3 - The Socio-economic Setting of the Informal Security Regime

Summary

Vietnam can be characterized as being both in an economic transition and a modernization process. Officially, the Vietnamese government has followed an East Asian strategy of outward-oriented economic growth with a rise in exports and the attraction of large masses of Foreign Direct Investment (FDI). The Communist Party of Vietnam and the government are of the opinion that they have kept a wary eye on the economic transition from plan to free market. However, the long period of war and the international isolation meant that the reform process Doi Moi was not an option, but a necessity, as the social and political system was deprived of desperately needed funds. In fact, major changes including the privatization of the economy and the decentralization of decision making and governance have often taken place informally from the bottom-up without the involvement of the national government. Peasants for example evolved entrepreneurial skills through agreeing on sneaky contracts with local cadres. Moonlighting has increased rapidly among the public health care staff and has blurred the line between the public and private sphere.

Integration into the world market and the shift towards export-orientation has decreased poverty in Vietnam from around sixty per cent in the early 1990s to less than sixteen per cent in 2006. However, modernization and the economic transition have also increased the competition among provinces for FDI, thereby putting a strain on the government to adjust incomes. The major share of capital is concentrated in key economic areas such as the Red River and the Mekong Delta. Less attractive provinces thus compete against each other by lowering safety standards and ignoring environmental regulations. Provincial People's Committees try to attract private (foreign) capital by offering cheap land and tax breaks. Provinces which are able to attract investment, can invest in infrastructure. In view of the current lack of genuine income redistribution financed by taxes and social insurance contributions, this intensifies the uneven development.

The reform process in Vietnam has yielded quite contradictory results — being as it is the outcome of a strange mix of selective state interventions and neo-liberal recipes.