KNOW NOW:
Vietnam's Extreme Migration
Environment Hangs in the Balance
This is Ben Thanh Market, Ho Chi Minh City’s massive labyrinth of indoor merchants hawking everything from shrimp paste to Burberry knockoffs. Midday, it throbs with shoppers pushing through the congestion and vendors shouting price cuts from stalls piled with product. HCM, formerly Saigon, is Vietnam's largest metropolis, an unending sprawl created by millions of rural transplants desperate for work. Bulging with nearly 14 million people today, city planners fear density could double by 2025. Construction cranes swing across the urban scape crushing rotting structures and erecting towering buildings at such a frenzied pace, there’s a public outcry for safety. Building collapses, both vintage and new construction, are common occurrences. Vietnam’s mangled electrical “grid” known for its iconic utility poles wrapped in unruly masses of wires, simply cannot support what’s here, much less what’s to come. This city alone suffered 1,000 major fires last year. The government will host a power sector fair next year. It’s billing the marketplace a $150 billion opportunity for global investors and suppliers.
Open trade and investment have become the twin mantras for Vietnam’s committed communists and they’ve been luring foreign capital since 1986’s doi moi economic liberalization. It’s a strategy that’s put millions of Vietnamese to work and prevented more from sinking into poverty. Today, tax-free industrial zones beckon manufacturers with liberal land use, cheap labor, and an unregulated environment. Massive new factories -- think Nike with 32,000 workers -- literally determine Vietnam’s new landscape. Once these miles-long plants are built, the government and corporation create and populate entire towns to serve them. Vietnam is fast eclipsing China as the world’s top shoemaker, but its priority is to expand electronics exports, now five times that of footwear and only limited by the nation’s ability to turn out a trained workforce. The government’s modus operandi is sustaining momentum, and there is much fallout along the way. The International Labor Organization, among other groups has long documented Vietnam’s widespread labor abuses and human trafficking, including forced adult and child labor.
Most vulnerable are poverty-stricken migrants pouring into cities where the country’s peculiar laws deny them official residency and deprive them of the attending medical care, education, and dwelling permit. This leaves life outside, and there is a lot of it. Lining narrow streets and broad avenues, women stir steaming cauldrons of hot pho while men stoop over tiny grills balanced on broken concrete; everyone rinses dishes in murky water. Acrid wafts of spices and raw sewage combine into one swirl. Motorbikes become sleeping beds with grown men draped over saddles. During rush hour, scooters stuck in traffic bounce up and over curbs onto sidewalks, the preferred fast lanes. Their two-stroke engines throw off thick black fumes, and mix with construction dust. Everyone’s face is covered in a self-styled handkerchief or a surgical mask.
Party officials contend the overcrowding, the labor abuses, even the ecological disasters are small prices to pay for thrusting Vietnam into the world of economic powerhouses. And they are prickly about criticism. It’s not like 1975 when the Vietnam War ended and Communist dogma crackled nonstop through loudspeakers in every corner of the country. The demagoguery is greatly throttled back. "We're more Communist than Communist over here -- we have Marxism, Leninism, and Ho Chi Minh-ism," the saying goes. But above all, Vietnam is Communist Practical, with one basic rule: don't challenge the government. A Vietnamese court imprisoned a man this year for posting a video of local demonstrators whose livelihoods were erased after a major industrial chemical spill dumped cyanide and destroyed 125 miles of fishing and farming along the northwest coast. Like others before and after him, he was removed from society for "propaganda against the state."
DO NOW:
Examine ways local and international groups raise environmental awareness in Vietnam and provide citizens with the tools to reach others. The Asia Society based in New York, California, and Vietnam tackles environmental degradation and climate change and runs a broad-based program. A world hub for consumption and export, Vietnam further endangers the ecosystem by poaching rhino, bears, elephants, tigers and more for the black market. Wildcat Vietnam works both digitally and on the ground in Vietnamese schools and other community settings to expose and stop Vietnam’s robust illegal trade of endangered species. For a broader and deeper look at the country’s history of challenges, especially through its war years, see the work of world-class Vietnam expert Robert Brigham.
Extracted from a talk to the most recent graduates of the Kellogg School of Management at Northwestern University about investing responsibly in fast-growing markets:
...So let’s wrap up in the streets of Hanoi, an anthropological study in urban migration. It’s an urban sprawl created by millions of rural Vietnamese in search of work. The capital is bulging at nearly 8 million residents today, and city planners expect that number to reach 9 million in short order. Imagine what rush hour is like when the sidewalks become the fast lanes for motor scooters stuck in road traffic. The air is so thick with gas fumes thrown off by two-stroke engines, riders and almost everyone else on the streets wear masks.
