Van Chinh, the party General Secretary of

Long An Province who was in charge of the experiment, was promoted to the

position of food minister in the central government. This and other incidents that occurred during this period suggested that the Long An experiment could be

adopted on a nationwide scale, as national newspapers finally began to report the experiment.!9 At the 6th Plenum of the 5th Central Committee, held in July 1984, the party leadership came to a consensus in which they recanted the previous productionfirst theory and decided that a comprehensive reform in price and wage systems would be the key to break through the immediate difficulties and to improve production”°. This plenum achieved a consensus on this point in principle, but postponed the decision on specific methods of implementation. It is important to note, however, that its members acknowledged that the Long An experiment was a model that could be emulated nationwide. Since this meeting, several provinces including An Giang Province abolished the rationing system, and Long An was no longer an isolated instance.

Given practice in several provinces, at the 8th Plenum of the 5th Central Committee held in June 1985, the party headquarters decided to give a go to the nationwide abolition of the rationing system and the implementation of a comprehen-

sive reform of price, wage and currency that would introduce the single-price

system.?! From the time of the 6th Plenum of the 4th Central Committee in 1979, when it proposed the abolition of the subsidies system, it took six years before the party finally reached a consensus on the method of implementation. A series of measures such as abolition of the rationing system, introduction of

a new wage system, setting policy on new prices, and currency reform took place rapidly. This major reform, however, after the final currency conversion and denomination went into effect, brought about the unexpected result of worsening of virulent inflation, and Vietnam’s economy was thrown into chaos.

Because of

this, urgent measures such as partial reinstallation of the rationing system were

adopted, and it looked as if the reform was “retrogressing.”

Furuta Motoo

8

In response to this situation, three types of arguments emerged. One was a conservative response, which argued that the idea of abolition of the rationing

system and moving toward a unified price system was wrong in itself, and that the party should go back to the previous system. It is said that some of the provinces

went back in this direction22

The second argument was that the reform was

correctly conceived but poorly implemented. The advocates of this argument proposed more cautious implementation of the reform while firmly holding on to the goal of abolition of the subsidies system.”* The third argument was the most pro-reform response, while it differed little from the second argument in its view

concerning implementation.

It argued that the cause of the chaos lay in the

conservative notion about socialism that had perpetuated the subsidies system too long and in the resultant irrational distribution/circulation mechanism. It maintained that there would be no effective advancement of the reform, unless such notion and the mechanism were wiped out.”4 Both the 9th Plenum of the 5th Central Committee held at the end of 1985, and

the 31st Resolution of the Politburo which directed countermeasures for the current chaos, took the position that the party should not go back to the centralized bureaucratic administration system of subsidies simply because difficulties existed temporarily.2° This was an amalgamation of the second and third arguments, which denied the first. Long An Province was again in the spotlight across the nation, and it re-asserted the correctness of its six-year experiment by determinedly holding onto its system without rationing.

III. The Path Leading to the 6th Congress In a broad sense, for the Communist Party of Vietnam all the processes of reform,

especially the content of the 6th and 8th Plena of the 5th Central Committee, were processes in preparation for the coming 6th Congress. The final preparation for the Congress took place in the midst of the chaos brought about by the price/ wage/currency reform based upon the decisions made at the 8th Plenum of the Central Committee. We must not overlook the significant change in thinking that took place during this time. The 6th Congress was seen as a continuation of the

reform that began at the 6th Plenum of the 4th Central Committee in 1979, but was later to be characterized by a new leap in promoting the reform, the direction of which was set in the final process of preparation for the Congress. The practical preparation for the Congress came into a full swing when the party Secretariat issued, in March 1986, a directive concerning the convention

delegation that was to be drawn from various ranks of party organizations, together with a directive to start strict criticism and self-criticism. The party

The 6th Congress of the Communist Party of Vietnam

9

headquarters adopted a draft political report for the Congress at the 10th Plenum of the 5th Central Committee held in late May and early June 1986. This draft was put up for discussion by the entire party. In August, based upon the discussion, the basic party organizations began selecting the delegation for the Congress. The party conferences were held between October 16 and November 19 at the primary administrative provinces and the organizations directly under the control of the party headquarters.

The provinces and the organizations elect the actual

delegation to the Congress. Following that, the content of the final political report

was further discussed at the 11th Plenum of the Central Committee. In this process, the content of the original draft that was adopted at the 10th Plenum of the Central Committee was drastically changed. The first draft of this political report was not publicized, but we can comprehend

the outline of it

through the various articles in the August issue of the party’s theoretical organ, Communist Magazine. The leap that was achieved in the final process of prepara-

tion becomes clear when we compare the content of the first draft with the actual political report delivered at the Congress held in December of the same year. Most of the debate centered on the recapitulation of the events leading up to the Congress in the report.

The basic idea of the first draft was to confirm the

“great results and victory” that were achieved in “the two strategic tasks” of the construction of socialism and defense of the country since the previous 5th Congress, while at the same time seeking the cause of the current economic

difficulties in the “grave mistakes” made in economic guidance by the party. The draft acknowledged the fault in which “they had not overcome the incorrect assessments of the specific problems of construction of socialism at appropriate times,” while stressing the “correctness” of the basic line.

It stated that “the

overall line of the socialist revolution and the line of construction of the socialist economy throughout the transition period, as were proposed at the 4th Congress, was correct and creative.

The goals and major lines of the 5th Congress that

supplemented and specified the overall line at the first stage of transition were also

correct.” In short, the first draft concluded that the party line was correct, but that some

guidance errors were

made

in its guidance for implementation, which

resulted in half-success and half-failure. This recapitulation, interpreted from the point of the urgent price/wage/currency reform, was drawn from the same

position as the second argument.”° However, in the course of discussing the draft, major changes were made in

the framework, and it was decided that the emphasis must be placed on the close examination of the subjective deficiencies. As a result, the actual report given at

the Congress emphasized at the beginning that they “must not only ascertain the achieved success, but also earnestly examine the weaknesses, analyze closely the errors and mistakes, clarify their causes, and set new tasks and goals.”

The

Furuta Motoo

10

emphasis was on the analysis of the subjective cause that brought about difficulties.2” As far as the evaluation of the party lines was concerned, the report used the expression “the correct viewpoint within the overall and economic lines set by the 4th and 5th Congress,” thereby suggesting where the inherent problems in the lines existed. Specifically, it evaluated the previous two Congresses in the following terms. “We failed to adequately recognize that the transition period to the achieve-

ment of socialism is a relatively long historical process, and that we have to go

through many stages. Our guiding philosophy was not objective but hasty, and had a tendency to skip necessary steps. Because of this we could not set the goals for the initial stage of transition at the 4th Congress.

Between 1976 and 1980 we

adopted the line by which to promote industrialization while the prerequisites were not sufficiently met, thereby delaying the renovation of the obsolete economic management mechanisms.

The 5th Congress set two strategic tasks and

advanced one step further the economic line at that stage, proposing comprehensive goals and basic economic and social policies.

However, we did not follow

through on this important conclusion in actual guidance for implementation, and

failed to resolutely overcome reckless and conservative ideas in accordance with what was laid out in the policies on economic structure, socialist reform and

economic management organization.””* This stems from the same thinking as the third position on the recapitulation on price/wage/currency reform.

Rather than stressing the “correctness” of the

previous line concerning the socialist revolution, it emphasizes parting from the conservative ideas about socialism. Because of some major changes that were created in the fundamental view-

point of the recapitulation, the first draft was forced to go through extensive revision.

In the next section I will discuss the specifics of the transformation of

thinking concerning socialism that was brought about by these changes.

Here I

would like to examine the other factors that prompted this big leap during the final process of preparation for the Congress. In addition to the ongoing economic difficulties, an extremely virulent inflation of 700 percent per year had been progressing since the series of reforms had taken place in 1985, and the people’s frustration had been pent up. The party was at the point where it had to take the situation very seriously. The sense of crisis

on the party’s side was frankly admitted in remarks such as the following made at the Congress: “The people have lost faith in the party. This has never happened since the party was founded.””9 It is important to note that the pressure from the people acted to promote, not to repress, the reform. In the midst of the chaos created by the price/wage/

The 6th Congress of the Communist Party of Vietnam

il

currency reform, some provinces went back to the former system.

However,

producers, including farmers, showed strong resistance to the reintroduction of lower purchasing price, and refused to supply goods to the government.

The

conservative response that meant going back to “socialism in which poverty is shared” was met with people’s determined refusal.*° The second factor was the death of General Secretary Le Duan.

Apparently

the retirement of the top party elders at the Congress, including Le Duan, had already been decided before Le Duan died.2!

Le Duan was a leader who had

promoted reform since 1979.** Therefore, it is not conceivable that the death of the General Secretary who had led the 4th and 5th Congresses was a factor for

drastic changes, but his death contributed to the atmosphere that facilitated

relatively objective evaluation of these Congresses. Following Le Duan’s death, Truong Chinh was elected General Secretary ad interim of the party. He was often considered as a typical conservative ideologue by Western observers. However, as the General Secretary who was the pillar of the 6th Congress, he was to play an important role in achieving a new advance in reform.

. Truong Chinh’s positive attitude toward the advancement of reform was

clearly shown in his lecture at a cadre meeting in which the draft political report for the Congress was studied.

party organ, Nhan Dan.

This was published in the July 26th issue of the

This lecture was actually given before the death of Le

Duan, but was made public after Truong Chinh’s inauguration, and served to show

the new General Secretary’s basic posture toward the reform. In his talk, Truong Chinh pointed out that the viewpoint of “people being the foundation” had not been fully carried out, and that this neglect was the most important lesson to be learned.

He emphasized that the validity of a party policy must be judged by

whether the majority of people welcomed it and put it to practice willingly.

If it

proved otherwise, he stressed, the party must either wait until the people understood, or revise the policy to meet reality and the people’s level, at no time resorting to administrative coercion. This is seemingly a commonplace statement. However, given the situation existing among the masses

that was described

earlier, it was clearly a pro-reform statement that demanded parting from the idea of “socialism of sharing poverty.”

The slogan “people are the foundation” best

expressed the fundamental spirit of the 6th Congress.** The specific meaning of this slogan became clear in the close examination of the “errors” in the previous economic guidance, errors that were pointed out at the Politburo meeting held in August under the auspices of Truong Chinh. It was then pointed out that equation of socialism with industrialization gave priority to new investment in large factories, while ignoring substantial improvement of people’s lives, and that the equation of socialism with nationalization and collectivization

12

Furuta Motoo

swept out individual management.

All of this had had a bad influence over

improvement of production and stabilization of living. This meeting presented the

basic content of the change of thinking concerning conventional socialism, which the 6th Congress was to spell out.*4 Some of the party headquarters members were concerned about whether the expected retirement of the elders could actually take place at the 6th Congress.

Truong Chinh played an important role in rejecting the demand that he should continue in his position, and in achieving the retirement of the three elders including himself.

He must have been sensitive to the fact that people wanted

changes, not continuation. The third factor was the influence of a series of Mikhail Gorbachev reforms and

the 27th Congress of the Soviet Communist Party that was held concurrently with the final process of preparation for the 6th Vietnamese Congress.

Nguyen Van

Linh pointed out in the opening speech at the Congress that the “renovation” that was in order for the Party of Vietnam was in line with the “deep essence of

Marxism-Leninism that is prominently embodied in the main ideas of the 27th Congress of the Soviet Communist Party, and it is the inevitable current of the

times.”*> If the confrontation with China had made it easier for the reform-inclined Vietnamese Communists to brand (and reject) their old notion about socialism as

“Maoism”

since 1979, obviously the Gorbachev reforms in the Soviet Union

further facilitated parting from the conventional doctrine for the Vietnamese

Communists. Also, at the 10th Plenum of the Central Committee, the Vietnamese leaders began to publicly admit “wasteful use” of foreign aid from the Soviets and others.*° Upon close inspection, this was also a problem linked directly with the basic defect in economic management in Vietnam.

IV. The 6th Party Congress and “Renovation in Thinking” Here I would like to examine the nature and extent of the changed idea about socialism that was spelled out at the 6th Congress of the Communist Party of Vietnam held Dec. 15-18, 1986.

At the very base of the idea of socialism that was established in the socialist countries of Asia in the 1950s and 1960s, there existed a “dreamy” view that socialism could come true on a national scale as early as the next day. These countries included China and North Korea, and it was not limited to Vietnam. Thus, rapid economic growth with emphasis on heavy industry was pursued as the urgent task, while neglecting the examination of factors which were to support such growth, namely productive power and management capability. Nationalization of ownership or collectivization was considered “socialistic” and it was put into

The 6th Congress of the Communist Party of Vietnam

practice in a short period of time.

13

It was also considered legitimate to hold the

standard of living at a low level in order to accumulate capital forcefully. All of this

was possible only when the society was under some sort of tension. In the “cold war” regime in Asia, including the actual warfare in Korea and Vietnam, the

wartime stance that the socialist countries adopted and this idea about socialism

constituted the two sides of the coin. It can be stated that the Asian socialist countries on the wartime footing

held onto the view which broadly equated socialism with people’s perseverance in today’s poverty and with their participation in the struggle, independent and willing, for the “dream” of a better tomorrow. I call this the “socialism of sharing poverty.”

The purest expression of this type of socialism was seen in

China during the “Great Leap Forward” and the “Great Cultural Revolution” days. The Vietnamese

Communists,

especially Le Duan and his socialist ideology,

cannot be identified with the Chinese socialist ideology, up until the Cultural Revolution, as Vietnam had been critical of China.’ teristics of this “socialism

However, the basic charac-

of sharing poverty” took its root in the process

of the Vietnam War, and were thoroughly embraced by North Vietnam socialists. The most important feature of the 6th Congress was its clear departure from

such thinking. First of all, in this Congress it was clearly stated that they would sever themselves from the idea that socialism could be realized in a day, and take the position

that “the transition period to the realization of socialism” is a “relatively long historical process.”*® As was pointed out earlier, the 5th Congress recognized that Vietnam was at the “very first stage” of the “transition period,” although there was no consensus on its length.

The Congress still hoped that it would be a short

process and that they could move on to the construction of orthodox socialism, once this short transition period was overcome.

