Australian Outlook

Time has Changed Vietnam

16 Nov 2016
By Richard Broinowski
Photo Credit: AIIA NSW

In October, AIIA NSW completed a study tour of Vietnam. The journey took participants to a variety of locations between Hanoi and Ho Chi Minh City. Valuable insights into the Vietnamese perspective were gained on issues such as the country’s strategic outlook, concerns over climate change and Vietnam’s economic transition.

The 10-person AIIA study tour to Vietnam visited Hanoi, Ninh Binh, Dien Bien Phu, Hue, Hoi Anh, Dalat and Ho Chi Minh City. In Hanoi, we were briefed by the Australian Ambassador, Craig Chittick, and through his good offices had discussions at the Diplomatic Academy of Vietnam, the Ho Chi Minh National Political Academy, the Centre for Strategic Studies and International Development, the Institute for Defence International Relations and the Central Institute for Economic Management.

We were given accounts of recent national achievements, notably on economic performance. From seasonal grain shortages and poverty in the years immediately following national unity in 1975, Vietnam now has a per capita income for its 91 million people of more than US$2,000 (A$2,648). It is the second largest exporter of rice and coffee in the world, the largest of cashew nuts and black pepper, and the third largest oil producer in Southeast Asia. It is a major exporter of tea, rubber and fish.

State-owned enterprises are now more efficient and the private sector is expanding under the stimulus of accelerating foreign investment, particularly from Japan, Korea, Taiwan and the European Union. All this has been achieved in spite of still comparatively low labour productivity, especially in agriculture. Migration continues from rural areas to the cities. A rapidly expanding tourism industry will improve Vietnam’s trade balance, provided the pace of investment does not overreach the pace of world economic growth.

Officials briefed us on the country’s defence strategy, which is firmly oriented toward cooperation with neighbours and the peaceful resolution of territorial problems. At the same time, Vietnam is rapidly modernising its armed forces. While phasing out its obsolescent mainstay MiG-21 fighters, it is acquiring more modern Sukhoi fighters and fighter bombers. Its navy and coast guard have around 70 vessels varying from 70 to 2,900 tonnes, and five Kilo-class submarines, with a sixth about to be delivered. The army, equipped mainly with modern Russian weapons, is among the 10 largest in the world. While Russia supplies 90 per cent of Vietnam’s military equipment and is its primary strategic partner, Vietnam nevertheless courts partnerships elsewhere, including from Japan, India and the United States.

The Vietnamese assert that without a US presence, the South China Sea would be a Chinese lake. Hence the need for a counterweight. Vietnam welcomed the normalisation of defence relations with the US in 1995, the lifting of the arms sales ban in December 2006 by the Bush administration, the advent of regular high-level talks on security and strategic issues since 2008, and President Obama’s visit to Vietnam in 2016. Also joint naval exercises: in 2016, Vietnam conducted its latest naval exercise with United States vessels, following which two US warships called at Cam Ranh Bay, the first time since the end of the Vietnam War. I note in passing that Cam Ranh is no longer only a naval base, but like Subic Bay in the Philippines, is also a commercial port and ship-building centre. During our visit, the local Sung Thu Shipyard Corporation announced cooperation with Russia’s Vostochnaya Verf shipyard to build cruise ships.

Vietnam performs a multilateral strategic balancing act. In October 2016 Executive Secretary of the Central Committee Secretariat, Dinh The Huynh, visited Washington and talked to US Secretary of State John Kerry. The same month he visited Beijing and was reported in Vietnam News on 21 October as “treasuring the friendly neighbourly ties and comprehensive strategic partnership with China”. Vietnam recently invited President Duterte of the Philippines to Hanoi for talks on common strategic interests. It remains an enthusiastic participant in ASEAN Defence Ministers’ meetings and other regional forums.

But several of our interlocutors described China’s South China Sea claims as a brake on closer bilateral relations. One likened Vietnam to Su Wukong, the Monkey King in the Chinese fable Journey to the West, in which the monkey’s headband gets tightened when it gets out of line. China has five armies, two in charge of containing Vietnam. The Chinese diaspora in Vietnam, Laos and Cambodia is China’s “hidden power”. China diligently cultivates its relations with Laos and Cambodia in an effort to contain Vietnam. Meanwhile, Vietnam occupies 21 islands in the South China Sea and won’t give them up, so Sino-Vietnamese tensions will persist.

Other concerns expressed to us in Hanoi included the Trans-Pacific Partnership (TPP), climate change and nuclear power. The Vietnamese are anxious to see the TPP ratified. They see it as an essential trade multiplier and economic stimulant for the region and are worried that it will not get off the ground. Climate change is of major concern, especially its implications for flooding in the Mekong and Red River food bowls, and along the east coast, where Dutch assistance and expertise are being deployed to build dykes in low-lying areas.

On the likelihood of Vietnam adopting nuclear power, we received mixed signals. By 2030 the country will need three times the generating capacity it has now. It has a nuclear cooperation agreement with Russia and plans to construct four 1000-megawatt reactors, two from Russia and two from Japan (or South Korea). But our Army interlocutors were worried about the possibility of nuclear fallout blanketing parts of Vietnam from Chinese reactors planned along Vietnam’s northern border, and the Diplomatic Academy said that any reactors still need the approval of the National Assembly, which may not be forthcoming. No reactors may be built in Vietnam at all. Meanwhile, the country is planning extensive wind and solar generation.

In Ho Chi Minh City, we met with the Consul-General, Karen Lanyon and her senior staff including Erin Leggat and senior Austrade representative Yvonne Chan. We toured the RMIT Saigon South Campus with Executive Director of Operations, Dr Matthew Sukumaran. We met with around 50 members of the Australian Chamber of Commerce, where I gave a talk contrasting Vietnam from 1983 to 1985 when I had been Ambassador, with its vastly changed circumstances today. I did not predict then the depth and extent of Australian involvement in education, infrastructure and trade—Australian companies and banks were remarkably reluctant to come on board. I did predict however that by 2030 the country would grow in status to become a valued member of ASEAN and that its economic growth and per capita income would pass that of Thailand. This may yet occur.

Richard Broinowski is the president of AIIA NSW and a frequent commentator on public affairs on radio and television. He served as Australian Ambassador to the Socialist Republic of Vietnam between 1983 and 1985.

This article is published under a Creative Commons License and may be republished with attribution.