S T Nash Esq
2
17 July 1986
black and free markets import such goods regularly via legitimate trading ships and dollars are the payment medium. These have to be purchased on the black market therefore the cost of such goods is high. When you look at the south you should also remember that there they only have to look back to 1975 to remember the "good times", no doubt made better by 10 years of Communist rule. Their expectations are higher to begin with.
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5. Moreover there are now a growing number of Vietnamese who go abroad to non Communist bloc countries, particularly in south and south-east Asia. Western Europe is known to be a land paved with gold and most officials, if not ordinary Vietnamese, could live with that. But it is very different when people see Bangkok or Hong Kong, Singapore, Manila, Kuala Lumpur and Jakarta. They say you can still buy anything in Vietnam and I suppose it is true but consumer goods are scarce. They are not in the rest of the region. Even if you are making money here what can you do with it?
6.
Thus the short term factor of inflation plus the growth in knowledge of the outside world more than offsets what trained economists see as encouraging signs. Uncertainty over ODP because of problems with US, French and Canadian programmes may also be a contributing factor, as indeed are the usual delays in all ODP programmes.
7. As for the medium term, I should not expect too. much of the reformers too quickly. I do not think we shall see any radical improvements in economic performance until we are nearly at the end of this 5 year plan, even if major reforms come at the Party Congress. The Vietnamese are not prone to dramatic changes in policy, particularly in the economic sphere. And any change will depend upon the bureaucracy of government and party for implementation. It is there that the whole reform programme could easily break down. It will certainly be slowed by the administrative ineptitude which bedevils the bureaucracy at present. Reform is going to have to come there in a sense, before economic reforms can, I fear, have a real impact.
cc:
ever
Nike
M J H Wood
C T Wood Esq, Hong Kong Govt Sec't PJ D Whitehead Esq, Research Dept, FCO Mr Woodward, Economic Advisers
Mr King, UKDEL IMF/IBRD Washington HKD,
FCO
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