Vietnam's succession

Recently the Wall Street Journal published a small story about the change in power taking place in Vietnam.

HANOI—Vietnam's Communist Party reappointed Prime Minister Nguyen Tan Dung to its elite Politburo at a secretive congress Wednesday ... indicat[ing] Vietnam will likely continue its pro-growth policies. In recent years, that has meant plowing billions of dollars into subsidizing lending programs and other state-driven spending plans to maintain rapid expansion despite bouts of inflation.

The inflation is truly incredible. While in Vietnam in April 2010, I saw a dollar strengthen against the Đồng to heights unimaginable when I first traveled to the country 6 years earlier. Currently the inflation is double digits, and a dollar that used to get you 15,000 VND now gets you almost 20,000 VND.

Worse, it's pinching the populace. A plate of rice for lunch at a street vendor was only 5000 VND in 2004. Now, with the government trying to kowtow to foreign investment and "clean up" its image, the combination of inflation and cracking down on street vendors has caused that rice dish to shoot up towards 15000 VND in many parts of Ho Chi Minh City.

So, for a 33% increase in inflation, a lunch is almost 300% more expensive.

I clearly remember driving down CMT8 towards chợ Bến Thành when a police truck pulled out from a corner alley and two police men slowly moved to meet it dragging a street vendor's cart. On the other side of the cart, pulling with all her might, was a middle aged woman in threadbare clothes, her black hair tied back, shouting curses and crying. Eventually the cops put that woman's lifeline on the back of their truck and sped away, leaving her in a heap on the side of the road.

That is an "open" economy, mismanaged due to lack of competition stemming from nepotism and a flawed philosophy by Mr. Nguyễn who

"encouraged state-owned enterprises to expand into large conglomerates to keep large parts of the economy in Vietnamese hands while the country opened up more to foreign investment. But state-directed lending bred inefficiency and reckless expansion at many state-owned companies ..."

Let's hope this round of government moves Vietnam one step closer to a more competitive government in addition to its more competitive marketplace.