The Doi Moi Reforms

In 1986, it was concluded by a new group of more liberal socialist party leaders that reforms which consisted of six major economic policy changes (Doi Moi) could help Vietnam come out of its economic crisis. These six new policies were:

1

The decentralization of state economic management, which allowed state industries some local autonomy (Murray 1997:24).

2

The replacement of administrative measures by economic ones, including a market orientated monetary policy, which helped to control inflation (Murray 1997:24).

3

Adoption of an outward orientated policy in external economic relations; exchange rates and interest rates were aloud to respond to the market (Murray 1997:24-25).

4

Agricultural policies that allowed for long term land use rights and greater freedom to buy inputs and market products.

5

Reliance on the private sector as an engine of economic growth (Murray 1997:25).

6

Letting state and privately owned industries deal directly with the foreign market for both import and export purposes (Murray 1997:25).

These six new policy reforms led to drastic changes in Vietnam's economic foreign relations. These changes have also had good and bad results that are recognizable.

In rural Vietnam the effects of Doi Moi have been felt more drastically and positively. A farmer can now choose what crops he is going to grow, and he will decide this based on the availability, price, and demand of the seed (Nugent 1996:67). The farmer also now knows that the more crops he grows the more profit he will be able to keep for himself (Nugent 1996:67). The overall effect is that the farmer is now working for himself, and not for the state (Nugent 1996:67). Another arguable positive factor is the increasing rates of farmers buying mechanized equipment such as mechanized ploughs, and threshing machines that produce higher yields (Nugent 1996:70).

However, there are many negative aspects to Doi Moi as well, like higher taxes, and the extra cost it takes for the farmer to get his product to the market. Most farmers have been struck with high taxes on Vietnam's most valuable product, rice. It has been estimated by Faith Keenan of the Far Eastern Economic Review that Vietnamese rice farmers receive only 16% of their profit from harvest (1997). Considering farmers make up nearly 80% of Vietnam's population, this percentage is not acceptable and the average per capita income of only around 220 US dollars reflects this processing and transportation problem (Witter 1992:202). This particular problem has developed as a result of some privatizing of rice farming caused by Doi Moi.