Trees punctuating the capital city’s sidewalks are also pressed into service. Their gnarled roots and thick trunks are Buddhist shrines, outdoor closets, barbershops, fruit and vegetable stalls, super-rigged electrical outlets, and of course, dog urinals. It’s on the pavement where people of all ages eke out essential income, by hawking whatever they have to sell. Entrepreneurship is a national pastime. In Hanoi, every square inch is occupied with it. Paved areas are crowded with pushcarts and the ubiquitous plastic stools occupied by people drinking tea or deep into bowls ofpho. Motorbikes transform into sleeping beds with men draped over their saddles. Along broken up cement and stone sidewalks, vendors stir cauldrons of boiling gizzards and fan the fires of small grills.
In the past twenty years, Vietnam has become the consummate market capitalist while the ruling Communist Party maintains strict control. Unlike 1975 when the Communist Party dogma crackled nonstop through loudspeakers in every village, town, and city, the demagoguery is greatly throttled back. “We’re more communist than communist over here – we have Marxism, Leninism, and Ho Chi Minhism,” explain locals, but above all, Vietnam is Communist Practical. The rules are pretty simple: don’t criticize the government. On paper, the story is one of a soaring economy beckoning foreign investment in export industries – from athletic shoes to chip manufacturers. The country's low wage workers are a great draw to firms priced out of China’s labor costs, but Vietnam must do far more to educate, train and deploy its workforce to workforce to sustain it. And to stay free of clear of trouble,
Party officials lament the housing shortages and the dangerous strains on infrastructure, but they’re unwilling to put any checks on a rapid growth that has created a small but significant middle class – estimated to double in size by 2020. Most importantly, the growth has prevented much more of the nearly 100 million Vietnamese from sinking into poverty.
Then there is the very messy, largely ignored issue of environmental degradation. Sixty million people rely on the Mekong Delta for their livelihoods. But all along the Delta, farmers, factories, and municipalities regularly discharge solid waste, pesticides and chemicals into the waterways; the pollution is so corrosive, it not only poisons the water, it erodes the riverbanks. Unbridled growth puts the delicate eco-system at great risk. Up along the north central provinces, a Taiwanese steel and plastics company discharged cyanide, phenol and more into the water, causing a massive fishkill over 125 miles of coastline, killing the fishing and tourism industries along the way. That was in 2016. A Vietnamese court in 2018 slapped a 14-year prison sentence on a man for a Facebook post about this massive ecological disaster in the South China Sea. He was found guilty of videotaping fishermen and other locals in uproar. The government just imprisoned him for “abusing democratic freedoms to infringe on the interest of the state.”
Vietnam’s regulatory environment is in its nascent stage, but as it seeks more investment and greater access to markets, it opens itself to greater scrutiny. The International Labor Organization and other entities have been part of many negotiations to create decent working conditions and boost incomes. Plants are huge, and their presence in the array industrial zones around the country mean entire villages and town are their dedicated labor supply. Think Nike’s stake: as one party official likes to say: 30,000 Vietnamese workers in Vietnam preparing shoes for you. He explains the government’s perspective Mutually supportive economic interests. Intimating that, for now, the low-skilled job hungry Vietnamese are happy to do it. “I don’t think Americans can spend their time making shoes…you have to build aircraft.”
Party officials tick off the biggest foreign investors in the country: South Korea, Japan, Taiwan, Singapore…the US comes in seventh. “All it takes is one big company like GE, one big investment, like repairing aircraft, and it moves to number one. The same official who beckons American business investment in Vietnam also boast that his country is “number one in ASEAN in internet use” and says the country is open. “This is the time to encourage young people to set up their start-up nation, right here.”
One of the American business dynamos who’s been in Vietnam, long and deep for the past twenty years, just led a group of US clean energy industrialists through Vietnam. Every province has an industrial park and the opportunities are endless for the intrepid investor: IT, agri-processing, auto production...
It is clear that Trans-Pacific Partnership (TPP) is an identity maker for Vietnam. It’s most important, says the official, because it allows us to know more about international trade, learn more, and adopt more. But it also pushed the country into the big leagues of trade and investment. US policy toward the ASEAN region is in flux. Trump contends there’s more to glean from straight up bilateral agreements, so pulling out of the accord wasn’t as damaging as others contend. Maybe one of you will be instrumental in developing a new bilateral accord?