Beneath Veneer

Communist and Post-Communist Studies 35 (2002) 353–368 www.elsevier.com/locate/postcomstud

Beneath the veneer of reform: the politics of economic liberalisation in Vietnam M. Gainsborough ∗ Department of Politics and International Studies, University of Warwick, Coventry, UK

Abstract Scholars working on transition countries are generally more hesitant than they used to be about using the term ‘reformer’. However, few scholars have explored why the term may be unhelpful or what the consequences are if we jettison it for how we think about reform. Such issues form the central focus of the paper. Looking at Vietnam’s second city and business centre, Ho Chi Minh City, the paper argues that the main problem with identifying politicians as reformers is that it gives a distorted picture of what reform is actually about, particularly its underlying logic. In the author’s view, what drives so-called reform has much less to do with issues of ideology, as the focus on reformers would suggest, and much more to do with the playing out of rivalries between new state business interests, which have emerged largely since the late 1980s.  2002 Elsevier Science Ltd. All rights reserved. Keywords: Politics; Political economy; Transition; Reform; Ho Chi Minh City; Ideology; Business

Introduction Foreign commentators on Vietnam, whether it is academics, business people or journalists, have long displayed a fondness for talking about the country’s so-called reformers. Whether it is Nguyen Van Linh, Vo Van Kiet, Phan Van Khai or Truong Tan Sang, such people have at one time or another all attracted the reformist accolade. A penchant among foreign commentators for identifying ‘reformers’ is by no means limited to Vietnam or indeed other transition countries. Politicians across Asia and from Latin America to the Middle East have also been similarly identified.

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Recently scholars working on Vietnam have become more hesitant in their use of the term reformer and rightly so in the view of this author. However, no one has explored why the term may be unhelpful or what the consequences are if we jettison it for how we think about reform. Such issues form the central focus of this paper. Drawing on data gathered in Vietnam’s second city and business centre, Ho Chi Minh City, a city which above all others in Vietnam has attracted the reformist label, the paper argues that the main problem with identifying politicians as reformers is that it gives a distorted picture of what reform is actually about, particularly in terms of its underlying logic. In the author’s view, what drives so-called reform has much less to do with issues of ideology, as the focus on reformers would suggest, and much more to do with the playing out of rivalry between new state business interests, which have grown up around the bureaucracy and business sector, notably since the late 1980s. In advancing this argument, the paper will first look at what is typically meant by calling a politician a reformer, highlighting some of the potential problems with the use of the label. It will then set out an alternative history of the reform years in Vietnam. Rather than emphasising the rolling back of the state in the face of marketisation or the expansion of the private sector, the emphasis is on the continued heavy presence of the state in terms of regulation and other forms of red tape and the rise of new state business interests. While this account is derived from the author’s research in Ho Chi Minh City, it is the author’s belief that it offers an accurate depiction of the reform years nationwide.1 Next, the paper will consider, in general terms, the impact the rise of new state business interests has had on the everyday workings of the party-state. The paper will then turn its attention to two case studies. The first looks at the overhaul administrative procedures in Ho Chi Minh City with a policy known as ‘one stop, one stamp’ first introduced in 1996. The second case study examines an episode in 1995 when the government moved from a system of land use rights to a lease-hold system. The two cases allow us in a very vivid way to get beneath the veneer of reform—to see what is really at stake— in turn bringing us closer to the central concerns of the paper. In the conclusion, the paper will seek to be clearer about what is fundamentally driving the process we call ‘reform’. It will also offer some thoughts on issues such as how reform transpires and what factors determine its success or failure.

The rise of the reformer The tendency to identify certain politicians as ‘reformers’ gained ground in the second half of the 1980s, notably with the election of Nguyen Van Linh as party general secretary in 1986. Coming in the wake of the rise of Mikhail Gorbachev in the Soviet Union at a time when the West was receptive to the idea of change in

1 The author is currently engaged in a new research project looking at these issues in relation to two northern and two southern provinces.