The members failed to part with

the idea that the measures they were forced to take were an “inevitable compromise.” Consequently, the party failed to thoroughly

implement this understand-

ing of their position that they were at “the first stage of transition.”

The 6th

Congress, having reflected upon this, emphasized the lengthy nature of the “transition period.” Secondly, the 6th Congress clearly pointed out another mistake related to the first point:

It said that the party would be confusing the overall goal of “the

transition period” with the task for “the first stage of transition,” if it believed that industrialization, particularly one which was slanted to heavy industry, were the “

most urgent task. At the 5th Congress, it was pointed out that “agriculture is the primary front line.” However, large projects were still preferred when it came to actual investment, and “agriculture first” was not carried out thoroughly. This also resulted in “wasteful use” of foreign aid. The argument at this Congress was based

Furuta Motoo

14

upon the above reflection. Given this analysis, the phrase, “correct arrangement of investment projects” in the draft political report was changed to “major adjustment of investment projects” in the formal report, and drastic adjustments were planned. The adjustments included 60 percent of the investment going into the “Three Major Plans” of production in agriculture, commodities,

export goods, and shelving of the construction

of 20, or one-fourth

and

of all

the large projects.°? Thirdly, this Congress clearly indicated that socialist reconstruction was a

task that had to be carried out in accordance with the levelofprevailing productive power and management capability throughout the “transition period,” and given

the situation in Vietnam, it was “nomothetic” to allow non-socialist economic sectors to exist and function effectively for a rather long period of time.*° This concept of active utilization of the potential of non-socialist sectors grew out of the experiment that began in major cities in March 1986, in which the operation of small private businesses and cottage industries was allowed. The permission was limited in scope and issued only to small industries “for the purpose of promoting

production of household commodities and export goods.” Nonetheless, it was a noteworthy new movement.

Also on Nov. 26, 1986, the government adopted a

resolution concerning the development of household economy.

policy in line with the above trend.

This also was a

Based upon such experiences, the 6th

Congress gave theoretical grounds for the continued existence of non-socialist sectors.

The draft political report had presented the task in the form of “advancement

of socialist reconstruction and strengthening of new production relationships.”!! However, given all the rethinking, in the actual report the task was changed to

read “to build and reinforce socialistic production relationships, and to utilize correctly and reconstruct each economic sector.”4?

The actual report to the

Congress also emphasized that the party “must shed away preoccupations and prejudice in dealing with workers belonging to different economic sectors,” and strongly criticized the system and attitude that discriminated against private entrepreneurs, as opposed to those working in state and collectively-run businesses, for many years. *° The fourth point that Congress made was that it must outgrow the idea of

hurriedly attempting to build up a nationally self-sufficient system of industries topped by heavy industry, stating clearly that the nation must start to participate actively in the international division of labor and economic cooperation, under the slogan of “integration of people’s power and the strength of the times.”

The

immediate aim was set at actively participating in the international division of labor within COMECON, but the political report remarkably indicated, by extension of the new policy line, the importance of the task of expanding economic cooperation

The 6th Congress of the Communist Party of Vietnam

15

with capitalist countries including Japan. Japan was mentioned not as an “adversary” but as a partner in cooperation.*®

The draft and actual political reports differ greatly in their analysis of international affairs. The draft was structured to emphasize first the role of “the three major revolutionary forces,” then international tension, and finally the dangers of Chinese expansionism and hegemonism.‘° The formal report first referred to the

“three major revolutionary forces,” then it pointed out that the scientific and technological revolution had advanced internationalization of production powers to a new height, which now posed the problem of cooperation between the two camps

which stood in confrontation. After that, it dwelled in a general term on the danger of “hegemonism and imperialism” without naming China ‘*’. This is a very significant change in the perception of international situation. When one changes his idea about socialism, one inevitably changes his view of capitalism. Would it be an overstatement, if Iconcluded that this political report suggests such a change? The change in thinking described above meant parting from the idea of a “socialism of shared poverty.” The “renovation,” which symbolized the 6th Congress,

emphasized above all “renovation in thinking.”

The fundamental message of it

was this parting. It was

Joseph Stalin who established the view that a socialist state which has

the superior production relationships of state and collective ownership is the most advanced society in the world, no matter how underdeveloped its productive power is. The socialist countries in Asia “bypassed” criticism of Stalin in the 1950s and 1960s. The changes at the 6th Congress in Vietnam in a way suggested that

they had finally begun turning away from Stalinistic thinking. At the same time, this turnabout must be viewed as a reform this century is

unfolding in the 1980s, similar in vein, and just as contemporary as those that are being carried out in the present-day Soviet Union and elsewhere.

This is the era

when advance of consumer society the world over is presenting serious questions to the significance of socialism, not in the realm of yet-to-be “dream,” but in the

realm of “here and now” in the real lives of people. At the 6th Congress of Vietnam, many down-to-earth remarks were aired. One person remarked, “We should not be afraid of people becoming affluent, as our

country will be strong only when our people are affluent.”

This remark is

symbolic of the switch-over from the “socialism of sharing poverty” to the “social-

ism of rewarding life,” and this Congress, by clearly upholding the necessity of a turnabout, set the major basic direction of the reform which was launched as a

countermeasure to the crises in 1979. The other major issues of this Congress, together with the change of thinking about socialism, was the personnel change that included the top leaders. It was strongly insisted that a “renovation in thinking can take roots only after the

Furuta Motoo

16

personnel is changed.”*? The political report reflected this opinion, and it pointed out that “it needs to be emphasized that the direct cause of the failure for party guidance to meet the requirements of new situation last few years had been the inadequate personnel management for the succession of core leaders.” This was to be manifested in the retirement of the top three elders and major reshuffle in Central Committee

personnel, including the election of Nguyen Van Linh as

General Secretary. Traditionally, candidates for the Central Committee had been approved without any objection on recommendation from the party headquarters. In this Congress, however, an unusual event took place in which 250 candidates

ran for the pre-planned 124 seats for the regular Central Committee members, and 126 ran for the planned 49 seats for the Central Committee’s Candidate members.

These events were again symbolic of this Congress, where pressure from lower echelon members was strong. A total of 173 Central Committee members, regulars and candidate, were elected at this Congress.

Of those, 81 were new faces, and constituted 46.6

percent of the total. At the previous Congress,

43 percent were new members.

In the two sessions of Congress held since the reform was tabled in 1979, close to two-thirds of the regular members had been replaced. The average age of the new

Central Committee members was 56.1 years, which was slightly younger than 56.5 years for the previous Congress.

Rejuvenation of the Central Committee as a

whole was being accomplished to a degree.°!

V.

Conclusion

More than two years after the Congress, it is fairly clear that the “renovation in thinking” proposed at the 6th Congress has been bringing major changes in actual foreign and economic policies. As far as the political process is concerned, limited “democratization,” which reflects the pressure from the masses that was observed

at the preparation process of the 6th Party Congress, is now prominent in organi-

zations run by the people and in mass organizations such as the national cabinet, labor unions, farmers’ unions, and the Fatherland Front.

It should be noted that the most fundamental undercurrent that runs in the changes in Vietnam since 1979 is the inclination among the masses, who clearly show the posture that, if the system was unreasonable, they would fulfill their desire to work outside the system authorized by the party and state. For the most part, the reform was in fact a belated authorization of people’s “gray or black” activities. Regional initiatives meant a great deal, because they were closely linked

with this tendency of the masses.

The greatest significance of the 6th Congress

in the history of Vietnamese Communism lies in the clear realization on the part

The 6th Congress of the Communist Party of Vietnam

ty

of the Communist Party that Vietnam’s political and economic “renovation” de-

pends upon how much of the demand of the masses can be worked into the political and economic systems.

Notes I Le Duc Tho states in the Politburo report of November 1980: “We will apply the law of economy, and experiment with new economic and organizational models, and provide an organization and core staff members that can respond to changes in the economy.” Le Duc Tho, “Thuc hien mot so chuyen vien sau sac ve to chuc nham tang cuong lanh dao va quan ly ve moi mat, nhat la ve kinh te [Materialize profound transformation in organization to strengthen guidance and management in all fields, especially in economy.],” Nhung Nhiem Vu Cap Bach cua Cong Tac Xay Dung Dang [Some Urgent Tasks in the Party Construction], Nha xuat ban Su That, Hanoi, 1985,

p. 190. . Ibid., p. 296. . Gotoo Fumio has written an excellent paper on the organizational tasks that the Vietnamese Communists faced in the 1980s: “Betonamu Toitsu go no Kyosanto no Doko [The Direction of the Communist Party after the Unification of Vietnam - With a Focus

on the Report by Le Duc Tho at the 5th Congress],” Kyosan Shugi to Kokusai Seiji [Communism and International Politics], Vol. 8, No. 3, December 1983. . This is discussed in detail in Mio Tadashi’s “Bapponteki na Keizai Kaikaku wo Kaishi shita Betonamu [Vietnam Has Begun Radical Economic Reform],” Kokusai Josei

[International Situation], No. 58, October 1985. . Ibid.; “Giai quyet gia va luong tren co so xoa bo tap trung quan lieu bao cap, chuyen han saang hach toan, kinh doanh xa hoi chu nghia [To settle the price and wage problems on the base of the elimination of centralizing administrative system and the creation of socialistic economic management],” Nhan Dan, 9.7. 1987.

. Tran Dinh Van, “Long An dung vung [Long An is still standing firmly],” Dai Doan Ket [Large Solidarity], 24. 9. 1986 (Van 1986 hereafter). . “Distribution and Circulation of Goods in Long An,” On the Eve of the VIth Congress of the Communist Party of Vietnam, Foreign Language Publishing House, Hanoi, 1985,

Delos . Tran Dinh Van, “Tu thi diem Long An [From the experiment of Long An],” Dai Doan

Ket [Large Solidarity], 3. 7. 1985 (Van 1985 hereafter). . Van 1986. Hoang Huu Nhan was staff economist of Quang Nam Da Nang Province, and

later promoted to a position in the party headquarters. In August 1986, he was acting chairman of the party Industrial Committee. 10. Van 1985. . Le Duc Tho describes the level of consensus within the party at that time: “Within the Politburo they unanimously agree that the party line was correct, but there were some errors in the economic plans. However, there are still some differences of opinion as to what the errors with the plans were.” Le Duc Tho, op.cit., p. 327. 12: Mio Tadashi wrote a concise and succinct paper on the “Transition Period to Socialism” in Vietnam. “Toitsu go Junen: Betonamu no Aratana Shiren no Michi,” Kaigai Jijo

Furuta Motoo

18

[Overseas Situation], July-August 1985. 1s, Le Duc Tho suggested in 1984, after the 5th Congress, that there still remained the understanding in the party that the entire “transition period,” not to mention the “first stage,” would be over upon completion of one or two five-year plans. “Mot so yan de kinh te-xa hoi truoc mat,” Le Duc Tho, op.cit., p. 490. 14. Mio Tadashi, “Bapponteki na Keizai Kaikaku wo Kaishi shita Betonamu.” 15), Gotoo Fumio, op.cit. Also, Le Duc Tho comments on the assessment of this problem before the Congress: “It is high time many of the comrades in the Politburo and Secretariat retired. These comrades have gone through numerous hardships in the struggle and are experienced revolutionaries. However, their ability to think, their sensitivity toward reality, and their comings and goings are not as they used to be. Unfortunately, these comrades have to keep working because we are still in the state of war, because things are not yet stable, and we have not trained their successors properly.” Le Duc Tho, op.cit., p. 333. 16. It is estimated at 13 billion dong for 1984. ile Le Duc Tho said in June 1984: “Have we got over the most difficult economic period of the ’80s? No, not yet.” Le Duc Tho, op.cit., p. 469. 18. Tan Teng Lang, op.cit., p. 43. iG) Van 1985. 20. Mio Tadashi, “Bapponteki na Keizai Kaikaku wo Kaishi shita Betonamu.” Also, Le Duc Tho emphasized the urgency of a comprehensive reform of price, wage and currency. He made a statement right before this Central Committee plenum: “Distribution and circulation play an important role in the first stage of transition.” Le Duc Tho, op.cit., pp.495, 506-510. 2A. Mio Tadashi, “Bapponteki na Keizai Kaikaku wo Kaishi shita Betonamu.” ; ene Van 1986. 23. This standpoint is most strongly reflected in the official statement of the party of March 1986.

For example, the editorial in Nhan Dan, March 1, said: “The main cause that

brought about such bad results existed in the decision by the 8th plenum of the Central Committee and the method of implementation of the 28th Resolution of the Politburo. This failure reflects the subjectivism, hastiness and lack of consideration that existed when the specific policies concerning price, wage and currency were decided and implemented. More specifically, they failed to put these policies into perspective with the overall balance of the national economy, and consequently, at each stage they failed to implement them in balance with the renovation of the economic management system, the advancement in reconstruction of privately run businesses, the reinforce-

ment of market management, the expansion of socialist commerce and improvement of its activities, the encouragement of ideological and educational activities, and the mobilization of the masses.” Nhan Dan, 1.3.1986.

24. Van 1986. 74) Nhan Dan, 1. 3. 1986. 26. Le Can, “Tinh hinh va nhiem vu [Situation and Tasks],” Tap Chi Cong San [Communist Magazine}, 8, 1986. 21. Reference for the literature concerning the Congress, including the political report, is from the special issue of Tap Chi Cong San [Communist Magazine], 1. 1987. Referred to as TCCS hereafter. 28. MECOS) i) PS,

The 6th Congress of the Communist Party of Vietnam

19

29: “Dai hoi 6, nhung mong moi va de xuat cua can bo nghi huu. . ..: Trich tham luan cua dong chi Duong Quang Dong [The 6th Congress: Wishes],” Sai Gon Giai Phong [Liberating Sai Gon], 8. 1. 1987. 30. Dinh, 1986, and Tran Van Dinh, “Nong nghiep bao gio thuc su hang dau? [When agriculture will be treated as the first front?]” Dai Doan Ket [Large Solidarity], 27. 8. 1987, 10. 9. 1987. ale In April, 1986, staff members of the party began to tell Western reporters that their elders will retire at this Congress.

