1.

Before 1945
2. Period 1945-1975
3. Period 1976-1985
4. Doi Moi period: from 1986 to present

NPH-2
Ø Period under Chinese rule (179 BCE-938)
Ø Autonomous feudal period (938-1858)
Ø French Colonial period (1858-1945)

Before the mid-19th century, Vietnam's economy had

traditionally consisted of agrarian production and small-
scaled handicraft industries.
It was almost closed with negligible volume of foreign trade,
and most of the time displayed a village-oriented autarky.
NPH-3
ØHarsh colonial policy of Northern feudal dynasties
ØPolicy of assimilation and migration towards Vietnamese and
Southern people
qMigrating from the North to the South, spreading Northern cultural ideas
to the native Vietnamese
ØPreserving the Vietnamese language is a way to preserve the
Vietnamese race and culture to fight assimilation

NPH-4
Ø Many dynasties paid attention to agricultural development
q Unearthing wasteland
q Irrigation system development
Ø A majority of collected taxes and fees by the feudalist central
governments in Vietnam's history were used for unproductive
reasons, mostly warfare preparation, kings' residential palaces, and
aristocratic class luxury goods
q Rarely useful spending was documented for instance dyke building to
prevent cropland flood, frequently occurring in the Red River Delta causing
famine and starvation of farmers

NPH-5
Ø Taxes were heavy financial burden that ordinary people had to
accept.
q In narrative by historians, tax reduction is always the best thing a king
could do to his people, and that is only done a few years after his
coronation, then short-lived.
Ø Taxpayers, mostly proletarians, were greatly exploited by aristocrats
and kings through various kinds of tax and fees to maintain military
forces for the powerful feudalist bloodlines.

NPH-6
Ø Lê Thánh Tông (1442–1497) proved himself one of the most
talented feudalist leaders in the entire history of Vietnam.
q He implemented a set of measures which had been devised to encourage
farmers to actively improve both farming techniques, and to exploit unused
lands for cultivation, expanding farm lands further to jungles in the rural
areas
q He paid substantial attentions and made incessant efforts to encourage
trade activities, to significantly improve road and river transportation, to
establish many new markets as well as new ports along major rivers and at
important coastal areas

NPH-7
Ø Colonial exploitation policy
q In the North: mining, mechanical engineering, processing industry
q In the South: agriculture, agricultural product processing
Ø Building a relatively complete infrastructure system for trading
activities
q The railroads, highways, harbours, bridges, canals, and other public works
built by the French were almost all started under Doumer, whose aim was a
rapid and systematic exploitation of Indochina's potential wealth for the
benefit of France
Ø Vietnam was to become a source of raw materials and a market
for tariff-protected goods produced by French industries.

NPH-8
Ø The exploitation of natural resources for direct export was the chief
purpose of all French investments, with rice, coal, rare minerals, and
later also rubber as the main products.
q Because the aim of all investments was not the systematic economic
development of the colony but the attainment of immediate high returns
for investors, only a small fraction of the profits was reinvested.
q Whatever economic progress Vietnam made under the French after 1900
benefited only the French and the small class of wealthy Vietnamese
created by the colonial regime

NPH-9
ØFunding for the colonial government came by means of taxes on
locals and the French government established a quasi-monopoly on
the trade of opium, salt and rice alcohol.
q The trade of those three products formed about 44% of the colonial
government's budget in 1920 but declined to 20% by 1930 as the colony
began to economically diversify.
Ø Colonial government also extensively and extractively imposed
direct taxes: poll tax, field tax, etc

NPH-10
Period 1945-1954
Ø To foster production, build and develop the resistance economy
Ø Rural economy and agricultural production have a special position
in this period.
q In the liberated areas, the actual production in 1954 reached nearly 3
million tons, an increase of 13.7% compared to 1946
Ø Agriculture has made crucial contributions in solving hunger in
1945, 1946.