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the Communist bloc, Linh captured the imagination of foreign scholars and journalists with his call for renovation (doi moi). The fact that he had served in the south during the war later becoming party secretary in Ho Chi Minh City—a city long established in the popular mind with opposition to Communist control and central planning—and had temporarily lost his position on the Politburo before making a come-back, all helped in establishing him as the very apotheosis of change.2 (For biographical details of Nguyen Van Linh see Appendix. William Duiker captures the mood of the time well: Linh was himself a veteran member of the ruling generation and had served as a leading member of the Party’s Southern apparatus during the Vietnam War. But after 1975 as chairman of the Party’s municipal committee in Ho Chi Minh City, he had earned a reputation as a reformer for his efforts to encourage economic growth through the use of moderate policies and a liberal application of profit incentives…During his first months in office, the new general secretary moved vigorously to attack some of the chronic problem areas in Vietnamese society. He called for a renovation (doi moi) of the stagnant economy to stimulate production and raise the national standard of living. He pledged to reduce the festering odour of corruption that had lingered over the VCP since the end of the Vietnam War in 1975, and to redefine the dominant role exercised by the Party over government and society…The new programme was clearly reminiscent of the reformist policies that had been adopted by Mikhail Gorbachev after his election as general secretary of the Communist party of the Soviet Union. Indeed, the very use of the term ‘renovation’ and ‘openness’ appeared to be modelled after the Russian words perestroika and glasnost currently popular in the USSR, prompting pundits to begin referring to the new Party chief as Vietnam’s ‘Little Gorbachev’ (Duiker, 1989). In the wake of Linh, it was a relatively easy step for other southern politicians to be labelled as reformers, particularly when like Linh they rose to national office. (For biographical details of other key southern politicians see Appendix.) Vo Van Kiet, who was appointed to the Politburo in 1982 and later became prime minister, was linked to Linh on account of having served alongside him during the war and also having held the post of party secretary in Ho Chi Minh City. Rightly or wrongly, Kiet was also associated with opposition to central policies while serving in the south.3 Phan Van Khai, the current prime minister, has also been labelled a reformer, linked to Kiet on the grounds of having followed in his footsteps during the early part of his career. Khai took over from Kiet as chairman of the State Planning Committee in 1989 and also held office in Ho Chi Minh City. By the 1990s, the ‘southerner therefore reformer’ thesis was firmly established. Thus, when Truong Tan Sang 2 Why Ho Chi Minh City has been viewed as a reformist city is in itself a fascinating issue. One suspects it may be connected to US guilt over ‘the fall of Saigon’ and a desire to show that despite the city being abandoned to Communism ‘right’ prevailed in the end. 3 Such so-called established facts are in fact far from well-established in my view.

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become People’s Committee chairman in Ho Chi Minh City in 1992, he was quickly labelled a reformer although not necessarily with much justification. Sang went on to be party secretary in the city in 1996, the year he was also appointed to the Politburo. He now holds a senior position at the centre. In recent years the academic community has become more questioning about the use of terms such as reformer (or conservative).4 However, it is still widely used in journalistic and business circles as well as by academics, who individually are sometimes not consistent.5 Moreover, no one has explored why the term may be unsatisfactory or the consequences of abandoning it for how we understand reform. We will return to these issues later in the paper but first what is the intended meaning of calling someone a reformer?

Reformers uncovered Duiker, cited above, offers a fairly comprehensive picture of what it is to be a ‘reformer’ when he talks about support for markets; opposition to corruption; and a desire to redefine the relationship between party and government, which in turn incorporates the idea of strengthening the rule of law. The significant point, however, is that to describe a politician as a reformer is to make claims about their professed beliefs. Reformers are people who have seen the ‘error’ of past ways, so it is implied, and now advocate a different vision of the future in which markets play a full part, corruption is to be driven out, and the party is to be subject to the rule of law. Thus, identifying someone as a reformer is to make claims about what they believe. There are, however, a number of problems with this approach. The first has to do with the grounds on which someone is said to be a reformer. As stated above, to label someone a reformer is to make claims about their professed beliefs. However, in practice, it is rather hard to be sure what politicians beliefs are. In their writings or speeches, their words are naturally carefully chosen so they rarely give much away. This is arguably more so in a country like Vietnam where politicians are not subject to the same degree of cross-examination and scrutiny as in some other parts of the world. Moreover, we all know the importance of distinguishing between what people say and what they do. The grounds on which politicians are labelled ‘reformers’ are also problematic for other reasons. One suspects that label is often used with little thought at all, handed down from one generation of commentators to another without consideration as to whether it is really justified or meaningful. The ‘southerner therefore reformer’ approach is a good illustration of this. The rather vague definition of what it is to be a reformer (that is, pro-market, anti-corruption and so on) also leaves little room 4

