Hanoi pins hopes for growth on new breed of capitalists

PUBLISHED : Tuesday, 25 April, 2006, 12:00am
UPDATED : Tuesday, 25 April, 2006, 12:00am

Dao Trong Cuong is one of the more visible dollar multimillionaires around Hanoi - a breed who were hard to find in the Vietnamese capital just five years ago.

He wears chunky, ruby-studded rings, drives one of only two Humvee vehicles in the country and has already published his biography. On Saturday, he met Bill Gates during the Microsoft founder and chairman's first visit to Vietnam. Then, on Sunday, he was off to the countryside for 27 holes of golf.

He is exactly the sort of private entrepreneur the new Communist Party and government leaders will be trying to court after the party congress ends today.

The congress, reflecting on 20-years of stop-start reforms, has cemented ambitious development plans unveiled earlier this year to kick-start change and forge an industrialised nation by 2020. Hanoi's leaders are demanding far greater mobilisation of previously hidden domestic capital as well as intensified foreign investment.

They want to have pulled Vietnam out of the ranks of poor nations by 2010, eyeing growth rates of between 7.5 per cent and 8 per cent during that time. Its economy grew 8.4 per cent last year - the fastest rate in Southeast Asia.

Mr Cuong's firm, Than Chau Ngoc Viet Gems and Jewelry, has a licence to mine gems in Vietnam's poor mountainous hinterland. It employs more than 200 people, processing stones, making jewellery and exporting internationally.

Mr Cuong has forged friendships with senior party and military officials and is eyeing an eventual listing on Vietnam's hot fledgling stock market, now a major factor in Hanoi's development plans.

'The community of private businessmen expects a great deal from this congress,' Mr Cuong said. 'Not that long ago, life was very different for us. Now we are much more confident in ourselves and want to be able to get on with things ... we are comfortable in what we are doing and the leadership seems comfortable with us.'

The wider confidence is palpable. Foreign investment is up, consumption is soaring as a young middle class emerges and the stock market is overheating as domestic and foreign investors eye a slew of large state-owned enterprises starting to list.

Yet, despite the buoyant mood, a host of short-term issues must be resolved, analysts say.

Drafts of a new unified investment law seem likely to make life much harder for domestic firms planning big projects and the culture of arbitrary licensing is proving resilient, particularly in the trade ministry.

'We are still having to fight a culture of regulation, [with] laws for things that don't need to be covered by regulation,' said Baker and McKenzie partner Frederick Burke.

Vietnam's entry into the World Trade Organisation also bears some signs of strain, with question marks over how open distribution networks will be to foreign firms.

Foreign and local exporters will also be hit by an end to profit tax breaks, rises in the minimum wage and new rules making it harder for firms to transfer profits abroad.

'The leaders are moving in the right direction but we are still not there yet,' said Mr Burke.