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From the Inside: Lessons from Vietnam

Helen Zille is Premier of the Western Cape. See her Wikipedia profile.

Vietnam has 92-million people, many of whom are emerging from extreme poverty. Its economy is growing at 8% per year. Next year the projection is 9%, and by 2020, economic analysts agree, Vietnam is likely to have the fastest growing economy in the world. The central question that I asked everyone I met was: “What made these achievements possible?”

There has quite a bit of reporting recently on the “scandal” surrounding visits by Western Cape government and business delegations to Ghana, Thailand and Vietnam, facilitated by the provincial trade and investment promotion agency, Wesgro. These delegations have invariably been described as “junkets” by our political opponents (and their associated journalists), implying that they were nothing more than extravagant, festive tours at taxpayers’ expense.

My statements on the results so far (and what we still expect to achieve) have barely warranted a mention. The Ghana trip, for example, has already resulted in five Western Cape companies signing declarations totalling R112-million, and one company signing an Outward Foreign Direct investment (OFDi) declaration to the value of R35-million.

That is not a bad immediate return on a provincial government outlay of R388,644 for four delegates for periods ranging from six to 11 days.

In the case of our visit to Thailand and Vietnam, earlier this month, it is still too soon to quantify the immediate return, but we established invaluable contacts, including with airline companies, the tourism industry, and a range of importers. We will continue to nurture these networks, which will undoubtedly pay off, as SouthEast Asian economies continue their rapid growth, en route to bringing 200-million new entrants into the middle class by 2030. This emerging market will increasingly be looking for overseas holidays, fine wines and international cuisine.

Our competitors – like Chile, Australia and Argentina – are way ahead of us on most fronts. We dare not miss the wave entirely. Where an effort has been made, we are doing well. South Africa is ranked second for imported stone and core fruit into SouthEast Asia. This shows how much potential there is to position many other South African products in these markets. On this trip, we particularly focused on oranges, table grapes, wine, fruit juices, and tourism – the foundation stones of the Western Cape economy. It was particularly gratifying to learn, while there, that the South African economy was emerging from recession, led by our agricultural sector.

We did as much as possible to make the case for tourism and trade between our countries, including a number of television and radio interviews.

When South African wines won gold in two superior categories at a major food and hotel exhibition in Bangkok, importers sat up and took notice.

There was also much for the South African delegation to learn about how other developing nations are dealing with social and medical problems that we find intractable. Take the transmission of the HI virus that causes AIDS. It was fascinating to hear about the strategies that led to significant decreases in the infection rate in all three countries. I have no appetite to share these at present, for fear of the volcanic eruption on social media that the outrage manufacturers would be certain to generate.

So let me stick to the economy.

The most fascinating economic lessons, by far, came from the “socialist” Republic of Vietnam (where the only identifiable feature of socialism is the one-party state).

I arrived in the capital, Hanoi, two days after a meeting between SA’s Minister of International Relations and the Vietnamese Prime Minister, Nguyen Xuan Phuc, where they discussed increasing trade, tourism and investment between the two countries by $2billion in the short term.

Our delegation’s timing was perfect. The iron was red hot.

Many of Vietnam’s 92-million people are emerging from extreme poverty. Its economy is growing at 8% per year. Next year the projection is 9%, and by 2020, economic analysts agree, Vietnam is likely to have the fastest growing economy in the world. Unemployment stands at a mere 4%. Its HIV rate is down to a mere 0.3% (but higher among intravenous drug users who share needles).

The central question that I asked everyone I met, from tuk-tuk drivers to translators, business people, academics, hoteliers, and senior politicians was: “What made these achievements possible?”

It is important here to mention the historical context. Vietnam is emerging from 1,000 years of (often violent and brutal) oppression, first at the hands of the Chinese, then the French and finally the Americans in a war that often targeted the civilian population, including the use of chemical weapons. The after-effects of napalm and Agent Orange are still felt to this day in what was once known to us as “North Vietnam”.

Everyone I spoke to, in one way or another, attributed economic growth to the “equitisation” programme (another way of describing privatisation). Previously every producer had to sell to the state at a set quota and a fixed price; there was no incentive to produce more or better products; ordinary citizens depended on state rations – starting at 200gms of meat per person per month, and 18kgs of rice. Shortages and long queues were everywhere. Hunger drove people to eat every possible source of protein, which is why there is no wild-life left in Vietnam, and why pigs’ testicles are considered a delicacy. The Vietnamese know from real life experience what a recent headline in the Spectator observed: “Nearly every socialist experiment begins with the dream of an equal society, and ends with people eating their pets.”