For expressions of unease regarding the terms ‘reformer’ and ‘conservative’ see Phong (1995: 21), Elliott (1993: 80) , Sidel (1997: 483). 5 For references to Ho Chi Minh City leaders as ‘reformers’ see Abuza (1998: 1110), Cima (1989, 64–5), Esterline (1988: 89), Kolko (1997: 125), Porter (1990: 85), Sheehan (1992: 533–4), Stem (1993: 1), Thayer (1988: 190–1), (1995: 48–9), Turley and Womack (1998: 95–6, 108–15).

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for the more subtle nuances of policy. Support for the market, or opposition to it, can take a variety of forms. On the ground, it is clear that different policy positions cannot be so easily pigeon-holed, assuming one can work out what they are. Furthermore, use of the term reformer arguably says more about the academic community— and a tendency to see the world through neo-liberal spectacles—than Vietnamese politicians.6 The second criticism of the use of the term reformer relates to what it implies in terms of the underlying dynamic of reform. With its emphasis on the politicians’ alleged beliefs, the use of the term ‘reformer’ suggests that reform is essentially driven by a debate between rival ideas. Asked directly most commentators would readily accept that there is more to reform than a debate between ideas. Clearly, interests are also at stake. However, the use of the term reformer pushes us, unwittingly perhaps, towards a view of reform where ideas are paramount. The significance of this as a reflection of the dominant structures of power—shifting the focus of our attention away from interests and onto ideas—is worth considering.7 Similar criticisms are levelled in the literature on China. Arguing that reform was shaped more by economic conditions and the interaction between economics and politics than by the interaction between ideology and politics, Barry Naughton writes: Needless to say, the most energetic purveyors of this view [which emphasises the role of reformers] are in the Chinese propaganda apparatus. In this semi-official view, Chinese leaders adopted cautious, experimental reforms. Policies were tried out first in local experiments, and policies that worked were spread nationwide. Reforms began in rural areas, and achieved great success. As a result, a second stage of urban reforms was attempted and, although this was harder, it also eventually achieved success. Reforms succeeded because Chinese leaders were flexible and pragmatic. This is a highly sanitised account of the reform process, sufficiently misleading to count as misinformation: It distracts us from the real dynamics of the reform process in favour of an oversimplified morality tale (Naughton, undated: 22). After three years living and conducting research in Ho Chi Minh City, this author came to a similar conclusion. With the exception of economists in government think tanks, or people who had studied abroad, no one seemed very concerned with policy blueprints or different approaches to reform. The language of reform was quite possibly used to conceal more mercantile ambitions but the idea that there were reformers championing certain ideas on which they were prepared to stake their political careers—and ultimately their families’ security—seemed faintly ridiculous. And yet, there was clearly a lot at stake in Ho Chi Minh City in the late 1990s. Politics was

6 In diplomatic and business circles, for instance, this author found alleged ‘reformers’ referred to in almost affectionate terms, suggesting a sense of ownership: quite simply they were ‘one of us.’ 7 Note also that there is a confluence of opinion here in terms of both the government and the multilateral institutions.

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often rough. Politicians did fight hard. So what were they fighting about? The remainder of the paper attempts an answer.