32. The final important document that gives Le Duan’s comprehensive outlook for the reform is his speech at the 6th plenum of the Central Committee. This speech reveals his leading role, up until the time when the party acted upon the wage, price and currency reforms, in turning the party headquarters’ consensus to a more pro-reform direction. Le Duan, “Nam vung quy luat, doi moi quan ly kinh te [Grasp the law and improve economic management],” Nhan Dan, 13. 8. 1984.

SBE Nhan Dan, 26. 7. 1986. 34. This new outlook by the Politburo was reviewed in the article, “Mot so van de thuoc quan diem kinh te [Some problems in economic view points],” published in Nhan Dan between November 5 and 20, 1986.

35. NECCSa p20! 36. Truong Chinh also commented on this issue in the previously quoted talk. Nhan Dan, 26. 7. 1986. 3/7. Mio Tadashi has a detailed discussion on Le Duan’s socialist ideology in his article “Power Structure and Policies of the Communist Party of Vietnam,”

Japanese Ministry

of Foreign Affairs, 1977. The writer also examined how Le Duan’s concept of collective mastership differed from Chinese ideas during the Cultural Revolution. See Furuta Motoo, “Betonamu ni okeru Shudan shujinko Sisutemu Gainen no Keisei to Hatten [Formation and Development of the Concept of Collective Mastership in Vietnam],” Kyosan Shugi to Kokusai Seiji (Communism and International Politics], Vol. 4, No. 3,

December 1979.

38. NEES Dy 25 ahs); Ibid, pp. 25-26;

“Ket qua Dai hoi VI cua Dang [Some conclusions of the 6th Party

Congress],” Nhan Dan, 24. 12. 1986.

40. TCCS, pp. 26, 41-45. 41. Tran Kiem, “Ve phuong huong va nhiem vu kinh te, xa hoi trong nhung nam 1986-1990 [On the guide line and basic tasks in economic and social development from 1986 to

42. 43. 44. 45. 46. 47. 48. 49, 50. ol.

1990],” TCCS, 8. 1986, p. 26. UCCS male Ibid, pp. 44-45. Ibid, p. 54. Ibid, p. 67. Le Can, op.cit.

NCES ps ol-oor “Dai hoi VJ, nhung mong moi. . .”

Ibid. EECSH p29: “Ket qua Dai hoi. . .,”. Gotoo Fumio, op.cit.

Mio Tadashi

20

CHAP LIERZ,

Vietnamese Economic Reforms: — A Period of Trial and Error And the Present Situation MIO Tadashi

Introduction If the substance of the economic

reforms which socialist countries are now

experimenting with may be perceived as the introduction of market competitiveness to systems of centralized planned economic management, then the first steps to implement this kind of economic policy were taken in Vietnam in the

summer of 1979. What has taken place in the 10 years since then has been literal trial and error.

The price, wage and currency reforms launched under the

“economic reforms” of the fall of 1985 had a disastrous effect on the country’s economy and the after-effects are still making life miserable for the population of 64 million people. The Japanese, Koreans, Vietnamese and Chinese have a number of things in common: a combination of cold winters and an Asian subtropical climate, a very

limited amount of arable land per person, the custom of eating rice with chopsticks, a writing system using Chinese characters, Confucianism and Mahayana Buddhism. They also share a capacity for hard work, a love of learning, an ability to absorb and digest foreign science and technology and a mental disposition which balances conservatism and respect for tradition with a readiness to use new

ideas. Vietnam is considered a part of Southeast Asia geographically, but cultur-

ally it belongs to East Asia. In this respect, Singapore is another example. The

economic backwardness of North Korea, Vietnam and China in comparison with Japan, South Korea and Taiwan is due mainly to their political systems and certainly not to ethnic characteristics.

The characteristics of these peoples de-

scribed above do possess great potential advantages globally, but unfortunately these inherent characteristics have been benumbed by irrational political, economic and social systems. The leaders of Vietnam have become aware of this fact, faced their past errors

and are now searching with more flexible thinking for ways of developing the

Vietnamese Economic Reforms

PAL

potential of their natural and human resources. mistake to have chosen the path of socialism.

They do not believe it was a

What they do regret is an uncon-

ditional, a priori belief in the superiority of socialism over capitalism, an overly conceptual and dogmatic understanding of socialist political and economic theory, mechanical formulation of policies based on such an understanding and attempts to force these policies onto the working masses through a feudal and authoritarian bureaucratic system. The first mistake in the economic line taken by the leadership of the Communist Party of Vietnam (CPV) was the belief that it would be possible to “bypass the

stage of development from a backward agricultural economy to capitalism and go directly to socialism.” The necessary premise of this economic line was “economic, scientific and technological assistance from friendly communist countries, including the Soviet Union.” This premise lost its viability when the Soviet Union and the countries of Eastern Europe pressed for a more rational economic ap-

proach in Vietnam after the Vietnam War and especially after the reunification of the country. The second mistake was the precedence given to construction of heavy industrial facilities by the Hanoi leadership in the initial stages of building socialism. This decision also depended on the premise of unattached aid from friendly socialist countries and resulted from a desire, in the words of First Secretary (later General Secretary) Le Duan, “not to become a rural area in the socialist camp.”! From the start, the Vietnamese leaders had a strong desire not to become an

exporter of agricultural products under the name of an “international division of labor.” From the 3rd Party Congress of September 1960 to the 5th Party Congress of February 1982, there was an unchanging economic line of “giving precedence

to the building of heavy industry by rational means on the foundation of development of agriculture and light industry.” In view of the structure of the Vietnamese economy, this policy was correct as a long-term economic strategy. However, during the implementation of the three

five-year plans undertaken after 1960, there was a continual tendency to invest lavishly on the building of heavy industrial facilities, perhaps overwhelmed by the wish to build “anything that is large,” in spite of the avowed intention to proceed on the foundation of “the development of agriculture and light industry.” The handling of investment throughout this period caused stagnation in agriculture and light industry, and especially in food production. The third problem was the system of economic management, supposedly a socialist planned economy but much too dependent on assistance from friendly socialist countries and an administrative supply system consuming this aid in fulfilling the five-year plans. This system of administrative supply was maintained

throughout the 30 years of war with France and the United States. This led to the

Mio Tadashi

22

expansion of the bureaucratic structure which administered distribution of aid funds and commodities and to a greater reliance on outside assistance. It also encouraged an inclination to consume without calculating the economic effects, which permeated throughout society from top to bottom, affecting everyone from the party and government to the masses. After the country was split into north and south by the Geneva Agreement of 1954, North Vietnam entered a particular

period of war and general mobilization in which neither the leaders, bureaucrats, nor common people had an opportunity to learn methods of efficient economic management.

Around the 6th Party Congress of December

1986, Vietnamese

economists spoke critically of the system established during wartime as “economic management condoning economic acts which rely on outside assistance and ignore economic effects,” and, with a sense of remorse labeled it “wartime

socialism” or “wartime communism.” The fourth mistake was the failure of the northerners, after reunification, to make use of the economic expertise and practical experience of the people of the

south, particularly the Hoa people (Chinese descendants), in managing the national economy, garnered from the southerners’ experience in capitalist economic management during the 20 years after 1954. Instead of using their abilities, they despised and rejected them for ideological reasons and made a misguided attempt to run the economy according to dogmatic socialist economic principles.

After

reunification, the Hanoi leadership espoused “state capitalism” in the south as a

transitional policy, but in practice moved ahead rapidly with-nationalization and

collectivization, ignoring the potential vitality of capital, personnel and production facilities in the capitalist and private economic sectors. The result of this eclectic policy was economic stagnation and it culminated in the persecution of the Hoa

people.

The persecution of the Hoa people led to border incidents between

Vietnam and China which resulted in a surge of military expenditure.

I. The Process of Implementing Economic Reforms There have been two major characteristics of Vietnamese economic reforms. First, in contrast to the economic reforms of the Soviet Union and Eastern

Europe, which are developed or developing socialist economies, the economic reforms of Vietnam have taken place in a “backwards agricultural country in the first stage of the transition to socialism.” One Vietnamese economist has set the following quantitative guidelines as standards for this “transition to socialism,” defining the end of the transition in terms of per capita national income and productivity in major areas of agriculture and industry. The per capita goals are 500 rubles of national income, 150 - 200 kilograms of cement, 15 to 20 meters of

Vietnamese Economic Reforms

23

cloth, 7 to 10 kilograms of paper and an amount of industrial production which is double that of agricultural production as a share of national income.‘ Tables 1 and 2 show that the current state of affairs in Vietnam has not reached that of the East European countries of 1960.

Second, Vietnamese economic reforms have been aimed not only at general reform of the centralized economic management mechanisms and the system of

administrative supply common

to all socialist economic systems, but also at

abolishing the wartime economic management system known as “wartime communism”

or “wartime socialism.” The goal has been to develop an economic

accounting system. The wartime economic management system was established in North Vietnam during the wars with France and the United States.

It was

characterized by reliance on abundant aid from other socialist countries, especially the Soviet Union and China, and intentional neglect of economic effectiveness while conducting the war for national independence. This policy was carried out with a system of administrative supply of producers’ goods and consumer goods at low prices maintained by subsidies from state funds. The same system was instituted in the south after reunification of north and south after the war, and

this was the major cause of the huge government deficits which occurred thereafter. In Vietnam, this subsidy system is known as “bao cap,” an expression coined for use in the campaign for economic reform. This one phrase is used as a focus

for all of the regret and

antagonism

felt toward

bureaucratic

inefficiency,

squandering of foreign aid, inflation and economic hardship which were suffered in the past.° It was not a decade after the conclusion of the war that the top leaders of Vietnam became aware of the need for economic reform. As early as 1971, there

were voices in the party leadership calling for reform of centralized bureaucratic economic management mechanisms.° The year 1971 was the time the Hanoi leadership began implementing policies to revitalize the economy on the model of the Soviet New Economic Policy (NEP).

At this time, First Secretary Le Duan’s proposal for vitalizing the economy through material incentives and emphasis on securing the people’s livelihood dominated the economic debate in party circles in opposition to those who wished to continue promoting the class struggle and the ideological and cultural revolution.

There

was a growing tendency in the party and government to consider introducing market economy on a limited basis, but the resumed bombing of the north and the

expansion of the war in Laos and Cambodia put the economy back on a “wartime

communist” footing.

The Hanoi government and party leaders learned of eco-

nomic reforms taking place in the Soviet Union and Eastern Europe as early as 1965, the year when US bombing of the north began.’ It was not, however, until

five years after the war that they came

to feel an urgent need

to escape

Mio Tadashi

24

Comparison of Production of East European Countries at the End of Transition Period and that of Vietnam in 1984

Table 1

Vietnam 1984

Bulgaria 1960

Hungary 1960

Poland 1960

Romania 1960

Per Capita National (ruble) Income

466.8

669.8

581.8

507.4

Per Capita Major Products (kwh) Elecrtic Power

592

763

987

416

83.0

(kg) (kg)

— 32.2

268 189

3,047 225

200 98.1

96.8 * 0.9

(kg)

4.0 15.6

9.8 17.8

7.6 23.51

2.4 12.3

0.4 * 0.2

(kg) Cement Chemical Fertilizer (kg)

202 15.8

157 10.2

222 16.1

166 3.9

ei 2,

Cloth Paper

23.6 6.9

24.7 10.6

20.4 16.7

13-5 7.6

6.2 stil

45.6 B15

DK 21.8

47.0 23.3

42.1 34.8

32.8 42.5

Nation: Year:

Coal Steel

SOF

Lathes (No. per 10,000

population)

H,SO,

(m) (kg)

National Income Structure (%)

Manufactural Industry Agriculture/Forestry

* Figures in 1980 Source: Vu Tuan Anh; “Thu phan tich nen san xuat xa hoi nuoc ta duoi goc do co cau nganh kiih te,” Nghien cuu kinh te, Hanoi, No.2 (144), 1985, p.33 Figures in 1984 are derived from Tong Cuc Thong Ke: SO LIEU THONG KE

1930-1984, Hanoi, 1984.

Table 2.

,

Per Capita Production of Major Industrial Products in COMECON Member Nations (1985) Electric

Power Hungary Bulgaria Vietnam East Germany Cuba

(kwh)

4,646 2,508 87 6,839 1,208

Steel

Fertilizer

(kg)

(kg)

Cement

(kg)

(m)

329 342 0.9 472 40.9

AS 100.0 8.6 291 21.5

391 345 24 697 315

39.2 29.1 6.2 28.2 47,3

79.6

Cloth

Mongol

1,474

—

—_

Poland Romania Soviet Union

3,702 3,160 5,564

434 607 5o7

61.0 136 120

403 493 471

23.8 30.1 27.3

Czechoslovakia

5,202

970

Ht

662

37.4

Source: Paper by M.E.Trigubenko, Nghien cuu kinh te, Hanoi, No.2 (156), 1987, p.31

—

Vietnamese Economic Reforms

29

from the dependency on outside help of “wartime socialism” and “bao cap.” Economic reform in Vietnam has gone through two phases of trial and error and is now in a third phase. The first phase was the “new economic policy” adopted by a resolution at the 4th Plenum of the 6th Central Committee

in

September 1979. The second phase was the “economic reform” policy adopted at the 5th Plenum of the 8th Central Committee in June 1985. The third phase is the present program of economic reform, begun in December 1986, and the policies

of the Nguyen Van Linh regime which is burdened by the legacy of failure in economic policy inherited from the Le Duan’s time. The history of these three phases of economic reform is sketched in below. Incidentally, I should point out

that this division into three phases is my own construction; it has never been used by Vietnamese economists. 1. The First Phase — “New Economic

Policy’”®

As in other socialist countries, economic reform in Vietnam has run into difficulty

right from the start, because of opposition in the party and resistance and obstruction by bureaucrats who give lip service to the policy but secretly oppose it. This

resistance from party officials and bureaucrats was eventually weakened

by

hopelessly deteriorating economic conditions which culminated in the economic depression of 1979-1980. (1) Background of the New Economic Policy After a peak in 1978, the post-reunification Vietnamese economy turned around and collapsed in 1979-1980. The national supply of producers’ goods met only half

the demand. There was a shortage of electrical power and one third of industrial operations were halted. Shortages of energy, raw materials and parts reduced the capacity usage ratio of machines and facilities to 30-40% and industrial production

fell to a level 87% of that reached in 1978. One third of the labor force became superfluous and was reassigned as “auxiliary labor” in coal-mining and agricultural cooperatives. Workers for whom no job was available continued to receive 70% of their previous wages, but a sudden rise in commodity prices made it impossible for public servants, laborers and other workers with fixed incomes to make a sufficient living without additional job. Crops were good in 1976 thanks to favorable weather, but floods and droughts caused a steep reduction in agricultural production for the next two years.’ These terrible economic conditions were partly brought about by the incompetent economic management of the party and government, but reduced assistance from the Soviet Union and Eastern Europe, the total suspension of aid from China due to deteriorating relations between the two countries (in 1978), and the international economic isolation of Vietnam caused by the Vietnamese invasion of

26

Mio Tadashi

Cambodia were also major causes. A trade agreement between Vietnam and the Soviet Union signed in 1955 gave Vietnam the special preference of freezing prices of Soviet exports to Vietnam for the ensuing more than 20 years regardless of

international price movements.

