Is the Vietnamese miracle in trouble?

Recently, growing scepticism has been expressed by the major donor agencies and some Viet Nam experts about how far the Government is committed to market reform and whether the country's rapid rate of economic growth is sustainable. Below it is argued that the transition process to a market economy, far from having moved too slowly has moved at a reasonable pace. One indicator of the steady progress of reform is to be seen in contrasting the climate of economic stability at the time of the Eighth Party Congress in 1986 with the sense of uncertainty which marked the Seventh Congress in 1991. While it is true that rapid growth has given rise to a large current account imbalance, that relative poverty is growing, that inefficiency and that rent-seeking behaviour can be observed in the State Owned Enterprise (SOE) sector, evidence of these and other shortcomings can easily obscure the fact that Viet Nam's import boom is investment orientated, that overseas indebtedness is low and the outlook for sustaining the flow of domestic and foreign saving is encouraging, that the proportion of the population in absolute poverty is falling and that SOEs' labour productivity has risen substantially. While much remains to be done in consolidating the institutional structure of a market economy and promoting equity, Viet Nam appears to be facing up to the main problems of promoting sustainable, market-led growth and is performing well by regional standards.