Gerard Sasges and Scott Cheshier, “Scratching the Surface: Exploring the Legacies of
History in Vietnam’s Political Economy”
Introduction
This paper is the result of surprise. It is a collaborative effort between a scholar of the colonial
economy and a scholar of Vietnam’s command economy and subsequent transition period. Upon
reading each other’s work, we found that the similarities in the political economies and the
outcomes we described were as striking as they were unexpected. This paper is an exploration of
that surprise. On one level, we are simply trying to set out some of the continuities we saw in the
Vietnamese political economy and to posit some highly preliminary hypotheses as to why these
continuities might exist. On a more general level, however, we hope to call attention to the
theme of continuity in Vietnamese history, and to the way historical legacies have shaped
Vietnam’s past and continue to shape its present. On all levels, our intention is less to provide
answers than to ask questions that encourage us to think about the Vietnamese economy and
Vietnamese history in different ways.
Once we began looking for similarities across historical periods, they seemed to appear with
increasing frequency. Alexander Woodside’s description of misuse of imperial postal service
resources for personal gain by officials seemed very familiar in the context of recent corruption
scandals and the colloquial Vietnamese saying regarding the personal income potential of
holding public office: ‘có ăn không hoặc là chỉ ghế thôi?’ – does it pay or is it just a seat?1.
William Turley’s observation that “[e]ven policeman operating traffic lights at Saigon
intersections turned their tiny domains to advantage, with results that could be seen in their girth”
applies equally well today as to its original context in Thiệu’s southern regime.2
Nevertheless, we tend to treat these echoes of the past in Vietnam’s present as anomalies,
preferring to see different periods in Vietnamese history as more or less self-contained. Using
political economy as an example, the peculiarities of the Vietnamese economy during the
colonial period are usually assumed to derive from the colonial system itself and the dynamic of
integration within a global economy centered on France.3 Similarly, the characteristics of the
economy after 1945 in the North in the Democratic Republic of Vietnam (DRV) and after 1975
in the unified Socialist Republic of Vietnam (SRV) are typically explained as flowing from
socialism and the command economy developed in response to the demands of the war and
postwar economic development.4 The underlying assumption is twofold: first, that ideology and
political systems have been of fundamental importance in shaping Vietnam’s political-economic
reality, and second that the end of the colonial regime and the foundation of the DRV in 1945
thus represents a clear rupture in Vietnam’s history.
1
Woodside 1988, p.81-82, Gainsborough 2002, p.231
Turley 2009, p.214.
3
In English, see Martin Murray’s The Development of Capitalism in Colonial Indochina (1870-1940) (Berkeley:
University of California Press, 1980). In Vietnamese, see Nguyễn Văn Khánh, Cơ cấu kinh tế xã hội Việt Nam thời
thuộc địa, NXB Đại học Quốc Gia Hà Nội, 2004.
4
See for example Đặng Phong and Melanie Beresford 1998, Van Arkadie and Mallon 2003, Fforde 2007.
2
1
This characterization of 1945 as rupture is understandable. Since the end of the colonial regime,
much of Vietnamese historiography, whether produced inside or outside of Vietnam, has been
concerned to create an indigenous history to replace narratives that had reflected first Chinese,
then French models and imperatives. This project of developing an indigenous historical
narrative was given further impetus by the Indochinese Wars, the Cold War, and their
aftermaths. At the same time, the peculiarities of the academic system have encouraged us to see
Vietnamese history in terms of discrete temporal – not to mention disciplinary – units. The two
authors of this paper, one a historian and scholar of the colonial period, the other a political
economist and scholar of the transition period, are perfect examples of this periodic and
disciplinary compartmentalization. The result has been to transform events like the 1945
founding of the DRV not only into a turning point – which it inarguably was – but also into a sort
of wall over which it can be difficult to see, no matter which side(s) we find ourselves on.
In 2002, Patricia Pelley looked at how elements of this wall were very consciously created in the
post-1945 Democratic Republic.
[T]he unstated goal of DRV culture in the period after 1945 was to make the revolution
‘stick,’ to make it mark the kind of historical upheaval that in 1945 it did not, in fact,
represent: the political and social terrain was far more ambiguous and complex. In other
words, the idea or chronology that we now take for granted – that the August Revolution
of 1945 marked a new beginning in the history of Vietnam – attests to the success of
DRV efforts after 1945 (and especially after 1954) to reconstruct the events of 1945 in
terms of rupture and clarity (Pelley 2002, p.2).
In recent years, scholars have begun to complicate the resultant nationalist narrative in different
ways. Scholars have emphasized the diversity of the past, highlighting such issues as gender,
regionalism, and ethnicity and questioning linear stories about the steady expansion and rise of
‘Vietnam.’5 Their research provides insight into the variety present in Vietnam’s history, a
variety which has been smothered and homogenized in nation-centered accounts. Yet while
these studies add much-needed detail to an overly-simplified narrative, they fail to call into
question the temporal features of that narrative, leaving the conceptual walls of years like 1858
and 1945 largely intact.
There are exceptions. Alexander Woodside’s classic Community and Revolution in Modern
Vietnam is in a sense an extended investigation of the interrelation of continuity and change in
colonial and post-colonial Vietnam.6 In 2004, Emmanuel Poisson showed how the establishment
of the French protectorate over Tonkin in 1884 represented far less of a disjuncture than is often
presumed and how the structures, personnel, and training of the local administration remained
largely unchanged throughout the late 1800s and early 1900s.7 And while it is not a central
concern of her study, Pelley discusses how the French overturned previous China-centric
historical models and put Vietnam at the center of the story, even if only to belittle it as a ‘little
5
See Keith Taylor 1998, Cooke and Tana 2004, McHale 2004.
Alexander Woodside, Community and Revolution in Vietnam, Boston: Houghton Mifflin, 1976.
7
Emmanuel Poisson, Mandarins et subalternes au nord du Vietnam: Une bureaucratie à l’épreuve (1820-1918)
(Paris: Maisonneuve & Larose, 2004).
6
2
China’. Thus the post-colonial project to invert the value attached to ‘Vietnam’ and place it at
the center of the historical narrative constitutes a legacy of colonialism that continues to the
present day.8 Nevertheless, these discussions of pre-colonial and colonial legacies are the
exceptions that prove the rule.
The position this paper adopts is similar to the one Liam Kelly adopted in his important 2006
article on Confucianism. Kelley shows how in order “to counter the descriptions by colonial-era
scholars of Vietnam as a lesser imitation of its northern neighbor,” scholarship has often been
concerned to identify a distinct “Vietnamese” identity.9 The result has not only shaped arguments
regarding the role of Confucianism, but also our understanding of Vietnamese history more
generally. Kelley argues that Vietnamese identity is no longer an issue and can be taken as
given, allowing us to consider Confucianism in Vietnam in a more objective light. Our position
is similar. The Cold War is long over. It is possible to explore historical continuities and
possible legacies of history without compromising the importance of the revolution.
This article is an attempt to add a dimension that exists in other area studies literature but
remains under-researched for Vietnam. For example, Lewin (1995) emphasizes the ‘burden of
history’ and how it shaped developments in Soviet Russia. He identifies a ‘Peter the Great
syndrome’ in various periods in pre-1917 Russian history where big push industrialization drives
were combined with the extension of serfdom and expansion of a highly centralized
bureaucratic-authoritarian state. This pattern of Russian development sounds familiar.
“Stalinism itself was another version of the same syndrome of the past – namely, the coupling of
a rather backward, strongly controlled society and an overgrown state.”10 Stalin combined an
‘agrarian despotism’ familiar in Russian history, where surplus was directly appropriated from
peasants without compensation, with a forced-march industrialization program implemented by a
metastasizing bureaucracy. As Lewin describes the process, “the past kept weighing heavily on
the present … and skewed or distorted new developments, policies, and hopes. … [W]e have to
be attuned to the presence of continuities between the prerevolutionary past and the different
stages of the Soviet period.”11
In Korea as in Vietnam, there is an understandable tendency to downplay continuities from the
colonial era and instead view South Korea’s remarkable achievements after 1950 as uniquely and
indigenously generated rather than the product of a Japanese colonial inheritance. Nevertheless,
an important strain within the Korea literature highlights colonial legacies to explain features of
the highly successful post-1950 developmental state.12 Kohli, for example, argues that the high
growth South Korean political economy is deeply influenced by the Japanese colonial heritage.13
The chaebol as the children of the Japanese zaibatsu model are the most obvious manifestation
of this. Woo concurs, arguing that colonial legacies “bequeathed a set of patterns, a model, that
could be the silent companion of Korean development.”14 For her, “the past two decades of
8
Pelley 2002, p.19.
Kelley 2006, p.318.
10
Lewin 1995, p.16.
11
Lewin 1995, p.14.
12
e.g. Eckert 1991, Woo 1991, Kohli 1994, Cumings 2005.
13
The “grooves that Japanese colonialism carved on the Korean social soil cut deep.” Kohli 1994, p.1270.
14
Woo 1991, p.41.
9
3
‘development’ in Korea cannot be abstracted from the earlier decades of this century without
distorting our understanding.”15
The Southeast Asia literature also features important attempts to engage with pre-colonial and
colonial-era legacies. In the Indonesian context, Benedict Anderson has argued that “most states
have genealogies older than those of the nations over which they are now perched” and the
enduring patterns of the colonial state influenced the form and behavior of the post-colonial
Indonesian nation.16 New national ‘imagined communities’ were grafted onto existing state
structures, with outcomes a result of interaction between the two. In a 1993 collected volume,
contributors explored the role colonial revenue monopolies played in the development of modern
Southeast Asian states and entrepreneurial classes.17 Similarly, Robison (1986) on Indonesia,
Jomo (1988) on Malaysia, and Hewison (1989) on Thailand explain rapid economic growth in
post-colonial Southeast Asia as a result of “a growing identification of interests between the
politico-bureaucrats who control the state and the capitalist class that has been created by the
state.”18 These authors adopt a historical approach, tracing the development of the state and class
relations from the colonial period and how it influenced post-colonial outcomes. Structural
relations established under colonialism shaped subsequent political economic development in
these countries.
There is, however, a need to avoid determinism. Lewin shows that although the ‘burdens of
history’ continue to exert influence, Russian history does not simply conform to an inherited
script. Even though Stalin’s industrialization drive shared key features with pre-revolution
Russian patterns, it generated tensions and contradictions that transformed Soviet Russia in
entirely new ways.19 For example, after Stalin and abatement of the purges and anti-bureaucratic
‘fury’ that had held it in check, the state bureaucracy was able to emerge as a genuine ruling
class. The traits of this post-Stalin bureaucracy cannot simply be ascribed to the past, they also
“grew from conditions of the present: wholesale nationalization, the elimination of markets and
of diversified sectors in the economy and society, and the administrative methods used in
planning.”20 In Korea, as elsewhere, there are competing legacies inherent in any complex
history. North and South Korea undertook very different post-colonial trajectories, both of
which had roots in the same past. And even though influenced by history, policy decisions still
matter in determining outcomes.21 Thus at the same time other area studies literatures underline
the importance historical legacies, they also remind us that these legacies are among many
factors influencing subsequent developments. Following Marx, people make their own history,
just not in circumstances of their own choosing.