However, this preference was revoked by the

Soviets in 1976, so international price levels were applied from then on and the Eastern European countries followed suit.!° World price levels rose by two or three times during the two decades, exacerbated by the two oil crises, causing the imports of producers’ and consumer goods from the Soviet Union and Eastern Europe to fall by half. In addition to the loss of Chinese aid, which resulted from

the deterioration of Sino-Vietnamese relations, the exodus of many Hoa people after the persecutions of April 1978 brought about a serious decline in the labor

force, especially in the number of skilled technicians in the fields of mining, machine industries and fishing, and a slowdown in production.

Moreover, the

stockpiles of goods left behind by the American military had been used up by 19781979.

There was a huge increase in military expenditures caused by the Sino-

Vietnamese war and the Vietnamese

invasion of Cambodia,

followed by the

termination of economic assistance from the Western nations in an international economic sanctions of Vietnam.

The Vietnamese economy was hemmed in on

every side. To Huu, politburo member and deputy prime minister at that time, said, “the per capita national income, after falling 20% in 1975, continued to fall by

2 to 3% per year from then on.”!! The national income in 1980 was equivalent to that in 1976, but the population had grown by more than one million.!” (2) Goals and Content of the New Economic Policy

The Vietnamese “new economic policy” was adopted by the party central committee as a measure for reviving the national economy from its bankrupt condition and as a desperate means to maintain the military occupation of Cambodia in the

face of international economic sanctions. The main purpose of this policy was to revitalize the economy

and guarantee a stable livelihood for the people.

It

primarily called for increased production of food and other essential commodities. By using the potential capacity of non-socialist economic sectors (especially in the south), decentralization of state economic management to local levels, the intro-

duction of certain market mechanism and re- adjustment of wages and prices, it attempted to develop potential domestic resources, particularly those of local areas, provide material incentives to producers to increase production of food and consumer goods.!* Between the 4th Plenum of the 6th Central Committee and 1982, the party leadership brought out more than 50 items of the “new economic policy” in rapid succession.

Of these, five measures functioned to prime or start the desired

reactivation of production.

They were (1) five-year freeze of the food delivery

Vietnamese Economic Reforms

“ail

Fig. 1 Foodgrain Production of Vietnam 1977-1988 (Ten thous. tons) Tons

Paddy equivalent

200 -

160 +

120 +

pee c ee

|

—

80 |

Total volume

===

learataly

Sass Subsidiary crops 40 +

0

l

n

n

1

n

n

l

Ll

i

1

1

1

1 ) 7 7

1

1 9 it 9

1 9 8 0

it 9 8 1

1 9 8 2

i 9 8 3

il 9 8 4

1 9 8 5

il 9 8 6

1 9 8 7

1 9 8 8

H 8

Year

Sources: NIEN GIAM THONG KE 1985, Thong cuc thong ke, Ha Noi, 1987, (Statistical Yearbook 1985, published by Department of Statistics, Hanoi, 1987), So lieu thong ke 1930-1984, Thong cuc Thong ke, Ha Noi, 1985 (Statistical Data 1930-1984, published by Department of Statistics, Hanoi, 1985) and other officially published materials in Hanoi.

Fig. 2 Foodgrain Import of Vietnam 1976-1987

2000 Tons

Paddy equivalent (Thous. tons)

1600 +

—

Total volume

ee

ICe

Corn and corn flour 1200+

800 +

400+ 0

2

Year

WOW;COO

Source: SO LIEU THONG KE ..., op.cit.

100 Or F

MD CowWr F NI F COWr

28

Mio Tadashi

norm imposed on the agricultural cooperatives, (2) five-fold increase in the state

purchase price of agricultural products, (3) introduction of a new contract system (contract based on final products, for teams of peasants and individual peasant families) in the agricultural cooperatives, (4) granting of rights of independent

management and financial operations to state-run enterprises and (5) revision of the wage system.'4 (3) Effects of the New Economic Policy’® Actual implementation of the new economic policy began in 1981. This is made evident by the fact that the five measures listed above were all put into effect in 1981. The year 1981 also happened to be the first year of Vietnam’s third five-year plan (1981-1985). The new economic policy clearly affected the results of the third five-year plan, particularly in agriculture and food production.

Per capita food

production (paddy equivalent) showed a generally downward trend, from a peak

of 274kg in 1976 to 256kg in 1977 and 251 kg in 1978.

It then rebounded

Fig. 3. Vietnam’s Industrial Production: Total Industrial Output by Sector 250 Index

1975=100

200

150 +

Production sector

100

As a whole

90 F

0

1

1 9 it 5

|

1 9 7 6

1

i

L

I

1 9 7 7

1 9 7 8

1 9 ff 9

1 9 8 0

Source: SO LIEU THONG KE. ..., op.cit.

zal

Feces ss

Group “A”

eee

LOUD om

|

ak.

L

1 1 yg 8 8 1 2

1 9 8 3

1 9 8 4

Year

Vietnamese Economic Reforms

29

Fig. 4 Vietnam’s Industrial Production: Total Industrial Output by Level of Management Index 250) -

1975=100

200 +

150 +

100 + As a whole 50 L

SeSS=Ss5

Under centrally management Under locally management

0 Year

CONOR F ONOr FF 00 Cr +ONOr OnNOorNNO SOOr Ff

NI rE COCO FE

WwWoowr FmCOWr

Source: SO LIEU THONG KE...., op.cit.

to 261 kg in 1979 and 267 kg in 1980. From 1981, new records were established each year, and the 1985 amount was 309 kg, or 32 kg higher than 1976. The result

was a decrease in food imports, as shown in Fig. 2. Weather conditions from 1981 to 1985 were disadvantageous for farming in both north and south.

1984 in

particular was marked by natural disasters and there were losses of 800,000 to 900,000 tons of paddy.

However, the peasants’ motivation was spurred by the

promise of material incentives under the new economic policy and there was a continuous increase in production (Fig. 1).

Dramatic effects were also seen in industrial sector.

As shown in Fig. 3,

industrial production began moving up in 1981 from the low of 1979-1980 and continued to rise. The average growth rate for industrial production from 1981 to 1985 was 9.5%, a tremendous increase in comparison with the 0.6% for average

annual growth from 1976 to 1980. National income, as shown in Fig. 5, recovered and increased each year after 1981 reflecting the revitalized activity in agricultural

and industrial sectors.

Mio Tadashi

30

Fig. 5 Vietnam: National Income Percentage change

16 % esl

a.

—

|

— a

ONOr 5 NINOr, 5 rR CONIC +

il 9 8 i

‘

Total

---- Agricul. ow

wee

Indust.

Year

NmOOr FF 0COCOr w fF O100 Or fF WoOOr Ff

“00 Ff 00 COO MD cowor Ff

Source: SO LIEU THONG KE ..., op.cit.

(4) A Tugboat Economy: Led by Regional and Light Industries

It is clear that industrial production was revitalized by the new economic policy. However, the highest growth rates were shown by light industry (group B in Fig. 3) rather than by heavy industry (group A in Fig. 3) and by locally-managed state enterprises rather than by centrally-managed state enterprises (Fig. 4). The growth rates were higher for light industry and locally-managed enterprises, because they were less dependent on imports for producers’goods and parts. The major purpose of the new economic policy was to activate potential domestic capacity and increase production of food, food products and other essentials goods in the face of reduced foreign assistance and international economic blockade.

Because centrally-managed industries and heavy industries were highly dependent on foreign sources for raw materials, parts and technology, they were the most seriously affected by the reduction in foreign economic assistance and international economic sanctions.

Regional industries and light industries (small and

manual industries) were able to obtain machinery, equipment, parts and raw materials locally and thus were relatively invulnerable to the effects of economic isolation.

The author would like to refer to this production structure led by

regional and small and handicraft industries as a “tugboat” economic structure.

Vietnamese Economic Reforms

31

(5) Defects and After-effects of the New Economic Policy!® a.

Increased Budget Deficit

While the new economic policy produced the significant effects as described above, it also produced some negative effects: extreme poverty for fixed-income workers due to inflation, market confusion and higher prices, and subsequently

rampant corruption and degradation of society.'!’ The major cause of this economic and social confusion was the expanding fiscal deficit and the national wartime subsidy system, or “bao cap” which caused it. The party Central Committee attempted through the new economic policy to eliminate the subsidy system

established under wartime communism and reduce the national debt. It introduced certain market economy forces and attempted to reform the administrative supply-price structure and wage system, but the only result was to complicate

further the wage and price systems. The subsidy system was perpetuated and the national debt was increased sharply, rather than decreased (Table 3). In order to

make up for the deficit, the government borrowed from the state bank and squandered its foreign economic aid (Table 4). The currency in circulation was increased, worsening inflation.

Because

of the imbalance between

supply and

demand in essential commodities, prices rose and the people were impoverished. (There were three main types of subsidy used in the state subsidy system: (1) the essential commodity ration price supplement, (2) the export promotion fund and (3) the state enterprise operating loss subsidy. Taking 1986 as an example, the

total amount of subsidy expenditure was 28.8 billion dong. 48.4% of this amount was used in category (1), 46.2% in category (2) and 5.2% in category (3), the greatest share going to support ration prices.)

In implementing the new economic policy, wage re-adjustments (wage raises) were enacted in 1981, 1983 and 1984. The amount of wages and salaries for which

the state took responsibility under this policy, expressed as a percentage over the previous year, was 81% in 1981, 68% in 1983 and 64% in 1984. These “bao cap” wage and salary adjustments caused an increase in the currency in circulation; increases of 64% for 1980, 200% for 1982, 43% for 1983 and 49% for 1984 in comparison to the

1978 figure. The increased currency was hoarded by consumers in order to deal

with a perpetual shortage of consumer goods.

The government’s attempt to

stimulate the propensity of consumers to save failed, because interest rates were too low, and the extra currency simply added to inflation. In November 1981, the government issued “Bond For Fatherland Construction” (Cong trai xay dung to

quoc) and made their purchase mandatory for public servants, workers in state enterprises, agricultural workers and other strata of private citizens.!° At a time when the monthly average price increase ran from 5 to more than 10%, these

bonds were registered 10-year bonds paying 2% per annum

and were

quite

Mio Tadashi

32

National Budgets of Vietnam and Relative Weight of Wages/Salaries and Sudsidies in the Budgets (in Billions Dong)

Table 3

Revenues Expenditure

1978

1979 1980

1981 1982

1983

1984 1985

1986

1987

1988

OG £0

O77 07

OR a

Tee OP

Beye A

tel 9

eee. Sa

sil 7

70) 9G

eaves 667.0 445001310)

0.7

0.77

08

14

43

39

5.5

12.1

76.5

390.0

783.0

CUE O06

Osi 0107

TORI 0)

Ores 03)

Oss 10:65

ORs 07)

US aye 3210

AN 28:8

EM 162.0

2G 1000

0309

0Iy

4

20

26

2210)

-0.3

-0.5

-0.2

-1.8

-19

Current

Expenditures Wages and Salaries Subsidies Capital Expenditures

030307

Overall Deficit

—0.25 -0.3

65-4

0023020

-4.4 -28.5 -110.5

-346.0

Sources: Provided by Vietnamese authorities.

Table 4

Financial Resources to Cover National Deficits (in Billions of Dong) 1978

1979

1980

1981

1982

1983

1984

“0/255

0/3

0:35

10:5

2.0)

1S)

9

442825

O23

OT

e029

0558

ale

eC

led

eel

ae

bss 2S

aL KONG) OSS ae Oss

Overall Deficits”

1985

Foreign Loans &

1986

1987

1988

105

346.0

.

Grants

a(0)

measOe OND

State Bank of

Vietnam Bonds

0.02 —

0.03 —

0.01 — —_—

(Oey —_-

—

Gee ewey

aa OMG

Sources: Data provided by Vietamese Authorities.

unpopular.

Yet, the total subscription had reached 3 billion dong (dong is Viet-

namese currency unit) by 1984 and contributed significantly to offsetting the national budget deficit (Table 4).

b.

Impoverishment

Because

of the inflation caused by the new economic

fixed wages

policy, workers with

or salaries had to suffer from monthly average price increase

of 5% to 10% between 1982 and 1985.19 Since monthly salaries provided no more than a week’s living expenses, almost all households had to find extra sources of

income to make up the shortage. It became common in Hanoi for families to use one room of their apartment house units to raise pigs. Pig-farming was the best

source of extra income and most families turned one room of a three-room

Vietnamese Economic Reforms

33

apartment over to pigs, hardening themselves against the noise, odor and poor hygienic conditions. c.

Irrational Price and Wage Systems Held by Subsidy System

The Communist Party of Vietnam employed a “war wage system” to guarantee the livelihood of workers and public officials during the war against France. Essential commodities were rationed at low prices at government expense, and government subsidies were used to keep the cost of housing, electricity, water, transportation,

etc. low. This policy was continued during the war with the United States and was implemented in the south after reunification. The purpose of the “wage and price adjustments” of 1981-1982 was to reform the wartime price system, which was a major cause of the national budget deficit and inflation, to reduce the deficit and to create conditions

for the switch to a cost economic

accounting

system

for enterprises. In order to stimulate producers’ motivation to produce, state purchasing

prices were raised so that the price might cover production costs and producers might be able to obtain a reasonable profit. The cost of producers’ goods to be included in production costs was to be calculated on the basis of international market prices, and the import price was to be directly reflected in the production cost, by abolishing any subsidy for the imported goods.”° In practice, however, this policy was fully applied only to the agricultural sector.

