Vietnam'S Economy In A Political Trap

Trinh said exports should be speeded up'' to deal with a trade deficit that stood at a record $3.25 billion in the first eight months of this year, compared with $2.3 billion for the whole of 1995.

The deteriorating economic performance also raises questions about whether the bureaucracy, stifled by consensus decision-making and plagued by patronage and inter-ministerial rivalries, is equipped to deal with the next, and arguably more important, stage in Vietnam's 10-year-old economic reform process.

There's a need for leadership to take some tough decisions over the next 12 months,'' said Roy Morey, resident representative for the United Nations Development Programme, which produces a wide-ranging assessment of the country's reform process next month. Vietnam has reached another crossroads where a number of structural reforms need urgently to be implemented if its development process and poverty reduction are to be sustained beyond the next five years.''

 

Without radical measures, some economists say, Vietnam risks losing the race to catch up with its south-east Asian rivals, an aim that topped the party's agenda when it convened a landmark congress three months ago.

Economists fear that constant carping between competing ministries, often with overlapping policy responsibilities, could kill policy initiatives. Rising corruption is also playing a part in distracting officials from the business of government just as some of the figures are starting to turn bad.

There is a market economy here. What Vietnam has to do is manage it,'' said one foreign economist. For some economists, debt is Vietnam's biggest macro-economic problem.

Hanoi has yet to agree a final package to settle $900 million of commercial arrears with its London Club creditors, is lumbered with a historical debt of a nominal Rbs10.5 billion owed to Moscow and is paying out about $500 million a year to service other debt.