Magazine article Insight on the News
Is 'Doi Moi' a Business Ploy?
Vietnam is a mirage. From a distance, U.S. investors now see the chance to reap unlimited profits because the country has 70 million consumers, a wealth of natural resources and a need for investment. Upon arrival, though, they will find an economic environment in disarray, where business practices are characterized by lawlessness and chaos.
Since almost all international business in the country is conducted through parnerships between foreigners and the government, bureaucracy is the No. 1 problem. And it can be daunting. Businesspeople must cut through several layers of committees, ministries, agencies and departments to accomplish even the most mundane tasks.
Enforcement of the law is tenuous. In the United States, businesspeople are used to having protection. But Vietnam's legal structure is strikingly similar to the former Soviet Union's. Property rights and land ownership rights are ill-defined, commercial and bankruptcy laws are just being written and interpretation of the law is often one-sided.
"They enact a new law and sometimes you don't know the text of it for weeks and months after it's enacted," says Irwin Jay Robinson, founder and president of the Vietnam-American Chamber of Commerce. "When you finally find out what the law is, they may be amending it already because they've found it's impractical."
Outdated business practices are another problem. Vietnam has been communist for nearly two decades and this shows in the way the country conducts business. That is especially true in the north, where central planning is more firmly entrenched, compared with the more entrepreneurial south.
"Quite frankly, a lot of the time, the government doesn't have the experience to do business," says John McInerney, a vice president of Leon D. DeMatteis Construction Corp., a New York firm that has spent two years preparing for business in Vietnam.
To hasten the country's development, the government has been trying for more than a decade to inject market-based reforms into the economy. In 1986, as the growth rate sagged to 1.3 percent annually and inflation skyrocketed to 700 percent annually, the government responded by introducing "doi moi," the economic restructuring which began the current cycle of reforms. …