Can North Korea copy Vietnam’s economic miracle?
- Hanoi’s series of reforms, known as doi moi, turned it into one of the world’s fastest-growing economies
- But there is much to do before Pyongyang can use them as a road map for development – including getting Kim Jong-un to relax his iron hold on power
When Vo Van Dai started working at Vietnam’s Van Phan Dien Chau fish sauce company in the late 1980s, the state-run firm comprised five departments overseen by 18 managers. By the time he rose up the ranks to take charge of the company after its privatisation in 2000, the Nghe An province-based firm had slashed management by two-thirds.
During the same time, revenues exploded tenfold to over 20 billion dong (US$860,000) and the regular workforce more than doubled to 180 employees.
“In the past, as a state-owned company, we worked according to the state’s plan, meaning we just cared about production and didn’t have to worry about sales,” said Vo, now the company’s director.
He owns 15 per cent of Van Phan Dien Chau, as the biggest of its 116 shareholders. The company was privatised after the government sold shares to workers – subsidising 30 per cent of the share value – and offering more shares to those who had worked there for longer.
“Privatisation meant we … had to decide on our own what to produce, to sell what the market needs. The state’s role changed from direct involvement to managing companies indirectly through laws and regulations,” Vo said.
Vo’s is an experience that has played out across officially socialist Vietnam since the death of strongman leader Le Duan in 1986 ushered in private markets, consensus-based decision-making via the Politburo, and vigorous engagement with the outside world.
Vietnam’s economic and political reforms, known as doi moi, have been credited with transforming a decrepit system of central planning into one of the world’s fastest-growing economies. Per capita GDP has risen five times since the 1980s to about US$2,500, with economic growth last year topping 7 per cent.