Why is Vietnam still poor?

CA Camillacam asked on 07 June 2020, 10:22
1 answers / 627 views / 1 votes
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It’s a complex issue with no simple answer that captures the multitude of reasons of why Vietnam is ‘poor’. By some international measures of income per capita, as some have stated here, Vietnam has been ‘lifted’ out of poverty and is now enjoying a ‘middle-developed’ status. By other measures, including how the vast majority of Vietnamese live day to day, it still qualifies as ‘poor’.

Having lived and worked in Vietnam for many years and still a frequent traveler there, I’ll give my perspective on why I consider Vietnam as ‘too poor’ relative to its resources and abilities. In other words, why Vietnam has not achieved its potential.

#1. Corruption, corruption, corruption. It makes you sick to see it and live with it. It makes you ill to watch hard-working shopkeepers with an entrepreneurial spirit be shaken down by the local police, then the district police, and then the local party head on a regular basis. Even in my capacity as country manager for a large US company, we were visited by representatives from the labour ministry and told we owed $100k to the government because they changed a law last month and made it retroactive for two years. It was just a high-level shakedown. Have a look at the rail system being installed in Ho Chi Minh City, which includes underground and above-ground trains that reach out from District 1 and into District 2 and other areas of greater HCMC. On its completion it will be the most expensive rail system ever built IN THE ENTIRE WORLD (it’s still not finished after many years). Is that because the cost of labour is so high in Vietnam or materials are difficult and costly to procure or that the train system is so vast? No. It is because every layer of government official is on the take. Think about that. We are talking tens of millions of dollars that are going into private pockets when it could be used for other public projects to improve the lives of Vietnamese citizens. Corruption is rampant and visible at every level of Vietnamese society and is a cancer that impedes its growth.

#2. Poor quality public infrastructure and public goods. I’m not talking about roads - there are many decent roads, particularly in Hanoi (go figure) - or internet, as good wifi is available in even the most remote coffee shops. I’m talking about a) education and b) health care. For all the statistics people touting the ‘great development’ across Vietnam, I invite you to drive one hour outside HCMC or Hanoi or Danang or Nha Trang, and visit a local school or hospital. While some schools are in decent shape, most are in awful condition. It is heartbreaking to see children in small, hot, non-air-conditioned rooms sitting two to a desk and attempting to study. And the toilets - they are usually outside and absolutely filthy beyond description. I know this because I’ve volunteered at a few schools and built playgrounds, etc. The conditions at many schools are absolutely not conducive to receiving a proper education. Oh and the teachers and staff are all on the take as well, which brings me to one of the biggest shames of Vietnam: the hospitals. I’ve been in them, I’ve visited friends in them, and it is truly shocking. The last time I visited a friend in a hospital was two months ago, and I counted 22 people in a room that was about 16 square meters. People sleeping under beds, patients two to a bed, open windows in this room because there is no air conditioning, letting mosquitos in. Patients sleeping on tiny beds in the hallways. Belligerent ‘doctors’ grumbling everywhere. Okay this is bad enough, but what makes it so maddening and heartbreaking is that, like most systems in Vietnam, it is corrupt. I know for a fact that doctors and especially heads of hospitals, as well as local government officials take bribes to give ‘better’ treatment and are paid by pharmaceutical and medical device companies to use their products. They take this money and line their own pockets while their fellow citizens lie in desperate agony in unsanitary hospitals, hoping for a cure from belligerent, semi-qualified ‘doctors’ who are also on the take. It is shocking and depressing to witness.

#3. Lack of legal infrastructure protecting property rights (there are some even in pseudo-socialist Vietnam) and enforcing contracts. It’s the wild west when it comes to contract enforcement and for the most part, the side that wins a dispute is the one who is ‘better connected’ or who has more ‘power’. And by connections and power I mean the side that ‘knows someone’ in the government, the party, the police, or the army. Especially the army or government; if you have a high-ranking army or government connection you can be assured you will win most of your disputes regardless of merit. The government connection factor isn’t different to many other countries, let’s be honest here, but the benefits from a good army connection sets Vietnam apart in my opinion.

So my take is this: Vietnam’s quality of life is not ‘poor’ because its people are unintelligent or lazy or disinterested. Most Vietnamese are very intelligent, aspirational, and willing to work hard for a better life for themselves and for their families. But they unfortunately are swimming upstream against the powerful forces of corruption, poor infrastructure, and lack of property rights and contract enforcement. In the face of such negative forces you would forgive them for thinking, “what’s the point?” and for giving up. If more Vietnamese begin to demand more accountability these negative forces can be reduced and Vietnam can reach its potential as a country much more quickly.

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