A history of the reform years: the commercialisation of the state A key hallmark of the reform years has been much greater involvement in business by state institutions and officials (Gainsborough, 2001: 45–90). There is no clear-cut break between the pre-reform and the reform era. Markets operated under planning, including with state involvement (Fforde, 1993). However, state involvement in business is now of an entirely different magnitude. The process particularly seems to have gathered momentum starting from the late 1980s.8 The growth of state business interests has occurred at all levels of the party-state although there is some evidence that its development has been more prolific among the lower levels.For a discussion in relation to China as to why this might be the case see Nevitt (1996). The emergence of new state business interests has taken a number of forms. First, the reform years have seen already established state-owned enterprises breaking into new areas. This has often involved the shedding of unprofitable business lines, including sometimes the unauthorised sale of state assets (Tuan et al., 1996). The areas in which these enterprises have been most active have included foreign and domestic trade, real estate, banking, tourism and entertainment. These are areas where companies have benefited from various forms of monopoly or oligopoly control, or other anti-competitive practices, or where political connections are important in terms of providing a certain level of protection from interference by the police or other state institutions with formal oversight responsibilities. They are also areas which saw rapid growth during the 1990s. Against this backdrop, many state enterprises have been highly profitable in stark contrast to the dominant view of the ailing state enterprise (see Gainsborough, 2001: 45–90). Secondly, state institutions have formed new state companies in order to take advantage of the business opportunities presented by reform. This has occurred at all levels of the party-state. The areas in which these new state companies have operated were no different from the more established state enterprises cited above although general trading firms and housing and land companies have been particularly common, especially at the lower levels. The formation of such companies has very often been driven by a desire to supplement institutional funds in a climate of harder budget constraints.9 Moreover, the de facto owners of such firms, namely the institution which set them up, have been well-placed, like their older counterparts above, to exploit the advantages accruing from their holding bureaucratic office. This might include prior knowledge of regulatory changes affecting the sector in which

8

This is evident through the scrutiny of politicians’ career paths. Business and banking appointments are much more common from the late 1980s (Gainsborough, 2001: 91–128). 9 For an article which addresses similar issues in relation to China see Ma (2000).

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they are operating or preferential access to government contracts (Gainsborough, 2001: 45–90). Thirdly, state institutions (both state enterprises and bureaucratic institutions) and officials have established shareholding or limited liability companies. This is the least transparent aspect of the growth of new business interests under reform given that reference to a company’s name offers few clues regarding ownership.10 Shareholding or limited liability companies have been formed for a variety of reasons. They have sometimes been established as a way of siphoning off state assets into the private sector. This could involve the use of state capital assets for private gain or the channelling of state contracts to a private company. Shareholding or limited liability companies have also been formed in an attempt to create more room for manoeuvre than might otherwise be the case in the state sector although there are arguably some additional risks associated with operating in the private sector. Shareholding or limited companies are active in light manufacturing (textiles and garments, footwear and beverages, for example) but can also be found in real estate and trade. Given the prominence of state shareholders in these companies, they very often have access to inside information, can garner capital, or call upon protection in a way which puts them on a par with any state enterprise. They are also able, given their state origins, to overcome restrictions which normally apply to ‘private’ firms.11 State companies in Ho Chi Minh City were still responsible for a significant proportion of the city’s GDP in the late 1990s, according to official statistics. The official data distinguish between four types of corporate management: central state, local state, non-state and foreign. According to this data, companies in Ho Chi Minh City under state management contributed a hefty 46.5% to the city’s GDP in 1998. Of this, 27.7% derived from central state and 18.8% from local state firms. In the period 1994–98, the biggest change was an increase in the penetration of foreign capital. It more than doubled its share of GDP during this period to 17.0%. However, some of this expansion reflects growth in the state sector since this category includes both 100% foreign-owned companies and joint ventures between foreign and domestic firms which nearly always involve state companies (Riedel and Tran, 1997: 22).The non-state sector’s contribution to GDP in Ho Chi Minh City was 36.4% in 1998 although there is no way of knowing what proportion of so-called non-state capital represents the activities of companies with their origins firmly in the state sector. (For a full breakdown of Ho Chi Minh City’s GDP by ownership from 1994 to 1998 see Appendix B). The still rather heavy presence of state companies in Ho Chi Minh City in the second half of the 1990s is further borne out if one looks at the commanding heights of Ho Chi Minh City’s economy. Taking the top 100 companies and banks in the 10 A similar claim can be made about state enterprises although the problem is more complex with limited liability companies where one does not even have the benefit of a controlling institution. For a discussion of these issues see Gainsborough (2002). 11 For example private firms were forbidden to export directly, required instead to use the services of a state company, until the end of the 1990s. However, a number of well-connected limited liability companies were able to get round this.

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city selected according to size of turnover in 1995, the list is dominated by central and local state companies. Non-state companies do not feature very prominently at all. There are no joint stock companies or private firms and just five limited liability firms of which three had state or de facto state shareholders (Saigon Times, 1997; Gainsborough, 2001: 48–9). The key question though is what have the consequences of the growth of state business interests been for Vietnam’s politics?