Implementation in

state-owned industrial sector was fragmentary and the subsidy system was kept in place. The government supplied producers’ goods to state-owned industries at a subsidized price below the import price, and finished products were “bought up,

if not plundered,” from the enterprises by the government at a low price, which just barely left enough funds to pay wages.

This meant that the price of the

product was lower than its production cost. The producer could neither make a profit nor build up accumulation fund. Without depreciation reserve, machines

and facilities could not be repaired and capacity utilization ratio dropped in a short period of time.?! These were the results of an irrational policy. Because of these price adjustments, official prices rose by five to seven times, approaching markets prices.”

The party and government were attempting to

abolish “bao cap” by means of this policy, but they did not implement it radically. The price adjustments were made in a piecemeal fashion and the subsidized character of the wage and price system remained intact. Specifically, the rationing prices of nine essential commodities - rice, pork, sea fish, fish sauce (nuoc mam), sugar, glutamate, soap, kerosine and poplin cloth - were kept low by government

subsidies.

The difference between the ration price and the retail price at state-

owned outlets for these nine items was subsidized and the official prices for

commodities other than these nine were raised.

34

Mio Tadashi

These price adjustments complicated the official retail price system for consumer goods, effecting a change from the former “two-price system” (ration price

and official market price) to a new kind of “two-price system” which included three kinds of retail prices for consumer goods. These three kinds of retail price were “fixed prices” (ration prices for the nine essential commodities), “business prices”

(variable prices at state-run outlets) and “state-guided prices” (ration prices for commodities

prices which

other

followed

than

the nine

essentials).

the price adjustments

gap between fixed prices and business prices.

caused

The

rise in commodity

rapid widening of the

In 1985, there was a 100-fold

difference for rice, 53-fold for pork, 30-fold for fish, 18-fold for fish sauce, 29-fold

for sugar, 53-fold for glutamate and 33-fold for kerosine.?* The greater this difference became, the heavier the burden on state finances and the larger the fiscal deficit (Table 3). d.

The Problem of “Wages in Kind”

The result of the price increases which followed the price adjustments of 19811982 was a great change in the nature of wages. An abnormal situation occurred in which nominal wages

(wages and salaries paid in paper currency)

made

up only 30% of real wages, and the remaining 70% was paid “in kind” with rationed goods sold at ration prices.24

The payability of the fixed prices for the nine

essential commodities was ignored and the difference with business prices was covered by government subsidies, so the gap between fixed prices and business prices grew as market prices soared. When the market price for the rationed nine

essential commodities was converted into a business price, the value was 70% of real wages.

The “wages paid in kind” were non-labor-related income, since they were

distributed to everyone in the work-place through ration books and coupons without regard to rank, ability or effort.

This flat compensation had a very

destructive effect on the motivation of able, diligent workers and officials. Also, under this wage system, only nominal wages, counted in terms of fund for wage,

were included in production costs. Wages paid in kind were left out of production costs, so an enterprise could not calculate its production and distribution costs accurately.

Furthermore, because each enterprise and government institution

could raise the wages and bonuses of its cadres and workers at will to increase

their take-home pay, any effective correspondence between the wage system and price system was lost and this had an adverse effect on the distribution of goods throughout the country.?® This irrational price system was a “rope which tied down enterprises to the bureaucracy and spoiled the production and autonomous management of enterprises.” It robbed enterprises of productive motivation and creativity, and tended

Vietnamese Economic Reforms

35

to make them unmindful of wasted materials and energy.2°

The “two-price”

system containing three kinds of retail prices led to indiscriminate wages and payment in kind, practices which went against genuine socialist principles of distribution.

The system not only reduced worker motivation, but also led to

bloating of the administrative structure and to increase the degree of bureaucratism.

This form of wages made it impossible for an enterprise to calculate

production costs accurately and, together with irrational production goods prices,

produced “prices which do not reflect value.” This price structure made calculation of the gross national product and national income inaccurate and was the major cause of squandering foreign economic assistance.

2. The Second Phase — the So-called “Economic Reform””’ The 5th Plenum of the 8th Central Committee studied the results of the five-year “new economic policy” and decided that, in order to switch from a wartime economic management system, which was dependent on foreign assistance, to a

socialist economic accounting system, it would be indispensable, above all, to reform the wage and price systems based on government subsidy and to re-

evaluate the dong currency which had lost so much actual purchasing power. Reform of the wage and prices systems began in July 1985 and monetary reform, consisting of denomination and devaluation, began in September of the same year. This policy was labeled from its start “cai cach kinh te” or “economic reform.”?°

The 8th Central Committee resolution set the following basic policy on the price and wage issue. First, all prices were to be calculated on the basis of the price of paddy rice,

a single-price system was to be established in the overall price system, eliminating irrational price differences by administrative division or economic sector. The two categories of wages, wages in kind using subsidized prices and money wages, were to be turned into a single money wage and a minimum wage determined to serve as the standard for a national unified basic wage system. Fluctuation in the retail price (business price) of rationed goods was to be met by state adjustments

in wages, in accordance with the amount of a price differential subsidy and a livelihood subsidy.?? The wage and price systems described below were established on the basis of these basic guidelines. (1) Wages to Include Price Differential Compensations

The actual method proposed for implementing a unitary money compensation system was to incorporate into money wages the price differentials for fixed prices and business prices. This wage figure was then to be included in production and distribution costs.

This policy, referred to as “money compensation for price

differentials,” was implemented in July of the same year.

Under this policy, the

36

Mio Tadashi

issuing of ration books and coupons was to be abolished and rationed goods were

to be subject to direct purchase by cash at the “business price.” The result of incorporating the differential between the ration price (fixed price) and business

price in wages or salary was to increase nominal wages three-fold. The implementation of a single-price system and money wage system made

it possible to include the “wages in kind,” which make up 70% of real wages, in production costs. Asa result, goods could be sold at a “value-reflecting price” (the business price). The subsidized prices, or “fixed prices” and “state-guided prices,” could be eliminated, and a single-price system created using the “business price” as the only retail price for consumer goods. (2) National Unified Basic Wage System

Under this system, a single minimum wage was established nationwide in line with price levels as of September 1985. On the basis of this standard, a three-level wage system — minimum, average, and maximum — was created, and wages

were to be paid with allowances for profession, skill and locale. The standard for calculation of the minimum wage was the amount of money necessary to reproduce the labor force of a worker doing the simplest and lightest work under ordinary working conditions. It is calculated, on the basis of an Engel coefficient of 64%, to guarantee a minimum intake of 2,000 kilocalories per day per worker and

to guarantee that available support for each dependent (child, parent, etc.) is 38% of the subsistence expenditures required for the worker himself.

Each type of

living allowance was to be adjusted every three months according to price fluctuations.

The standard for rational wage differentials was set at 1.3 times the

minimum wage for the average wage and 3.5 times the minimum wage for the maximum wage.°° (3) Single-Price System

The price of paddy was used as the basis for calculating prices in the single-price system, because, in Vietnam, “Small-scale production is predominant, and agriculture is the first front-line of economic activity”! (in 1985, 71% of the work force was

engaged in agriculture and 11% in industry, with agriculture accounting for 40% of the national income and industry 33%). Under this policy, the government purchase-price of paddy and other agricultural products was to be determined by consultation between the government and the producers. It was to be a “mutuallyagreed price” system.

This system attempted to guarantee that the producer

could cover production costs fully and realize a reasonable profit.

For this

purpose, a “bilateral economic contract” (hop dong kinh te hai chieu). system was

proposed.

Under

the system,

the government

calculates the total price of

the agricultural producers’ goods it supplied to the farmers based on a fixed rate

Vietnamese Economic Reforms

if

throughout one farming season, and the farmers are allowed to claim expenses for obtaining other producers’ goods which were

not provided by the govern-

ment but purchased on the free market.*? At present as well as at that time,

the production goods supplied to farmers by the government (kerosene, gasoline,

chemical

fertilizer, agrochemicals,

irrigation pumps,

etc.) still meet only 40

to 50% of demand and the farmers must purchase the rest of what they need on the free market,

so this method

of determining

prices is necessary.

The

reason that the amount of agricultural producers’ goods supplied by the government is still so small is that almost 50% of imported goods are diverted into

the free market.** As for production costs of industrial goods, it was recognized that there was a need to accurately calculate the amount of the wage fund, production costs, and depreciation.

Also, since 80% to 90% of major producers’ goods in

Vietnam are imports, it is necessary to accurately determine the price of imported

producers’ goods.*4 (4) Poor Implementation of Policy

The government attempted to establish a single-price system and completely abolish the subsidy system, but in practice the double-price system remained in effect. Some strategic goods such as steel, oil, and gasoline continued to have two

prices or three prices, depending on their use as producers’ goods or consumer

goods. Because of this, the subsidy system was maintained, and the government continued to bear the burden of subsidized price differentials. The abolishment of the subsidy system was piecemeal and the new policy was only applied to the

prices of the nine essential commodities.

Subsidies continued for housing, elec-

tricity, water, medical treatment and transportation.

The ration coupon system

was not completely abolished, and the coupons were still issued for commodities which were in short supply, like food, fuel and textiles.

In short, the subsidy

system stayed in effect.*° (5) Monetary Reform On September 13, 1985, the Vietnamese government carried out a denomination

of the dong currency. The unit of the dong was reduced by one tenth, so ten dongs under the old currency system were taken as equivalent to one dong under the new system. A limited amount of old notes and coins were exchanged for new, and

any cash exceeding the limit was to be deposited into a bank account where it was frozen.2° This was the third monetary reform since reunification, the other two having taken place in September 1975 and May 1978. The exchange rate was devaluated along with the dong denomination.

The

dong exchange rate for US dollars was lowered from 15 old dongs per dollar to 15

38

Mio Tadashi

new dongs per dollar. At the time of this devaluation, the black market exchange

rate was 400 (old) dongs per dollar. (6) Results of Price, Wage and Monetary Reforms The results of the “economic reform” begun in 1985 were the opposite of what was

intended by the party and government, creating an unexpectedly serious predicament and resulting in high-level personnel changes in the party and government. It had been expected that the price and wage reforms would do away with the national subsidies, but the amounts of expenditure for wages and salaries and for subsidies in the national budget for FY 1985 rose substantially, by 4.6-fold and 85% respectively over the previous year. As a result, the budget deficit also rose to 2.2 times the deficit of the previous year, and subsidies accounted for 45% of the total deficit, an increase rather than a decrease.

Monetary reform had no beneficial

effects, and the dong denomination was reduced again in November 1986 by 80%.

The exchange rate was also reduced to 80 new dongs per US dollar. The resulting precipitous drop in the purchasing power of the dong was reflected in a further

devaluation to 368 new dongs per US dollar in December 1987. The tempo of consumer price increases quickened substantially after the economic reform of 1985. A “game of tag” situation arose between state prices and

free market prices.

In Haiphong, one of the three major cities of Vietnam, the

monthly average increase in prices of 47 essential commodities was 236% for the

first quarter of 1986 (249% for March of that year alone), and this was a continuing trend.*’ In Hanoi, the percentage index of the minimum wage taken up by the cost of living for October 1986, one month after implementation of the wage and price reforms, rose to 41%-55% compared with 25% for the previous month.

By Decem-

ber, it was 70% and in January of the following year 80%. As prices continued to

climb, a situation was created in which “the worker cannot buy the goods necessary for living and working and cannot work with peace of mind. Any cash on hand is soon used up in an attempt to stock up on goods while they are available. With these violent price fluctuations, business enterprises cannot convert to a cost ac-

counting system. Some workers abandon their jobs to become merchants.

Only

the merchants can make money.”’® In January 1986, the party and government finally reverted to a rationing system in Hanoi for rice, salt, sugar, soap and fuel in order to protect the people’s livelihood. In October 1986, one year after the economic reform, then General Secretary Truong Chinh gave a speech in which he lamented the fact that traditional values, spirit and morals were deteriorating because of unemployment, high prices and poverty. He warned that there was pervasive doubt about the future and a loss of trust in the party among the workers.*? Le Duc To, the Politburo member in charge of ideological activities for over 40 years, lamented in an article written in

Vietnamese Economic Reforms

39

June 1986, “Money is overwhelming the conscience and, even honor, of party members. The tact and behavior of party members have never been so compromised as they are now.”?°

The economic reform initiated in the 8th Plenum of the 5th Central Committee was a failure. To Huu, Politburo member and deputy prime minister, who had risen quickly in the power structure since 1976, was made to take the blame for the failure of the economic reform and relieved of his post of deputy prime

minister. At the 6th Central Committee, he also lost his seats on the Politburo and the Central Committee. General Van Tien Dung, defense minister and hero of the Ho Chi Minh campaign, was criticized for some reasons and ousted from his

position as defense minister at the People’s Armed Forces Party Division Conference in October 1986, just before the 6th Party Congress, and lost his seat on the Politburo at the Party Congress itself. These moves drew attention as the beginnings of a shakeup in the top leadership of the party, resulting from the failure of the economic reform. 3. Third Phase of Economic Reform — The Economic Reforms of the

6th Party Congress The 6th Congress of the Communist Party of Vietnam, from the preparatory stages on, was marked by the promotion of “doi moi” or renovation, particularly “renovation in economic thinking.” The “renovation” first showed itself in person-

nel changes among the top party leadership.

The top secretary (variably called

First Secretary, Secretary-General or General Secretary in years) and many of the

Politburo members were proponents of a pragmatic, flexible socialist policy who spent time at the Ho Chi Minh City Party Committee.

Nguyen Van Linh, former

secretary of the Ho Chi Minh City Party Committee, was elected the General Secretary of the CPV, and other important figures from the same committee,

including Vo Van Kiet and Mai Chi To, were elected to the Politburo. The top party leadership engaged in deeper and more serious self-criticism at the 6th Party Congress than at any previous meeting.

