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Geography
The Socialist Republic of Vietnam covers
a total area of 329,566 square kilometres
and lies along the western shore of the South
China sea, bordered by the People's Republic
of China to the north, by Laos to the west
and by Cambodia to the south-west. Vietnam
is dominated by the deltas and immediate
hinterlands of the Mekong and Songkoi(Red
River) which are linked by the mountainous
backbone and adjacent coastal lowlands of
Annam.
Demography
The population of Vietnam was approximately
70 million at the end of 1992 compared with
52.7 million in 1979. With an effective growth
rate of 2.1%. per annum. 40% of the population
is less than 15 years old. Vietnam's population
is still predominantly rural, with the urban
dwellers forming 20% of the total. The largest
town in Vietnam is Ho Chi Minh City (Saigon),
in the south, with a population of 3.9 million,
whereas the largest city in the north, the
capital Hanoi and its port, Haiphong, have
populations of 3 million and 1.4 million
respectively.
Vietnamese, who are ethnically related to
the southern Chinese, form 80% of the population.
There are also significant minority groups,
notably the Tai in the north numbering some
2 million. The literacy rate is approximately
88-94% of the population over the age of
10, compared with 85% in 1979.
In 1987, the total economically active population
by official estimation was 28 million, of
which 73% were engaged in agriculture and
forestry, 10.8% in manufacturing, 2.9% in
construction, 1.7% in transport and communications
and 11.5% in administration and commerce.
There are approximately 60,000 engineers
in the country, thanks to large-scale training
programmes carried out mostly in the Soviet
Union or in East Germany, and there is an
abundant supply of technically and scientifically
trained staff.
History and Political Situation
Vietnam's history reads as through the country
has been at war for the last 1000 years either
with nature or with other countries seeking
to take away a fiercely-held independence.
The Chinese were bitter enemies for centuries;
then come a hundred years of French colonial
rule; but the highest price has been paid
since 1945. At the end of the Second World
War, Britain was made responsible for the
surrender and withdrawal of the occupying
Japanese Forces to the south of the 16th
parallel, whilst the Chinese (under Chiang
Kai Shek) supervised the withdrawal to the
north. Before this could be achieved however,
Ho Chi Minh declared the birth of the Democratic
Republic of Vietnam on 2nd September 1945.
Though separate agreements with the Chinese
and the British, France had restored their
pre-1940 claims to the country and returned
to the country they had colonised in the
middle of the previous century. Thus began
the war of "liberation" with France
which culminated in the defeat of the French
in 1954 at Dien Bien Phu.
Following the defeat of the French, the country
divided in two and fighting broke out between
Ho's Hanoi-based communist government and
the anti-Communist regime of Ngo Dinh Diem
in Saigon. With the support of the United
States, the government in the south of Vietnam,
refused to agree to United Nations supervised
electrous and shortly thereafter fighting
broke out between the USSR backed north and
the US backed south. US military involvement
in the south between 1963-1973 contributed
to the devastation of the country but failed
to bring victory for the south. Following
the signing of a peace accord in Paris in
1973, the economic and political situation
in the south continued to deteriorate and
in early 1975, Vietnamese Forces invaded
the south and re-unified Vietnam. On 2nd
July 1976 the country was proclaimed the
Socialist Republic of Vietnam.
The invasion of Cambodia in 1978 - effectively
an extension of hostilities with China, which
backed the murderous Khmer Rouge regime -
earned Vietnam the reprobation of the world
and economic isolation as its punishment.
These moves forced Vietnam to rely on the
Soviet Union and it's COMECON allies for
economic and military assistance, and intensified
the economic crisis created by the adoption
of a central planning economic model ill-adopted
to the country's circumstances.
The Drop of the pro-Chinese Hoang Van Hoan
at the fourth Party Congress in 1976 and
of the victor of Dien Bien Phu, Vo Nguyen
Giap, and the leading proponent of economic
reform, Ngugen Van Linh, at the 1982 Congress
was cases in point. But, for the most part,
consensus was maintained throughout this
testing period. Even the sixth Party Congress
of 1986, which retained only three members
of the 13 member Politburo of 1982, rehabilitated
Nguyen Van Linh to fill the most senior party
post of general secretary and made an apparently
unequivocal commitment to economic renovation
"Doi Moi", did not mark the complete
eclipse of the conservatives or herald the
immediate implementation of the reform programme
set out at the congress.