Commercialisation of the state: consequences for politics The proliferation of state business interests in the reform era has contributed to a situation in which power has become scattered. As with the growth of state business interests themselves, there is no clear cut break between the pre-reform and reform era insofar as it is unlikely that the party-state ever worked like a well-oiled machine.12 However, it is certainly the case now that institutional particularism is the norm. This comes across in the derogatory way in which institutions talk about each other and in their footdragging and evasiveness in the face of requests for action or cooperation from their institutional counterparts. While there are likely to be many reasons why institutional particularlism is so entrenched—which do not all have to do with the proliferation of state business interests13—pursuit of the profit motive whether in the form of direct business interest or in the defence of revenue-generating gate-keeping responsibilities seems to be an important factor. This, it will be seen, comes across clearly in our case studies. In Ho Chi Minh City, the centre still retained a level of authority in the city in the second half of the 1990s. However, this was principally confined to specific, and fairly limited, circumstances where a conscious decision had been made to concentrate resources in pursuit of a particular goal (e.g. combating speculation in land or foreign exchange). Moreover, the centre’s ability to assert its authority in such situations for an extended period was limited. The ability of city-level institutions, such as the Party Committee or People’s Committee, to impose their will on formally junior institutions was far less assured. This contrasts with the characterisation in sections of the scholarly literature on China of the party boss able to mobilise all agencies and bureaus within his locale.14 We now turn to the first of our case studies. The episode described here formally comes under the rubric of public administration reform. However, there is clearly much more at stake than the best way to run public services.

12 See Porter (1990). Porter’s article, which was published in 1990, captures the way in which ‘bureaucratic politics’ was fully established by the mid-1980s. In fact, it had probably taken root much earlier. 13 One example would be the granting greater responsibility to government institutions, which was a key feature of the critique of the political system which accompanied the Sixth Party Congress in 1986. See Thayer (1992) 14 See Oi (1992). For an example of a China scholar whose position is close to mine see Lu (2000).

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Case study one: one stop, one stamp In 1996 there emerged in Ho Chi Minh City a reform of administrative procedures, known as ‘one stop, one stamp’ (mot cua, mot dau). Supported by the United Nations Development Programme (UNDP), it was first introduced on an experimental basis in a limited number of the city’s districts with a view to being applied more widely if it proved successful.15 Its stated aim was to end the situation whereby people wishing to carry out administrative procedures, such as legalising the documentation on one’s house or getting a license to renovate it, had to run the gauntlet of countless offices collecting numerous official stamps. Apart from being time-consuming and inefficient, this also created an environment in which bribery and corruption flourished.16 To put an end to this, ‘one stop, one stamp’ involved the creation of a single office (phong tiep dan) in each district, where the public would go to complete procedures. Moreover, the idea was that this would be the only place they had to go. ‘One stop, one stamp’ was backed by the city People’s Committee, which could be seen emphasising its successes and calling for renewed efforts to address the problems it threw up.17 If successful, centralising authority in the hands of the districts as envisaged by ‘one stop, one stamp’ would naturally create both winners and losers. In this case, the potential winners were the city and district authorities. The potential losers were the departments to whom the public no longer needed to visit, which in turn would lead to the loss of a revenue source for them. However, when ‘one stop, one stamp’ was applied in District 1 in 1997–98 the proposed changes did not go exactly as planned. The district authorities were quite successful in regaining control over their own offices which previously had acted rather unilaterally in respect to administrative procedures.18 Where problems emerged was in relation to the departments. Under ‘one stop, one stamp’, documentation was still required to cross department desks but it was the responsibility of the district authorities not the people themselves to liase with the departments. The departments proved reluctant to give up their role in the process. According to district sources, the departments took so long to return documentation that people continued to go directly to the departments themselves, thereby defeating a central plank of ‘one stop, one stamp’19. A number of different interpretations as to what lay at the root of these problems have been offered. One interpretation suggested that it was the departments’ relation15

The other districts where ‘one stop, one stamp’ was conducted on an experimental basis were District 5 and Cu Chi. In November 1997 the government called for the project to be extended to all remaining districts in Ho Chi Minh City. See Thoi Bao Kinh te Sai Gon March 18, 1999. 16 In the press, people were described literally as having to ‘do the run around’ (chay long vong) while there were frequent references to the existence of negativities (tieu cuc)—a catch-all for corruption—and trouble for the people (phien ha cho dan). To complete house documentation, it was commonplace for a person to have to visit the district authorities alone some five times. To get a license to renovate your house could take six months. See Sai Gon Giai Phong May 16, 1998. 17 Ibid and Nguoi Lao Dong June 15 and October 3, 1998. 18 See Fforde (1997: 33–4) with suggestions for how to support it. 19 Nguoi Lao Dong April 10, 1998 and Sai Gon Giai Phong May 16, 1998.