It became a general

confession session for the leadership. General Secretary Truong Chinh criticized

himself by admitting mistakes in economic policy by the party and government, characterizing these mistakes by words like idealism, leftist infantilism, subjectivism and impatience.

He reflected painfully that because of excessive haste in

socialist collectivization, the non-socialist economic sectors were eliminated too

quickly, that there was too much emphasis on large-scale, heavy industrial construction, that bureaucratic upperstructure not suited to Vietnam’s economic substructure were maintained by dependence on foreign assistance, and that the

subsidy system was continued too long, resulting in a major wastage of foreign economic assistance.*! Chinh had been seen as a typical advocate of spiritualism

Mio Tadashi

40

and dogmatism of the party since 1950s, and this turnaround was extremely surprising to observers inside and outside Vietnam. However, by skillfully making a show of personal “renovation” from a dogmatic position to a more flexible one, he was substantially instrumental in paving the way for the pragmatic Nguyen Van

Linh’s takeover of the government. (1) Economic Policy of the Nguyen Van Linh Leadership The Linh regime’s economic policy retained the basic position of the previous government’s policy, that the central task of for all phases of the transition to socialism is the promotion of industrialization, but it took a different approach to performing this task. It held that socialist industrialization was a later stage in the transitional process and that, at the present early stage in the transition, the major task is implementation of economic measures which lead directly to stability and improvement of the people’s livelihood. This means expanded production of food, food products, other necessities of daily life and export products.

The policy

demanded, as a comprehensive guideline, more selective construction of heavy industrial facilities, only where these facilities were directly related to the achieve-

ment of this major task.*? The economic reform, which the previous regime attempted and failed, was tenaciously continued as the only way to eliminate bureaucratic centralized economic management dependent on the subsidy system in order to convert to a cost accounting system. However, under the new policy, elimination of the subsidy system and price and wage reform was basically to be gradual and keyed to the degree of development of the national economy.*? The basic economic development policy adopted at the 6th Party Congress was announced as “three major economic programs.” This reform policy called for

concentrated development in three sectors: food and food products, consumer goods, and exports.** Investment was to be concentrated in these three areas and there was to be active utilization of the potential strength of non-socialist economic sectors, that is, the individually- managed sectors and private capitalist economic sectors in the south, principally in Ho Chi Minh City, in addition to the state and

collective economic sectors. In 1987, the Central Committee announced a succession of specific measures for putting this policy into effect. First, in the 2nd Plenum of the 6th Central Committee (April 1987), targets were presented for the “four decreases,” an attempt to solve the three immediate problems of prices and

distribution, the national budget deficit, and wages and livelihood.

The “four

decreases” were reductions in the national budget deficit, bloated monetary inflation [cash in circulation], high prices and hardship.*®

Vietnamese Economic Reforms

Table 5

4]

Major Economic Indicators of Vietnam

National Income Industrial Production Agricultural Production Food Production Exports

1983

1984

1985

1986

1987

1988

1989*

ee 6.7 ee, 2.8 23.8

8.3 12.0 4.2 4.8 13.1

Del 12.4 4.7 ap 12.2

3.4 4.5 Heo 1.8 D2

Za ES -1.3 =5.8 12.1

5.8 9.0 4.1 8.5 13:5

8.2 10.0 5.0 9.3 15.0

* National Planning Goal Source: Published data of the Vietnamese government.

Table 6

Vietnamese Population, Commodity Production and Currency Purchasing Power

. Population (1000)

. Total Production . Retail Commodity Volume . Currency in Circulation . Retail Commodity Prices . Currency Purchasing Power WD fF no Source:

1976

1980

1985

1986

1987

49,160 100 100 100 100 100

93,022 105 79 223 189 O29

59;872 155 152 2,995 2,890 3.8

61,070 157 123 13,610 16,150 0.80

63,000 162 04,864 62,305 0.16

1. Population figures are obtained from Vietnamese Statistics Bureau data. 2-3. Figures are obtained from Huy Minh’s paper in CHI CONG SAN Magazine,

Table 7

November 1988.

Vietnam: Balance of Payments, 1983-1987

(In Milions of USS)

Exports Imports Trade Balance Current Account Capital Account Overall Balance Gross International Reserves Weeks of Imports (convertible) * Net International Reserves External Debt (end-of-year)

1983

1984

1985

1986

1987

588 -1,310 -722 -730 582 -174 48 8

665 -1,560 -895 —926 618 -313 17 2

746 —1,590 844 —891 630 —269 17 2

785 =2,155 =1,379 —1,423 1,109 -315 15 2

880 =2,191 =1,311 -1,361 998 -374 15 2

—84 5,074

-l1 5,719

-15 6,740

-20 7,652

—26 8,622

*Number of weeks during which the current international reserves can import goods from convertible areas.

Source:

Data provided by Vietnamese authorities.

42

Mio Tadashi

(2) Economic Performance in 1987: The First Year Under Linh The new leadership achieved noticeable results in the areas of “democratization”

and “openness” in everyday social and political lives. In economic field, however, although the “three major economic programs” were carried out to some extent,

none of the “four decreases” were achieved. The budget deficit in 1987, as shown in Table 3, grew four-fold over that of the previous year (5% of Gross Domestic Production), and 60% of the debt was covered by borrowings from the state bank.

This caused an increase in the currency in circulation (Table 6), contributed to inflation spiral and led to a rise in prices which put further pressure on the people’s

livelihood (Tables 6 and 7). In macro-economic terms, the economic performance for the first year under

the new government, 1987, was worse than that of the previous administration. Agricultural production (which accounted for 48% of the national income) was low, because of poor weather in the northern part of the country during that year.

Growth in national income had averaged a healthy 8% between 1982 and 1984, but dropped to 4.5% in 1985 and 1986, because of low agricultural output due to bad weather.

In 1987, it fell further, to 2.1% (Table 5). This was because of an even

greater drop in agricultural production (1.3% less than the previous year) brought

on by bad weather, blight and insect damage in the north and a shortage of

fertilizer and insecticide. Food production, the pillar of the “three major economic. programs,” was up to 304 kg (paddy equivalent) per person in 1985, but fell to 280 kg per person in 1987. In pre- harvest months, famine broke out in some areas and the government was forced for the first time since the founding of the country to make an international appeal for aid in food.’° Prices continued to climb (Table 6) and there was no relief for the Vietnamese people’s impoverishment. Exports showed a substantial growth of 12.1% in 1987. Although there was a decrease of 6% in exports to nonconvertible areas, there was a 40% increase to convertible areas. This sudden increase in exports to Western countries occurred,

because Vietnam began exporting crude oil to the West (30 million dollars’ worth)

that year.

The balance of trade showed a deficit of 1,276 million dollars with

respect to the nonconvertible areas, about the same as the previous year (1,224 million dollars), but because of the large amount of exports and small amount of

imports in trade with convertible areas, the total trade deficit was only 1,311 million dollars, down from the 1,379 million dollar deficit of 1986. In terms of the

international balance of payments, however, the overall deficit was 374 million dollars, up from 315 million in 1986 (Table 7). * The gross international reserves in Vietnam had fallen rapidly from 48 million dollars in 1983 to 17 million dollars in 1984, continued falling to 15 million dollars

Vietnamese Economic Reforms

43

in 1986, and then stayed at about the same level. The external debt grew from 7.65 billion dollars in 1986 to 8.62 dollars in 1987 (Table 7).

(3) 1988: Production Begins to Rise The only data on the economic performance of 1988 available at the time of writing

is contained in the economic report of Deputy Prime Minister Vo Van Kiet at the National Assembly session late in 1988 and an interview Deputy Prime Minister and Foreign Minister Nguyen Co Thach gave to a reporter from the Vietnam News Agency in January 1989. Very few specific figures were mentioned in the year-end

report to the National Assembly, because compilation of economic performance was probably not complete at the time the assembly session was held. After the failure of the economic reforms started in the fall of 1985, the

Vietnamese

economy

continued to show a decline in production until 1987

along with three-digit inflation, but production seems to have begun moving upward

in the second

quarter

of 1988.

On

the macro-economic

level, as

shown in Table 6, economic performance showed signs of recovering from the continuous decline seen between 1985 and 1987 and inflation began to slow down

to some extent. During the second year of the Nguyen Van Linh leadership, there was some progress in increasing the production of food and consumer goods. In spite of 500,000-ton loss due to flooding in central Vietnam, food production reached the state-planned target of 19 million tons (paddy equivalent), and per capita food production moved up to 297 kg. This did not mean achievement of self-sufficiency in food production, but there were at least no further outbreaks of famine like

those seen in 1987. This improvement was due to good weather, sufficient imports of fertilizer, agrochemicals and insecticides, and improvements in government purchasing practices for agricultural products, particularly food, which came closer to meeting peasant requirements. Walking the streets of Hanoi and Haiphong, one is impressed with an obvious increase in the volume of consumer goods, especially essential commodities.

Deputy Prime Minister Vo Van Kiet, in his year-end report for 1988 to the National Assembly, said, “Consumer goods have become abundant and [products] have diversified.

The imbalance between supply and demand has begun to right

itself.”4” Specific figures were not given, so it is impossible to say how much production of particular products had improved, but according to Kiet’s speech, overall industrial production (in value) was up 9% over the previous year and consumer goods (in value) were up 11%.

From observation of the marketplace,

this author gained the impression that there was a much greater quantity and variety of essential commodities available than in 1987. However, it was a matter of some concern to see that the obvious increases in the amount of goods were in

44

Mio Tadashi

privately-managed

stores rather state-owned outlets.

This meant that goods

meant for the state-owned stores had been illegally diverted to free market. (4) Inflation Starts to Cool

According to an International Monetary Fund (IMF) report, inflation (the rate of increase in consumer price index) in Vietnam jumped from 90% in 1985 to 500% in 1986, fell to 300% in 1987, and began to creep upward again in 1988 because of the

monetary inflation [increased currency in circulation] and the growing imbalance between supply and demand

for goods.

Table 6 was taken from an article

published in Tap Chi Cong San, the CPV official publication, and it shows that, in comparison with 1976 levels, retail prices multiplied 29-fold in 1980, 162-fold in

1986, and 623-fold in 1987. Deputy Prime Minister Vo Van Kiet, in the speech already mentioned, stated that inflation continued to be a serious problem, but there were some signs of a

letup in the last three or four months of 1988, and that the rate of price increases for all of 1988 was a little slower than that of 1987. Deputy Prime Minister Nguyen Co Thach made the following statement in an interview with a reporter from the

Vietnam Courier.*® “On the whole there has been some economic progress in the second half of 1988. Whereas in the first half of the year the average rate of monthly inflation was 18%, it has gone to 8% in the second half.”

With respect to the reasons for the slowing down of inflation, he said,

“Monthly currency issue has gone down from 20% to 10%; the late autumn harvest brought in 19 million tons of paddy and paddy equivalent, an increase of over a million tons from 1987; the prices of goods produced in the State

sector have been for the most part brought up to free-market level, thereby reducing demand and boosting supply, the overall result being to lessen the prolonged artificial imbalance between supply and demand; the application of the contract system in agriculture and the granting of financial autonomy to State-run enterprises have made their initial impact felt.” At the time of this writing, no figures had been published for the national

budget, so it is not known whether there has been an increase or decrease in the deficit.

Food production met state planning quotas, somewhat improving the

supply and demand

condition in the food supply and inflation was slightly

reduced, so preliminary results have been achieved for the two of the “four decreases.” However, it is doubtful that the budget deficit has been reduced or that there has been a significant reduction in the level of people’s hardship, so the economic performance of the second year of the Linh regime cannot be given very high marks. It is noteworthy that the gap between the official and black market rates

Vietnamese Economic Reforms

45

for the US dollars began to show a narrowing

trend in mid-November

of

1988. This author’s own observations in Vietnam showed that, in March 1988, the black market rate was 1,800 to 2,000 dongs per dollar, as opposed to an official rate of 368 dongs (the official exchange rate in effect since December 1987), climbing to 3,600 dongs in September, and 4,700 by the first part of November.

However,

the

State

Bank

devaluation of the currency on November

of Vietnam

announced

a major

12, to 2,600 dongs to the dollar,

triggering the narrowing gap between the official rate and the black market. In December,

the black market

rate fell daily, from 4500 to 4300 to 4200.

The State Bank then proceeded to devaluate the dong further, to 2,800 dongs

to the dollar on December 15 and to 3,000 dongs and 3,300 dongs in January 1989.

The

narrowing

of the gap between

official and black market

rates is not

necessarily a reflection of revitalized Vietnamese economy, but rather the result

of the state bank policy of beginning to sell US dollars, for the first time since the founding of the country, along with reductions in the official exchange rate. In March 1989, the Trade Bank of Vietnam began to publish exchange rates for the dong and currencies of non-communist nations in the daily Saigon Giai Phong, a newspaper published by the administrative committee of Ho Chi Minh City. The exchange rates, published roughly every four days, showed in June, 1989, that the dong was rated very close to the actual value of the currency (4,000 dong), so

it seems that the Vietnamese government is moving gradually in the direction of a floating exchange rate. (5) A Policy of Fast-Paced Economic Renovation

The Nguyen Van Linh leadership is faced with very serious problems of deterio-

ration of public order and security caused by its economic problems: the imbalance between supply and demand, three-digit inflation fueled by a perpetually growing budget deficit, a pinch on workers with fixed incomes including soldiers, an unemployment rate of more than 10% and a growing gap between income levels brought about by government policies for vitalization of the economy.*® The only

overall solution for these problems is further vitalization of the economy, and for in quick succession during the second year ofits administration, particularly during the 5th Plenum of the Central Committee. These measures include renovation of eco-

this purpose, the Linh regime has adopted a number of measures

nomic management mechanisms, expansion of autonomous management privileges and conversion to a cost accounting system for state-run enterprises, promo-

tion of family economic activities, individual business management, and private capitalistic economic sectors, promulgation of foreign investment code, reform of distribution practices, various tax system reforms and new land- regulations. The number of major new policies adopted in a little more than two years by the Linh

46

Mio Tadashi

regime is about the same as the total number of major economic policies adopted in the first ten years after the war.

General Secretary Nguyen Van Linh has demonstrated a very strong commit-

ment to economic improvement.

