WE'RE A FAVOURED SUITOR
Eric Ellis
06/16/1993

Australia has been quick to recognise, and benefit from, the emergence of Vietnam from economic isolation. ERIC ELLIS in Hanoi reviews Australia's relationship with Vietnam and likely future developments.

AS it emerges from years of communist economic isolation, Vietnam is a little like the prettiest girl at the dance.

Eminently available, it is receiving offers from suitors all over the world, all eagerly crossing to her side of the room to mark her dance card.
But like the canny miss who knows she is a good catch, nation-building Vietnam, and its 70 million potential consumers, stands back, playing it cool, carefully assessing who offers the best prospects for the future.

To extend the metaphor, Vietnam may be said to be currently "going out"with Australia.

But it remains to be seen whether the delicate courtship, underlined by last month's visit to Australia by Vietnamese Prime Minister Vo Van Kiet, will blossom into a long and happy relationship, or whether Hanoi is stringing a besotted Australia along in the promise of better prospects elsewhere, perhaps when the United States lifts its long-standing, post-war economic and political embargo.

For Australia's part, it won't be for want of trying. Often accused of being late into Asia, Australians arrived early, and in large numbers, in Vietnam.

In their commercial vigour, Australians rival the Taiwanese and Japanese.

In political influence, Canberra ranks alongside former colonial power France, and certainly outstrips the United States.

Of the headline-making deals, Australians operate the national telephone system (OTC-Telstra) and the first bank from an English-speaking nation ( ANZ), and are developing the country's biggest oilfield ( BHP ) and have proposed commercialising the national broadcaster (Murdoch, Packer and the ABC).

Beyond that, there is a raft of smaller players; Ansett wet-leases plans to ply the busy Hanoi-Ho Chi Minh City (Saigon) route, Westralian Sands searches for ilmenite outside Hanoi, Thiess and Transfield are active in construction and re-development of infrastructure, lawyers Phillips Fox wrote the famous"Green Book" that translated Vietnam's foreign investment code.

That excludes the scores of Australian business consultants operating in Hanoi and HCMC, some licensed, most not, the latter led by the notorious refugees from the WA Inc scandal.

Such is the vigour with which Australia has courted the Vietnamese politically and economically, that Canberra stands accused by international human rights groups of giving succour to a repressive regime, a charge usually levelled at traditional early birds, the US and Japan.

Indeed, some in Vietnam's ruling Communist Party go so far as to see Australia as a new but benign "big brother", a term with particular significance in Hanoi as it has been traditionally applied to the pre-Gorbachev Soviet Union.

The present cosy relationship is mutually beneficial. The wooing of Vietnam is pivotal to Australia's wider regional interests, its new policy of pro-active engagement in Asia.

With the Cold War barely over and having been denied savour of its greatest recent achievement - beating the mighty US at war - Vietnam still sits on the fringes of the international mainstream.

The US embargo, Vietnam's exclusion from ASEAN and from major international aid and development agencies make Australia a useful ally, a role Australia is keen to fill to display its enthusiasm in regional affairs.

The recent remarks by Vietnam's (Cuban-schooled) head of the Americas Department of the Foreign Affairs Ministry that Australia was positioned "to point out to the US long-term strategic interests in the region" was evidence of Australia's perceived usefulness to Hanoi.

Says a former diplomat in Hanoi: "Australia is probably playing a much more mature game here than we have done elsewhere.

"It is beyond dispute that Vietnam has to come on, but the continuing US embargo makes some countries a bit nervous to get fully engaged.

"Our relationship with the US is strong enough for that not be a problem in our dealings here."

But already there is some disquiet.

In a country that treats symbols and status very seriously, BHP's $US1.8 billion deal to develop the Dai Hung (Big Bear) oil prospect has been received with both enthusiasm and concern.

For some, the BHP deal is seen as the culmination of Australia's determined efforts to get established in Vietnam.

The deal was won with considerable official backing and the fact that BHP is Australia's largest company and, it follows in Vietnam, its most important, has not gone unnoticed.

There is a concern that opportunities on the scale of Dai Hung will be less available to Australian companies in the future.

The argument follows that the BHP's deal is something of a reward from Vietnam for Australia's solid work over the years, in aid and political support, but now it is time to give others a chance.

Graham Alliband, a former Australian Ambassador in Hanoi and now a private business consultant, said: "The Vietnamese have a plan and they are working to it. It's not as easy here as some people seem to think.

"They have very clear ideas about where they want to be and they will use whatever means available to them to achieve that."

Dr Nguyen Mai, vice-chairman of the State Committee for Co-Operation and Investment explained it in a more doctrinaire fashion.

He said: "We have acknowledged that we have made mistakes with our economy in the past. Our problem was that we copied too directly from our allies in the former Soviet bloc.

"There were very special reasons for that but now that things have changed in the world we believe we may be able to explore our own alternatives, and that of our neighbours.

"We found that the Bulgarian agricultural model was not appropriate, now we are very interested in how agriculture is applied in Western Europe.

"We have studied the government to business relationship of the Korean and Japanese trading companies and that is very interesting.

"It is also instructive to study the development of small and medium-sized industries in Taiwan.

"Before we followed an East German model, which wasn't successful.

"We are also quite interested to study how China has developed its special economic zones.

"What we must do is renovate our infrastructure. It is then than we will truly we able to compete with our regional neighbours."

If Dr Mai's comments suggest a calculated, methodical approach, that's because that's the way Vietnam is opening its door after nearly 40 years of communist isolation in the north and almost 20 years in the war-ravaged south

Mr Alliband said: "It should not be forgotten that in Vietnam there is a very strong sense of nationhood and independence, which they have fought two significant wars and several minor ones to achieve.

"What we have here is a very determined people, who know where they are going and have a pretty good idea how to get there.

"What they do not want is economic development in the way that say Thailand has developed. Singapore is probably a better model."

Despite the somewhat premature publicity about an "emerging dragon economy", Vietnam is a fundamentally very poor country with a government still internally grappling with the ideology of opening to a world that it is has traditionally found hostile.

While it is unlikely that the doi moi policy of economic reform that begin in 1986 - pre-dating implementation of Gorbachev's perestroika - will be reversed, there remains significant opposition within communist party ranks about the "anti-social consequences of the market economy", notably corruption, prostitution, smuggling and crime.

Moreover, party chiefs have been alarmed by developments in the former Soviet Union and Yugoslavia, where political reform has careered out of control, and in China, where economic reform has been unchecked.

"There is very tight control applied here," said a Western diplomat. "These people are absolutely paranoid about the people getting away from them."

However, Mr Alliband said: "This is one of the most stable governments in Asia.

"That is not to say they are overwhelmingly popular but they are a lot closer to the people than say the governments in Eastern Europe or China are.

"You have to remember that communism was not imposed here. It was a truly popular revolution, which is something that could not be said for Eastern Europe."

Coming off a low base, the Vietnamese economy has quickly reaped the benefits of doi moi.

Exports have quadrupled since 1988, the economy is growing at an annualised 8 per cent and inflation, the scourge of reformist economies, has largely been checked, reined in from 200 per cent in 1988 to a projected 8 per cent this year.

Even the national currency, the dong, has strengthened this year, after losing 75 per cent of its value since 1988.

The currency black market has virtually vanished.

Mr Alliband said: "The future looks pretty bright for Vietnam.

"And don't they know it."