The legacies of history in Vietnam’s political economy
15
Woo 1991, p.16.
Anderson 1983, p.477.
17
John Butcher and Howard Dick, eds. The Rise and Fall of Revenue Farming: Business Elites and the Emergence
of the Modern State in Southeast Asia. New York: St. Martin’s Press, 1993.
18
Hawes and Liu 1993, p.658.
19
Lewin 1995, p.182-183, 206-207.
20
Lewin 1995, p.198.
21
Kohli 1994, Nolan 1995.
16
4
In this paper, we’ve chosen to focus on four interrelated aspects of the Vietnamese political
economy under the colonial and the DRV/SRV regimes.22 The first is the interpenetration of
state and enterprise through state-created monopolies that blurred the distinction between public
and private. Second is the inability/unwillingness of the state to enforce these monopolies and
the “illegal” activities (smuggling, “fence-breaking,” etc.) that resulted. Third is the
inability/unwillingness of the state to discipline its own monopolists and the way monopolies
have served as bases for rampant diversification into speculative ventures. Fourth is the use of
these monopolies as a tool for remaking Vietnam’s economic landscape. Sources for this
discussion are varied, including archival sources, published and unpublished primary and
secondary sources, and interviews and surveys.23 As much as possible, we’ve attempted to base
our discussion on concrete examples taken from our own primary research. We end our
discussion with some possible explanations for the patterns of similarity that we’ve identified.
Whether or not readers find any of the explanations convincing, we hope at least to show that
categories like “colonial” or “post-colonial,” “the market” or “the command economy” are
insufficient to explain the peculiarities of the Vietnamese political economy, that continuity can
coexist with rupture, and that the legacy of history is an important one indeed.
Monopolistic state-related accumulation
It is obvious that enterprise during the command economy era was based on state-created
monopolies and controlled by members of the party-state apparatus. Nor is it particularly
surprising that since 1986, the former state monopolies continue to play a preponderant role in
the economy. This, we tend to assume, is the more or less natural result of the command
economy and the process of transition towards the market economy. Yet we have to wonder if
this is really a sufficient explanation when enterprise in the colonial period features a remarkably
similar dependence on state-created monopolies and high degree of public-private
interpenetration.
The early years of the French presence in Vietnam were far from conducive to rapid economic
development. In the main, economic policy consisted of reinstating earlier Nguyen patents and
monopolies, or inventing new ones such as opium or alcohol as the French administration
scrambled to increase revenue. The main exception were canal projects that drained and opened
up Cochinchina’s West and Southwest, setting the stage for a massive increase in rice production
after 1900. European enterprise in this period was confined largely to a handful of trading and
shipping houses with pre-existing operations in the region’s trading hubs (Singapore, Hong
Kong, Manila, and Yokohama) that allowed them to move quickly and easily into the reopened
port of Saigon. Once installed, their operations focused on two main activities, capturing a part
22
Our decision to exclude the Republic of Vietnam from our discussion simply reflects our desire to focus on what
we know best. We suspect that being able to include the RVN period in our discussion would in fact strengthen our
argument. See, for example, Bernard Fall’s comparison demonstrating the similarities between the DRV economy
and Diệm’s regime, Fall 1963, p.387-388.
23
Primary sources for the colonial period come mainly from the National Archives One in Hà Nội (Cục lưu trữ
Quốc gia 1, abbreviated as CLTQG1 ), the National Library in Hà Nội (Thư viện Quốc gia Hà Nội, abbreviated as
TVQGHN), and the French Overseas Archives in Aix-en-Provence (Archives nationales d’outre-mer, abbreviated as
ANOM).
5
of the existing overseas trade previously monopolized by Chinese trading houses, and two,
winning contracts to supply goods and services to the colonial state. 24
The appointment of the new Governor General, Paul Doumer in 1897 marked the beginning of a
new era in the history of French Indochina. During his five-year tenure, Doumer balanced the
budget, rationalized and centralized the administration, and embarked on an ambitious program
of public works. Equally important – though less often remarked – were policies to promote the
development of locally-based French enterprise through the creation of state monopolies. Initial
moves in this direction predate Doumer’s arrival, the most obvious example being the opium tax
farm, which the state attempted to sell to two French entrepreneurs in 1861, and which was
eventually nationalized in 1883.25 After 1897 this process accelerated and deepened: existing
monopolies such as alcohol production were taken away from Chinese consortiums, while new
monopolies held by French entrepreneurs proliferated. These monopolies might take the form of
products (cigarettes, matches, salt, alcohol), services (mails, transportation), or public works
(railways, canal dredging, ports). Yet in each case, these monopolies went to locally-based
French entrepreneurs. Of the ten largest locally-based French enterprises – what we’ve chosen
to call the Colonial Conglomerates – listed below, eight were based on the revenue derived from
state contracts, monopolies or quasi-monopolies.26
Table X: The Colonial Conglomerates (core enterprise, activity, headquarters, year of incorporation or foundation,
and capital of core enterprise in francs in 1929 if publicly listed) 27
Fontaine group: Société française des distilleries de l’Indochine, contract to supply alcohol regie, (Paris, 1901, 3.5
million)
Denis frères group: Maison Denis frères, import-export including contracts to supply opium regie, and one of the
main suppliers of rice to the French market (Bordeaux, 1862),.
Bernard group: Messageries fleuviales de Cochinchine, ocean and river transport including monopoly on route
between Bangkok and Saigon, quasi-monopoly on river transport in Cochinchina, Cambodia, and Laos (Paris 1881, 2
million).
Rauzy et Ville group: Société commerciale française de l’Indochine, import-export, along with Denis frères one of
two main suppliers of rice to the French market (Marseille, 1908, successor to Maison P. Rauzy et P. Ville 4 million),.
Homberg group: Imprimerie d’Extreme-Orient, government printing house; (Hanoi, 1907, 4 million).
24
These trading and shipping houses were not necessarily French: Hale of London, Spiedel of Hamburg, and
Diethelm of Zurich are just three examples of non-French trading houses able to establish a durable presence in this
period. Nevertheless, it was the French houses that were able to win contracts with the state that allowed them to
diversify outwards from their core business activities.
25
The two French entrepreneurs almost immediately went bankrupt and fled the colony; the concession reverted to
Chinese consortiums until 1883. Hakiem Nankoe, Jean-Claude Gerlus and Martin, J. Murray, “The Origins of the
Opium Trade and the Opium Regie in Indochina” 182-195, in John Butcher and Howard Dick, eds. The Rise and
Fall of Revenue Farming: Business Elites and the Emergence of the Modern State in Southeast Asia. New York:
St. Martin’s Press, 1993.
26
We have defined Colonial Conglomerates as those enterprises with a minimum listed capital of 1 million francs
whose primary revenue was derived from activities in Indochina. This excludes enterprises with considerable
interests in the colony such as large French-based enterprises like Ciments Portlands Artificiels or Michelin.
27
Based on information contained in the Annuals of Enterprises (Annuaires des entreprises) published in Paris
beginning in 1912. Compiled by a colonial lobby group – the French Colonial Union – and based on information
supplied by the enterprises themselves, these Annuals are far from perfect. However, for revealing officially
invested capital, patterns of ownership and investment, and general developments over time, they are a fascinating
and important source.
6
Estier and Vigne frères group: Union commerciale indochinoise, import export, river transport, monopoly on
transport of state monopoly products of opium, alcohol and salt (Paris, 1904, 4 million).
Hermenier group: Compagnie des eaux et de l’électricite de l’Indochine. Supply of water and electricity for Saigon,
Cholon, Phnom Penh (Paris, 1900, 5.7 million).
Barthélémy and de Portalès group: monopoly on operations of Cam Ranh port (Paris),.
Allantini group: Compagnie de commerce et de navigation d’Extreme Orient,,import export, coaling, ship refitting
(Marseille, 1909, successor to Société Allatini et Cie., 3 million).
Mazet group: A. And E. Mazet, import-export, contract to supply alcohol regie, (Marseille),.
One can see in these early contracts an attempt by the state to create a series of demarcated
monopolies. For example, the alcohol regime in Tonkin after 1902 separated production from
sales, and even interposed a largely superfluous state bureaucracy between the two.
Transportation is another obvious example: Bernard’s Messageries fleuviales enjoyed state mail
contracts in Cochinchina, while Paul Roque (later the Société anonyme de chalendage et de
remorquage de l’Indochine) had similar contracts for Tonkin. The transport of state monopoly
products in Tonkin, however, was reserved for another company, the Union commercial
indochinois. Overseas transportation, for example, the mail route between Hai Phong, Kouangtchéou-wan, and Hong Kong was reserved for yet another company, the Est-asiatique française.
The result of these state monopolies was to reinforce the interdependence of the state and
enterprise. Put another way, the colonial entrepreneurial class grew out of the state. For
example, the holder of the contract to supply the state’s alcohol monopoly, the Fontaine Group’s
SFDIC, was founded by A.R. Fontaine. Fontaine was a former employee of the Indochinese
Customs Department (the Département des douanes) the same department charged with
administering the state’s alcohol monopoly; his older brother Léonard was the director of
Customs for Cambodia until the discovery of irregularities in his administration of the local
alcohol monopoly resulted in his early retirement for “health reasons.”28 As Fontaine’s
enterprise began to take shape in the late 1890s, this interpenetration developed accordingly.
Henri Guermeur, CEO of the Debeaux Group’s Compagnie générale and Fontaine’s partner in
establishing the initial monopoly over sales and production in Tonkin and North Annam was the
former chief of the Governor General’s secretariat.
The circuits that tied Fontaine’s enterprise to the state were institutionalized with the creation in
1901 of the SFDIC. Previously, Fontaine’s operations had been conducted through the whollyowned Société A.R. Fontaine. Its transformation into a publicly-traded corporation 1901 was
less about raising capital (his factory in Hanoi was already running at full capacity and the
factory in Nam Dinh about to come on line) and more about institutionalizing the circuits of
mutual interest that linked enterprise to state in colonial Indochina. Aside from Fontaine, his
brother Léonard, and their partners Debeaux and Guermeur, the remaining 28 shareholders
28
Pierre Brocheux and Daniel Hémery, Indochine: La colonisation ambiguë, 1858-1954 (Paris : Découverte, 2001);
Resident Superior to Governor General, Phnom Penh, 3 January 1890. Governor General to Minister of Colonies,
Hanoi, 7 March 1890. ANOM INDO/GGI//9424
7
consisted almost entirely of colonial administrators and officials.29 One shareholder, Procureur
de la République Albert Long, was to be responsible for drafting and enforcing the contraband
legislation. Another shareholder, the French parliamentarian and later Minister of Colonies
Etiènne Clémentel was to provide crucial support to Fontaine in 1905 as he sought to expand his
operations to Cochinchina. The SFDIC’s board of directors was another important means of
regularizing this interpenetration, over the years welcoming a long list of officials, from
Vasselle, former director of affairs for Asia at the Ministry of Colonies, to former resident
superior and noted scholar of Cambodia Georges Maspero. The creation of a publicly traded
corporation and the corporate structures it created were thus important means of ensuring the
broad convergence of private with public interests.
