Vietnam INTERNAL COMMERCE
Black market American goods, Ho Chi Minh City
Courtesy Bill Herod
Scrambling to buy plastic water containers in Hanoi
Courtesy Bill Herod
Hanoi pen merchant uses hypodermic needle to insert ink into used ballpoint pens
Courtesy Bill Herod
The control and regulation of markets was one of the most
sensitive and persistent problems faced by the government
following the beginning of North-South integration in 1975. The
government, in its doctrinaire efforts to communize the
commercial, market-oriented Southern economy, faced several
paradoxes. The first was the need both to cultivate and to
control commercial activity by ethnic Chinese in the South,
especially in Ho Chi Minh City. Chinese businesses controlled
much of the commerce in Ho Chi Minh City and the South generally.
Following the break with China in 1978, some Vietnamese leaders
evidently feared the potential for espionage activities within
the Chinese commercial community. On the one hand, Chinese-owned
concerns controlled trade in a number of commodities and
services, such as pharmaceuticals, fertilizer distribution, grain
milling, and foreign-currency exchange, that were supposed to be
state monopolies. On the other hand, Chinese merchants provided
excellent access to markets for Vietnamese exports through Hong
Kong and Singapore. This access became increasingly important in
the 1980s as a way of circumventing the boycott on trade with
Vietnam imposed by a number of Asian and Western Nations.
The second paradox lay in the role markets played in economic
planning. State plans depended upon complex and interrelated
flows of industrial and agricultural commodities, mediated by
state markets at fixed prices. For example, predetermined amounts
of food had to be produced and made available to coal miners, who
were required to increase production of fuel for thermal power
plants, which would in turn supply energy to fertilizer factories
and machine shops. Production of fertilizer and small
machines--for example, irrigation pumps and insecticide
sprayers--would close the circle by providing planned levels of
inputs necessary to increase agricultural production. Production
campaigns under the guise of encouraging volunteerism--heroic
efforts for the development of the fatherland--were to be used to
keep production at quota levels at every part of the cycle. By
the late 1970s, however, this plan had failed conspicuously.
Although inhibited by controls and the exodus of numerous Chinese
in the late 1970s, the private market remained active
(see Ethnic Groups and Languages
, ch. 2). Enterprises working under the
Second Five-Year Plan found themselves competing for needed
inputs in the private sector. Prices in the free market were
usually well above those set by the plan, but private markets
often were the only source for needed goods. Bottlenecks and
shortages persisted, aggravated by the tendency of low-level
managers to stockpile above-quota production against future
levies or simply to sell production on the private market.
Repeated failures to improve harvests caused food shortages to
approach crisis proportions and forced the government to back
away from its attempt to mold the South into the North's economic
image. After 1978 the government moderated its crackdown on
private commerce in the South to allow some commercial activity,
including reinvestment of private profits. By 1979 the share of
state-owned commerce in Ho Chi Minh City had declined to 27
percent, compared with 54 percent for the country as a whole.
A major problem for the leadership was the structure of the
economy in the South. Nationalization had little effect on the
small-scale manufacturing that characterized much of production.
Moreover, commerce was a principal occupation in the major
cities. While state stores were established as part of a new
government-controlled distribution network, private vendors were
able to compete effectively with them by offering to pay more to
suppliers and by providing customers with better and otherwise
unobtainable goods in exchange for higher prices. Hanoi's
orthodox communist leaders viewed this activity in a time of
shortage as speculation, hoarding, and monopolization of the
market.
At roughly the same time that the government intensified the
collectivization drive, it launched a campaign in the South to
transform commerce into a largely public-sector activity. Private
shops were closed, merchandise was redirected to state channels,
and merchants were shifted to production work. At the peak of the
transformation drive in 1978, state-sponsored commerce in Ho Chi
Minh City reportedly accounted for 40 percent of retail sales.
The government's crackdown on private traders initiated an
unprecedented exodus of ethnic Chinese, who made up many of their
number. The market dislocation also increased hardship in the
South, which, along with unpopular resettlement policies,
convinced many Southerners to flee. Not only did the government's
program deprive the South of the services of some of the more
capable members of the middle class, but the escape of many
Southerners by sea provoked a shortage of fishing boats and a
decline in the fish catch, a principal source of foreign-exchange
income.
Through 1986 and 1987, official policy toward unofficial
markets continued to alternate between restrictive and liberal
approaches. Restrictions included licensing and tax regulations
and proscriptions against reinvestment of profits. In periods of
relaxation, these restrictions were eased; local organizations
were given greater autonomy in setting prices for locally
produced goods; and unofficial markets were permitted to
flourish.
Lenient policies reflected official awareness that both
production and distribution remained to some degree dependent on
the unofficial market. In agriculture, for example, the "family
economy" continued to account for an important share of peasant
agricultural production. The state plan for industrial production
recognized the existence and importance of the unofficial market
in the "dual quota planning" system. Under this program,
introduced in 1985, enterprises that met plan quotas were allowed
independently to plan, finance, produce, and privately market
surplus goods on the unofficial market. In 1986 state enterprises
in Hanoi reportedly were unable to meet their budget contribution
quotas because of the high cost of purchasing goods on the
unofficial market. Many organizations not authorized to trade
continued to do so, however, and the available goods on the
official, "organized" market remained well below quotas.
Data as of December 1987
|