After the death of conservative prime minister
Pham Hung in 1988, Do Muoi, the successor,
showed the sort of flexibility towards Cambodia
that would enable it to break out of its
international isolation
Troop withdrawals from Cambodia in 1989 and
first steps towards a market-driven economy
have begun a process of gradual rehabilitation
of the country in the eyes of the world,
despite the leadership's reluctance to follow
its erstwhile Soviet allies in abandoning
socialist principals.
The slight shift in political emphasis in
the seventh Congress resolutions was expressed
in a new constitution in April 1992. The
constitution enhanced the powers of the National
Assembly. In the elections for a new National
Assembly in July 1992 Vietnam Fatherland
Front took 8% of the seats, although non-party
candidates were allowed to stand.
Economy
Vietnam has never experienced successful
industrial development. French colonial policy
concentrated on natural resource exploitation;
communist attempts at heavy industrialisation
of the north through state-owned enterprises
failed as did attempt to root out American
style capitalism in the south.
Since 1976, Vietnam's economy has been guided
by a series of Five Year Plans (FYPs) which
sets precise targets for the inputs and outputs
of state-run enterprises. Unfortunately,
severe economic inefficiencies have characterised
Vietnam's FYPs in the past, including distorted
price structures, arbitrary state intervention,
miss-allocation of state subsidies, a repressed
financial system and unrealistic production
quotas. Most discouraging has been the highly
inefficient pricing system, the multiple
levels of fixed exchange rates, and the negative
real interest rates on loans extended by
state banks to inefficient state enterprises.
In the aftermath of reunification, the second
FYP of 1976-80 set over ambitious targets
for economy. Achieved average annual growth
rate at 0.4% reflected the burden of high
military expenditure, lack of infrastructure,
hasty north-south integration efforts and
limited direct foreign investment. Vietnam
experienced a vicious cycle of corruption,
inefficiency, and an ever-growing black market.
The resulting slowdown in trade and economic
aid caused by the US-led trade embargo and
the abrupt halt in aid from China when Vietnam
invaded Cambodia triggered an economic crisis
in 1977-78, which in turn touched off a briefly
flurry of economic liberalisation.
Under the third FYP of 1980-85, cautious
liberalisation of the private sector was
hampered by periodic clamp downs on the free
markets. In 1985, subsidies to state enterprises
reached critical levels and , in 1986, inflation
surged to more than 400%. Mounting inflation
discouraged exports and this led to a deterioration
of the current account and overall balance
of payments.
In 1986, the government responded to the
crisis by introducing a radical economic
reform and restructuring programme called
"Doi Moi", along the lines of Gorbachov's
"Perestroika" in the Soviet Union.
"Doi Moi" restored the agricultural
sector to its pre-eminent position in the
economy, the manufacturing sector underwent
a policy shift from heavy to light industry
and the government extended greater decision-making
powers to managers and cut some subsidies
to state enterprises. Small-scale commercial
enterprises were encouraged to lead the way
in the development of a private sector. Since
1988, further reforms including a reduction
of trade restrictions, the passing of a very
liberal and less intervention in the management
of state-run enterprises have all occurred.
Vietnam saw a dramatic reduction in support
from its important trade partner and aid
patron the Soviet Union following the break-up
of the USSR. In recent years, Vietnam's foreign
trade had been primarily conducted with socialist
countries in Indochina and the COMECON. The
collapse of the COMECON has created a need
for rapid shift in trade towards Asia and
the West. In 1988 the share of Vietnam's
total trade with the non-convertible currency
area (principally COMECON) was approximately
70%. By 1992 such trade was less than 10%
of the total. Principal exports are now rice
and oil which increased rapidly in 1992,
whilst exports of coal, tin, rubber, coffee,
grovednuts, garments and other light manufactures
showed increased over 1991.
Attempts to attract foreign investments have
had some success: by early 1992, 45 investment
projects, at a total value of $2.9billion
had been approved, with Taiwan being particularly
keen to participates. Investors are attracted
by Vietnam's advantageous geographical location,
by its mineral resources and by its cheap
and relatively well-educated labour force.
Vietnam has poor infrastructure and this
can not be restored without international
assistance. Although US embargo blocks international
assistance, US are likely to clear in near
future.
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