Defiant Saigon

Free enterprise lives

More than five years after the fall of Saigon brought South Viet Nam under the banner of socialism, private enterprise survives there. Indeed, the free-market system that Hanoi vowed to crush accounts for 60% of the South's economic activity. Out of necessity, the regime has tacitly accepted the fondness that the entrepreneurial Saigonese have for profits--and even the still treasured U.S. dollar. Following a visit to what is now officially called Ho Chi Minh City, TIME Correspondent David DeVoss filed this report:

Early one morning in March 1978, residents of Saigon were jolted awake by something eerily reminiscent of the city's "liberation" three years before: the growl of tanks on the broad boulevards. This time, the goal of Hanoi's forces was to stamp out capitalist trade in the Cholon business district. Squads of Communist Youth League zealots searched every shop and warehouse. Merchandise was seized; stores were padlocked. Employers of more than five people were denounced as exploiters of the working class. Family-run produce markets were allowed to stay in business--but only if they held their profit margins to 10%.

Over the next year, competing entrepreneurs were ordered to form collectives, and longtime-resident Chinese traders were advised to flee altogether. The regime dealt with rising unemployment by packing some 250,000 people off to rural work camps called "new economic zones."

Yet Hanoi did not break the market economy. Small merchants gradually returned to Saigon to sell their wares, even though they had to do so on the streets and bribe local officials for the privilege. By last year the regime had abandoned its aim of completely crushing Saigon's entrepreneurial spirit.

Today street vendors sell wares that on any given day may include French bicycles, Australian butter and Japanese beer--all at princely prices. A single can of root beer may fetch $6, a carton of cigarettes $140. The main source of the imports is an Air France flight that arrives every Friday from Bangkok with 45 tons of cargo. Vietnamese who live abroad but still have relatives back home send a steady stream of packages loaded with food, clothing or medicine that can be quickly sold on the black market.

During the war, Saigon became hooked on the inflow of U.S. dollars, and now the city is broke. More than 25% of the 3 million residents have no job. Says one high official: "Saigon needs $200 million a year to survive. The money should come from Hanoi, but this year Hanoi sent only $100 million and suggested we find the balance wherever we could."

To attract needed dollars, the government is resorting to vintage capitalist incentives. Saigonese with dollar accounts abroad who repatriate their wealth are rewarded with access to duty-free stores that sell imported goods. Citizens who receive dollars from relatives overseas can exchange them for Vietnamese dong at a premium rate. Businesses that make products for international trade are allowed to receive or spend dollars and gold freely. Explains one government adviser: "We don't care where the dollars come from as long as they are used to import raw materials and create new jobs." Saigon is also welcoming investment from Western nations. In partnership with Viet Nam's Ministry of Health, the French chemical firm Rhone-Poulenc has invested $500,000 in a factory where 120 Saigonese produce vitamin C, aspirin and cough syrup.

Saigon factory workers are being paid more than their counterparts in Hanoi, in hopes that this edge will boost productivity. Says Le Van Ban, manager of a cooperative that makes knives and razors: "In this city, the best bonus you can give is money."

Incentives are sorely needed. Viet Nam's economic growth rate is under 2%. The exodus of "boat people" refugees left severe labor shortages. Factories are falling apart. All homes and businesses forgo electricity one day each week so that more oil will be available for the war in neighboring Kampuchea. A year ago, the gasoline ration was three liters a month; now it is four liters every three months. The Soviet Union contributes about $5 million a day in economic assistance, but its value is limited. Explains a Vietnamese economist: "You can't buy American technology or Canadian wheat with rubles." Some of Moscow's aid benefits mostly the U.S.S.R. One Saigon factory tailored 500,000 pairs of blue jeans for the Soviets. Unaware of what jeans cost, the Vietnamese agreed to be paid a mere 50-c- per pair.

As conditions continue to deteriorate, the spirit of defiance in Saigon grows. The Saigonese may not be able to shape Viet Nam's economic development to their liking, but they are far enough away from Hanoi to be able to chart their own path. The broken remnants of the city's old bourgeoisie often gather at dusk along the Saigon River's Bach Dang Quay to watch the unloading of rusty freighters and talk business. They have endured, and they still hope some day to prosper once again. sb

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