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ship with the centre which was to blame for difficulties between District 1 and the departments. The head of the Committee for Administrative Reform in Ho Chi Minh City, Mai Quoc Binh, [now deputy People’s Committee chairman] described the departments as being ‘caught up with’ requirements imposed by the ministries at the centre (so nganh vuong quy dinh cua cac bo, nganh o Trung uong). However, District 1 also articulated its own problems with the centre, notably over the right to print the forms needed to carry out the administrative procedures, which it said the ministries refused to relinquish. It described this situation as ‘extremely absurd’ (het suc vo ly). Against this backdrop, District 1’s feeling of powerlessness in relation to the departments and the centre was very evident. The deputy head of Committee for Administrative Reform in District 1, Nguyen Van Lang, said in an interview in 1998 that it was not the districts that had the power to ‘throw out’ the laws only those who had issued them, namely the centre (cap quan lai khong co quyen bo ma ‘nguoi’ co quyen chinh la ‘nguoi’ da ban hanh quy dinh). He also called on the government to lean on the ministries to pay more attention to the administrative reform (de nghi Chinh phu chi dai cac bo day manh va chu y hon nua den cong cuoc cai cac hanh chinh) (Ibid.). In Vietnamese newspaper articles dealing with public administrative reform references to problems between the departments and the People’s Committee are extremely common. The difficulty is often encapsulated in a phrase, which talks about the ‘complicated relationship’ between the vertical leadership and local management by departments (quan he phuc tap giua lanh dao nganh doc va quan ly theo dia phuong doi voi cap so).20 Embodied in this is the idea that the principal cause of the problem is fact that the departments have dual accountability to both the city People’s Committee and the centre. Leaving aside the possible structural roots of administrative conflict in Vietnam, what is clear is that ‘one stop, one stamp’ floundered because of the reluctance of the departments to give up their role in carrying out administrative procedures, a role which had undoubted financial benefits. The centre’s refusal to surrender the seemingly trivial right to print the forms needed to complete such procedures was also motivated by a desire to maintain access to revenue since it was normal practice for the forms to be sold to the lower levels (Gainsborough, 2001: 78–9). We now turn to our second case study. As with our previous one, there is clearly more going on than is suggested by strict adherence to the idea that the ‘reform’ in question was simply about how best to run the land market. Arguably more important was an attempt by the centre to rein in the activities of the lower levels.

Case study two: decree 18 and the land market Decree 18 (nghi dinh 18), which was introduced in February 1995, occurred in the midst of a speculative boom in which land and property were changing hands

20

Thoi Bao Kinh te Sai Gon May 16, 1998 and March 18, 1999.

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at a rapid rate and in which local banks were lending heavily on the back of inflated asset prices. To this day, Decree 18 is remembered amongst Ho Chi Minh City’s business community and those with interests in real estate as a ‘defining moment’ in the same way that a stock market crash might be recalled in Hong Kong or London. That it caused such a shock to the land market is because it undermined a belief that companies had private property rights in all but name. By 1995 this belief had become well-established in local business circles despite the fact that the formal position remained that individuals and companies had land use rights with all land owned by the state.21 The idea that there was de facto private ownership had gained ground in the wake of the passage of the 1993 Land Law, which had recognised the right of households and individuals to exchange, transfer, rent, inherit and mortgage (chuyen doi, chuyen huong, cho thue, thua ke, the chap)—the so-called five rights. However, it was rather vague as to the rights of urban land users, saying that this would be set out in subsequent regulations.22 However, in the absence of the promised clarification, businesses and banks proceeded as if companies had the five rights. The issue of who really owned the land was regarded as mere semantics. It was against this backdrop that there was a surge in land and property trading. Banks also willingly accepted property and land as collateral for lending. Prominent among those trading in the land market were state institutions or their corporate arms. These institutions had very often benefited disproportionately from land allocations after 1975 and again in the early 1990s. Moreover, as the land market took off, they were in a position to reap profits from an asset they had usually paid little or nothing for. An editorial in Sai Gon Giai Phong (Liberated Saigon) and an article in Lao Dong (Labour) published shortly after Decree 18 was issued captured neatly what had been going on: Until now…some businesses have used the system of land allocations as a way of doing business – invest a bit of money, complete the required procedures, pay some land use fees (at a low price) along with the necessary ‘fees’ to oil the wheels, and you’ll get yourself allocated some land which you can divide into lots and sell for a ten-fold profit (Sai Gon Giai Phong, March 22, 1995). Businesses…outwardly claim that they need land use rights for in order to build a factory or other establishment when in reality they want to acquire land to sell on or to do business, gaining super profits in the process, or to mortgage it so as to borrow an even larger amount of money (Lao Dong, March 30, 1995).