This convergence of private and public interests is seen very clearly in the privileged relations
the Fontaine group enjoyed with the colonial state. The contracts signed between the group’s
SFDIC and the state for the supply the state’s alcohol monopolies in Tonkin and North Annam
(1902) and Cochinchina (1905), although apparently for ten years in fact obligated the state to
purchase the SFDIC’s alcohol in perpetuity.30 Incredibly, the price of sale was set by the SFDIC
itself.31 The result, noted officials of the Ministry of Finance in Paris, was profits anywhere from
five to ten times higher than similar state contracts in France.32 Yet perhaps most telling is the
relative distribution of revenue from a monopoly that along with similar monopolies on opium
and salt it was referred to approvingly as one of the three “beasts of burden” of the colonial
budget. In 1913, an auditor of the Inspectorate of Colonies calculated that of total net revenue
from the alcohol régie in Tonkin and North Annam, 43% went to the SFDIC, 36% went to
various intermediaries (including the régie itself), and only 21% to the state treasury. This
represented an insignificant 2.7% of the colony’s budget.33 A distribution of revenue like this
encourages us to reconceptualize the SFDIC as more or less a state corporation. Or the colonial
administration as a corporate state. Whichever we choose, however, it seems clear that in the
colonial period as today, in Vietnam the public is never completely public, nor the private
completely private.34
In 1976 the Socialist Republic of Vietnam (SRV) was created and the decision was taken to
implement the socialist system of the DRV in the newly liberated south with the launch of the
Second Five Year Plan (1976-1980). The south was given a three year transition period to
implement nationalization and agricultural collectivization. Northern managers and cadres
streamed south to begin the process and assume control of the southern government apparatus.
29
The list of shareholders included two procureurs generaux, one procureur de la Répulique, one brigade-level
general, one lieutenant-colonel, two high-ranking army surgeons, one provincial resident, one receveur des finances,
one tresorier-payeur general, two administrateurs des services civils, as well as various other lower-ranking
administrators. See Adolphe Combanaire, Mensonges et vautours coloniaux: l’Indochine en deliquescence
(Châteauroux: Imprimerie Mellottée, 1910) 181.
30
A series of legal opinions prepared for the French Ministry of Colonies confirmed that as long as the colonial
government taxed or otherwise intervened in the alcohol market in any way, then it would be obligated to purchase
the same annual quotas guaranteed in the original contracts of 1902 and 1905.
31
Report Number 48, “Régime des alcools en Indo-Chine,” Inspector Méray to Minister of Colonies, Hà Nội, 29
April 1908, CAOM FM/INDO/NF/880.
32
Minister of Finance to Minister of Colonies, Paris, 8 March 1913. ANOM FM/INDO/NF/4040.
33
Mission of Inspector General Phérivong of 1913. Report of Inspector Berrué. ANOM FM/INDO/NF/464. For an
essentially identical analysis, see also the le Conte mission of 1930. ANOM FM/INDO/NF/2481.
34
Đào Xuân Sâm describing the transition-era economy, quoted in Fforde 2007, p.1.
8
Immediate post-war growth was based primarily on southern industrial capacity. However, by
1977 growth had begun to stagnate and by 1979 Vietnam was in economic crisis. Resistance to
collectivization in the south saw agricultural output plummet. By 1981, growth rates were
negative. This pattern would continue throughout the planning period as state attempts to control
the economy resulted in mushrooming budget deficits and recurring macroeconomic instability.35
In terms of state revenue, a primary ‘beast of burden’ in the planning and transition periods was
state enterprises. While many smaller SOEs were a significant drain on state resources, the
larger state enterprises were and are considered vital to sustaining revenue inflows. In 1994,
these larger state enterprises were consolidated with the creation of state General Corporations
(GCs) (tổng công ty).36 Over the next several years corporations were established in a variety of
sectors, predominately from reorganizing existing state firms and enterprise unions.37 The
intention was to pool investments and create production synergies between member firms. In
theory, the model for the new General Corporations was the South Korean chaebol; however in
practice, similarities with the earlier Colonial Conglomerates, particularly after the waves of
foreign-investment driven diversification after 1993 (see below) are striking.
Table X: General Corporations 91 and Selected General Corporations 90
Corporations 91
Electricity of Vietnam
Northern Food Corporation
Southern Food Corporation
Vietnam Paper Corporation
Vietnam Airlines Corporation
Vietnam Coffee Corporation
Vietnam National Cement Corporation
Vietnam National Chemical Corporation
Vietnam National Coal Corporation
Vietnam National Gem and Gold Corporation
Vietnam National Shipping Lines
Vietnam National Textile and Garment Corporation
Vietnam National Tobacco Corporation
Vietnam Oil and Gas Corporation
Vietnam Post and Telecommunications Corporation
Acronym
EVN
Vinafood 1
Vinafood 2
Vinapimex
Vietnam Airlines
Vinacafe
VNCC
Vinachem
Vinacoal
Vigego
Vinalines
Vinatex
Vinataba
Petrovietnam
VNPT
For discussions of the immediate postwar years, see Porter 1993, Van Arkadie 1993, Beresford and Đặng Phong
2000, Fforde 2007
36
In that year, legislation was promulgated to create two kinds of Corporations: Decision 90-TTg established the
so-called GCs 90 under the authority of ministries and provincial People’s Committees. Decision 91-TTg
established the larger GCs 91 under the authority of the Prime Minister. General Corporations 91 in particular were
meant to play the ‘leading role’ in their sectors.
37
Fforde 1995; Marukawa 1999; Van Arkadie and Mallon 2003; Cheshier, Penrose and Nguyễn Thị Thanh Nga
2006
35
9
Vietnam Rubber Corporation
Vietnam Shipbuilding Corporation
Vietnam Steel Corporation
Selected Corporations 90
Hanoi Beer and Alcohol Corporation
Saigon Beer and Alcohol Corporation
Saigon Tourism Corporation
Saigon Trading Corporation
Vietnam Construction and Import Export Corporation
Vietnam Machinery Erection Corporation
Vietnam National Petroleum Corporation
Geruco
Vinashin
VSC
Habeco
Sabeco
Saigon Tourist
Satra
Vinaconex
Lilama
Petrolimex
Source: Van Arkadie and Mallon (2003), Table 10.1, p.134 and Cheshier, Robertson and Stoops (2008), p.11
Table X shows that in 1997 the top 200 largest SOEs contributed 65 percent of the state
enterprise contribution to the state budget.
Table X: Financial Indicators of State Enterprises, 1997, billion VND
Total State Capital
Total Contribution to Budget
Total Profit Before Tax
Total Debt
100 Largest
40,492
14,094
3,275
29,369
200 Largest
44,332
15,651
4,942
40,237
Total
73,075
23,919
8,177
101,439
Source: IMF (1999)
Some state monopolies provide considerable revenue for the state. In 2005, one state firm,
Vietsovpetro, accounted for fifteen percent of total government tax revenues.38 This is reflected
in Table X. Corporate income tax from state enterprises accounted for around one-fifth of
government revenues between 2002 and 2007. However, this does not include revenue from oil,
the majority of which is generated by Vietsovpetro. When this is included, state enterprises
accounted for over 40 percent of state budget revenues between 2002 and 2007. These figures
would increase if customs revenues and other revenues from state enterprises, for example from
land and housing, were added.
Table X: Structure of State Budget Revenues Final Accounts, 2002-2006
Revenue from state owned enterprises
Oil revenue
Total
2002
20.24
21.40
41.64
2003
18.88
24.15
43.03
2004
16.85
25.43
42.28
2005
17.12
29.16
46.28
2006
16.58
29.82
46.40
2007
15.94
24.37
40.31
38
The 2005 total tax revenues and grants figure is from IMF (2006), Table 14. Vietsovpetro is a joint venture with a
Russian oil firm under the authority of Vietnam Oil and Gas Group (Petrovietnam).
10
Source: General Statistics Office, http://www.gso.gov.vn/default_en.aspx?tabid=468&idmid=3&ItemID=8670
In apparent contrast to the colonial period, state enterprises have been net contributors to the
state budget. This can be seen in Table X.
Table X: Net Transfers from State Enterprises, % of GDP, 1989-1996
1989 1990 1991 1992 1993 1994 1995 1996
Tax and non-tax revenue from state
enterprises
Budgetary transfers to state enterprises
Net transfer from state enterprises
9.2
9.5
8.9
10.8
11.8
12.1
9.8
9.7
4.8
4.4
2.6
6.9
1.0
7.9
0.9
9.9
0.6
11.2
0.5
11.6
0.5
9.3
0.5
9.2
Source: IMF 1998, Table V.I, p.22
However, if government guaranteed loans and other non-budget transfers to state enterprises are
included, the picture is less clear. A recent National Assembly report on the status of Vietnam’s
state corporations indicated that at the end of 2008, seven state economic groups had overdue
debt of USD 247 million, of which one group, Vinashin, accounted for 91.4 percent.39 Taking
Vinashin as an example, at the end of 2005 the Vietnamese government issued its first sovereign
bond, obtaining USD 750 million. This was on-lent to the Vietnam Shipbuilding Industry Group
(Vinashin) in order to fund expansion of the shipbuilding sector. More recently, Deutsche Bank
provided a USD 2 billion loan to Vinashin.40 In early 2010, the Vietnamese press reported on
Vinashin’s inability to pay creditors, and the government stepped in by on-lending foreign
currency support loans provided by the Asian Development Bank to Vinashin.41 While the
available data is insufficient to assess with any precision the overall net impact of state
enterprises on government revenues, it would seem that some of the General Corporations are
anything but “beasts of burden” for the state budget. The parallel with the colonial period is
clear: sectoral monopolies created for joint exploitation by the state treasury and the state client
can often provide little net revenue for the state.
Failed monopolies and illegal activities
As the poor performance of many of Vietnam’s state corporations underlines, monopolies are not
known for allocating resources efficiently or responding effectively to consumer demand. As a
result, they tend to produce either extensive systems of surveillance and control or a tacit
acceptance of endemic smuggling and contraband. More often than not, both conditions prevail
simultaneously. Such was the case in both colonial and post-colonial Vietnam. In the colonial
period, monopolies functioned less as functioning monopolies than as protected revenue streams
for state clients. The post-colonial era was little different: as long as state enterprises were able
to capture a minimum part of, for example, the rice trade or import-export, then “illegal”
economic activity could not only flourish, but quite often support “legal” monopolistic activities.
39
(Vietnamnet 2009f)
(Pincus and Vũ Thành Tự Anh 2008)
41
(reference)
40
11
In both cases, the result was to implicate broad swathes of the population in illegal activities,
including the very officials charged with operating and enforcing the monopolies.