The country’s rapid transformation is symbolised on the streets by growing numbers of people walking their well-groomed “best friends” on leads.

Today 70% of state-owned enterprises have been privatised, including the national airline. In South Africa’s “market economy,” in contrast, the state allegedly plans to raid the public service pension fund to bail out failing state-owned enterprises.

It shows how meaningless all the ideological “isms” (from socialism to capitalism) have become in the modern world.

With privatisation came a surge in productivity because, for the first time, people could benefit from their own enterprise and ingenuity, which they harness to the full in order to improve their lives. I repeatedly asked how citizens had managed the transition from complete dependence on the state to self-reliance, virtually overnight. And I was always given the same answer: older people found the transition difficult, but the youth loved it and thrived in the new environment. I was regularly told: “We can now take responsibility for our own lives” – or versions on that theme.

And as I probed deeper, I learnt some interesting things about the “socialist” Republic of Vietnam, which I sought to confirm on my last night in Da Nang in discussion with that city’s Director of International Relations, Lam Quang Minh.

It is important to stress that I am not proposing the steps below as appropriate policy for South Africa. It was nevertheless fascinating to discuss with a range of Vietnamese citizens their assumptions of the role of the state (and a socialist state, nogal) in improving their lives.

Taxes: There is a progressive personal tax system, ranging from 5% (at the lowest) to 35% (at the highest) rate – 10% lower, at the top end, than South Africa’s. There are additional deductions for “social security” including medical and pension schemes.

Social Grants: The people I spoke to said there are no automatic social grants in Vietnam, except military veterans’ pensions. To qualify for a pension, citizens must have contributed to a pension scheme during their working lives. There are exceptions, such as elderly people who have neither a pension fund, nor family to support them.

There are also no child grants. Parents are encouraged to have a maximum of two children. If they have a third, they must pay a fine before the child can be registered.

Health: There is no guarantee of free healthcare unless people have contributed to a medical scheme. When people are ill in state hospitals, their families provide food and other necessities. People with disabilities seem to be a particularly neglected sector, with interventions often coming through international assistance via NGOs. The state does not automatically provide free antiretroviral treatment for people living with HIV.

Education: Seventy percent of schools are public ones, and 30% are private. Half of all universities are private. Public education is not free. While the state pays salaries of teachers and the upkeep of buildings, parents pay for books and other educational requirements. There is a very strong emphasis on learning English, because it is the language of the global economy. Many young South Africans are in Vietnam, teaching English as a second language.

Housing is subsidised for the poorest 2% of citizens, who are allocated a small apartment for which they have to pay a monthly rent, even if they are unemployed. After 10 years of consistent payment, the apartment becomes theirs. Everyone is required to pay for water and electricity. People generally pay the amounts they owe, and if they do not, an organisation known as the Women’s Union visits them and “encourages” them to pay. If they still do not pay, they are evicted after three warnings – a rare occurrence, I was told, because almost everyone finds a way to pay.

I found all this information, from informed individuals, quite startling in a “socialist” country and it went a long way to explain why most people seem to work ceaselessly, at whatever enterprise they can, in order to afford the basic necessities of a decent life. They do not expect the state to provide them.

Crime is low, especially violent contact crimes. Opportunistic property crimes (pick-pocketing and handbag snatching) do occur, but we felt safe as a group of women, walking alone at night.

I also asked many people how they felt about the new wave of American investment in Vietnam. Without exception, they welcomed it. One American pamphlet describes Vietnam as “the fastest-growing middle and affluent class in the region, with young consumers who are among the most optimistic in the world providing the right demographics for growth”.

History has its share of ironies.

The attitude of the Vietnamese is: “We live in the future, not in the past.”

I was also struck by the far lower levels of visible materialism than are immediately evident in South Africa. The motorbike culture is entrenched, but is not accompanied by a “status” imperative to own a better bike than the next person. A successful business seems to be the national status symbol in Vietnam, and even one-person enterprises are extremely proud of what they have achieved, as they strive to improve and grow.

In short, the economic culture of Vietnam is the polar opposite of South Africa’s, which goes a long way to explaining the differences in both countries’ growth and employment rates.

Vietnam’s economy has only just achieved “lift-off”. Great things still lie ahead, in almost all the countries of SouthEast Asia. We can only benefit from building the closest possible economic links with these entrepreneurial nations, and learn why their version of “radical economic transformation” is succeeding in building economically inclusive societies focused on the future. DM


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