What turned around Dong’s life—and that of millions of other Viet¬namese—was the government’s decision at the Sixth Party Congress in 1986 to institute a program called doi moi, or “economic renovation.” Given the depths of Vietnam’s desperation, it was a decision made out of necessity, yet it reflected the pragmatism of a government that under¬stood slogans don’t fill empty stomachs. Doi moi was designed not as an ideological retreat from socialism but as an instrument to introduce ele¬ments of a free-market economy, to encourage private enterprise, and to free the entrepreneurial spirit of the Vietnamese.
Land reform—this time executed without bloodshed—allocated plots to farmers who proved themselves the most productive. A merit system that awarded points to people who merely showed up for work (even if they didn’t do any work) was abolished. The government kept title to all land, but land could now be leased, traded, inherited, and mortgaged. People were given the right to “enrich themselves.” The equitization— Hanoi couldn’t bring itself to use the word “privatize”—of the state-run economy took its first timid steps. A bevy of new laws were drawn up, in¬cluding one to deal with something that didn’t happen when the state owned every business: bankruptcy.
I moved to Hanoi about ten years after the adoption of doi moi and four or five after its implementation began, more or less, in earnest. For the conservatives in the communist hierarchy, the exercise was no fun. The communist countries of Eastern Europe had made the transition to a free-market economy by focusing on all they had to gain. Vietnam’s lead¬ers could only think of all they had to lose. At the top of the list was not ideology; it was privilege. Although there were countless bright bureau¬crats who worked tirelessly for Vietnam’s well-being, everyone knew that the directors of the state-run industries and many of the people who ran the ministries didn’t get their jobs on merit. The director of tourism, for instance, had impressive wartime credentials as a revolutionary but knew next to nothing about tourism. She refused all requests for interviews with foreign journalists, a peculiar response in a country trying to pro¬mote tourism as a major source of hard currency. But I suppose the Old Guard had a right to be nervous. If the playing field were leveled and promotions were based on competency rather than contacts and Party commitment, a lot of senior people would have been out on the street. The thought of suddenly waking up and finding oneself with the salary of a civil servant or a teacher—about $30 a month—was as appealing as a bowl of soggy rice.
The results of doi moi over the first eight or nine years were dazzling. The annual inflation rate fell to single digits from 700 percent. Farmers, freed from collectivization, transformed Vietnam from a rice importer into the world’s second largest rice exporter, after Thailand. The gross do¬mestic product grew by nearly 9 percent a year. Thirty-five thousand small businesses started up in the private sector. Families that couldn’t af¬ford a new pair of shoes a decade earlier were now riding to work on Honda Dream motor scooters. Shops that didn’t have a bolt of cloth or a can of paint to sell in the Dark Years were awash in goods: lamb chops from New Zealand, microwave ovens from Japan, silk from Vietnam for tailoring, kitchen utensils from China. Many homes in my neighborhood didn’t have running water, but almost every one had a TV set.
All of a sudden Vietnam had buzz. It was the darling of the new emerging markets. Foreign donors tripped over each other to be among the first to shower money on Vietnam. Investors and entrepreneurs from the capitals of Europe, North America, and Asia poured into the country and snapped up apartments at $5,000 per month, two years’ rent due in advance. Hanoi knew a cash cow when it saw one. It set up a dual-pricing structure, charging foreigners three times what a Vietnamese paid for rail and air tickets. Phone rates were among the highest in the world. Hanoi soon became one of the world’s ten most expensive cities to live in for ex¬patriates. But no one seemed to mind. Vietnam was the place to be.
“There was electricity in the air,” remembered Jay Ellis, an American whose R&R Tavern became Hanoi’s favorite watering hole for expats. El¬lis put up pictures of George Washington and Ho Chi Minh over the door. “People—Vietnamese and foreigners—were excited. You had the feeling things were really happening.”
The World Bank rented a villa. Tourism soared. With the end of the U.S. trade embargo in 1994—an event greeted by fireworks in Ho Chi Minh City—Coca-Cola unveiled its $24 million plant outside Hanoi with parading drummers in costumes. One U.S. company said it would develop a $243 million resort in Danang, next to the U.S. Marines’ former R8cR center on China Beach. Eleven recently arrived automotive manu¬facturers predicted they would be selling 120,000 vehicles by the year 2007. Chrysler’s investment alone was $191 million. A dozen American money managers who controlled billions of dollars in pension funds for General Electric, Arco, General Motors, and other corporations prowled Vietnam looking for places to invest. “We were very excited,” one of them, Kent Damon, said.

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