A. Executive summary
Vietnam has not yet shown any signs of political liberalization towards democratic transition. Decisions made by the Communist Party of Vietnam (CPV) politburo have the power of law. While tolerance for criticism from within the party has grown, the same cannot be said for opposition from outside the state-party apparatus.
The party-state apparatus is present all over the country with a three-pronged government and administrative infrastructure. Despite decentralization efforts, the political decision process takes place in Hanoi, and this centralization combined with high levels of corruption has led to the only partial implementation of many policies.
Democratic elections do not exist at the national or the local level. The most recent “elections” to the National Assembly, or Quoc Hoi (in May 2002), however, did bring forth a broader spectrum of delegates than in earlier polls.
The government has reacted harshly to protests by ethnic minorities in recent years but has also announced greater openness and improved opportunities for political participation for ethnic and religious actors.
Separation of powers does not exist. The judiciary branch is clearly subject to the CPV. As a result of Vietnam’s ongoing integration on the international stage, Vietnam’s legal system has undergone some reforms. In general, however, the legal system in Vietnam still does not conform to the international legal system.
The government made some modest progress in its fight against corruption, but corruption is still rampant.
Guaranteeing civil rights has improved overall, but it still exists only partially. Infringement on basic human and civil rights is evident, particularly concerning ethnic minorities.
Of all ex-communist and communist states in the Asian-Pacific area, Vietnam has expressed the clearest commitment to a market economy. Although the reform policies have taken hold in many areas and have resulted in one of the highest GDP growth rates in the region and a desirable foreign direct investment (FDI) rate, some questions regarding the reorganization of state-owned enterprises (SOEs), the granting of loans and the role of the state in development remain unanswered.
While the government has recognized the need for targeted interventions in favor of disadvantaged groups, such as ethnic minority groups, and made some progress in the fight against absolute poverty, income disparity and social exclusion have increased slightly.
The first turning point for Vietnam's development towards a market-based economy was the implementation of a new enterprise law in 2000, which simplified the process of founding a new business by easing application procedures.
Both the new legal conditions and changed political climate have triggered a boom in the founding of new private businesses. At the same time, however, state policies and laws still favor SOEs over the private sector.
Vietnam is currently negotiating to join the World Trade Organization and has completed nine negotiation rounds with the WTO accession working party. The most important achievement so far was the conclusion of bilateral negotiations with the European Union.
Cooperation with international donor organizations is generally trouble-free and it has resulted in considerable cooperative contributions to reform, such as programs to fight poverty and environmental protection programs.
Vietnam's foreign donors have praised Vietnam for its "steady and large" economic growth, its macroeconomic stability and its high investment rate. However, they also called on Vietnam to strengthen the governance of state-owned commercial banks and to pay further attention to ensuring that the benefits of growth are shared across all social and economic groups.
Although Vietnam has experienced considerable achievements in improving the macroeconomic framework conditions, it has also become evident that institutional and administrative structures are lagging behind.
There is no tradition of civil society in a Western sense. Vietnam’s civil society organizations perceive themselves as working in partnership with the Vietnamese government and not outside of and independent from the state-party system.
Political participation by women is greater in Vietnam than in any other country in Asia.
B. History and characteristics of transformation
Following on the heels of the failed attempts at reform that took place between 1979 and 1985, the CPV’s sixth Party Congress initiated the doi moi economic reform program. In doing so, the party conceded the failure of the centrally planned economy and smoothed the way for a market economy. However, economic reforms have been accompanied by only moderate structural changes to the political system and they continue to lack even rudimentary efforts at democratization. There has been no indication of any move towards a multi-party system yet, and the political reform focus has been largely on improving the rule of law, particularly on reducing the high levels of corruption. In terms of corruption, Vietnam ranks above only above Bangladesh, Indonesia and India in Asia. While the government has scored a number of high-profile successes towards eliminating graft, these efforts are almost exclusively tied to its efforts to attract investment and do not display a desire for grassroots political reform. Thus, the following description is limited to the economic sector.
Initial reform measures, such as the significant reduction of internal trade barriers and steps toward liberalizing foreign trade, remained largely ineffective due to galloping inflation rates in the triple digits. It was only with the reduction of the role of agricultural cooperatives, the complete abolition of planned-economy structures in conjunction with the floating of prices for most goods and services and additional trade liberalization measures in 1988 and 1989 that the desired results began to be seen. These results included a reduction of the annual inflation rate to 2.7 % per year (1998-2003), and Vietnam’s rise to its position as the third-largest rice exporter in the world and the world’s second-largest exporter of coffee beans.
