HANOI—One thousand years old this year, Hanoi’s streets remain decorated with thousands of the gold-starred red flags of the resistance. Nominally a socialist republic, the country’s economy has in fact adapted the post-Deng economic model of China, applied with a Vietnamese touch.

Looking across the Red River, Hanoi. (Photo: Simon Roughneen)

Now a focus for Western investors such as Intel, Boeing, Microsoft, Apple and many more, Vietnam has seen spectacular economic growth since the Đổi Mới system was introduced, and particularly since the normalization of relations with the US in 1995. Membership of the World Trade Organization came in 2007, another boost for the latest addition to Asian Tiger ranks and adding to the growing incentives for foreign multinationals to invest.

According to economist Suiwah Leung, “During the last two decades, the country has had an average FDI/GDP ratio of 5.9 percent; the highest among many Asean countries during their respective periods of rapid growth from the mid-1970s to mid-1990s.”

In his August 2009 meeting with Burma Prime Minister Thein Sein, US Sen. Jim Webb, who fought in the Vietnam War and has worked on America’s relations with Asian countries for many years, said that the Vietnam experience was one that Burma could look to. Links between the two countries are growing. In April 2010, a bilateral trade fair was held in Rangoon and flights from Burma’s main city to Hanoi and Ho Chi Minh City were launched. The value of bilateral trade between Burma and Vietnam has increased almost 60 per cent year on year, now coming up on US $160 million, according to Vietnamese deputy industry and trade minister Nguyen Thanh Bien, who was in Rangoon last week

According to the August 2009 diplomatic cable drafted by the US Embassy in Rangoon and published by Wikileaks, Sen. Webb deferred to Thein Sein’s view that economic development was needed before a country could democratize. The cable added that Sen. Webb “had observed parallels between Burma and Vietnam during his 2001 personal visit to Burma.”

With Vietnam’s economic growth spurred by a normalization of relations with the US, which is the country’s second biggest trade partner after China, Webb hinted that the removal of sanctions on the Burmese junta could, in his view, help revitalize the Burmese economy, noting “that one of his friends had closed his business in Burma because of sanctions, putting people out of work. Burma’s citizens could have a better life if relations (between Burma and the US) were better.”

The recent Nov. 7 elections seem to have put paid to some of the optimism in US and Western policy-wonk circles about a looming, if flawed, transition to democracy in Burma, with the junta accused of ballot-stuffing by way of advance voting, intimidation and setting electoral rules that hampered the opposition parties. The Union Solidarity and Development Party (USDP) won with 76 percent of the vote, for 75 percent of available seats, and with the military guaranteed the remaining 25 percent of seats, as well as key positions in the next government, Burma will be a democracy in name only.

In Vietnam, there is no pretense. With its centralized political system maintaining rigid control and brooking no dissent, the Vietnam government is betting its legitimacy on delivering economic growth and rising living standards for the country’s 90 million people. In Hanoi, there are signs of this growth everywhere, from new construction sites to increasingly heavy traffic and the feeling is of an increasingly confident city and people.

Despite categorizing Vietnam alongside Cambodia, Laos and Burma as countries that should not have been admitted to the Association of Southeast Asian Nations (Asean) during the 1990s, Singapore’s Lee Kuan Yew conceded that Vietnam had made progress where the others had not and labeled the Hanoi leadership as “bright.”

As is the case in China, Facebook is blocked, though getting around the restriction is fairly easy. However, around 20 writers, bloggers, lawyers and people from religious minorities have been arrested or jailed in the past two months, adding to a list of dissidents, some fairly high profile, that have been imprisoned in Vietnam in recent years.

The government accuses most of those imprisoned of various forms of sedition, or of breaching public order, and the country’s Constitution elevates the ruling Communist Party above the law. Although the country’s parliament has seen some debate over issues such as troubles in Vinashin, a state-owned shipping company, opposition parties are not tolerated and there is no sign that anything like a multiparty system will come to Vietnam anytime soon.

Could Burma, wealthy with natural resources and an investment target for companies from China, Thailand, India and South Korea, take the Vietnam-style route to prosperity, sugaring a “benign authoritarianism” with the promise of higher living standards and economic opportunity?

It is an understatement to say that Intel or Microsoft will not be setting up shop in Rangoon or Mandalay anytime soon. While sanctions preclude any such investment, the chief obstacle to Burma’s adopting a Vietnam-style road seems to be the Burmese rulers, who are motivated by retaining power and enriching their families and business associates, in the first instance. An out-dated and complex exchange rate fiddle means that the country’s oil and gas income is downplayed in official figures, with the real revenue possibly siphoned off into military spending or personal bank accounts. When a “wave of privatization” was implemented in Burma during 2010, more than 300 state-owned businesses were sold, but the buyers were all regime cronies.

State-owned enterprises still make up a large chunk of the national economy in Vietnam, perhaps at least a quarter, and there are stories of corruption, but the government is capable of convincing Western investors to put their money into the country and has been commended for economic reforms and legal amendments in recent years.

In contrast, economic policy making in Burma has been dismissed as opaque and incompetent even at the best of times, with digressions into numerological folly—such as former dictator Ne Win’s decree that all currency denominations should be divisible by 9— marking Burma out as an economic twilight zone, attractive only to those who want to take oil, gas, gems, timber and other resources., out of the country. Even if Western sanctions were reduced or dropped, it remains to be seen whether Burma’s rulers would break with a half century of disastrous economic policies in response.

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