Platt Perspective on Business and Technology

Vietnam, doi moi and the search for business and economic strength and global relevance 5: the quest for an enabling 21st century infrastructure 2

Posted in UN-GAID by Timothy Platt on March 28, 2015

This is my fifth installment to a series on Vietnam (see the UN-GAID directory, postings 34 and following for Parts 1-4.) As an overarching goal for this series and to put this installment to it into a wider perspective, I began all this with a three point list of issues that I would discuss in succession:

• Vietnam’s growing role in international commerce and the business systems that make that possible,
• Their active and still expanding programs of basic infrastructure development that would make this possible, and that would facilitate their country’s active participation in the global community as an equal and a peer,
• And the closely related issues of how other countries relate to and interact with Vietnam. And in anticipation of that, I note here that I will discuss at least some of the complex partly positive, partly negative realities of the relationship between Vietnam and China, and the likely emergence of closer alliance between Vietnam and the United States and at least partly because of that. (See Part 1.)

I focused on addressing the first of these complexes of issues in Part 2 and Part 3, and I then turned to at least begin to more directly focus on the second of those bullet pointed to-address topics in Part 4. And I focused there on the distinction between Vietnam as it pursues a market-driven economy approach under their redevelopment program of đổi mới, and Vietnam as a still legally, formally a communist country with all of the pressures to continue along a more centrally administratively planned economic approach as would be called for under more rigidly orthodox communist doctrine.

• Vietnam’s emerging entrepreneurial class both demands and requires a more open supply and demand-driven economy if they are to succeed, and ultimately Vietnam needs that they succeed in building and running a more robust and competitive business and industrial base if the country as a whole is to succeed too. And this success hinges significantly on Vietnam as a country entering into and carrying through on a very comprehensive and far-reaching program of basic infrastructure development.
• But it is the government in Vietnam, still largely under the sway of older pre-1986, pre-đổi mới thinking, that has to organizationally lead this infrastructure development. And this is certainly a valid point if the mid-level and lower-level bureaucrats who turn general goals into operational rules and day-to-day implementation are considered, as well as the country’s top political and governmental leaders who publically express those overall goals and intentions.

So I ended my Part 4 posting at a point in this discussion where I had at least briefly sketched out the terms of what could be seen as a fundamental conflict. And I did so while repeating a brief list of core infrastructure development goals that all sides in this see as crucial if this overall effort is to succeed. And those specific arenas to that potential for conflict are:

• Transportation,
• Electrical power generation, and
• Telecommunications and internet access.

This is a selective list, focusing on areas that I have more directly observed as being under active development. And I begin addressing them here with the first of them: transportation.

Transportation systems development covers a tremendously wide range of types of projects that include everything from highway and rail system development, harbor dredging and expansion and the development of better, larger port facilities and more. Seemingly everywhere you go in the country from the North up near their border with China on South to the lower end of the Mekong River Delta, you see this, and with massive tunnel projects where needed as for example in the Central Highlands. And a great many positive results are being accomplished. But at the same time, Vietnam faces some very significant challenges here too.

I have in effect already begun this discussion in Part 1 of this series where I outlined a challenge that at least one, and in fact several of their new highway projects have created where the farmers who work the land on one side of these new crossing barriers, live on the other side making their land much less accessible and much more difficult to productively and cost-effectively work.

No infrastructure development project is perfect and even the most carefully planned and executed of them will raise problems that have to be solved head-on and directly, or worked around and quickly. I have head of and seen as bad and worse as that situation in countries that were not communist and that were more politically open and diverse. But a significant element of central planning per se seems to be an essential element to essentially any really large-scale infrastructure development program, if it is to be carried out with coherent consistency across large areas and over a significant timeframe. So at least some problems, such as a failure to include those farming communities in the planning for how these roadways would be built through their communities is to be expected. Stakeholders – peoples and communities that will be directly affected by this type of development, have to be identified and included, and from early on in the planning for where they would be so affected if these programs are going to proceed without the additional costs, delays and resistance building that come from what should be avoidable oversights and misunderstandings.

But I would focus more here on a new, railroad systems development challenge that Vietnam is definitely facing and certainly in its North. The central planners who organize and lead this overall development challenge see this type of initiative, quite legitimately, as an opportunity to transfer in foreign expertise that their own construction and development business sector can learn and internalize as their own new best practices too. So foreign firms are brought in with their specialized equipment where necessary and with their skills and expertise, to in effect build the prototype project implementations that Vietnamese can learn from and use themselves elsewhere in their country; that at least is the goal.

Businesses from all over have moved in on big infrastructure development project opportunities in Vietnam like this one, and both to carry them out at a profit and to build stronger, long-lasting international business collaborations that would lead to new business opportunities for them as well. But when the winners of these contracts are determined on the basis of political and even overtly ideologically political factors as well, problems can and do arise. And in anticipation of a soon to come series installment where I will focus on point three of my top of posting list, I raise here a challenging example of how that works out with China and its businesses as collaborative partners for Vietnam’s infrastructure development.

The relationship between Vietnam and China is and essentially always has been very complex and nuanced. China is their big and powerful neighbor to the North, and it is and always has been both a trading partner to them and a source of threat to them as well – and generally simultaneously. China has always viewed Vietnam as a weaker, lesser state that is and should be subservient to it in any relationship. It is no accident that as I write this, one of Vietnam’s biggest sources of international concern is China’s recent and still ongoing campaign to take effective ownership control over the East and the South China Seas, and as a specific case in point of that over island territories explicitly claimed by Vietnam as being long-held parts of their sovereign national territory. But Vietnam is a communist country and so is China, and both operate single communist political party systems to prove it. So (largely if not essentially entirely) Chinese government, state-run businesses have bid on a wide range of development projects in Vietnam and way too many of these contractual agreements have proven problematical than should be considered acceptable, but they are still being awarded these contracts to build.

I find myself thinking of a specific project that I saw several times while in Vietnam as I write this: a new north-south rail line that holds promise for tremendously enhancing capacity to ship both raw materials and finished goods. And I find myself thinking of a huge railroad bridge that would be completed as a crucially important element of that project: a bridge that as of this writing has rail lines leading up to it on one side, and that simply stops about 90 percent of the way across the waterway it is supposed to span. There is a short path of prepared rail bed on the far, unfinished side and then that stops too. And the Chinese business that agreed to contractual terms on this project and both for what was to be done and when, and for what compensation they would receive for this work has resisted any technology transfer initiatives into Vietnam, even as China as a government policy insists on technology transfer into China when any foreign business seeks to do work in China. And this business keeps demanding further payments and increased overall fees if they are to bring any of this work to completion, and with all work that is to be done halted pending acquiesce on the part of Vietnam – which is a poor country and one that cannot afford massive and seemingly open-ended cost overruns here.

Vietnam’s communist party loyalist and true believer government managers, on their side of this, very clearly interpreted their understanding of a centrally planned economy to include an understanding that as a communist country, they should preferentially do business with other communist countries – and with their big neighbor China that they need to keep happy anyway, in particular. So this situation, at least up to now and through most any immediately foreseeable future just continues.

I am going to continue this discussion in a next series installment with a goal of at least briefly discussing all three of the areas of infrastructure development that I have cited here. And then I will more fully turn to the third and final area of discussion that I initially listed at the beginning of this series: putting Vietnam and their efforts at implementing đổi mới into an explicit international context, and for the issues of both of the first two to-address points for this series. I have in effect already begun that here, but I will have more to add too, noting here that I will add a few more details and observations there, to my just-cited railroad systems development project. Meanwhile, you can find this and related postings and series at the UN-GAID directory.

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