Renovating Everything but Communist Rule the Main Architect of Economic Reforms Insists Capitalism Has Arrived in Vietnam, Even Though a Stock Market and Democracy Are Still Not in Sight Series: Journey through the New VIETNAM. Part Three of a Three-Part Series

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HO CHI MINH CITY, officially known as Saigon until 1975 and unofficially ever since, is the fountainhead of Vietnam's economic transformation.

A third of the foreign investment in Vietnam has been spent here. The average income in large parts of the city is $600 a year; the average for the entire country is closer to $200.

The power may reside in Hanoi, the capital, but the man some call the father of doi moi - as the "renovation" of the economy is known - lives in Saigon.

He is Nguyen Xuan Oanh, a Harvard University-trained former economist for the International Monetary Fund who served as central bank governor and acting prime minister in the south Vietnamese government.

His short political career led him to a nine-month period of house arrest after 1975, because the government of unified Vietnam was suspicious of his loyalties. Since then he has given new meaning to the term "survivor."

He has opened a business consultancy, served as a representative from Ho Chi Minh City in Vietnam's National Assembly, and become an economic adviser to Prime Minister Vo Van Kiet. An original Renoir painting decorates Mr. Oanh's office.

In addition to advising numerous international companies on their Vietnam operations, he is chairman of the Vietnam Frontier Fund, which counts former United States Central Intelligence Agency Director William Colby as an investor.

A soft-spoken, dignified man, Oanh offers soothing answers to the problems of Vietnam's economic transition.

Some investors worry that Vietnam has no reliable legal system for resolving disputes between business partners, but Oanh promises that administrative courts will soon be established and that Vietnam will join international arbitration agreements by the end of this year.

He agrees that Vietnam needs a stock exchange if the free market is to flourish. "We must have a money market, but we cannot build a stock market overnight."

Complaints about corruption?

It's not really a problem, Oanh says. Most of what is labeled corruption is "harmless gift-giving ... of little significance."

Vietnam has sometimes been compared to its large northern neighbor, China, in that the leaders of both countries are intent on keeping power in the hands of the Communist Party as they create essentially capitalist economies.

But Oanh argues that there are differences. Vietnam will not let growth "overheat" in certain areas, as has happened in coastal China.

And Vietnam will provide even greater political stability, so that investors will not have to worry about revolutions disrupting business.

"We haven't got anything like Tiananmen Square," he says, referring to the pro-democracy movement that Chinese leaders crushed in June 1989.

Oanh offers himself as proof that the Vietnamese Communist Party is not running a repressive state in its efforts to guarantee stability.

"I can do almost anything in this country, because they know I'm not trying to overthrow the government," he says. Anything includes discussing the prospect of multiparty democracy in Vietnam, which he says is possible "in 10 or 15 years' time."

Others are not given quite so much leeway. In 1993, eight dissidents were jailed by the government for circulating a newsletter called Freedom Forum, which called for multiparty politics. …