His policies for promoting individual business

management and private capitalist enterprise particularly impressive. In order to reduce the state budget deficit, the Linh administration

has

admitted to establish the first private college in socialist Vietnam’? and has intro-

duced a system under which patients will be liable for part of their own medical expenses.°! The Vietnamese Ministry of Higher Education had begun retracting privileges, like scholarships and tuition exemption, from students who failed to

demonstrate a serious attitude toward their studies, and the establishment of private universities is expected to make a significant contribution to the elimina-

tion of “bao cap.” Other noteworthy attempts at step-by-step elimination of “bao cap” are the resolutions

to completely

“commercialize”

the the businesses

of supplying

agricultural producers’ goods to the peasants and of purchasing agricultural products in 1989,° as well as to convert all commercial enterprises in Hanoi to a cost accounting system by April of the same year.°?

These moves are basic steps

necessary to achieving the “single-price system” policy adopted in the 8th Plenum

of the 5th Central Committee.

II. Issues and Trends in the Economic Policy Debate A vigorous debate on economic policy is conducted in Vietnam today, particularly on the issues of inflation and privation. The state-run economic sector is today not fully capable of activating the country’s economy and it is necessary to find a way to solve the problems of a burgeoning population, an imbalance between the supply and demand of essential commodities, a stubborn budget deficit and excessive currency in circulation, and the resulting three-digit inflation. The party policy line now calls for active utilization of the non-socialist economic sectors, and there is a growing consensus on this issue both in the party and among economists.

However, opinion is divided on how much freedom of action should be

allowed in the non-socialist economic sectors, particularly how far to go in granting autonomous management privileges to individual entrepreneurs and private

capitalist economic sector. Even among the economists in the economic research institute under the party’s authority, there is a broad range of opinion. At one end,

some believe that all state-run enterprises should be transferred to the private sector, while at the other end, some believe that it will be sufficient to expand the degree of managerial autonomy inside state-run enterprises.

Vietnamese Economic Reforms

47

At present, the party and government have adopted a policy of transforming the state-run enterprises which have low rate of operation or prolonged losses into collective enterprise or joint state-private enterprise, or of leasing these troubled enterprises to domestic capitalists.°4 They have also decided to remove restric-

tions on capital and number of employees in individually-managed and private capitalist enterprises to promote their growth.

In reply to the conservative

opposition which maintains that these policies are in conflict with socialist economic ideas and could lead down the path to capitalism, party leaders explain that the most important and immediate concern is to expand the volume of available goods, employment opportunities and income.

This policy of the CPV central

leadership is well expressed in the following statement made by Nguyen Van Linh when he visited two limited partnerships in Hanoi in February 1989. “There is no need to worry about becoming bourgeois. The main thing is to pay taxes correctly and to pay the workers a decent, rational wage. Expanding

the amount of goods for consumers and providing export products for the

nation — this is what will contribute to the building of socialism .... There is still much fund in people’s hands.

In Hanoi alone, there are billions of dong.

However, there is still suspicion in the people’s hearts. They are afraid that someone will ‘let them get fat and then take away the meat.’ Therefore, I must categorically state that the policy of coexistence of multi-component economy is a long- term policy.”°° This new policy is completely different in substance from the policies of the Le Duan era. General Secretary Linh refers to it as the first stage of the transition to socialism, and his policy for distribution and allocation is completely different from previous policies. The basic principles for distribution and allocation in the Le Duan period were expressed by the phrase “union of three interests” — the interests of the state, the interests of the collective, and the interests of the

individual. Under the principle of joining these three interests (the 6th Plenum of the 5th Central Committee, July 1984), precedence was given to the interests of

the state while the interests of the individual were considered last. At that time,

the party leadership, following the policies adopted in the 6th Plenum of the 4th Central Committee June 1979), had been carrying out certain economic liberalization measures which included the use of market mechanisms and good results

were achieved in the production of food and consumer goods.

However, there

were abuses of freedom at production sites and there was a growing tendency to

emphasize the individual and collective interests and ignore the interests of the state. This is why the party leadership felt it necessary to define the proper order of the three interests.°® The Linh leadership, however, has reversed the order of

precedence of the “three interests,” giving first place to the individual, second to the collective and last to the state.>” In the Le Duan era, the partial introduction of

48

Mio Tadashi

market mechanisms was limited to production; they were strictly forbidden in distribution. As a means of activating the economy, however, the Linh administration is attempting to make active use of the non- socialist economic sector in

distribution and services as well as in production.* It is noteworthy that after only two years in power, the Linh leadership has created a new principle of production, distribution and allocation, which is completely different from the principles used by Le Duan. Another unsettling problem which has arisen in connection with the party policy of using the non-socialist economic sectors is the question of whether party members should be able to take an active role in these sectors. Ifthe present Party Statutes are strictly interpreted, party members are permitted to participate in family economic activities, but cannot participate in economic activities in any other economic sectors (Article 1). Since hired labor is used in the non-socialist

economic sectors, unlike family economic activities where only family labor is used, the problem of “exploitation” in terms of Marxist-Leninist political and economic theory is bound to arise. In the wake of the depression of 1979-1980, all Vietnamese with fixed incomes, including public officials, workers, and military personnel and their families, find it impossible to make a living without moonlighting.

This economic deprivation

was made worse by the failure of the economic reform begun in the fall of 1985. After the 6th Party Congress, the party leadership took the stern position that the state would be unable for some time to guarantee real wages sufficient for the subsistence of workers with fixed incomes, and asked all such workers to supplement their incomes from other sources such as family economic activities (reso-

lution of the 2nd Plenum, April 1987).°° Workers with fixed incomes are only able to support themselves and their families for one week on a monthly salary, so must use other sources of income to survive.

According to an article in the official

periodical issued by the CPV central organ, 16,229 of the 38,443 households

engaged in individual business activities are cadres, workers and public officials. 1,838 of these households are party members. in Ho Chi Minh

In a survey of 840 party members

City, it was found that 195 were

involved in some

kind of

individually-managed business, including money lenders and massage parlors and that many of them had hired workers who were not members of their family. A resolution of the 5th Plenum in July 1988 states; “A party member must work, but must not exploit others. This is a matter of principle.

Under present conditions, all party members

are required to

struggle and strive, using all of their abilities, to eliminate poverty and back-

wardness with their own creative and high quality work (including physical and mental labor and technical and management work) to make the nation rich, to increase the people’s and their own income and contribute to the

Vietnamese Economic Reforms

49

stability and improvement of life.” There was an active debate among party members, cadres and researchers over this resolution after the plenary session with respect to “economic activities of party members and the presence of exploitation.” An exchange of opinion on

this subject was published in Tap Chi Cong San, the theoretical journal of the party central organ. A number of articles displaying a variety of opinion were run from September to November 1988. There were five common themes treated in these

articles: how exploitation takes place, whether party members were permitted to engage in capitalist and private business activities, whether party members should be allowed to become wealthy, what conditions must be met if party members are

allowed to engage in private economic activities, and whether workers in individually- operated businesses can be accepted to party membership.®?

A conference

of representatives from various fields was convened by the party authority in Hanoi in the fall of 1988 to discuss these questions and the debate was heated. According to the summary report of this meeting, consensus was reached that party members could participate in family economic activities and, if necessary, hire some outside help. However, opinion was divided three ways as to whether

they should

be allowed

to operate

individual

proprietorships

or capitalist

private enterprises.*®* Discussion of these issues will surely continue, but the basic position of the

party leadership has been determined, as evidenced in the above-mentioned statements by General Secretary Linh, and this position is an almost completely laissez-faire attitude toward the non-socialist economic sector. One of the profes-

sors of economics at the training school for party cadres, a group which has great influence on party and government economic policies, says;

“The categories of ‘employee, ‘exploitation,’ and ‘being exploited’ are categories of the old economy, the old society.

They should not be used for the

present society of our country .... If we use the categories of hiring and exploitation, we cannot accurately grasp or interpret many economic phenom-

ena and many new factors of our society.”°* Another professor holds the opinion that; “exploitation is not a good thing, but frankly speaking, unemployment, stagnation and poverty are far more threatening. Today, we should recognize that we could not avoid exploitation or eliminate it at once.

That is, we should

permit a small evil in order to fight many other larger evils, permit one evil in order to fight greater evils. This decision is wise and consistent with the spirit of renovation and the actual circumstances of our country.”®° It seems that the process of implementing the Linh regime’s bold economic policies has aroused two diametric reactions. that the recent drastic moves

One is the tendency to anticipate

to vitalize the economy

will open the way to

Mio Tadashi

50

capitalism.

The other is the tendency to hope for a restoration of bourgeois

democracy and capitalism through the Linh leadership’s policies of “renovation,” “democratization” and “openness.” The former tendency is generally seen in Hanoi and the north, and the latter Ho Chi Minh City and the south.

The CPV

leadership convened the 6th Plenum of the Central Committee in March of 1989 to clarify the party’s basic position on these issues. At the meeting, after nine days

of discussion, involved

six basic

in the

transition

principles

were

adopted

to socialism,

keeping

in relation

to the tasks

to the premise

purpose of the current “renovation” is to maintain the path to socialism.

that the The six

principles are: a) The building of a socialist Vietnam is the goal and ideal of the party and the people.

b) Marxism-Leninism

must always be the ideological

foundation of the party. c) The purpose of “renovation” is to strengthen the power

and efficiency of the dictatorship of the proletariat. d) Leadership by the party is a determining fatherland. democracy.

condition

for

the

building

and

defense

of the

socialist

e) Vietnamese democracy is socialist democracy and not capitalist It is guided democracy.

Anyone who destroys the fruits of the

revolution or disturbs public order and safety will be severely punished. f) Patriotism is inextricably linked to proletarian internationalism and socialist

internationalism.®° By announcing these six principles, the party leadership was attempting to prevent excessive demands for democratization being made in Vietnam like the demands which the Chinese students in Beijing was to begin three months

afterward.

III. Conclusion As can be seen from the foregoing, the Nguyen Van Linh regime has shown during the two years of its administration an ability to begin solving, one by one, the huge backlog of problems it faces in politics, economics, foreign relations,

domestic social relations and other areas.

Compared with previous administra-

tions, it is moving with unexpected speed in identifying problems and taking

actions.

Unfortunately, bureaucratic resistance and negligence still impede the

timely execution of measures which the party and government have adopted and which would be welcomed by both producers and consumers.

“Renovation,” “openness,” and “democratization” in cultural and social matters have already

produced results which can be easily observed by a short-term foreign visitor, but improvements in economic performance have been spotty. The outlook for relief from the impoverished conditions of the present is bleak and Vietnam still finds itself inside a dark tunnel. Still, there is hope. There was some, although of token

Vietnamese Economic Reforms

Bil

significance, reduction in macro-economic indicators like prices and inflation in

1988.

National income was up by 5.8%, industrial production by 9% (11% in

consumer goods), agricultural production by 4.5% (8.5% in food) and exports by 13.5%.

With good weather and initial implementation of incentives for farmers,

1988 saw signs of an emerging recovery from the continuing poor harvests of 1986

and 1987.

The crop was

19 million tons (paddy equivalent), a new record.

However, there were still food shortages in some parts of the country, because of ineffectiveness in food purchasing programs and shipping bottlenecks. No one in Vietnam opposes the basic political and economic line adopted at the 6th Party Congress, namely “elimination of centralized, bureaucratic economic management system based on the subsidy system” and “ideological renovation in all domains,” but there is a great deal of controversy over the specific

measures for implementing this policy-line. The idealistic, stoic view of man and the world, taken to by the first generation revolutionaries, is giving way to amore this-worldly outlook among the middle-aged and younger generation of today.

This change has been effectively utilized in the political, economic, social and cultural “renovations” of the Linh regime.

A greater voice has been given to

intellectuals in the universities, research institutions and the media and to the

masses through organizations like the National Assembly, the Vietnam Federation of Trade Unions, the Vietnamese Women’s Union, the Vietnamese Peasants’

Union and the Vietnam Fatherland Front.

This has had a significant effect in

weakening the opposition of conservatives and dogmatists inside the party and

government to the new policies. This means that there is now some hope that the more open political, economic, social, cultural and ideological policies of the Linh government will succeed.

Mio Tadashi

Notes . Le Duan, Cach Mang Xa Hoi Chu Nghia o Viet Nam

[Socialist Revolution in Vietnam],

Tac pham chon loc, Tap I, Nha xuat ban Su that, Hanoi, 1976, p. 330.

. Nguyen Duc Bin, “Nghi quyet tam va nhung nhiem vu cap thiet cua cong tac ly luan [the 8th Resolution and the urgent tasks of theoretical work],” Tap Chi Con San (hereafter TCCS), No. 11 (November) 1985, p. 18. . Le Duc Thuy, “Ve chinh sach kinh te trong thoi ky qua do tien len CNXH 0 nuoc ta [On the economic policy in the transition period to socialism in our country],” Nghien Cuu Kinh Te (hereafter NCKT), No. 5 (153), October 1986, pp. 19-20.

. Vu Tuan Anh, “Thu phan tich nen tai san xuat xa hoi nuoc ta duoi goc do co cau nganh kinh te [A tentative analysis of the social reproduction in our country viewed from the angle of structure of economic sectors],” NCKT, No, 2 (144), April, 1985, pp 32-33. . Aresolution of the Council of Ministers made in June 1974 uses the word bao cap in

a statement referring to the irrationality of the averaged wage system and the subsidy system created under war conditions. Cf. Nhung Quy Dinh Ve Lao Dong Va Tien Luong Cua Nha nuoc Viet-Nam Dan Chu Cong Hoa (1955-1974) [The regulations concerning the labor and wages of the Democratic Republic of Vietnam: 1955-1974], Nha xuat ban Su that, Hanoi, 1975, pp. 353- 354. . Le Thanh Nghi, “Mot so quan diem co ban ve doi moi quay ly kinh te [Some fundamental views concerning the renovation of economic management],” TCCS, No. 10 (October), 1982, p. 13.

. Le Huy Phan, “May sui nghi ve co che quan ly kinh te o nouc ta tu truoc den nay va ve phoung huong doi moi co che do [Some considerations on the economic management mechanism in our country since many years and on the direction of renovation of this mechanism],” NCKT, No. 4 (146), August 1985, p. 19.