NPH-11
Period 1945-1954
Ø Fighting against ignorance is considered one of the top priorities
q From 1946 to 1954, 10.5 million people escaped from illiteracy.
Ø The government encourages the expansion of trade, allowing
goods to flow freely.
q Decree of the President dated 22/09/1945 on the abolition of French
monopolies
q Decree of the Ministry of National Economy dated 19/09/1945 on the
abolition of all restrictions on the circulation of life essential goods such as
wood, paper, food, etc

NPH-12
Period 1955-1975
Ø Land reform 1953-1956: redistributing land to peasants, abolishing
feudal landlord class
q In the first stage, the reform achieved positive results, strongly boosting
the people's morale, making them actively support the resistance war
against the French.
q However, in the later period, from mid-1955, the implementation of
reforms on a large scale caused many losses, especially the violence caused
by class and individual hatred, which made the landlords the object on
which the poor vent their anger.

NPH-13
Period 1955-1975
Ø Since 1958, the collectivization movement has been promoted: the
means of production such as land, cattle, and ploughing are collectively
owned.
q By the end of 1960, about 85.8% of farmers had joined the cooperative, by 1975 it
was 93.1%.
Ø From 1964-1975: arable land was expanded, but agricultural productivity
decreased sharply, from 243 kg/person in 1964 to 194 kg/person in 1975.
q The US escalated the bombing of the North
q Tens of thousands of young men enlisted, causing a massive decline in the
agricultural labor force

NPH-14
Period 1955-1975
Ø The State advocates the development of state-owned industry.
q Private factories were gradually phased out. By 1964, only state-owned
enterprises remained
Ø Prioritized the development of heavy industry: electricity,
metallurgy, chemicals and minerals.
Ø Due to the lack of investment in light industry and agriculture, the
economy fell into shortage of consumer goods.

NPH-15
Period 1955-1975
Ø The economy was heavily depended on foreign aid because tax
revenues were not enough to finance budget spending
q About 60% of state budget expenditure is financed by economic aid from
the socialist bloc (USSR and China).
q In total, over this period of 20 years, the socialist countries have donated a
total amount of 2.36 million tons of goods.

NPH-16
Period 1955-1975
Ø Education achieved significant progress
q On average per ten thousand people, in 1955 there were 949 people
going to school, in 1975 there were 2,769 people, 2.9 times higher.
Ø Expanded healthcare system
q In the North: from 57 hospitals, 17 infirmaries in 1955 to 442 hospitals and
645 infirmaries in 1975

NPH-17
Ø From 1976 to 1979: process of unifying the country and the
economy into an integrated whole in accordance with the central
planning principles
Ø From 1980 to 1985: experiments on readjustments of economic
policies oriented toward trade liberalization

NPH-18
Ø The economic model which had been applied in Northern Vietnam
from the 1950s and based on a centrally planned economy, though
having gone through decades of war with many alterations
undertaken, but still bore a number of major specific traits as follow:
q The State determined the direction of all important economic activities in
the whole country through a system of production plans and goods
distribution based on strict regulations on pricing, interest rate.
q The market mechanism operated only in small business and household
economy, that is to say in a part of the agricultural, handicraft, consumer
good retail sectors. The majority of capital goods used for production were
not permitted to be sold or bought on the market but were distributed
according to a planned distributing system under State control.

NPH-19
Ø Economy is heavily based on public
ownership, including state-owned and
collective economies
Ø The State directly intervenes in all
activities of the economy using direct
distribution and subsidization
Ø Commodity-money relations are only
superficial

NPH-20
Ø When there is no free market and no free exchange, the value of
goods and products of labor in general cannot be measured
directly.
Ø Since values cannot be accurately measured, they could be/should
be determined and regulated by the State.
Ø Finally, almost the entire national economic plan is a plan of in-kind
balances: how many tons of grain, how many tons of cement, how
many millions of meters of fabric, etc.
Ø In the same vein, money in centrally planned economy is not
purely money.
q Each coin must be accompanied by permissions for the
purchase of an amount of goods corresponding to it (planned
quotas, stamps, vouchers, referrals, etc.)