Policies intended to promote French control of key sectors were failures. As we’ve outlined
above, the state intervened heavily in the transportation sector, creating demarcated monopolies
for the transportation of passengers (e.g. the Bernard group’s Messageries fleuviales) or
particular products (e.g. UCI’s monopoly on the transport of regie products). Railways were an
even more privileged site of intervention, seeing the state invest hundreds of millions of francs in
their construction and operation. The intention of these policies was to create revenue streams
that would allow monopolists to expand and capture a share of a transportation market
dominated by Chinese shipping operations. This never happened. Throughout the period, the
bulk of the colony’s trade continued to be transported on Chinese-owned ships.42 The railways,
when finally built, evolved into exclusive (and expensive) carriers of passengers, with the HanoiYunnan line able to operate only thanks to the state’s generous annual subsidies.43 Far from
promoting French control of the transportation sector, the state-created monopolies simply
protected their clients from competition and provided “free” profits that either went to
metropolitan shareholders (i.e. the banking and industrial concerns behind the Hanoi-Yunnan
railway) or financed expansion into non-related sectors that promised easier returns (i.e. turning
monopolists into Colonial Conglomerates).
While continued Chinese control of shipping may not have been what the colonial state wanted,
it was not, strictly speaking, illegal. This was not the case with the trade in monopolized goods
such as alcohol. Traditionally-distilled rice alcohol in Vietnam was a highly differentiated
product, made primarily but not exclusively from rice, varying according to the rice, water
source, and yeast used, distilled to different strengths, and often infused with medicinal or
flavoring agents. The industrially-produced alcohol the state tried to sell – in Vietnamese rượu
ty, or “company alcohol” – was not only two to four times more expensive, but also
standardized, and, to local tastes, markedly inferior.44 In spite of more or less polite requests
from regie officials that the SFDIC modify its products to better conform to consumer tastes, the
rượu ty emerging from its factories remained essentially unchanged for the duration of the
monopoly: improving the alcohol would have required installing traditional (and less efficient)
pot stills that would have eaten into the SFDIC’s profits, and with sales contractually guaranteed
by the state, there was little incentive to produce alcohol Vietnamese consumers might actually
want to drink. This was not a situation calculated to increase market share: the questionable
quality of the alcohol – not to mention persistent rumors that it caused impotence – were key
Serge Labrousse, Politique du cabotage en Indochine, Paris: Imprimerie française d’outre-mer, 1950.
For the railroads in Indochina, see Michel Bruguière, “Le Chemin de fer du Yunnan : Paul Doumer et la politique
d’intervention française en Chine (1889-1902),” Revue d’histoire diplomatique January-March 1963: 23-61, AprilJune 1963: 129-162, July-September 1963: 252-278. David Del Testa, “Paint the trains red : labor, nationalism,
and the railroads in French Colonial Indochina, 1898-1945” (Ph.D. dissertation, University of California at Davis,
2001).
44
In fact, the price of contraband alcohol came to be pegged to the price of legal alcohol, rather than any real cost of
production. Remarking on the attempt to introduce SFDIC alcohol to the Annam market, the interim director of
Douanes in Hà Nội wrote that “the experience of almost 18 months has demonstrated that this fashion of proceeding
presents certain inconveniences, of which the most serious is to offer to the less affluent consumer an alcohol
lacking the empyreumatic taste to which he is accustomed, and which he will accept only thanks to a difference in
price considerable enough to overcome his repugnance.” Interim Director Guis to Governor General, Hà Nội, 17
September 1907. CAOM INDO/GGI/8907.
42
43
12
features of the publicity campaigns mounted by the Chinese consortiums as they resisted the
SFDIC’s entry into the Cochinchina market.45
One of the primary outcomes monopolizing alcohol production, therefore, was the creation of a
vital and lucrative contraband industry. Despite practices such as monthly village consumption
quotas and the creation of an extensive and often brutal system of contraband suppression, legal
alcohol was never able to capture more than half of the real alcohol market.46 Contrabanders
perfected a range of techniques that allowed them to continue producing and distributing alcohol.
Incredulous French customs officers would report finding large, modern distilleries in a bamboo
shack next to the house of a village lý trưởng, for example, or thousands of liters of alcohol
maturing in pots hidden underground on village communal land.47 The French themselves
participated in the illegal trade, with plantation owners and even army officers taking advantage
of legislation that exempted them from search. In 1918, it came to light that A.R. Fontaine’s
own plantation in Phú Thọ had been the center of contraband distilling for the province for more
than ten years.48
The alcohol monopoly was in large part an administrative fiction. Rather than creating a
monopoly, it encouraged the growth of a large, highly profitable, and officially illegal industry.
At first glance, however, it is difficult to attribute to it the same ultimately destabilizing effects as
smuggling and off-plan activities were to have on the command economy. Indeed, we have
argued elsewhere that one of the alcohol monopoly’s primary functions was to stabilize the
regime by projecting its systems of surveillance and repression deep into the Vietnamese
countryside.49 However, it is possible to argue that it was simultaneously destabilizing. By
rendering illegal a widespread practice, the monopoly familiarized millions of Vietnamese with
the habits of resistance necessary to continue making and drinking their traditional alcohol. It is
particularly telling that the techniques used to distribute illegal alcohol in urban areas – for
example, transporting it in wineskins concealed under nightsoil – would later be taken up by the
Việt Minh to transport weapons and other supplies during the First Indochina War. Widespread
contraband and smuggling of course, can only happen with official collusion, eroding state
legitimacy and transforming state officials into rent-seeking entrepreneurs. The dangers of
monopolies and the incentives they create is even more clear in the case of opium. Opium
smuggling was an important source of revenue for the Viet Minh throughout the French war.50
See Eduard Deleurance, “Le régime de l’arbitraire aux colonies. Le monopole des alcohols en Cochinchine.”
CAOM, BIB SOM B/BR/1080. See also “Procès colonial: Les dessous du monopole de l’alcool en Cochinchine,”
La Dépeche Coloniale 19 March 1906.
46
In his study of the alcohol monopoly, Peyrouton estimated that 60% of Vietnamese consumed contraband alcohol.
Guermer estimated that the régie supplied only about 1/3 of the alcohol total alcohol market. Bernard-Marcel
Peyrouton, "Etude sur les monopoles en Indochine" (doctoral dissertation, Paris, 1913) 192. Henri Guermeur . Le
régime fiscal de l’Indochine. Hà Nội: IDEO, 1909. 215, 224.
47
See Gerard Sasges, “The Moral Economy of Oppression and Resistance: towards a deeper contextualization of
resistance to the colonial alcohol regime in Northern Vietnam, 1897-1945.” Paper presented at the third
International Conference on Vietnamese Studies, Hanoi, 4-7 December 2008.
48
After the distillery was closed, the local legal alcohol distributor reported a tenfold increase in sales. Neither
Fontaine nor the manager of the plantation was prosecuted. Resident to Resident Superior of Tonkin, Phu Tho, 25
February 1918. CLTQG1 RST 55327.
49
See Gerard Sasges, “Beast of (a) burden: State, Enterprise, and the Alcohol Monopoly in Colonial Vietnam”
JSEAS (forthcoming).
50
Picard 2004.
45
13
A similar state of affairs existed in the post-colonial period. Both during and after planning,
“[m]ost smuggling was either carried out or condoned by state organizations.”51 The DRV
inherited an extremely under-developed economy. What little industry that had existed prior to
1954 had either been destroyed by the war or taken south by the French. By 1958 the Party had
established control over the economy and began implementing the socialist economic model. A
three year plan (1958-1960) was implemented to nationalize the economy. By the start of the
First Five Year Plan (1961-1965), the DRV had established its state monopoly in production and
trade, and 90 percent of peasant families had been organized into producer cooperatives. While
the intention of policies of nationalization and collectivization were intended to promote the
extraction of surplus necessary for the development of industry, northern Vietnam had long been
characterized by population saturation, small plot farming and small agricultural surpluses. This
placed a fundamental constraint on the viability of ‘neo-Stalinist’ forced industrialization. Since
domestic resources in the north were insufficient to fund industrialization – there was very little
to ‘squeeze’ out of the agricultural sector – the planning system in the DRV quickly became
heavily dependent on foreign aid. The result was that much of the DRV industrial system
operated well below potential, combined with systemic competition for inputs. This created what
Fforde and Paine (1987) refer to as ‘aggravated shortage’, combining the well known features of
shortage in centrally planned economies described by Kornai (1979, 1992) with extensive market
activity outside the plan (the kinh tế ngoại, or ‘outside economy’).52
In the countryside, the terms of trade were turned against agriculture in order to support the
industrialization effort, reducing the incentives to participate in collective production.
Agricultural cooperative members, allowed to produce on their own ‘5 percent land’ actively,
and often successfully, sought to expand these plots beyond the statutory five percent limit.
“Such strategies required protection against interference from higher levels and supervisory
bodies, and the cooperatives themselves frequently played this role and acted as ‘protective
intermediaries’; as such, their real social functions became quite different from those intended by
official policy” (ibid, p.101). The result was widespread ‘nominalization’ of collectives,
facilitated by inaccurate and misleading reports to higher levels (ibid, p.101). The enduring
presence of rice markets throughout the planning period testifies to this.53
The result was a widening gap between institutional form and function which made
implementing the plan even more difficult. State enterprises actively resisted interference from
supervising ministries and engaged in quasi and strictly illegal activities to secure inputs
necessary for fulfilling plan targets and to accumulate cash balances needed for future ‘outside’
transactions. The participation of officials in illegal trade became even more explicit after 1975.
Activities which came to be known as ‘fence-breaking’ (phá rào) - bending the rules and
Fforde 1993, p.302, footnote 24; see also Porter 1993 and Beresford and Đặng Phong 2000.
It is unclear whether Fforde and Paine (1987) see ‘aggravated shortage’ as unique to Vietnam. That the planning
system in Vietnam was always weaker and less pervasive than in other socialist economies is not in dispute, and in
its operations it resembled ‘reform socialism’ more than ‘classic’ Stalinist planning (see Kornai 1990, 1992 for
discussion). However, the relationship between shortages (and hoarding and misinformation) and markets (parallel,
shadow, secondary) had been discussed with reference to the Soviet Union as early as 1960 by Gerschenkron (see
Gerschenkron 1962, which is a compilation of his earlier essays).
53
Fforde 1993.
51
52
14
operating outside the plan – proliferated.54 For example, in 1979 a ‘rice smuggling committee’
was created by the Ho Chi Minh City (HCMC) People’s Committee in order to secure sufficient
rice supplies for the city.55 Meanwhile in Hai Phong province, members of Doan Xa commune
voted to implement a ‘sneak contract’, distributing land to individual households and
implementing production contracts. The result was a six-fold increase in output. Despite official
censure, the model spread and eventually was implemented throughout the district. By 1980
word of these activities had reached provincial Party Secretary Bùi Quang Tạo, who not only
extended the model throughout the province but also began to lobby the central government on
its merits.56
Whether in the city or the countryside, fence-breaking was facilitated by an increase in unofficial
trade (smuggling). Although unofficial trade was already a feature of both the DRV and
Republic of Vietnam (RVN) economies in the 1960s, the reunification of the country in 1975 and
the creation of new circuits of trade through communities of refugees in Southeast Asia and the
West meant that high-quality Western products transformed both the scale and dynamics of this
lucrative trade. “People wanting to obtain motorcycles, bicycles or fans need no longer go to the
Soviet Union or Germany. They could go to the south.”57 These goods not only spread into
northern Vietnam but became the basis for new unofficial trade relations. “Cadres and students
going abroad at this time began to calculate on taking with them some goods purchased from the
south for resale in Eastern Europe.”58 As a result, the goods brought back to Vietnam changed.
