- The Washington Times - Thursday, April 29, 2010



It is sad to witness the unrest on the streets of this city but even sadder to see how Thailand’s ‘fraternal’ ASEAN partners are trying to exploit its troubles. Consider Vietnam. Its ruling Communist Party is openly using the political crisis in democratic Thailand to shore up ebbing support for its own authoritarian one-party regime.

Journalists in Hanoi confirm that the government-controlled press has been instructed to give prominent coverage to the protests in Thailand and paint a clear contrast between the unrest there and the stability at home.

As well, the media have been told to play up the notion that foreign businesses will be more inclined to invest in Vietnam than in turbulent Thailand.

“It would be logical to say that foreign investors would move their investment from Thailand to Vietnam,” said Pham Chien Khu, director of the Research Institute for Social Opinion, a division of the Communist Party’s Commission of Propaganda to the German Press Agency DPA.

“Foreign investors find Vietnam has a stable political regime, so those who have been investing in Thailand may now choose Vietnam instead,” he said.

Well, yes, they may. On the other hand, if they are savvy businessmen who take the trouble to do a little due diligence, they may not.

The fact remains that Vietnam is far from being an attractive location and is way behind Thailand on every parameter that any investor would evaluate. In the World Bank’s 2010 rankings, Vietnam is 93rd out of 183 countries in terms of ease of doing business. Thailand is 12th.

Indeed, despite all its social volatility, Thailand has notched up three decades of steady growth and remains ASEAN’s second-largest economy and the region’s manufacturing hub. Its balance of payments, national reserves and currency remain strong - in contrast to the endemically weak dong, depleted reserves and burgeoning trade deficit in Vietnam.

Also, given Vietnam’s double-digit inflation, restless labor force and lamentable infrastructure, it beggars belief that the party apparatchiks could even suggest that businessmen might favor them over Thailand.

Wishful thinking, comrades. It is not going to happen. Look at your own figures. Last year, foreign direct investment in Vietnam fell 70 percent, to $21.5 billion, from $71.7 billion in 2008.

Endemic corruption, lack of accountability and transparency, and fearsome red tape are among the hurdles to foreign investment. Officials in Hanoi routinely announce schemes to fight corruption, but they always peter out when journalists are detained for reporting bribery scandals.

The situation, wholly owing to the ossified political makeup of the country, will only get worse in the short term as officials jockey for posts ahead of the Communist Party’s 11th national congress in January next year. This internal volatility will have a far greater impact on Vietnam’s economy than the far-off protests in Bangkok.

Besides, Vietnam is hardly free of its own social unrest. There has been a rising number of strikes, protests and land disputes in recent years, often affecting foreign businesses. Last month, more than 10,000 workers walked off the job to protest low salaries and shocking conditions at a Taiwanese shoe factory in southern Dong Nai province.

On April 5, the strikers gathered on National Highway 1, causing massive traffic jams, and when the police arrived and arrested one striker, his colleagues surrounded the police officers and forced them to release the man. Sound a bit like the Red Shirts? And bear in mind there have been more than 330 similar strikes in the past six months in Vietnam.

Meanwhile, although tourist arrivals are down in Thailand, they have not fallen as much as in Vietnam, where there was a decrease of 18.7 percent in foreign visitors last year.

On a trip to Washington last week, Vietnam’s Prime Minister Nguyen Tan Dung promised skeptical U.S. business leaders that his government would work to improve the investment climate and upgrade the appalling infrastructure. Said Mr. Dung: “The Vietnamese government is well aware of difficulties in the investment climate, first of all infrastructure like roads, ports and energy.”

Keep this in mind when you hear the silly talk of investors switching from Thailand to Vietnam. Do not be sucked in by those who say Vietnam is no longer a real communist regime but has somehow become a hotbed of free-market capitalism. It is hogwash.

Last month, the Communist Party’s key decision-making body, the Central Committee, ended its plenary session with a loud public call for more socialism in the coming decade.

It has been 35 years since the end of the Vietnam War and almost 25 years since the policy of economic reform or “doi moi” was introduced to free up the market and allow entrepreneurs to flourish. Yet doi moi has never been applied properly, and grossly inefficient state-owned enterprises still dominate the economy. Consequently, Vietnam remains an economic laggard.

As an ASEAN ambassador said in Hanoi last week, there is no sense that the regime knows what’s going on in an economic sense. There is no direction. Until the party dinosaurs find some direction and loosen up their rigid political and economic controls, Vietnam will never catch up with Thailand.

Roger Mitton is a former senior correspondent with Asiaweek and a former bureau chief in Washington and Hanoi for the Straits Times of Singapore.

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