Vietnam: Communist or Capitalist?

The next and final stop on our Sloan Southeast Asia Study Tour was Vietnam (see my first 2 posts here and here). We visited Ho Chi Minh city (or Saigon as preferred by the locals) and Hanoi to get a comprehensive experience of both the south and the north of the country. After spending majority of the week visiting companies in both cities, we drove out to the beautiful Ha Long Bay area for a couple nights of stay as an extraordinary ending to an already perfect trip.

Prior to leaving for the trip, we had spent quite a bit of time learning about the history, political system, and economic state of Vietnam. Although I knew that the country is politically communist (more socialist) but economically capitalist going in, I was still impressed by the amount of entrepreneurship and economic activity happening in the country without the constraints of a traditional communist state.  Growing up in a post-soviet country with a newly democratic society, I had subconsciously expected to see lot more of those constraints impacting the lives of Vietnamese people but was surprised to find the opposite.

Traces of Communism

While walking through the streets and trying to get a glimpse of the local life, I was able to definitely recognize some traces of the impact that communism has on the daily lives of Vietnamese citizens. This started from the iconic red flag with a golden “hammer and sickle” everywhere (especially on government buildings with french architecture and beautifully manicured lawns) and the police truck driving through the narrow streets filled with street vendors and markets talking through a loud speaker, to the parks turning into a central location for the entire city to come together and celebrate life in the evenings and the weekends.

Flourishing of Capitalism

Although governed by a single communist party, their economic push towards capitalism was extremely evident. The country has been privatizing their state-owned-enterprises (SOEs) through an equity based privatization system since 2000, and a close to 60% of the SOEs are already privately owned today. It opened up its economy to trade and foreign direct investments (FDIs) in 2007 which has continued to increase since. With over 20% of its budget dedicated to education, the country is also investing heavily in the STEM to help towards future technological development.

At the blue collar level, I could see the impacts of these changes when walking through the streets which is bustling with so much economic activity. At the white collar level, the impacts are even more evident. Our chats with the founders of and visits to the offices of VNG Media, Saigon Innovation Hub, and BKHUP coworking space (where we also got a chance to meet the US Ambassador to Vietnam, Ted Osius) proved that there is an exponentially growing informal environment for entrepreneurship and tech innovation in the country.

I was also impressed by the infrastructure development in the cities. Even on our drive towards the Ha Long Bay area, we got a chance to see the countryside of Vietnam in the north. I was surprised to see so much development considering it’s a developing nation. This left me with many questions to ponder. With this ever flourishing economic capitalism and weak institutional governance, how will Vietnam continue on the right trajectory without being taken over by corruption? With so many similarities between the economic setup of Vietnam and Mongolia and yet Vietnam performing much better, what can I learn more about Vietnam in the future that I can take to Mongolian development?

Khatantuul Filer

Khatantuul Zorig Filer (Khat) is a 1st year MBA student at MIT Sloan School of Management where she spends most of her time working on the initial phase of her mobile app startup, learning about entrepreneurship and innovation, and finding ways to improve our lives, to advance our minds and bodies, and to make an impact in the world through emerging technologies (AI, Machine Learning, AR, VR, and IoT). Before coming to Sloan, she was a Technology Consultant at Accenture where she had variety of experiences in product development, business development, strategy, marketing, sales, finance, operations, analytics and project management for the defense sector. She studied Math and Statistics at University of Virginia. She was born and raised in Mongolia and hopes to help develop the country in the long term.

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