NPH-21
Ø Socialist large-scale production based on 3
revolutions:
q Revolution of production relations
ü Rehabilitate all non-socialist sectors
and integrate into two basic economic
sectors, state-owned and collective.
q Scientific and technical revolution
ü Retool large production facilities with
modern engineering, mechanization,
electrification, etc. to ensure that the
large socialist production unit achieves
higher productivity
q Cultural and ideological revolution

NPH-22
q The State monopolized foreign trade. Due to historical circumstances, almost all
the trade relations of Vietnam were essentially made with the (former) Soviet
Union and East-European countries through the governmental treaties.
§ Foreign trade companies under the control of the State would implement these trade
treaties. The profit-and-loss account of foreign trade was entirely covered by the State
budget.
q The finance of the State was is closely linked with that of state-owned enterprises.
§ The State undertook to cover the losses incurred by state-owned enterprises by means of
subsidies and the latter, if they operate at a profit, would have to deliver it to the State
budget.
§ The State still subsidized all productive activities through the selling at low prices of raw and
other materials, machinery and equipment that it had imported with aid funds and credit
loans.
§ For that reason budgetary deficits and foreign debts would have increased along with the
country's development of production.

NPH-23
Ø Such economic policies aimed at quickly carrying out industrialization
and, at the same time effecting social policies whose aim was to provide
for the vital necessities of the population and to overcome the heavy
aftermath left by the war.
Ø However, the economic policy as such did not create incentives for
businesses and individuals. There was no room for private individuals'
creativeness and business dynamism in such economic institutions.
Ø The reduction of foreign aid in 1979-1980 (which constituted a
considerable receipt to the State budget) revealed clearly the weak
points and the out-mode practice of existing economic institutions and
demanded new suitable solutions.

NPH-24
Ø In agriculture was widely applied the contractual quota system to
every farmer's household which had been already piloted by a
number of agricultural cooperatives.
Ø In industry, the State authorized the State-owned enterprises to
freely operate beyond the assignments of the State plan.

NPH-25
Ø Going along with production liberalization, the State maintained
monopoly in only a limited number of goods, gave more freedom
to the circulation and exchange of commodities and proceeded
with two major readjustments of prices (one in October 1981 and
another in October 1985) with the aim of narrowing the gap
between the State-fixed prices and free market ones.
Ø In foreign trade, more and more companies operating at locality
and branch level were put the list of those entitled to directly export
and import goods.

NPH-26
Ø However those readjustments which were not made in the context
of an comprehensive reform of all the mechanism in charge of
operating the whole economy, failed to bring about the expected
results.
q The State continued maintaining as in former times its administrative
management and its subsidization scheme toward State-owned businesses
while it paid very little heed to economic efficiency and ensured no stability
for the macroeconomic environment

NPH-27
 1980 1985
Indicators 1976
Planned Actual Actual/Planned Planned Actual Actual/Planned
(%) (%)
Coal (million tons) 5.70 10.0 5.3 53 9 5.4 60
Electricity (billion kWh) 3.06 5.0 3.7 74 6 5.2 86
Cement ( million tons) 0.74 2.0 0.6 30 2 1.4 70
Iron and steel (million 0.06 0.3 0.06 30 0.2 0.05 25
tons)
Fabric ( million m) 218 450 175.3 39 400 367.1 92
Chemical fertilizers 0.44 1.3 0.31 23 0.4 0.52 130
(million tons)
Paper (thousand tons) 75.0 130 46.8 36 100 69.5 70

NPH-28
Year GDP growth Inflation
(%) (%)
1976 16.8 21.9
1977 3.7 18.6
1978 0.7 20.9
1979 0.6 19.4
1980 -2.9 25.2
1981 3.5 69.6
1982 8.1 95.4
1983 6.5 49.5
1984 7.9 64.9
1985 6.0 91.6

