Vietnam looks to red capitalists to boost economy


HO CHI MINH CITY, Vietnam -- The factory produces batteryless flashlights, but the designer and manufacturer is an even greater innovation in Marxist Vietnam -- a Communist capitalist working to renovate the country's creaking economic machinery.

'We are quite proud to be one of the family industries to break through the former policies to find a new way for our development,' said Le Cong Thanh as he displayed the antique production facilities in his rambling house.


The inventor-entrepreneur is a dedicated socialist who went to North Vietnam in 1954 to join the revolutionary government, but now is part of a new Communist trend pragmatically cobbling bits of capitalism into the socialist system.

Family businesses, state farms, small cooperatives and even large state enterprises are being asked to experiment with capitalist working methods.

Slowly, but not without resistance, they are working.

Bitter soul-searching by Vietnam's leadership and a wave of rice-roots protest over the economic failures orthodox Marxism has wrought have sparked wrenching changes in policy.


New Communist Party Chairman Nguyen Van Linh is leading the change, telling state traders and production units theyhave to learn from capitalism.

'Communists do not know how to trade,' he said. 'You can fight well on the battlefront but you are totally ignorant about trade.

'It is the same way with the field of production. Learning trade is learning from capitalist traders because only they know how to trade,' he said.

But Linh and other top Communists do not want to eliminate the socialist system, only to 'renovate' it.

'Their statements on economic reform are often incompatible,' said a Hanoi-based diplomat. 'They want to make sure they retain socialism while seeking the production boosts offered by capitalism.'

Entrepreneurs like Thanh hope the limited changes will be enough to end socialist Vietnam's years of poverty and economic backwardness.

His product, meanwhile, fills a need the produced by that backwardness.

In a country where electric power is unreliable and where batteries are expensive and short-lived, his little device is in great demand.

Thanh said he spent more than two years perfecting the flashlight, which is based on magnetic induction -- squeezing the handle spins a magnet that induces an electric current to light the conventional bulb.


But the real difficulty was setting up a private business in the newly socialist south where Thanh returned to his family home after the 1975 Communist victory.

'Getting the capital was a big problem. I had to borrow the money from various friends because at that time the government banks would not lend for family production. I am still in debt,' he said.

'The hardest struggle was with stubborn elements in the local bureaucracy -- individuals with old-fashioned, bureaucratic ways of thinking and working.'

He said that great numbers of documents were required and each one took a long time to be approved, even though the flashlight is made almost entirely from scrap metal and plastic.

'There was amazing improvement after Nguyen Van Linh came to visit the factory on Oct. 26, 1986,' Thanh grinned. 'Since our leader showed interest, everything became somehow easier.'

His factory turns out 3,000 flashlights per month for sale at about $1 each. But Thanh said he fears filling the orders for more than a million more because even the most liberal reforms still keep sharp limits on private enterprise.

'We proved that expansion of production requires changes in socialism,' Thanh said. 'To raise living standards we must abandon the former authoritarian way of working.'


But private enterprise forms only a tiny fraction of Vietnamese production, which is still dominated by ponderous state enterprises.

Nguyen Ngoc Son, manager of government-owned Seaprodex, the country's leading seafood processor, said recent reforms have given him some of the same decision-making powers enjoyed by his counterparts in capitalist countries.

Lunching with a visitor over huge plates of steamed shrimp and bottles of Saigon's '33' beer, Son remarked, 'There is more incentive now. If production doubles, then salaries double.'

But Son said the new methods are not always accepted by middle-level party and state bureaucrats.

Some of them accused him of fueling inflation -- already at 800 percent -- by using foreign currency and products to buy shrimp from provincial fishing organizations.

'What we are doing is quite risky,' he said.

Nguyen Thi Thi, a veteran revolutionary who spent most of her life fighting the French and then the Americans, was put in charge of Ho Chi Minh City's food distribution system and immediately began turning it from an overstaffed, slow-moving operation into the most innovative government enterprise in the country.

She cut staff, reduced red tape, provided new incentives to managers and gave shoppers clean, well-stocked food markets.

Part of her success came from enlisting the help of old-style capitalists idled by the Communist takeover.


One was Chau Hon, 51, who had worked at his family's private Dong Khanh Bakery for 20 years before it was closed down by the Communists in 1975.

Six years ago, he met Thi, who agreed to secure the raw materials for him to go back into business.

Now his three bakeries are supplying the state distribution system. His cookies and crackers are also exported to Singapore and Canada.

'The government has some good, new principles that allow people to do business,' said Hon as he conducted a tour through a bakery full of primitive equipment and fast-moving workers.

But he reserved most of his praise for Thi.

'She is a brave woman,' he said. 'She is not like other Communists. She doesn't take without paying.'

That reputation made Thi the logical choice to head up socialist Vietnam's first private commercial bank, which opened last month.

Nguyen Xuan (Jack) Oanh, 65, the key figure behind the bank and an unofficial advisor to Linh, is a sign of how far changes have gone in Vietnam.

In 1975, Oanh, a former vice premier of South Vietnam and Harvard-trained economist, was running the economy of the U.S.-backed regime.

Left behind in the frantic days of the U.S. exodus, Oanh has re-emerged under the Communist government to again play a significant economic role.


'Whenever Chairman Linh comes to town he asks me to see him,' said Oanh, who runs an economic advisory office. 'He is an old man with young ideas.'

Oanh is supportive of the reforms, but says much more remains to be done.

'For government enterprises, you are going to have to put managers on a business basis,' he said. 'You must make clear the rights and duties of the managers.'

For smaller-scale collectives and family enterprises, the state must demonstrate its respect for the fundamental rights of capitalism, he said.

'There must be definite rights to property,' he said. 'It is hard to get people to invest if they are worried that sooner or later the government will take their property away.'

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