. For a detailed treatment of the first stage of Vietnamese economic reform, see Mio Tadashi, “Betonamu no Keizai Kaikaku [Vietnamese Economic Reform],” chapter 2 of Mio Tadashi, ed., Indoshina wo meguru Kokusai Kankei [International Relations of Indochina), published by the Japan Institute of International Affairs, Tokyo, pp. 39-53. . Vietnamese food production per capita peaked at 274 kg in 1976, then showed a downward tendency, 251 kg in 1978, 261 kg in 1979, and 267 kg in 1980. Mio Tadashi, “Toitsugo Junen - Betonamu no Arata na Shiren no Michi [Ten Years After Reunification - Vietnam’s New Trials], Kaigai Jijo [Foreign Affairs],” Tokyo, 1985, JulyAugust, pp. 14, 15. 10. Vu Quoc Tuan, “Xay dung tung buoc mot co che co cau kinh te moi [Let us construct steadily a new mechanism of economic structure],” NCKT, No. 1 (137), February 1984, D2:

118 To Huu, “Xoa bo quan lieu bao cap, giai quyet mot so van de cap bach ve gia-luong-tien [Let us abolish the bureaucratic- subsidy and solve some urgent problems concerning price-wage- money],” Nhan Dan, September 18, 1985.

12: Vu Quoc Turn, “Xay dung tung buoc .. [Let us construct...],” op.cit., p. 1. 135 Nghi quyet Hoi nghi lan thu sau cua Ban chap hanh Trung uong Dang (khoa 4) [The Resolution of the 6th Plenum of the 4th Central Committee of the Party], Nuan Dan, October 9, 1979, p. 1. pac

14. For a list of resolutions, decisions, and instructions related to the new economic policy, see Mio Tadashi, “Betonamu ni okeru Shinkeizai Seisaku - Haikei to Tenbo [New Eco-

Vietnamese Economic Reforms

DO

nomic Policy in Vietnam - Background and Prospects],” Gaimusho Chosa Geppo [Monthly Report of Foreign Ministry Surveys], Vol. XXV, No. 2, Tokyo, 1983, pp. 35-39. 15. For a detailed treatment of the effects of the new economic policy, see Mio Tadashi, “Betonamu no Keizai Kaikaku [Vietnamese Economic Reform],” op.cit., pp. 44, 45. 16. For a detailed treatment of the flaws and after-effects of the new economic policy, see

Ie

ibid., pp. 51-53. On the social conditions during this period, see Mio Tadashi, “Betonamu wa Ima Do Natte iru ka - Taizai 2-nenkan no Kenbun [What Is Happening in Vietnam Now? - Observations During a Two Year Stay],” Asia Quarterly, Vol. 15, No. 4, Tokyo, April 1985, pp. 29- 40.

18. The following references were used with respect to Bonds For Fatherland Construction.

1) Phap lenh ve viec phat hanh Cong trai xay dung To quoc [The law on the issue of the Bond For Fatherland Construction], Nkan Dan, November 29, 1981, p. 1. 2) Quy dinh chi tiet viec phat hanh Cong trai [Detailed regulations on the issue of the Bond], Nhan Dan, December 8, 1983, p. 3.

3) Cong Trai Xay Dung To Quoc |The Bond For Fatherland Construction], Nha xuat ban Phap ly, Hanoi, 1984.

12

Noi chuyen voi ban doc ve chinh sach gia-luong-tien va co che quan ly moi [Talking with readers about the price-wage-money policy and the new mechanism of management], Nhan Dan, October 14, 1985, p. 2. 20. Doan Trong Truyen, “Cai tien cong tac gia trong thoi gian truoc mat [Let us improve the price tasks in the coming years],” Nhan Dan, June 2, 1981, p. 1.

21

Giai quyet gia va luong tren co so xoa bo tap trung quan lieu-bao cap, chuyen han sang hach toan, kinh doanh xa hoi chu nghia [Settle the price and wage problems based on the abolition of bureaucratic-subsidy system and turn to the socialist economic accounting and business], Nhan Dan, July 8, 1986, p. 1. 2a, To Huu, “Xoa bo quan lieu... [Let us abolish the bureaucratic-subsidy...],” op.cit. 75 The following references were used with respect to “two price system’ including “three kinds of retail price.” 1) Tran Linh (Board of price of commodities), “Ve viec dieu chinh gia ban le va cuoc dich vu [On readjustment of retail price and services],” Nhan Dan, September 16, 1981. 2) Phap Luat Ve Quan Ly Thi Truong [The Law on Market Management], Vol. 1, Nha xuat ban Su that, Hanoi, 1984. 3) Le Duan, “Cai tien cong tac phan phoi, luu thong, nham thuc day san xuat, on dinh doi song [Improve the distribution and the circulation work in order to stimulate the production and to stabilize the people’s daily life],” Nan Dan, June 1, 1981, p. 1. 24, Dang An Toan, “Nguyen vong cua chung toi la dua nhanh cac khoan bu gia vao tien [Our hope is to promptly appropriate the items to wage],” Nhan Dan, May 13, 1985, p.

Ze 20. Dao Thien Thi, “Quan triet nguyen tac phan phoi theo lao dong, xoa bo bao cap trong tien luong lam cho tien luong that su tro thanh don bay kinh te co hieu luc [Carry out correctly the principle of “distribution according to the labor,” abolish the subsidy in wage and make the wage really effective economic lever],” Nhan Dan, September 23, Pp LSay ps Z: 26. Editorial, “Xao bo co che quan lieu-bao cap chuyen sang hach toan kinh te va kinh doanh xa hoi chu nghia [Abolish the bureaucratic-subsidy system and turn to the

Mio Tadashi

54

socialist economic accounting and business operation],” TCCS, No. 7 (July), 1985, epee

Ale For a detailed treatment of the second stage of economic reform, see Mio, “Betonamu no Keizai Kaikaku [Vietnamese Economic Reform],” op.cit., pp. 63-73. 28. Thong bao cua Hoi nghi lan thu tam Ban chap hanh Trung uong (khoa V) ve gia‘luongtien [Communique on the 8th Plenum of the 5th Central Committee concerning the price-wage-money], Nhan Dan, June 21, 1985, p. 1.

“ey Editorial, “Xoa bo co che quan lieu...[Abolish the bureaucratic...],” op.cit., pp. 5-9. 30. To Huu, “Xoa bo quan lieu...[Let us abolish the bureaucratic...],” op.cit. oil, Tran Thanh, “Doi moi co che gia-luong-tien tren co so xoa bo quan lieu bao cap, chuyen sang hach toan kinh doanh XHCN [Renovate the mechanism of price-wage-money based on abolition of the bureaucratic-subsidy and turn to the: socialist economic accounting and business operation],” NCKT, No. 4 (146), August 1985, p. 31.

OZ: ih), 34. 30.

Ibid., p. 34. To Huu, “Xao bo quan lieu...”, op.cit.

Tran Thanh, “Doi moi...”, op.cit., p. 34. “Thuc hien tot chu truong dieu chinh gia, cai tien che do tien luong [Carry out successfully the policy of adjustment of prices and improve the system of wages],” Nhan Dan, September 24, 1985.

36. The following references were used with respect to the monetary reform of 1985. 1) Quyet dinh cua Hoi dong Bo truong ve viec phat hanh tien ngan hang moi, thu doi

tien ngan hang cu [Resolution of the Council of Ministers concerning the issue of the new bank-notes and the exchange with the old bank-notes], Nkan Dan, September 14,

1985. 2) Thong bao cua Ngan hang Nha nuoc Viet Nam ve viec phat hanh cac loai giay bac moi [Communique of the State Bank of Vietnam concerning the issue of the new banknotes], Nhan Dan, September 14, 1985. 3) Quyet dinh cua Hoi dong Bo truong ve muc tien mat douc doi ngay khi phat hanh tien ngan hang moi, thu doi tien nhan hang cu [Resolution of the Council of Ministers concerning the limit which can be exchanged on the date of issue of new notes and the absorption of old notes], Nkan Dan, September 15, 1985. eiffc Nguyen Dang Khanh, “Mot so van de can xu ly trong gia ca [Some problems related to prices which must be solved],” Lao Dong, February 20, 1986, p. 7. 38. Thieu Mai, “Gia ca—moi lo gai CNVC [Price-Anxiety of Workers and Civil servants],” Lao Dong, February 20, 1986, p. 7.

39. Truong Chinh, “Cung co quan he san xuat xa hoi chu nghia, ra suc phat trien luc luong san xuat, xay dung thu do vung manh, giau dep [Strengthen the socialist production relations, develop the production forces and construct a mighty and wealthy beautiful capital Hanoi],” Nhan Dan, October 20, 1986, p. 1. 40. Le Duc Tho, “Nhung nhiem vu cap bach cua cong tac xay dung Dang [Urgent tasks in the Party construction work],” Nhan Dan, May 5, 1986, p. 3.

41. Truong Chinh, “Cung co quan he...”, op.cit., p. 1. 42. Mio Tadashi, “Betonamu no Keizai Kaikaku no Yukue - Dairokkai Taikaigo no Doko [Direction of Vietnamese Economic Reform - Tendencies Following the Sixth Party Congress],” Kokusai Josei [International Situation], No. 60, March 1987, pp. 128-130. 43. Phuong huong, muc tieu chu yeu phat trien kinh te, xa hoi trong 5 nam 1986-1990" [Direction, major objectives for economic and social development in five years 1986-

Vietnamese Economic Reforms

BO

1990: Report given by the Central Committee of the Vietnam Communist Party to the 6th National Congress of the VCP], Van Kien Dai Hoi Dai Bieu Toan Quoc Lan Thu

Vi [Documents of the 6th National Congress of the VCP], Nha xuat ban Su that, Hanoi, 1987, pp. 153-171. 44, Mio, ibid., pp. 133-136. 45. Thong bao cua Hoi nghi lan thu hai Ban chap hanh Trung uong Dang (khoa VI): Giai quyet nhung van de cap bach ve phan phoi, luu thong [Communique on the 2nd Plenum of the 6th Central Committee of the Party: Solve the urgent problems concerning distribution and circulation fields}, Nhan Dan, April 17, 1987. 46. In a speech in November 1987 at the 3rd Congress of All Army Communist Youth League, Nguyen Van Linh said, “At present, life in the corps is more difficult than during the war with America. There is a shortage not only of food and clothing but also of the minimum things necessary for spiritual life such as books, newspapers, and broadcasting studios, musical instruments, etc., for recreation and cultural activities.”

Nguyen Van Linh, “Gin giu va phat huy truyen thon , mot di san quy cua quan doi ta [Preserve and show the tradition of , a precious legacy of our Army],” Nhan Dan, December 21, 1987, p. 4. 47. “Nhung van de chu yeu ve kinh te, xa hoi nam 1989 [Major socio-economic problems in 1989],” speech delivered by Vice- chairman of the Council of Ministers, Vo Van Kiet, at the 4th session of the 8th National Assembly in December 1989, Nhan Dan, December 14, 1989, p.1.

48. Vietnam Courier, No. 2, 1989, Hanoi, p. 4. 49. Mai Chi Tho, “May van de cap bach ve cong tac bao ve an ninh, trat tu va xay dung luc luong cong an nhan dan [Some urgent problems on keeping security and order and on building the people’s police],” TCCS, No. 12 (December), 1988, pp. 12-19.

50. Khai giang trung tam Dai hoc Thang Long [The Thang Long College Opens], Nhan Dan, February 22, 1989, p. 1. This is a first privately-funded college, opened in Van Mieu [Temple of Literature of Confucianism], a famous place in Hanoi, with a course on mathematics for 75 students.: ol. “Nhung van de chu yeu...”, op.cit., Nhan Dan, December 15, 1988. p. 4. 52. Thuong mai hoa viec cung ung vat tu va tieu thu san pham nong nghiep [Commercialization of business of supply of agricultural production materials and of consumption of agricultural products], Saigon Giai Phong, March 18, 1989, p. 1. 53. Tu thang 4- 1989, Nganh thuong nghiep Ha Noi chuyen toan bo cac co so sang hach toan kinh doanh [From April 1989, Hanoi commercial sector will make all commercial enterprises shift to cost accounting business], Nhan Dan, March 11, p. 1. The People’s Committee of Hanoi City made a decision to begin selling rationed rice at a commercial price (660 dong/kg) on March 16. However, a subsidy of 150 dong per kg was added to the salaries of national government officials.

54. “Nhung van de chu yeu...”, op cit., Nhan Dan, December 15, 1988, p.1. 50. Saigon Giai Phong, February 16, 1989, p.1. 56. First Secretary Le Duan used the phrase “the three interests” - interest of the State, interests of the enterprises, and interests of the workers - in a speech given in February 1980. Le Duan, Tien Len Duoi Ngon Co Ve Van Cua Dang {Let us advance under the glorious

banner of the Party — speech delivered at the commemoration of the 50th anniversary of the foundation of the Communist Party of Vietnam], Nha xuat ban Su that, Hanoi,

Mio Tadashi

1980, p. 43. . Ona visit to an agricultural cooperative in Quan Nam Da Nang Province in February 1989, General Secretary Nguyen Van Linh said, “The new contract system is in the interest of the people. That is, it is in the interest of the State and the Party,” Saigon Giat Phong, March 3, 1989, p. 1. : . Inthe above economic report to the national assembly, Deputy Prime Minister Vo Van Kiet made a statement indicating that service and distribution activities would also be permitted outside the state-managed economic sector. Cf. “Nhung van de chu yeu...,” op.cit. . Hoi nghi lan thu hai..., op.cit., Nkan Dan, April 17, 1989.

60. Pham Van Khanh, “Nen must be allowed to work ber), 1988, p. 55. 61. Nghien cuu—Trao doi: Exchange of Opinions:

de Dang vien lam kinh te ca the va tu nhan [Party members in private and individual businesses],” TCCS, No. 10 (OctoDang vien tham gia cac hoat dong kinh te [Research — Party members’ participation in the economic activities],

TCCS, No. 9 (September), 1988, p. 14.

62. Ibid. 63. Tran Binh, “Hoi nghi khoa hoc-thuc tien