NPH-29
NPH-30
NPH-31
NPH-32
NPH-33
Ø 6th National Congress of the CPV held in December 1986 mapped out the following:
q Confirming the long-term development of the multi-sector economy.
§ This would mean the elimination of all the former discrimination against an equal footing for the
private economy in a healthy competitive environment.
q Confirming the important role played by market mechanism in the boosting of the commodity
production.
q Renovating the economic structure by allocating the available resources toward three main
objectives: development of agriculture, promotion of consumer goods production, forceful
increase in exports of goods and services and expansion of external economic relations.
q Stabilizing the socio-economic environment, by means of achieving the following targets:
reduction of the inflation rate, budgetary deficits and improvement of people's living standard.
q Putting into implementation an open-door policy in the relations with foreign partners.

NPH-34
Ø Vietnam has engaged in making reforms in the context of being isolated both
politically and economically.
Ø The economic support from outside to the reform process has proven to be
small.
q Aid and credit of the East European and former Soviet Union countries were cut off since
these countries began their own 'perestroika’ (reform)
q The international financial institutions like WB, IMF, ADB had not been providing assistance
to Vietnamese reforms except consultation.
q Aid based on bilateral governmental agreement had been mostly orientated to social
purposes.
Ø The economic blockade and embargo against Vietnam and the involvement
of Vietnam in various political and military conflicts, have compelled Vietnam to
consume many resources which should have been used for its economic
growth and development.

NPH-35
Ø The needs for economic reforms have arisen from the economic
area itself but not as a consequence of political upheavals.
Ø The switch-over from war time to peace-time has given rise to
many explosions in demand for necessaries and therefrom has
required that obstacles in terms of economic institutions should be
removed.
Ø The reality has “thawed out" the dogmatic theories and was
making pressure to shape a new economic system of more suitable
theories and concepts.

NPH-36
Ø In Vietnam, Doi Moi did not mean switch-over from an old model
to another existing one taken from another country, but it
constitutes a real process in which the elements of the old model
are to be wiped out and replaced by new elements more suited to
Vietnam's circumstances.
q This kind of slow reform process seems more psychologically appropriate
for the whole population and it could ensure a durable social stabilization.

NPH-37
Ø Implementing diversification of ownership to mobilize resources for
investment and development
Ø The State promulgates a legal system to create a framework for the operation
of all economic sectors: the Law on Limited Liability Company, the Law on
Private Enterprises, the Law on Cooperatives…
Ø Promulgating a system of policies to reform the state economic sector
(contracting, selling, leasing...); reforming the collective economic sector,
encouraging the private sector and the foreign-invested sector
Ø In the multi-sector economy, the state economy is determined to play the
leading role

NPH-38
Ø Eliminating the central planning mechanism of bureaucracy and subsidies
Ø Forming a market mechanism with state management and socialistic
orientation
Ø Renovating the state's economic management tools and policies
q Improving planning
q Eliminating subsidies, liberalizing prices, restoring commodity-money relations
q Renovating of financial - monetary policy
Ø Creating and gradually forming synchronously market factors: market for
goods and services, labor market, capital market, etc
Ø Improving the State's economic management capacity and efficiency

NPH-39
Ø Implement the policy of opening up, diversifying and multilateralizing foreign
economic activities
Ø Foreign Trade Reform
q Abolish the principle that the state monopolizes foreign trade
q Allow all economic sectors to participate in import and export activities
q Reform of exchange rate policy

Ø Create favorable conditions to attract foreign investment (especially FDI)

Ø Actively integrate into the international economy

NPH-40
Ø High and stable economic growth
Ø Positive economic structural transformation
Ø Inflation under control
Ø Deeply integrated into the global economy
Ø Significant increase in the standard of living

NPH-41
NPH-42
NPH-43