Since higher quality and cheaper consumer goods were available in the south, returnees began to
focus on importing needed raw materials and production inputs such as brewer’s yeast, dyestuffs,
spare parts, and machine tools. The result was to mobilize (unofficial) capital, address (illegally)
some of the problems of shortage that were created by the state monopolies, and provide the
conditions for (off-plan) economic growth. 59
Thus in both periods we see monopolies failing to capture markets and instead creating shortages
that were addressed with widespread “off-plan” activities. These activities necessarily involved
the participation of state officials, whether they be a colonial lý trưởng protecting his mother’s
distillery, or a cadre returning from Moscow with kilos of brewer’s yeast. In both periods, these
illegal activities were simultaneously stabilizing and destabilizing: on the one hand they allowed
the economy to function, on the other, they undermined efforts by the state – whether colonial or
socialist – to bend the economy to its own ends. Most important, though, they had a corrosive
effect on state legitimacy, turning evasion, collusion, and corruption into everyday, if not
necessary activities.
Monopolies bases and undisciplined diversification
See Porter (1993), p.118-127 for discussion of several fence-breaking ‘models’.
Rama 2008, p.17. See also Porter 1993.
56
Rama 2008, p.16.
57
Ibid 76
58
Ibid 76
59
Beresford and Đặng Phong (2000) argue that Vietnamese smuggling undermined central planning in both
Vietnam and the Soviet Union and Eastern Europe, since “it promoted disorder and anti-social activities such as
bribery, theft, smuggling, sabotage of public property, disintegration of the administrative apparatus” (Beresford and
Đặng Phong 2000, p.95).
54
55
15
As the evidence on smuggling and off-plan activities makes clear, state-created monopolies
failed to guarantee effective control of markets or activities. The thing they did guarantee were
revenue flows that could be used as bases for diversification. In the periods under discussion,
there is an obvious parallel between the Colonial Conglomerates and the post-planning state
General Corporations. In both cases, initial diversification tended to move up and down the
supply chain from the monopoly itself. However, state attempts to create neatly demarcated
monopolies foundered on complex patterns of cross-ownership and on the waves of later
diversification made possible by the revenue derived from the monopolies themselves. The
subsequent tendency toward extensive diversification was exacerbated by key developments with
parallels in both periods: the reform of property law and increased access to foreign direct
investment. The end result was investment heavily focused in two sectors: real estate and
finance. As a result the Colonial Conglomerates of 1929 and the General Corporations of 2009
look remarkably similar: highly diversified investment houses.
The Colonial Conglomerates’ initial diversification moves were into related sectors. The
Homberg group’s first monopoly base was the Imprimerie d’Extrême Orient (IDEO, Hanoi,
1907) the Indochinese government’s official printer. By 1913, the group was producing its own
paper (Société anonyme des papeteries de l’Indochine, Grenoble), and by 1917, industrial
chemicals and inks (Société industrielle de chimie d’Extrême Orient, Paris). The Fontaine group
expanded into the transportation of its products (Union commerciale Indochinoise, 1904), other
monopoly products (Manufacture des tabacs de l’Indochine, 1904), non-distilled alcoholic
beverages (Société Asiatique des boissons indigènes, 1910) and eventually bottling (Société des
verreries d’Extrême-Orient, 1923) Other early diversification moves were regionally oriented.
Working from their monopoly on the operations of the Cam Ranh port, the Barthélémy/de
Portales group moved to capture the retail markets of Southern Annam (Comptoirs français de
Sud-Annam, Marseille, 1908), and then expanded into public works and railway construction in
Northern Cochinchina and Southern Annam (Société d’entreprises et d’exploitations en
Indochine, Paris).
The end of the First World War opened the economy to unprecedented flows of private direct
investment from France, drastically altering the financial landscape of Indochina. Whereas
private investment in Indochina during the first six decades of French rule totalled approximately
365 million francs, in the single decade beginning 1920 it was well over 3 billion.60 For the first
time, the Colonial Conglomerates were able to move into sectors requiring high levels of initial
investment, such as mining or heavy industry, which had previously been monopolized by
consortiums of metropolitan and financial interests.61 After 1919, they expanded into coal and
minerals (for example the Fontaine Group’s coal mines at Trang Bach and Mao Khe or the
Barthéléy/de Portales Group’s Compagnie fèrmier des étains d’Extrême-Orient). For its part,
Denis frères responded to synergies with their shipping operations, moving into drydocks, heavy
60
Multiple factors were at play: first, conscious efforts by both the metropolitan and colonial governments to
promote the colony’s investment opportunities; second, the postwar commodities boom (including Indochinese
products like coffee, sugar, and above all, rubber); and third, the collapse in the value of the franc between 1920 and
1928 and the relative rise in the Indochinese piastre. Investment figures from Nguyễn Văn Khánh, op. cit. 77.
61
The obvious example is the Ste francaise des charbonnages du Tonkin (Paris, 1888) that exploited a 20,000
hectare coal mine on Ha Long bay that by late 1920s was producing almost 1.5 million tons of coal per year for
export throughout southern China and Southeast Asia. Another example would be the Ciments artificiels Portland.
16
equipment, and engineering (Ste anonyme deconstructions mécaniques, Saigon, 1918, and
Compagnie Indochinoise d’Equipement Industrielle, Saigon, 1926).
Nevertheless, the most remarkable development in this period is the growth of the finance and
real estate sectors. These interrelated developments were the result of the massive capital
inflows meeting the reform of Indochina’s property regime in the mid-1920s. By 1925,
mandatory property registration and new legislation had created a unified property regime that
would serve as the basis for a European-style free market in land and mortgages. However, the
slow progress of the cadastral survey outside of urban areas meant that the colonial real estate
boom was largely an urban phenomenon. The one exception was Cochinchina, where by 1938
the administration had succeeded in surveying almost three-quarters of the colony’s total land
area. Given Cochinchina’s pivotal role in the plantation and rice economy, this is hardly
surprising. Accordingly, Cochinchina was also the Indochina’s most heavily indebted region; by
1930, ricefields in Gờ Công, for example, were mortgaged at an average rate of 540 francs per
hectare.62
The increased capital flows after 1918 drove the creation of new financial institutions that would
supplement the traditional role of the Bank of Indochina by playing a more active role in the
placement of funds. The first of these new institutions was the Société indochinoise de
commerce, d’agriculture, et de finance (SICAF, Paris, 1919), the creation of a consortium led by
the Bank of Indochina and later including the Fontaine Group. It provided technical expertise,
management services, and above all financing to the dozens of projects attempting to cash in on
Indochina’s plantation boom. As the profits to be made in the financial sector became clear,
though, Colonial Conglomerates such as the Homberg, Fontaine, and Vigne group all moved into
the field, either independently or in partnership with other Conglomerates.
The real estate sector followed a similar pattern. In 1923, the Bank of Indochina cooperated with
the Homberg and Fontaine groups to found Credit foncier de l’Indochine, followed by Credit
agricole in 1928. Together, these two served to increase massively the available credit in
Indochina, offering loans secured with urban and rural property, respectively. The Colonial
Conglomerates followed suit with their own smaller ventures: the Mazet, Rauzy-Ville,
Homberg, and Fontaine Groups all had their own real estate arms.
Table X: Piling into Real Estate
Hersent group: Sociéte foncière de l’Indochine, 2.5 milllion Paris, (Hanoi),
Denis frères group: Société anonyme des immeubles Denis Frères, 1922. 1.1 million francs.
Mazet group in cooperation with Rauzy and Ville group: Cie. Foncière de l’Indochine, 1922 Saigon 22 million
francs; Ste urbaine foncière indochinoise, Saigon, 1923 10 million piastres.
Fontaine group: Société foncière et immobilière de Chi-Hoa (Saigon, 1929), 800,000 piastres. Société foncière du
Tonkin et de l’Annam, Hanoi, 1929, 10 million francs, .
Homberg, Bernard, Fontaine, Vigne, Hermenier groups in cooperation with the Bank of Indochina: Crédit
foncier de l’Indochine, 1923 Paris 110 million francs; Crédit foncier agricole de l’Indochine, 1928, Saigon, 1 million
piastres; Union immobilière indochinoise, 1928 Saigon, 20 million francs,
62
P. Estebe, Le Problème du riz en Indochine, p. 68. Quoted in Colonisation ambigue, 123.
17
We can similar patterns of diversification in the transition period. Until recently, General
Corporation diversification most often occurred in input supply and services required by the
corporation’s core business activities. For example, the Vietnam Coal and Mineral Industries
Group (Vinacomin, formerly Vinacoal) moved into truck manufacturing to provide mining
trucks to its member companies. The Vietnam Paper Corporation (Vinapaco, formerly
Vinapimex) moved into chemicals for paper production to supply its members and Vietnam
Chemical Corporation (Vinachem) member companies created workshops to supply spare
parts.63
However, the state’s original intention to create demarcated monopolies has been undermined by
the decision to open several core monopolies to ‘bounded competition’ primarily from other
General Corporations. For example, the telecoms sector was dominated by the Vietnam Post and
Telecommunications Group (VNPT), but has seen the entry of the Army (Viettel), FPT (FPT
Telecom), Electricity of Vietnam (EVN Telecom), and the Public Security Ministry (Beeline).
Vinachem’s fertilizer base of operations has been penetrated by the Vietnam Oil and Gas Group
(Petrovietnam). Both Petrovietnam and Vinacomin are moving into power generation, previously
a monopoly of EVN.64 Diversification is moving beyond within-group activities focused on
input provision and is now occurring in a range of upstream and downstream areas that were
once off limits due to maintenance of monopoly positions.
A crucial factor in this diversification is increased access to foreign direct investment. As the
following graph illustrates, since 1986, Vietnam has seen two major spikes in capital inflows.
Source: World Development Indicators 2010, http://data.worldbank.org/data-catalog/world-development-indicators
63
64
Cheshier and Penrose 2007, Cheshier and Pincus 2010.
Cheshier and Penrose 2007; Cheshier, Robertson and Stoops 2008; Cheshier and Pincus 2010.