Thus, in only a few years, Vietnam abolished the neo-Stalinist centrally planned economy that had been introduced in North Vietnam in 1954 and was imposed on the former South Vietnam after the country’s reunification in 1975. Although central economic sectors continue to be dominated by SOEs, they also operate based on capitalist principles and compete with a growing number of private enterprises. Doi moi has not been without setbacks, which were intensified by external factors. The major economic crisis of 1985, characterized by hyperinflation, famine and the boat people phenomenon, was followed by the collapse of the Soviet Union in 1990, which meant the loss of Vietnam’s most important trading partner and donor of development and military assistance.
Thanks to a successful foreign policy focused on diversifying international relationships, the Vietnamese government was better able to absorb the economic and political aftermath of international structural changes than were other communist regimes. In the 1990s, Vietnam quintupled its international relationships and joined the most important regional and global international organizations. In 1995, Vietnam scored a triple diplomatic success by joining ASEAN, establishing official relations with the United States and signing a framework cooperation agreement with the European Union, which contains a human rights clause and covers economic and trade relations,
Because of accession to ASEAN, Vietnam became a member of the ASEAN Free Trade Area (AFTA). However, full accession to the AFTA regime is only expected to take place in 2006, and so-called sensitive product groups will be excluded from the free trade provisions until 2013. Particularly important to the success of economic development were the normalization of relations with the United States, the lifting of the trade embargo in 1994 and the concluding of a bilateral trade agreement in 2001. A framework cooperation agreement was signed between the European Commission and Vietnam in 1995. It seems likely that Vietnam will achieve its target of joining the World Trade Organization (WTO) by the end of 2005 as planned.
Since 1990, Vietnam has experienced continual improvement in its economic fundamentals, joining the ranks of countries with mid-range incomes. In addition, economic development slowed only temporarily because of the Asian financial crisis. Despite the CPV’s serious commitment to reform and continual implementation of new reform measures, including the improvement of investment conditions and reduction of corruption and graft, not all transformation goals were reached. Furthermore, the operation of market-economy institutions is limited significantly by the vast number of regulations and laws that still exist. /OR/ Furthermore, the operation of market-economy institutions is limited significantly by the vast number of processes related to the informal economy that still exist.
Vietnam has not yet shown any signs of political liberalization towards democratic transition. The right of the CPV to guide the state and society has been codified in the constitution since 1980. While decisions made by the CPV politburo used to have the power of law, today this is only the case to a great extent, but not absolutely. The situation is complex. The politburo can no longer make all decisions. However, it does make decisions on issues of special importance. Day-to-day exercise of CPV power is delegated to the Secretariat. In any case, the politburo's decisions cannot be implemented without the participation of the government and the National Assembly; and it is here that the bureaucracy takes over and that much distortion or interference takes place.
While tolerance of criticism from within the party has grown, the same cannot be said for opposition from outside the state-party apparatus. Individual calls for a multi-party system are regularly and categorically rejected by the political elite. In February 2005, Thich Quang Do, the deputy head of the banned Unified Buddhist Church of Vietnam (UBCV), appealed to the Vietnamese authorities and intellectuals to build up democracy and pluralism in the country.
In the first few years after reunification, both the ideological conflict that continued to exist between the northern and southern parts of the country and the minority problem, in particular the existence of ethnic enclaves in southern Vietnam compromised the nationwide enforcement of a state monopoly on the use of force. Since the dissolution of Front unifie pour la libération des races opprimées (FULRO) in the late 1980s, there have been hardly any problems with state identity.
Some territorial exceptions exist, as some South Vietnamese do not want to accept that the seat of the state monopoly on the use of force is in Hanoi, even three decades after reunification. All citizens have the same rights, but discrimination against individual ethnic minorities is evident. The central government has a long history of suppressing the Montagnard hill tribes who live in the central highlands. They comprise a dozen or so tribes ethnically and culturally distinct from lowland Vietnamese, and following their introduction to the faith by missionaries who accompanied U.S. soldiers in Vietnam, they often became practicing Protestants. Violence flared up again in April 2004, when some 10,000 Montagnards took to the streets of Daklak and Gia Lai to protest against government repression of their religion and the confiscation of their land. In the ensuing response by government forces, human-rights groups claim that ten people were killed and more than a hundred injured. The official count is two deaths and a handful wounded (Asia Intelligence, Political & Strategic Review, August 2004).
