May 15, 1997
In a significant step to normalize relations with Vietnam, the United States recently established its first embassy in the Asian country since the fall of Saigon in 1975. To head the new mission, the U.S. selected Pete Peterson a former prisoner of war in Vietnam. Following a background report, Margaret Warner looks at the state of relations between the two countries with three experts on Vietnam.
MARGARET WARNER: Now, for more on the political and economic outlook for Vietnam. Virginia Foote is president of the U.S.-Vietnam Trade Council, which represents American companies trying to do business in Vietnam. Pho Ba Long is an independent consultant to businesses and educational institutions in Vietnam, Laos, and Cambodia. He was born in the former North Vietnam, moved to South Vietnam in the 1950's, and then came to the U.S. as a refugee at the end of the Vietnam War. He's now an American citizen. Adam Schwarz left Hanoi last November, after two years as Vietnam bureau chief for Far Eastern Economic Review Magazine. He's currently a visiting fellow at the Johns Hopkins School for Advanced International Studies and he's writing a book on Vietnam. Welcome all of you.
Ginny Foote, what is it going to mean, what does it mean for American interests and American businesses to have full normalization, to have an ambassador in Hanoi?
VIRGINIA FOOTE, U.S.-Vietnam Trade Council: I think it's very important. It basically completes diplomatic normalization between the U.S. and Vietnam. So symbolically it's important, but it's also important because Amb. Peterson and the Vietnam ambassador in the U.S. are people of real distinction in their own countries. So I think the two ambassadors will be very helpful in the next step in the relationship.
MARGARET WARNER: But I mean, what is American business looking for?
VIRGINIA FOOTE: They're looking for economic normalization, which is the next piece of the overall relationship, MFN status, the support system of the U.S. government on full trade relations, and that's really what has to come next.
MARGARET WARNER: Mr. Long, the Vietnamese also wanted this normalization and an ambassador. Why was it important to Vietnam?
PHO BA LONG, Business Consultant: Well, I think that it is very important because Vietnam wanted to play a good role in the community of nations, especially within ASEAN, and especially--
MARGARET WARNER: That's the Association of Southeast Asian Nations, an umbrella organization.
PHO BA LONG: Especially and next with huge neighbor, China, want to be recognized as an independent country--family--with all the other countries, especially in the region.
MARGARET WARNER: And what do you see as the significance of this latest development and in terms of what the expectations are by both the Americans and the Vietnamese?
ADAM SCHWARZ, Journalist: Well, it moves things to a higher level, having an ambassador on the ground will certainly be viewed favorably by the American business community, that has for a number of years now been clamoring for a furthering of what Virginia called the economic normalization, and they will be pleased to have an ambassador on the ground to try to bring a little bit more clout to bring in the various components of that relationship forward.
MARGARET WARNER: Mr. Long, is there any residual bitterness among the Vietnamese toward Americans because of the war?
PHO BA LONG: I am very surprised. I have been back to Vietnam since 1988, with Larry Pressler.
MARGARET WARNER: Former Senator from South Dakota.
PHO BA LONG: From South Dakota. And since then I've been back many times, and I was very surprised that there is absolutely hardly any bitterness at all. It seems forgotten. It seems that the French war that preceded the American war has been clearing the way, more or less. If there is any bitterness I would say there's some worry about China, rather than America.
MARGARET WARNER: Do you--does American business encounter any lingering bitterness, resentment, any special obstacles because of the war?
VIRGINIA FOOTE: No. I think actually we have--American companies have a very good reputation in Vietnam. The Vietnamese are looking for the American management skills and capital and technology. So I think we in some ways have a favored role in investment in Vietnam, although the relationship has hurt, overall, American companies' ability to go in there, so it's a mixed relationship now.
MARGARET WARNER: Explain that.
VIRGINIA FOOTE: Well, the U.S. is the last country to normalize with Vietnam. And we don't have full trading status, so American companies still operate with quite a handicap in comparison to companies from other parts of the world.
MARGARET WARNER: Let's talk a little bit about economic reform in Vietnam and how far it's come. And give us a little sense, first of all, of the history. Why did this Vietnamese regime decide to open a door even a little bit to free market economics?
ADAM SCHWARZ: There are competing views as to sort of what prompted the government to change tack in the mid 80's. I think--I think everybody agrees that part of the reason is simply that the system that they had been following from '75 to 1985 wasn't working, the country was not getting wealthier. It was not developing. People were going hungry. Production was down. So they changed tack, and they've decided what they call their doi moi economic reform policy have bit by bit begun to bring in the pieces of a free market system. And in certain respects to great success; in other respects they haven't probably gone as far yet as they need to, to complete the transformation.
MARGARET WARNER: And you were there in the very early years of this effort. How hard was it? How hard is it for a country like Vietnam to start to embrace free market economics?