18
The resulting diversification by state companies, including establishing banks, is similar to the
post-1919 period. Martin Gainsborough has traced the rise (and fall) of Tan Binh Production
Service Trading and Export Company (Tamexco) in the early 1990s. Tamexco was established in
1989 as a general trading company under the Tan Binh District Party Committee in Ho Chi Minh
City. It imported fertilizer, construction materials and automobiles, exported seafood, and
operated real estate and tourism ventures. In 1992 Tamexco established and became the leading
shareholder in Tan Viet Joint Stock Commercial Bank (Tacombank).65 Another example is the
Can Tho Agricultural and Animal Products Company (Cataco) established in 1978. In 1992
Cataco began to diversify into seafood processing and export, real estate and construction, hotels,
restaurants, and tourism.66
Figure X: General Corporation Diversification
Coal - Vinacomin
Power Generation - EVN
Petrol Trading - Petrolimex
Oil and Gas - Petrovietnam
Real Estate
Finance
Tourism
Telecoms - VNPT
Fertilizer - Vinachem
other GCs
Shipping - Vinalines
Shipbuilding - Vinashin
steel
Source: adapted from Cheshier, Robertson and Stoops (2008), p. 14
At the center of Figure X are the finance and real estate sectors. This reflects both increased
access to investment capital and the reform of land-use rights in 1993 and 1998. While this trend
dates from the early 2000s (Petrovietnam established its finance company in 2000), entry into
real estate and finance accelerated significantly during the 2006-2008 boom.67 General
Corporation diversification has moved beyond the traditional process of entry into related
activities and now includes acquiring banks, establishing finance, insurance, leasing and
securities companies, speculating in real estate and building golf courses, office buildings, five
star hotels and tourist resorts.68 The full details of General Corporation involvement in finance
and real estate are difficult to ascertain. They are also undergoing rapid change. For example,
General Corporation and economic group stakes in banks underwent dramatic shifts during the
2006-2008 boom-bust cycle, the results of which remain to seen.69 Nevertheless, it is possible to
map some of the connections.
65
Martin Gainsborough, 2003.
Cheshier and Penrose 2007.
67
Harvard Vietnam Program 2008.
68
Cheshier and Pincus 2010.
69
Thanks to Scott Robertson for highlighting this point.
66
19
Table X: Selected State Corporations with Financial and Real Estate Subsidiaries
Corporation
Petrovietnam
Vinacomin
Vinatex
Vinashin
EVN
VNPT
Petrolimex
Vietnam Airlines
Geruco
Vinalines
Primary Sector
Bank Finance Insurance Securities Land
Oil and Gas
X
X
X
X
X
Coal
X
X
X
X
Textiles, Garments
X
X
X
X
Shipbuilding
X
X
X
X
Electricity
X
X
X
Post, Telecoms
X
X
X
Petrol Distribution
X
X
Airlines
X
X
Rubber
X
X
Shipping
X
X
Source: adapted from Cheshier and Pincus (2010)
The 1990s and 2000s saw General Corporations move from relatively non-overlapping sectors of
operation characterized by diversification to support core business activities, to diversification
into related upstream and downstream activities turned ‘bounded competition’ in certain sectors,
to wholesale entry into finance and real estate following an investment boom driven in part by
large foreign capital inflows.
From accumulation to remaking the economic landscape: the monopolies and the Chinese
One of the enduring features of Vietnam’s political economy is the predominance of ethnic
Chinese in commerce and enterprise, above all in Vietnam’s south.70 Often resident in the
territory of present-day Vietnam for generations, these overseas Chinese capitalized on access to
regional networks of trade and finance to control much of local and overseas commerce. The
following account shows that both the colonial and the SRV regimes were surprisingly
dependent on access to Chinese capital, trading networks and expertise. Initial attempts to
deprive Chinese enterprises of their revenue bases were unsuccessful, and the regimes were
instead compelled to leverage the access of local Chinese to external networks of trade and
finance. Later, however, increasingly consolidated regimes were able to cooperate with state
monopolists to deprive the Chinese of at least some of their revenue streams.71
The use of the term “Chinese” is an imperfect shorthand for a highly heterogenous group from various regions of
present-day China, sometimes soujourners, sometimes longterm residents of Southeast Asia. See Tran Khanh
(1993) for more on the history of the community in Vietnam.
71
We should be careful to resist the temptation to see state policies as ethnically motivated. States moved to take
control of the Southern economy as a whole rather than focusing exclusively on Chinese enterprise. Hugely
successful Vinamilk, for example, was formed through the nationalization of four companies, only one of which,
Thong Nhat Dairy, was Chinese-owned. Although French-encouraged boycotts of Chinese goods might have had
racist overtones, even in the colonial era, the state was focused on appropriating revenue streams tout court, no
matter who might control them. For a discussion of post-1975 policies, see Riedel and Turley (1999) and Fforde
(2007). For the colonial boycott, see Micheline Lessard, “Organisons-nous! Racial Antagonism and Vietnamese
Economic Nationalism in the Early Twentieth Century,” Journal of Colonial history 2007.
70
20
Throughout most of the nineteenth century, commerce and enterprise in Southeast Asia was
dominated by Chinese merchants. Chinese controlled both regional and internal trade, with
Europeans only able to carve out a position in trade with Europe and North America. “Chinese
were also prominent in most other fields of the capitalist economy where monopoly profits were
to be made: revenue farming, moneylending, shipping, urban real estate and production,
including rice mills, sugar factories, tin mines and plantations.”72 Lacking local knowledge, with
limited resources, and initially confined to Cochinchina where the Chinese community was
numerous and well-established, early French administrations had little choice but to adapt to this
pattern. Chinese consortiums retained their dominant position in commerce and quickly won the
right to administer the state’s opium and alcohol revenue farms.73
If for the present, the colonial regime was unable to dislodge the Chinese from their dominant
position in trade and enterprise, they could at least benefit from access to Chinese capital. Ian
Brown finds that even in 1930, “overseas Chinese investment in Southeast Asia was of a
magnitude comparable with that of Western investment. In a period of tightening Western
political and administrative control, when the major part of expanding commodity exports was
directed towards Western markets and when Western manufactures accounted for the major part
of imports, Chinese capital was still of central importance in the great expansion of production
and trade.” 74 The Bank of Indochina plugged into these circuits of capital through branches in
Hong Kong, Shanghai, and Singapore. On a more local level, the operations of every Bank of
Indochina branch were managed by a Chinese comprador, normally the head of a prominent
trading family, who provided the bank with a caution of several millions of francs for the
privilege.75 A crucial function of the Bank of Indochina therefore was to leverage Chinese,
rather than French capital, diverting investment from Chinese enterprises and towards French
As time went on, an increasingly self-confident and powerful state-enterprise apparatus
attempted to go to the source of the Chinese consortiums’ capital by appropriating key sources of
revenue. This intent can be read clearly in the debates that set the stage for the abolition of the
Chinese opium farms in the early 1880s, or in an 1892 policy paper on the industrialization of
alcohol production in Cochinchina.76 As the Director of Customs asked rhetorically in 1906,
“Will [Indochina] continue to be a field of commercial exploitation reserved solely for the
Howard Dick, “A Fresh Approach to Southeast Asian History” in John Butcher and Howard Dick, eds. The Rise
and Fall of Revenue Farming: Business Elites and the Emergence of the Modern State in Southeast Asia. New
York: St. Martin’s Press, 1993. 3-18, 10
73
In the case of the opium farm, for example, a disastrous attempt by two French entrepreneurs to administer the
opium farm paved the way for the Chinese to take over after 1864. Hakiem Nankoe, Jean-Claude Gerlus and
Martin, J. Murray, “The Origins of the Opium Trade and the Opium Regie in Indochina” 182-195, 184. in John
Butcher and Howard Dick, eds., op. cit.
74
Ian Brown, “Imperialism, Trade and Investment in the Late Nineteenth and Early Twentieth Centuries” 80-88,
87. In John Butcher and Howard Dick, eds. op cit.
75
Patrice Morlat, “Les réseaux patronaux français en Indochine (1918-1928)” in Hubert Bonin, Catherine Hodeir,
and Jean-François Klein, L’Esprit économique imperiale (1830-1970): Groupes de préssion & réseaux du patronat
colonial en France & dans l’empire. SFHOM, 200?, 615-629, 617.
76
See W.P. Groenveldt, Procès verbaux du Conseil Colonial (Saigon: Conseil colonial de la Cochinchine, 1881).
Calmette wrote, without apparent irony, how scientific production techniques “will allow our compatriots finally to
reclaim for their own profit, a monopoly that it is painful to see remain so long in foreign hands, in a country that we
have paid for so dearly with our gold and our blood.” Albert Calmette, Rapport sur la production… 1892.
72
21
Chinese?”77 The first and most obvious target was the lucrative opium farm, which Chinese
consortiums had administered since 1865. In 1883 the administration abolished the farm and
moved to create a state-administered regie. In practice, however, the Chinese not only continued
to control storage, distribution, and sales, but also engaged in smuggling widespread that
undermined the new regie’s profits.78 In the end, the financial repercussions of the change to a
“direct” – but in practice still Chinese-controlled – monopoly were minimal.
By the time of Governor General Doumer’s arrival in 1897, the state-enterprise apparatus was
ready to try again. The first step was the creation of a monopoly of production for the SFDIC in
Tonkin and North Annam after 1897, where legislation denied Chinese entrepreneurs the right to
participate in the newly regulated alcohol market. By 1902, with the backing of the Bank of
Indochina, dependable access to monopoly revenue streams in Tonkin, and a new distillery under
construction in Chợ Lớn, the SFDIC was ready to extend its monopoly to Cochinchina. At the
time, 39 of 47 distilleries in Cochinchina were members of a consortium headed by a certain Tay
Chow Beng.79 The consortium not only controlled production, but also was tied into distribution
and sales networks that included a variety of licit and illicit goods and services (opium,
prostitution, pawnbroking). Initial state moves against the consortium, most notably a drop in
the state-mandated price of sale and limitations on production quotas, were stepped up markedly
after 1904 and the entry into operation of the SFDIC’s factory in Chợ Lớn. In the summer of
1905, the Saigon Commercial Court declared the consortium illegal, and by the end of the same
year the state had nationalized distribution and sales. Nevertheless, continued access to capital
and undisputed control of highly effective – if now illegal – distribution and sales networks
allowed many of the consortium’s members to continue operations: 1905, for example, was
marked by a two-thirds drop in legal sales that was no doubt mirrored by a two-thirds increase in
contraband.80 In 1907, the administration came to terms, allowing the 14 surviving distilleries to
remain in operation, and guaranteeing them 22% of the annual sales in Cochinchina.81 More
important, the administration handed over responsibility for distribution and sales to a
consortium headed by none other than Tay Chow Beng.82
The history of enterprise in Southern Vietnam after 1976 features similar moves to nationalize
enterprises and appropriate revenue streams, against the background of a resilient Chinese
business community with management expertise and access to circuits of trade and finance that
the state, at least in the 1970s and 1980s, still lacked. To illustrate these two features of the SRV
political economy, we’ve focused on two enterprises, Cholimex and Biti’s.
The internment of perceived collaborators, the nationalization of enterprises, and the replacement
of managers by (often) Northern cadres after 1975 put strict limits on the activities of the
77
Director of Douanes Morel to Minister of Colonies, Hanoi, 1906. ANOM FM/INDO/NF 463.
ibid, 191
79
See “Procès colonial: Les dessous du monopole de l’alcool en Cochinchine,” La Dépeche Coloniale 19 March
1906. See also Dominique Niollet, L’épopée des douaniers en Indochine 1874-1954 (Paris: Editions Kailash,
1998), 452-457.
80
Average monthly sales in Cochinchina in 1904 were 357,243 liters; in 1905 they were 124,304. Report No. 48.
“Régime des alcools en Indo-Chine.”ANOM FM/INDO/NF/880.
81
69% for SFDIC, and 9% for a smaller distillery owned by the Mazet group.
82
The end result mirrored the operations of the opium monopoly.
