The economic travails that have affected the rest of Asia and the world are starting to hit Vietnam very hard.  The investments that were expected to propel the country into the Asian elite have faltered, and this has emboldened those who were never all that comfortable with the emergence of the market reforms in the first place.

The nation as a whole has become deeply resentful of those who have amassed fortunes and, now, the government is going after these tycoons with assertions that they have been playing fast and loose with public funds. The reality is that Vietnamese officials have always been corrupt, and that was the normal means of conducting business. The difference now is that those who have not become rich are bent on bringing those who profited down to earth.

Analysis: The growth rate has stalled, and the banks are saddled with debt that is equal to 10% of their assets. This has all but halted the whole privatization process, leaving the country in a kind of limbo between market and state management. It is ironic that Burma now is starting to reach out to the world and the lures of the market system of the Vietnamese seem to be in retreat. It may be only a matter of a few years before these nations trade places.

Chris Kuehl, PhD, NACM Economist and a Contributing Editor of BIIA