The political process is completely secularized, although Confucian teachings continue to be important as a framing principle of governmental organization. These teachings, however, are not part of a religious dogma in opposition to the state; rather, they are a basis for exercising power that enhances the communist ideology philosophically and traditionally and that lends legitimacy to the exercise of authority. The party-state apparatus is present all over the country with a three-pronged government and administrative infrastructure. Despite decentralization efforts, the political decision process takes place in Hanoi, and this centralization combined with high levels of corruption has led to the only partial implementation of many policies, particularly in the southern part of the country and in Ho Chi Minh City in particular.
1.2. Political participation
Democratic elections do not exist at the national or the local level. The most recent “elections” to the National Assembly (Quoc Hoi) in May 2002, however, did bring forth a broader spectrum of delegates (e.g., independent candidates, representatives of ethnic minorities and religious groups, entrepreneurs, etc.) than in earlier elections. Three members of the National Assembly are self-nominated and do not belong to the Vietnam Fatherland Front, and 51 seats were won by non-party candidates. Holding 17.3% of seats in the National Assembly, ethnic minorities enjoy a level of political representation higher than their actual percentage of the total population (14%). The National Assembly has 498 members who are elected to five-year terms. The assembly meets twice per year and has de jure control over legislation, planning and appointments, but in reality, it mostly just confirms the decisions made by party organs.
The National Assembly has, however, gradually been emancipating itself from party leaders since 1996. Opposition parties are forbidden, as is the founding of independent unions and associations. Civic groups can operate under certain conditions as long as they do not explicitly question the CPV’s monopoly on authority.
The government has reacted harshly to protests by ethnic minorities in recent years, but it also announced greater openness and improved opportunities for political participation for ethnic and religious actors. The first expressions of this policy include the representation of some of these actors from the moderate civic spectrum in the new National Assembly and the fact that the CPV’s general secretary is himself a member of an ethnic minority.
On the other hand, the persecution and prosecution of political dissidents continued unabated during the first half of the assessment period. In February 2005 however, following pressure from international human rights groups, two high-profile dissidents, Roman Catholic priest Thadeus Nguyen Van Ly, 58, and physician Nguyen Dan Que, 63, were released from jail along with 8,323 other prisoners in a Lunar New Year amnesty. Both have been outspoken advocates of religious freedom and democracy and have openly criticized the government for its poor human rights record. It is nevertheless unclear whether the release can be seen as a first indication of the government’s greater willingness to tolerate political opposition.
In 2004, the U.S. State Department ranked Vietnam as one of the most repressive countries in the world for religious freedom. Only a handful of government-approved religions are allowed to operate in Vietnam, but several outlawed churches continue to exist. Nonetheless, the Catholic congregation has grown from less than 3 million before 1975 to somewhere between 7 million and 8 million at present - a process that has been tolerated by the state. This indicates that the issue of religious freedom in Vietnam is more complicated and less straightforward than reports by the State Department and others seem to suggest.
Public opinion exists in a basic form and has been finding an outlet in the last few years in increasingly critical press coverage, which as a whole is still subject to serious manipulation and interference by state and party leaders. During the assessment period, various so-called “cyber dissidents” were jailed for using the Internet to criticize the government.
1.3. Rule of law
Separation of powers does not exist. The judiciary branch is clearly subject to the CPV. Because of Vietnam’s ongoing integration on the international level, the legal system has undergone some reforms. In general, however, the legal system in Vietnam still does not conform to the standards of the international legal system. Provisions such as a law on investment in construction and a law on price shifting are lacking but are on the legislative agenda of the National Assembly. In addition, the legal system in Vietnam is not sufficiently transparent and lacks consistency, stability and efficient implementation.
During the assessment period, the government made some modest progress in its fight against corruption. With a score of 2.6 (the same as 2001), Vietnam is the second most corrupt state in Southeast Asia according to the Transparency International Corruption Perception Index.