78
22
Chinese business community.83 The situation was exacerbated by heightening tensions with the
People’s Republic of China (PRC), manifested locally in changes to citizenship laws, exclusion
from state employment, and other discriminatory policies. As a result, ethnic Chinese made up a
large percentage of the refugees that began to stream out of the country in the late 1970s. The
situation only worsened in December 1978 with the start of the conflict with China’s client, the
People’s Republic of Kampuchea (PRK), followed by China’s invasion of Northern Vietnam in
January 1979.
At first glance, this would not appear to be a situation conducive to state cooperation with the
Chinese business community. Nevertheless, that is exactly what happened. In the late 1970s,
the HCMC People’s Committee turned to the remaining Chinese Vietnamese to provide the
skills, equipment and capital to necessary to jumpstart the Southern economy The leadership of
HCMC’s District Five, Chợ Lớn, the historic centre of ethnic Chinese in Vietnam, authorized
Chinese traders to activate their overseas networks in order to resolve bottlenecks in the
command system. They purchased agricultural and fishery products in Vietnam to pay for
imports of tobacco, fabric and gasoline. “After a few successful deals of this sort, the People’s
Committee of the City authorized lower levels of government to establish companies … to
directly handle foreign trade. Soon, some of them were booming.”84 Cho Lon Investment and
Import Export Corporation (Cholimex) was created as part of this process.
Cholimex was established in 1981 as a proto-joint stock company involving state officials from
Ho Chi Minh City’s District Five (Chợ Lớn) and the city’s Chinese Vietnamese.85 Cholimex was
managed by three representatives from the District Five People’s Committee and three local
Chinese Vietnamese entrepreneurs. The District Five officials acted as a bridge between the
HCMC People’s Committee and local Chinese Vietnamese. The state contributed land,
administrative approval and protection to engage in business. Local Chinese Vietnamese
contributed their overseas business connections and own capital. Their investments were valued
in gold, in return for which they received shares in Cholimex. The experiment was immediately a
success. Accessing pre-1975 overseas Chinese networks in Singapore, Hong Kong and Taiwan,
Cholimex imported raw materials and inputs, including yarn for textiles, flour for food
processing and spare parts. These were supplied to Cholimex factories and other factories in
HCMC. Cholimex then exported the output of many of these factories. Imports were also
exchanged with farmers for agricultural and aquacultural products and herbal medicines for
export.86
Although the freedom granted to the company provided a spur to the local economy it also
undermined the planning and price system. In 1982 Hanoi clamped down on non-plan activity
and in 1983 the company surrendered its right to trade to a newly established state trading
83
It would be interesting to investigate the extent small and medium-size enterprises were able to continue to
function. From anectodal accounts of former refugees working in small Chinese-owned factories in Saigon in the
1970s and 80s, we suspect these sorts of activities were commonplace
84
Rama 2008, p.17, see also Stern 1985 and Trần Khánh 1993).
85
Interview 3 February 2007.
86
Since Cholimex was not allowed to handle foreign exchange, most of these transactions were trade in kind.
However, Cholimex did sell some goods directly to local consumers.
23
enterprise, Imexco.87 At the same time, Cholimex was ‘nationalized,’ with the state buying back
the shares contributed by Chinese Vietnamese. Personnel changes soon followed. In its early
years over half the employees at Cholimex were Chinese Vietnamese but now this figure stands
at only 20 percent. And while the original management stayed through the ‘nationalization’ and
Imexco phases of the company’s history, there are no longer any Chinese Vietnamese amongst
Cholimex’s senior management. The current Vietnamese senior managers have been in their
positions for over ten years. Today, Cholimex is a fairly typical local state enterprise, real estate
subsidiary and all.
Binh Tien Consumer Goods Production Ltd (Biti’s) provides a counter-example of Chinese
Vietnamese entrepreneurs creating a durable interdependence with the state that has allowed
them to remain as directors and majority owners. In 1982 two Chinese born in Vietnam, Mr.
Vưu Khải Thành and his wife, established two small rubber sandal production workshops, Binh
Tien and Van Thanh. At that time, many materials were unavailable in Vietnam and only rubber
was sourced domestically. Mr. Thành had to smuggle or purchase smuggled chemicals and other
inputs. The workshops supplied footwear to the military and exported via government contracts.
For example, Vietnam had received a Soviet loan to build a hydroelectric plant. Vietnam repaid
this loan in consumer goods, with Biti’s assigned to produce footwear and export to the Soviet
Union as part of the loan repayment scheme. Biti’s was compensated from the state budget. It
also exported by selling to the organization that would eventually become Vinatex, which
exported on behalf of Biti’s. In 1986 the two workshops were merged into the Binh Tien Rubber
Cooperative, now producing higher quality slippers both sold in Vietnam and exported to Eastern
Europe. In only four years, Biti’s went from 20 to 1,000 employees. Also in 1986, the Biti’s
brand was launched.
In 1989, after three years of lobbying and in the same year central planning was formally
abolished, Biti’s became the first private company in Vietnam to be given an import and export
license. Two years later, Biti’s became the first private Vietnamese company to establish a joint
venture with a foreign firm.88 In 1994, following the thaw in relations between Vietnam and the
U.S., Biti’s became the first Vietnamese firm to open an office in the United States (Hiebert
1996, Templer 1998). By 2002, Biti’s began diversifying into real estate development, hotels,
tourism and office space rental along with continued upgrading of its core business production
technology. While Mr. Thành and his company are to be applauded for their excellent
management of the firm, much of its rapid expansion and growth is due to a close and effective
partnership with the state: quite aside from the initial contracts to supply the army or the state’s
Soviet loan-repayment programs, it is simply inconceivable that the first license for a private
company to engage directly in foreign trade or enter a foreign joint venture were not politicized,
particularly in the highly charged atmosphere surrounding the end of central planning.89
87
This reaction was not specifically oriented against the ethnic Chinese, but was part of a larger attempt by the
center to regain control over the economy in the face of local enterprises engaging directly in foreign trade and
contributing to the breakdown of the planning system. See Riedel and Turley (1999) and Fforde (2007) for further
discussion.
88
The license for this joint venture was obtained in 1989.
89
On a more symbolic note, see the stream of high-ranking visitors to the company, including General Võ Nguyên
Giáp, former Prime Minister Phan Văn Khải, and current Party General Secretary Nông Đức Mạnh.
24
These two examples of Cholimex and Biti’s underline three enduring features of the Vietnamese
political economy: attempts by the state to assert control over revenue streams – often under the
control of Chinese entrepreneurs – combined with continued dependence on the very skills and
access to circuits of trade and finance that make these revenue streams possible. Sometimes the
former impulse prevails and the state and its clients are ultimately successful (Cholimex or the
25 Cochinchinese distilleries whose operations were absorbed by the SFDIC), sometimes
interdependence prevails (Biti’s or Tay Chow Beng and the 14 distilleries that survived).
Whatever the eventual outcomes, though, these accounts confirm that whether the enterprise is
“French,” “Vietnamese,” or “Chinese,” business success in Vietnam is inseparable from access
to the state.
Any idea why?
In the preceding pages, we’ve identified four recurring patterns in the Vietnamese political
economy across the twentieth century: monopolistic state-related accumulation; the limited
effectiveness of the monopolies and the prevalence of smuggling and other illegal activities;
uncontrolled diversification from monopoly bases; and the use of monopolies not simply to
extract surplus but also to restructure the economy. The question remains, however, why these
patterns are so durable and what they might tell us about the legacies of history in Vietnam.
The first explanation that flows from these patterns is the way the colonial regime and the
DRV/SRV were, for all their differences, engaged in very similar projects, namely, the
consolidation of a newly and tenuously unified territory, the extraction of surplus, and the
creation of a “modern” centralized bureaucratic state. The importance of this factor is even
clearer when we re-examine colonial and SRV policies towards the Chinese community in
Saigon in light of the policies of another regime that engaged in the same project: the Imperial
Nguyễn state.
As Choi Byung Wook has shown, the first Nguyễn emperor, Nguyễn Ánh/Gia Long cooperated
closely with the Chinese community in Gia Định/Saigon both before and after the establishment
of the regime in 1804, and tolerated a large degree of local administrative and commercial
autonomy through the establishment of the Gia Định Thành Tổng Trấn (Gia Định General
Government).90 Things changed, however, under his successor Minh Mạng, an aggressive
centralizer who introduced policies banning the participation of Chinese in overseas trade and
abolished the Gia Định Thành Tổng Trấn, replacing it with six provinces administered by
officials without local powerbases and reporting directly to the central government in Huế. These
policies were of dubious effectiveness. Chinese traders circumvented the ban in various ways,
for example registering their ships in the names of Vietnamese wives or concubines, or
purchasing forged documents from cooperative state officials. More ominously, Chinese were
prominent not only in Le Van Khoi’s uprising against the Hue government in 1833, but also in
the various anti-dynastic and anti-Vietnamese movements that swept Cochinchina and Cambodia
in the 1840s. The Hue government’s repression of the various movements then provoked waves
Choi Byung Wook, Southern Vietnam under the Reign of Minh Mạng (1820-1841): Central Policies and Local
Responses, Ithaca: Southeast Aia Program Publications, 2004.
90
25
of migration that saw large numbers of Chinese entrepreneurs and artisans relocate to Cambodia
and Siam.91
While the details differ, the pattern is clear: newly established regimes in Vietnam by necessity
tolerate a degree of local autonomy and dependence on the Chinese business community; over
time, they move to assert central control and divert privileged revenue streams from the Chinese
to the state or state clients. We are not arguing for any equivalence among the three Imperial,
French, and Socialist regimes. We are arguing that what a regime is trying to achieve – in this
case the consolidation of a unified, “modern,” centralized state – plays a large role in
determining what it actually does.
A second, and related observation that emerges is the difficulties regimes have faced building
effective and durable institutions.92 This is, of course, an obvious weakness of the colonial state:
the French civilizing mission and debates over the relative merits of “assimilation” and
“associationism” failed to excite more than a minority, and in any case tended to founder on the
everyday exploitation and oppression that characterized such colonial institutions as the alcohol,
salt, and opium monopolies or the plantation system. But institutions and ideology have also
been problematic for the Democratic and Socialist Republics as well. The implementation of the
land reform in DRV-controlled Northern Vietnam after 1945 was disastrous for the party-state,
eroding the good-will and confidence that had been built up during the struggle with the
Japanese and the French. The result was a weakened state apparatus in the countryside with a
limited capacity to translate central directives into local practice. Similarly problematic was the
way the state defined class struggle as a mobilizing ideology. Abrami argues that during the
Second Indochina War ‘class struggle’ was defined in terms of nationalism and social unity
against the Americans and the southern regime.93 “As a strategy of rule enforcement, class
struggle assumed no regulatory role in the Vietnamese economy. Instead, ‘pre-socialist’
conventions of economic regulation, including occupation-based social ties and sentiments of
religion, village and kinship remained an ever forceful means of governing economic exchange
and entitlement in Vietnam – even at the height of state economic planning.”94 As a result, the
revolution failed to totally re-order society and important pre-revolutionary relations and
behaviors continued into the planning period.