21

Reflecting this dichotomy, the IMF has referred to the situation pertaining after 1993 as one of ‘quasiownership’ while the Constitution states that land and all other property which belongs to the state comes under the ‘ownership by the entire people’ (thuoc so huu toan dan) (Article 17). The state manages all land and entrusts it to organisations and individuals for stable and lasting use. They may transfer the right to use the land entrusted to them by the state (duoc chuyen quyen su dung dat Nha nuoc giao) (Article 18). See IMF (1996), Anon (1995, 1998b). 22 See Article 3 of the 1993 Land Law in Anon (1997b: 200–19).

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Decree 18 undermined this by announcing that land use rights had to be converted into leases with, importantly, restricted mortgaging rights.23 The sense in which people active in the land market at the time felt that the ground had been removed from beneath their feet comes across very clearly in comments in the press. One journalist described businesses now unable to mortgage land use rights as feeling they had been ‘dispossessed of power’ (bu tuoc doat quyen loi).24 A senior banker at the state-owned Bank for Foreign Trade (Vietcombank) described Decree 18 as having ‘caused disorder to business in urban centres’, adding that if it was not amended banks would only take collateral on houses and ‘absolutely not against land use rights.25 Moreover, among those most vocal in their criticism of Decree 18 was a configuration of departmental and district interests in Ho Chi Minh City, including the Department of Land and Housing, the Cadastral Department, the Go Vap district People’s Committee and the Tan Binh Housing and Development Company, controlled by interests connected to the Tan Binh District People’s Committee. According to Nguoi Lao Dong (The Worker) newspaper, they had made their views known to a group of city delegates on their way to a National Assembly meeting in Hanoi, referring to the ‘blocked up and illogical situation’ (tinh trang ach tach, bat hop ly) in the land market.26 Ho Chi Minh City National Assembly delegates were also outspokenly critical of Decree 18. This included city politicians linked to business interests at the Trade Department and a general corporation (tong cong ty) Saigon Trading Company (Satra), who called for Decree 18 to be watered down, including for it not to be applied retroactively.27 Although fully aware of the disruption that Decree 18 had caused, those at the centre who were behind the clampdown were wholly unsympathetic: ‘Of course banks must examine their ability to recover capital’, the head of the General Department of Land, Ton Gia Huyen, said expressing incredulity that banks had agreed to take land as collateral given that it belongs to the state.28 However, it is also the case that prior to Decree 18 neither the General Department of Land nor anyone else had sought to remind companies or banks of this fact nor had they intervened to stop it.

Conclusion: beneath the veneer of reform For much of the time, reform is talked about both inside and outside Vietnam in technocratic terms, such as enhancing efficiency or making things run better. This article has sought to get beneath this to show the way in what we often refer to as ‘reform’ is as much about attempts by rival political-business interests to gain control 23 24 25 26 27 28

For the text of Decree 18 see Anon, 1997b: 248–53). Thanh Nien March 30, 1995. Sai Gon Giai Phong March 22, 1995 and Tuoi Tre May 13, 1995. Nguoi Lao Dong March 28, 1995. Thanh Nien April 6, 1995; Sai Gon Giai Phong March 22, 1995. Tuoi Tre March 13, 1995.

