Kamal Ghorui
I spent a delightful couple of weeks in Vietnam recently. Vietnam is an ancient land with a charming culture that has also imbibed influences from China and India. Its scenic beauty verges on the magical. And for those interested, there is plenty of shopping. The country has risen from the ruins of the Vietnam war, during which its people faced the Agent Orange atrocities by USA – atrocities that humanity should never forget (the War Remnants Museum in Ho Chi Minh City is worth a visit).
In addition to these aspects, I was curious about the economic performance of Vietnam and whether India might learn any lessons. Overall, Vietnam doesn’t look very different to India, except that its cities are clean. The per capita income (on a purchasing power parity basis) of both India and Vietnam was the same in 1990, at around $1,210. By 2024, India’s per capita had grown to $11,160 while Vietnam did 50% better at $16,385. (In comparison, China’s was $27,104 and Singapore’s, $150,689 in 2024). Vietnam has done much better for its people than India has, but is not yet a developed country.
- No caste, hence clean cities
The people of Vietnam have no caste, so wielding a broom is considered to be a demeaning task. Everyone sweeps the street-front of their dwelling or shop, and the rubbish is neatly stacked in plastic bags for pick up. While Hinduism influenced Vietnam, the Vietnamese people were wise to reject the caste system. India needs to abolish caste, as well, in order to become even as good as Vietnam.
- Ho Chi Minh’s communist ideology
Ho Chi Minh lived a very simple life and is therefore much loved by the Vietnamese. He was right to fight against colonialism. But just like Nehru, he too was a disaster for his country; for the road to Hell is often paved with good intentions.
Ho Chi Minh’s complete works are available on archive.org. They show that he was an uncompromising communist and opposed individualism – the foundational philosophy of capitalism. He wrote, “Individualism spawns hundreds of dangerous diseases: bureaucratism, commandism, sectarianism, subjectiveness corruption. … Individualism is a cruel enemy of socialism. The revolutionary must do away with it.” He praised communism: “No system equals socialism and communism in showing respect for man, paying due attention to his legitimate individual interests and ensuring that they be satisfied. … [I]n the socialist and communist systems, of which the labouring people are the masters, each man is a part of the collective, plays a definite role in it and contributes his part to society…. The interests of the individual are closely tied to those of the collective. If there is any contradiction between them, revolutionary morality demands that the former yield to the latter.” And he praised the Soviet Union as “the bulwark of peace and democracy”.
After becoming President in 1946, he drew on the Soviet and Chinese models, with violent seizure of land and purges while creating agricultural cooperatives. In his 1964 book, “From Colonialism to Communism”, Hoang Van Chi estimated that around 500,000 Vietnamese people were killed during these purges (other estimates go up to a million). Industry was nationalised and managed through central planning. Vietnam had been a poor country under French colonialism but Ho Chi Minh’s policies failed to improve the condition of the people and cost many innocents their life.
- Đổi Mới Reforms of 1986
Ho Chi Minh died in 1969. Years later, in 1986, having observed Deng Xiaoping’s China reforms of 1979, the Vietnamese Communist Party under the leadership of Nguyễn Văn Linh, introduced Đổi Mới reforms (the term means “innovation”). Vietnam adopted what it calls a “Socialist-oriented market economy”. Today, Vietnam has most elements of the free market. Even small shops sell liquor and tobacco along with groceries and vegetables. There is no hue and cry by “moralists” (like in India).
As a result of these reforms, Vietnam is a magnet for foreign investment. Over the past three years, Vietnam (population of 100 million) has received around half the FDI that India received during the that period, i.e. seven times more than India’s on a per capita basis.
- Governance problems
Vietnam’s economy has been growing at a rate of around 7% per year over recent years, faster than India’s but nothing to write home about. Compounding matters, and while Vietnam’s growth rate is good, it has never achieved the growth what Singapore did: growth of around 10% for decades on end (even today Singapore is growing at nearly 5% – an enviable performance for an already very rich country).
Why this relatively slow growth? Apart from the need to further liberalise, I believe the weaknesses in Vietnam’s governance and some of the day-to-day habits of its people are likely to limit its future prospects.
First, governance. While people keep the streets clean, footpaths are barely walkable, often cluttered with obstructions and sometimes broken. I tripped twice. Airports have complete disregard for the comfort of passengers such as the elderly or those with children. At the Ho Chi Minh airport, there are shops everywhere but virtually no seats for passengers (except at the gates). The queues at customs are extraordinarily long. Security lines are dysfunctional and take enormous time. In the cities, there is no enforcement of pedestrian crossings. My wife and I could not cross many roads and had to use taxis to move from place to place.
Second, the day-to-day (i.e. non-artistic part of) culture. The people of Vietnam are very friendly but the behaviour of some of them can border on the uncouth. Don’t be startled if someone breaks the queue or pushes you from behind. In a domestic flight, a person sitting next to me prodded me incessantly with his legs and elbows. Such examples illustrate a host of underlying problems with governance and education. Vietnam is no Japan or Singapore.
- Governance reforms are critical
Capitalism cannot function without effective governance. An effective government oversees markets through appropriate regulation, facilitates the rule of law and discipline in society, and has the capacity to raise necessary (minimal) taxes in the least distortionary manner.
India’s politicians refuse to reform governance, apart from denying the laws of economics. Their fantasy world has led to dismal economic (and social) performance even in comparison with Vietnam (let alone Singapore). But Vietnam’s politicians don’t get it, either. Only by completely abandoning communism and bringing discipline to day-to-day life can Vietnam achieve its potential.
There is no better role model for both countries than Singapore, which is now vastly richer than countries like USA and Australia – which we once called “developed”.
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