A third, and in this case exogenous explanation is the way the Vietnamese and global economies
have interacted. In the colonial period after 1919 and the postcolonial period between 1989-1994
and 2006-2008, the Vietnamese economy has experienced rapid increases in the volume of
91
Li Tana credits Chinese migration after the failed Le Van Khoi uprising with the remarkable rise of Chantaburi as
a shipbuilding center. “Ships and Shipbuilding in the Mekong Delta, c. 1750-1840,” in Nola Cooke and Li Tana,
Water Frontier: Commerce and the Chinese in the Lower Mekong Region, 1750-1880, Singapore: Singapore
University Press, 2004. 119-138, 129.
92
Once again, there is a striking parallel with the Nguyễn regime and its problematic adoption of neo-Confucianism
as a state ideology. See Alexander Barton Woodside, Vietnam and the Chinese Model (Cambridge, Mass., Harvard
University Press, 1971). .
93
(Abrami 2002, p.330) There are long running debates about the relative importance of nationalism and socialism
in Vietnam (see Marr 1981), often discussed in terms of the motivations of Hồ Chí Minh. See Duiker (2000) and
Quinn-Judge (2003, 2004) for discussion. Abrami (2002) follows Fforde and Paine (1987) in arguing that
opposition to Chinese-style class warfare campaigns was a legacy of the errors of land reform.
94
(Abrami 2002, p.321).
26
foreign direct investment. The rate and directions of diversification that resulted is a typical
response to these sorts of investment flows. Kindleberger and Aliber have described the process
whereby international capital in search of new and profitable investment opportunities flows into
a particular national market, generating asset inflation and an investment boom.95 Such
speculative episodes go back as far as Tulip Mania in 1620 and the South Sea Bubble a century
later. A common response by domestic firms during the investment boom is to diversify,
particularly into finance and real estate. A feedback loop exists between these two markets,
especially in developing countries where investment options are limited. Credit growth is the
fuel, which can then ignite mania and asset inflation. Investors whose wealth increases due to
rising real estate values purchase stocks in order to diversify. The reverse also occurs. Investors
profiting from rising stock market valuations buy larger and more expensive property. Profits
from rising valuations spill over from one asset market into the other in a self-reinforcing
spiral.96 Mania eventually turns to panic and international investors pull out to move on to the
next opportunity.97
The fundamental issue, however, remains the reliance by both regimes on monopolistic staterelated accumulation. Anderson’s discussion of the persistence of institutional forms seems
relevant here, even if the precise transmission mechanisms remain obscure. Once again, the
historical legacy may have its roots in the pre-colonial past: the highly-capitalized, diversified
Chinese consortiums that dominated Southeast Asian commerce in the nineteenth century bear a
striking resemblance to the Colonial Conglomerates and the General Corporations to follow,
from initial monopoly bases to synergistic diversification to final transformation into investment
houses with large real estate and finance operations.98 It would seem, then, that while colonial
bureaucrats may have been reading their Adam Smith, and Party cadres may have been reading
their Marx and their Mao, they were at least in some way still influenced by the institutions and
practices that had come before. With the stunning French art deco headquarters of the Bank of
Indochina in Hanoi now serving as the offices of the State Bank of Vietnam, this is not as large a
conceptual leap to make as it might first appear.
Yet this sort of institutional transmission was also at work in extremely concrete ways. The
DRV after 1954 attempted to control alcohol production in ways that in practice were almost
indistinguishable from the French monopoly that preceded it. Not surprisingly, the result was
similarly widespread illegal distilling: a common term for traditional rice alcohol, rượu săm
(“inner tube alcohol),” is a reference to a DRV-era practice of transporting contraband alcohol in
old inner tubes. Beneath the state’s justification that the production of alcohol was a waste of
scarce rice lurked, in fact, the same intent: increased extraction of surplus from villagers. While
the French had preferred their extractions in the form of cash, however, the DRV preferred theirs
95
Kindleberger and Aliber in an updated edition of the classic Manias, Panics and Crashes, 2005.
Cheshier and Pincus 2010.
97
The Depression ushered in a period of readjustment and retrenchment for the Colonial Conglomerates. Many, of
the CCs survived only in drastically streamlined form and under the control and/or ownership of the Bank of
Indochina. See Gerard Sasges, “The Landscape of Enterprise in Colonial Vietnam” (forthcoming). This particular
historical legacy may have important implications for today’s General Corporations.
98
See Howard Dick, “A Fresh Approach to Southeast Asian History” 3-18. or John Butcher “Loke Yew” 255-261,
both in John Butcher and Howard Dick, eds. The Rise and Fall of Revenue Farming: Business Elites and the
Emergence of the Modern State in Southeast Asia. New York: St. Martin’s Press, 1993.
96
27
in the more basic form of rice itself.99 As for enforcement, practices could have been lifted from
a French Customs and Excise handbook.100 The pains the state took to remind villagers of their
legal rights and assure them that cadres would not engage in the same sorts of corrupt and
extortionate practices of the hated French Customs agents can only leave on wondering what, if
any difference, a poor farmer/distiller would have noticed from the change in regime.
As the example of our poor Vietnamese farmer/distiller attests, institutions and institutional
memories are not the exclusive domain of the state. One of our purposes has been to show how
the institutions of monopolistic state-related accumulation have been engaged in an ongoing
dialectic with the institutions of smuggling and other illegal activities. This is perhaps time for
us to make our own requisite reference to the saying phép vua thua lệ làng. But after all, there is
something to it. Avoiding taxes, smuggling, contrabanding, and “fence-breaking” have a long
and powerful presence in Vietnamese history, as long as the history of weak states and their
heavy-handed attempts to extract surplus and remake the economic landscape to better fit their
interests. The same villages that specialized in illegal distilling under the French continued to do
so under the DRV, and the same women who had learned to distill from their grandmothers in
1900 were passing the tradition to their own granddaughters in 1960.101 The institutions and
practices that arose in the DRV after 1945 – whether the State Bank of Vietnam, the ban on
alcohol production, or even clandestine distilling – did not spring fully-formed from some
Communist imaginary. Rather they emerged in dialectic with what had gone before.
Would the real problem step forward?
Nevertheless, the real problem may not be explaining why these continuities exist, and instead
understanding why they are so hard to see. Much of the problem, we suspect, stems from the
way that language has shaped our conceptualization of the periods under investigation. Knowing
as we do that the colonial era was a period of where the “market” was allowed – in some sense,
at least – to operate, we tend to conceive of the period’s political economy as involving relatively
equal interactions between the three poles of state, business, and illegal activity, something
we’ve tried to represent below.
99
Seen in this light, collectivized agriculture can be seen as replicating earlier forms of taxation in kind.
See Những điểm quy định để quản lý các nhà kinh doanh Men và rượu (Regulations for the control of yeast and
alcohol businesses), Vĩnh Phúc: Chi sở rượu Vĩnh Phúc, 1957. TVQGHN
101
Interviews with Đào Bá Tiêu and Lê Thị Càng, January 22, 2006, Thôn Hữu Trung, Xã Hữu Hòa, Huyện Thanh
Trì, Hà Nọi.
100
28
Diagram X: Colonial-era political economy (take 1)
state
business
illegal
activity
Now for the post-colonial era. Knowing what we know about planning, and the state’s attempt
to monopolize economic activity, we might ascribe a predominant, yet not hegemonic position to
the state, something like this.
Diagram X: Planning-era political economy
business
state
illegal
activity
But if we forget for a moment what we know about things like “the state,” or “the market” and
instead acknowledge the elephant that has been lurking in the room (and in the discussion of the
colonial-era), namely the Bank of Indochina, we might end up drawing a very different diagram.
In the aftermath of the financial crisis of 1921, the Bank of Indochina had already begun to take
an ownership position on many of Vietnam’s medium and large enterprises either directly or
through closely-allied intermediaries such as the Fontaine or Homberg groups.102 The crash of
1929 only accelerated this process, and by the eve of the Second World War, most of the ten
Colonial Conglomerates discussed in this article – including the Fontaine and Homberg groups –
102
Morlat. op.cit. 560.
29
had been transformed from allies into elements of the Bank’s investment portfolio.103 As for the
Bank’s relationship with the colonial state, the former’s ability to frustrate crucial policy
initiatives such as the adoption of the franc (rather than continuing to use the Bank’s own piastre)
should call into question any assumption of the primacy of the state. Thus if we focus on who
controlled the major assets of the colonial-era economy, we might draw a diagram that might
look something like this:
Diagram X: Colonial-era political economy (take 2)
business
State-Bank of Indochina
illegal
activity
Or, if we were in a particularly cynical mood, it might look like this:
Diagram X: Colonial-era political economy (take 3)
business
State
Bank of Indochina
illegal
activity
103
The Annuals of Enterprises after 1930 attest to the omnipresence of Bank directors like Stanislaw Simon or
Thion de la Chaume on the boards of directors of major enterprises. See also Yasuo Gonjo. Banque colonial ou
banque d’affaires; la Banque de l’Indochine sous la Troisième République. Paris : Imprimerie nationale, 1993.
30
In the end, it matters little to us whether you accept our argument that seen from certain
perspectives, the colonial and post-colonial political economies can appear almost identical. The
more important point is that terms like “public,” “private,” “the market,” “planning,” “the state,”
“enterprise” (or even “state” and “bank”) to describe these eras are all highly problematic, and
may indeed obscure more than they reveal. Any discussion of the political economy of Vietnam
should be extremely circumspect in the use of these terms, and should instead focus on what
particular institutions, firms and people really did (and to whom), rather than what our
vocabularies tell us they should have been doing.
So what?
We’ve offered four hypotheses to explain aspects of the continuities we’ve identified in the
Vietnamese political economy across the twentieth century: the way the colonial and
postcolonial regimes were engaged in similar projects of consolidation and centralization; the
similar limits institutions and ideologies placed on the state’s ability to realize its projects;
cyclical interactions with the global economy; and finally the persistence of institutional forms
and above all practices in the face of changes in regime and ideology. These explanations are
preliminary, and at best incomplete. Frankly, we’re not sure what the best explanation or
combination of explanations is, nor do we even want to be sure. As for which Venn diagram
best captures the realities of the colonial and transition era political economies, we’re even less
sure, if that’s possible. What we are sure of is the existence of strikingly similar patterns in the
political economies of Vietnam in the colonial and post-colonial eras. And we suspect that the
same kinds of similarities would emerge from other areas of inquiry, if only we cared to look.
We are the first to agree that different ideologies and political systems have shaped Vietnam in
different ways. History is not stuck in some eternal and unchanging playback loop. But
historical legacies do matter, and in ways that our own ideologies, politics, and vocabularies may
have encouraged us to ignore.
For too long, the starting point of our investigations into Vietnamese pasts has been an
assumption that dates like 1859 or 1945 are characterized more by rupture rather than by
continuity. At the same time, our investigations have been shaped by the use of categories and
vocabularies that may hide more than they reveal. Above all, then, our intention with this article
has been to call into question this assumption of rupture, to begin deconstructing some of the
temporal and conceptual walls that have been built in Vietnamese historiography, and to
encourage debate about how historical legacies have shaped Vietnam’s past and present, and will
continue to shape its future.
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