PHO BA LONG: I think it is very, very difficult. I think it is a matter of survival. When the leaders see what's going on in Thailand, and especially in China, I'm sure they must feel very worried, that they are behind all these changes, and I think they think maybe a little too much expectations that normalization in America may bring about maybe another miracle, in their view, which I am worried about as well.
MARGARET WARNER: Because you think that's unrealistic.
PHO BA LONG: It is, and it is also too much expectation from both sides, too much, too soon.
MARGARET WARNER: How far--from the standpoint of American business, how far do you think they've come and what haven't they been able to do? We read all the stories about still tremendous bureaucratic obstacles to doing business there. Tell us a little bit about it. Give us a sense of what it's like.
VIRGINIA FOOTE: Well, I would agree with that and that some of the changes that they have made have been quite fundamental and the changes left in front of them are also very important. The development of a private sector in Vietnam will be important for American companies. There are still restrictions on who can trade and how to invest. There's the problem of the bureaucracy, is still very much there. But there's also the problem that they're in transition, so they are looking at what other countries have done, how they have restructured their economies. And I think it's a difficult process. There is no real model for Vietnam to look to and say we are going to do it like country "X" did it. Every country has made this transition in quite different ways, and they are still seeking out what models, what transitions, and in what order should they--how should they proceed.
MARGARET WARNER: Our Treasury Sec. Robert Rubin was on this show a week or so ago after his trip, and he said that when he was over there, senior officials in the government told him, you know, we don't have people in our government who even understand market economics. Is that part of the problem?
PHO BA LONG: Well, I think it's not only part of the problem, it's also an attitude. People only do not understand; they do not have the mentality to be able to understand, and I'm afraid that is going to be phenomenal, and I think education, what do you call economic business, international education would be the first thing in order to make them understand, to convince them, and it takes some time--it's an educational process.
MARGARET WARNER: How far do you think Vietnam's come? Compare it say to what China's done in terms of economic reform, and give us some examples about what, what obstacles--what obstacles remain, or what old attitudes remain.
ADAM SCHWARZ: Well, I think China is a very good example to pick. I think if Vietnam is modeling itself on any one country, I would pick China as that. You have the combination of a Communist Party in charge politically and very determined to keep its exclusive hold on political power, while at the same time trying to resuscitate economic growth and develop the economy through adopting free market principles. My sense, after living in Hanoi, was that actually the government leaders and the party leaders in Hanoi pay quite close attention to what goes on in China, and the way China is sequencing its reforms. In certain respects, Vietnam is ahead of the game. You have to remember, China started its reform process a good ten years before, and so, therefore, it is further ahead in what it's trying to accomplish, I would say in particular in private sector developments. In other areas we're still waiting to see what Vietnam is going to do. There has not been really much fundamental change in the state enterprise reform.
MARGARET WARNER: Meaning the state businesses--state enterprises still are a big part of the economy?
ADAM SCHWARZ: Exactly. And seen to be jobs providers, rather than enterprise, that need to be profitable and continue under their own steam. So we--the bureaucracy and sort of this holdover from an earlier period where it was a production-based mentality and companies were told how much to produce and profits and revenues were an after thought. There is still a lot of that attitude in the government and the way that they look at enterprises and the way that they view the economy and how economic entities and units are meant to support the political structure, rather than simply as wealth generating or revenue generating entities in themselves, so that--that it's an attitude problem.
MARGARET WARNER: Is there a lot of--I've also read a lot of official corruption still?
VIRGINIA FOOTE: I don't think that's the fundamental problem, though. I think that what's going to pull Vietnam into the next phase of their economic reform is their decision to join the World Trade Organization, and to adapt their economy to international standards. Corruption issue, the bureaucracy, all of these are problems in getting there, but they have made the fundamental decision of where they are going. And now it's figuring out how to get there and what steps to take and train people to get there, but the decision really--a fundamental decision was made some years ago, and I don't think they're veering off of that course.
MARGARET WARNER: But if--if you were an American business and you could go to China, Russia, or Vietnam, which one is easier to do business in, more promising, with more immediate payoff?
VIRGINIA FOOTE: Well, of course, that varies, depending on what business you're in and what sector. Most large American companies, most Fortune 500 companies are in all three, and they're not choosing between one or the other. I think for Vietnam it's viewed as a potential market, rather than a place to invest now and have immediate profits. American companies have been there for about not quite three years now, since the embargo was lifted. Companies who are selling consumer products are doing quite well. Companies that are investing in longer-term investment projects still are hopeful but they're not making a profit yet. So it depends a great deal on your sector, but I think everybody feels that the potential is still very bright for Vietnam.
PHO BA LONG: I would like to comment on Adam's view and the role model. I think they are looking for a better role model--Singapore. They believe in Singapore, and there is only one party rule. That's what they want, and they think that Singapore is much more open to the West than China is.
MARGARET WARNER: All right. Well, I'm afraid we'll have to leave it there, but thank you all three very much.