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over financial and other resources. The corollary is resistance from those institutional interests which stand to lose by a change to the status quo. Such a pattern comes across clearly in relation both to ‘one stop, one stamp’ (public administration ‘reform’) and the response to Decree 18 (land market ‘reform’). If we then consider wider questions such as how reform transpires or what determines its success or failiure, this author would emphasise the way in which what gets accepted or pursued in terms of reform policies or ideas has a lot to do with the prevailing political climate. A shift to a land lease system or pursuit of public administration along lines designed by the UNDP, for example, is attractive because of the opportunities it offers to challenge entrenched local-level business interests or centralise licensing power in the hands of the city People’s Committee and the districts. Success or failure depends in large part in the playing out of rival institutional interests where the institution which can assert its position most forcefully wins.

Appendix A. Biographical data on four Ho Chi Minh City politicians (in alphabetical order)

Table 1 a

Phan Van Khai

Born in Cu Chi in 1933. Re-grouped to the north in 1954. Studied economics in Moscow 1960–65. Conducted research on the southern economy 1972–75. Deputy head of the Planning Committee in Ho Chi Minh City 1976–78. Deputy chairman Ho Chi Minh City People’s Committee 1979. Member of city party Standing Committee 1983 and 1986. Appointed full member of party Central Committee in 1984. Ho Chi Minh City People’s Committee chairman 1985–89. Chairman of State Planning Committee 1989–91. Politburo member 1991-present. Deputy prime minister 1992–97. Prime minister 1997-present.

Vo Van Kiet(Sau Dan)

Born in Vinh Long in 1922. Secretary of Kien Giang provincial party committee in the 1940s. Political commissar of the Saigon-Gia Dinh Military Zone in 1958. Appointed to the party Central Committee in 1960. In charge of the ‘Front Command 2’ attack on Saigon during the Tet Offensive of 1968. Secretary and political commissar Western Nam Bo Military Zone 1971–73. On the staff of the Central Office for South Vietnam 1973–75. Deputy chairman of the Military Management Committee 1975–76. Alternate Politburo member 1976–82. Party Secretary Ho Chi Minh City 1976–82. Member of city party Standing Committee 1977 and 1980. Full Politburo member 1982–97. Chairman of the State Planning Committee 1982–89. Prime minister 1992–97. Party adviser 1997-present.

Continued on next page

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Table 1 continued a

Nguyen Van Linh(Muoi Born in Hung Yen in 1915. Imprisoned on Poulo Condore 1930–36 and Cuc) 1941–45. Assigned to party work in Saigon in 1939. Held key positions in the south from 1945. Appointed to the party Central Committee in 1960. Deputy secretary of the Central Office for South Vietnam 1960–75. Politburo member 1976–82. Party secretary in Ho Chi Minh City 1976. Held various central positions 1976–81. Party secretary in Ho Chi Minh City 1982–85. Member of city party Standing Committee 1983. Re-elected to the Politburo 1985. Party general-secretary, 1986–91. Party adviser 1991–98. Died 1998. Truong Tan Sang(Tu Sang)

Born in Long An in 1949. Secretary of the Youth Union of guerrilla force in Long An 1971. Imprisoned 1971–73. Cadre in department of Central Reunification Committee 1973-75. Various appointments in Youth Volunteer Force and director of Forestry Department in Ho Chi Minh City 1975–86. Party secretary in city’s Binh Chanh district 1986–88. Member of party Standing Committee 1986, 1991, and 1996.Studied at Nguyen Ai Quoc Institute in Hanoi 1989. Director of city’s Agriculture Department 1990–91. Appointed member of party Central Committee 1991. Chairman of Ho Chi Minh City People’s Committee 1992–96. Party secretary in Ho Chi Minh City 1996–99. Politburo member 1996-present.

a Sources: Vietnamese press reports 1977–2000. Interviews February 18, 1998, May 26 and July 5, 1999.

Appendix B. Share of GDP in Ho Chi Minh City: by type of ownership 1994–98 (%)

Table 2 a

Central state Local state Non-state Foreign a

1994

1995

1996

1997

1998

30.1 21.1 40.5 8.2

29.1 20.1 39.7 11.1

28.8 19.0 38.1 14.0

27.7 19.4 37.4 15.6

27.7 18.8 36.4 17.0

Sources: Anon (1997a, 1998a)

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