Vietnam, with its frequent changes in policy and bureaucratic rule, has left investors confused and wary. Nicholas Cumming-Bruce reports from Hanoi
An 18-storey hotel, soaring above a jumble of low- rise Hanoi houses and construction sites, is a landmark to the rapid changes rattling this once- sleepy capital of faded colonial villas and lakes.
Foreign businessmen, intended to be the main clientele of this Korean-built hotel, pay nearly $200 a day for a room, the average annual income of a Vietnamese. Close by stand a green block of flats and a tower block the colour of gun-metal that has doubled Hanoi’s international-grade office space.
Yet some are wondering who will fill what one foreigner quipped was a monument to what might have been, such is the malaise in the foreign business community.
The five-yearly congress of Vietnam’s Communist Party — assembled for the past month under hammer-and-sickle banners — is the cause of some of their despondency. Unsure of what their masters would decide, Vietnam’s bureaucrats have been sitting on their hands. “No one has taken any decision that matters for six to seven months,” said a Western ambassador.
Vietnam’s internal security service has added to the problem by blocking visas while the congress sits. International flights to Vietnam have been largely empty and hotel room occupancy has plummeted.
The congress finished on Monday and normal trading should resume. But the atmosphere of gloom will not lift so quickly.
Ten years after a crisis-ridden, half-starved Vietnam decided to switch to a market economy, foreign businessmen have been surprised to find themselves the butt of criticism by old communist ideologues now worried by what is happening to the country’s values and independence.
Former Communist leader Nguyen Van Linh last week accused foreign companies of dodging taxes and profiteering from the state. “The government must defend the economic sovereignty of Vietnam,” he said.
More seasoned foreign businessmen in Vietnam take these rhetorical flourishes in their stride. Vietnam, after all, has achieved dramatic change in the past 10 years, raising living standards for most of the population, helped by $20-billion of direct foreign investment.
The party congress, despite tussles between reformers and hardliners, has toned down talk of the leading role of the state sector. It has also backed a course of industrial development that will need investment of $40-billion to $50-billion within the next four years, with a third of the money expected from abroad.
“I myself want to accelerate reforms, but I want to see efficiency and stability,” the Communist Party leader Do Muoi said, referring to foreign investors as “friends”.
Such reassurance is badly needed. Investors’ confidence has been eroded by frequent rule changes, bureaucracy, corruption, and land laws that cause confusion and delay.
Paradoxically, these conditions have deterred the cowboy investors that used to plague Vietnam. In their place are more serious enterprises, weighing the opportunities in a country of 75-million people with a bottomless need for goods and services.
Foreign expectations of Vietnam in the early days of its glasnost were almost certainly unrealistically high. Now the pendulum has swung the other way. “They have eradicated the goodwill they had two years ago,” said a frustrated consultant bluntly. “The love affair is over for good — it won’t come back.”