On the basis of the existing legal system, some high-ranking party members and senior government have been removed from office, arrested and, in some cases, prosecuted and convicted in public trials. It seems, however, that the crackdown on corruption has been highly selective. The “private use” of offices and mandates, fostered by existing political, legal and procedural loopholes, is still possible despite intensified control within the party. According to the Party Central Committee's Commission for Inspection, of the 19,103 party members and 3,494 party organizations inspected in 2004, 73.2% and 56.9% respectively were found to have violated Party regulations through lack of responsibility and the abuse of power for personal benefit. These figures, however, are believed to be just the tip of the iceberg.
Among the measures announced by the government to reduce rampant corruption and graft is a draft anti-corruption bill, which, if it becomes law, will require state officials and employees to publish their assets and income. The effectiveness of the bill and related measures remain questionable in the absence of more specific, stronger and more consistently enforced anti-corruption policies and laws.
Guaranteeing civil rights has improved, overall, but still exists only partially. Violation of basic human and civil rights is evident, particularly concerning ethnic minorities. International human rights observers are not allowed into the country. Official tolerance for religious communities grew during the evaluation period, but only selectively. Although the Cao Dai sect was granted freedom of activity and assembly in 1999, the Protestant churches in the central highlands continue to be suppressed, and the United Buddhist Church of Vietnam is banned. The Catholic Church also is discriminated against by the state. Vietnam has Asia's second largest Catholic congregation after the Philippines, with as many as seven to eight million believers among its population of 80 million.
The right to freedom of religion, set down in the constitution of 1992, is limited. It is practically impossible to sue a state actor for human or civil rights violations unless the CPV wants to teach a political lesson by making an example of or reprimanding the responsible parties. According to human rights organizations, trials in Vietnamese courts are not conducted fairly. The accused cannot call or question any witnesses, and the defense attorney’s only option is to petition for mercy for his client.
1.4. Institutional stability
There are no democratic institutions in Vietnam. All central political institutions are embedded in the state party system, which was very stable during the assessment period and so far has not shown any potential for future democratization.
1.5. Political and social integration
In accordance with the constitution, the CPV continues to have a monopoly on the leadership of the state and society. The CPV has approximately 2.67 million members. All national associations and interest groups (unions, farmers’ unions, youth leagues, women’s unions and other organizations) are under the umbrella of the “Fatherland Front.”
Since the early 1990s, as a result of the economic transformation and the societal and socioeconomic changes associated with it, intermediary actors have been emerging, most of whom work exclusively on a local level and are tolerated by the state as long as their activities are in harmony with the framework set out by the CPV. Non-governmental organizations (NGOs), which are defined very broadly by the Vietnamese, are filling in gaps opened up by economic reforms. Due to limited state resources, problems relating to the environment, education, healthcare, employment and basic social care can no longer be dealt with and solved by the CPV and its mass organizations alone. Social engagement helps to close these gaps. In this respect, state and private actors are in a symbiotic relationship that is functionally marked. This developing network of self-organized groups and organizations does not yet fulfill the criteria of civic autonomy, but it could be a preliminary step in the emergence of a civic society.
The representation of international NGOs in Vietnam grew consistently during the assessment period, but their total number is still only 560 (at the end of 2004), according to the official Directory of International Non Governmental Organizations in Vietnam.
2. Market economy
Since the doi moi program was introduced in 1986, Vietnam has been slowly transforming into a market economy. Of all former and current communist states in the Asian-Pacific area, Vietnam has expressed the clearest commitment to a market economy. Although the reform policies have taken hold in many areas, questions regarding the reorganization of SOEs, the granting of loans and the role of the state in development remain unanswered. These reforms have resulted in, among other things, one of the highest GDP growth rates in the region (6.6% on average between 1999 and 2003) and a desirable FDI rate.
2.1. Level of socioeconomic development
Vietnam’s HDI has been improving steadily as a result of the economic reforms in place since the middle of the 1980s - from 0.583 in 1985 to 0.688 in 2000 and to 0.691 in 2002 (Human Development Report, HDR, 2004). This enabled Vietnam to maintain its medium development ranking of 112 out of 177 countries during the assessment period. The GDI value improved from 0.668 (1998) to 0.689 (2002), but it is still slightly lower than the HDI value. This indicates some but not a significant degree of gender disparity in basic human development. Overall, gender-related social exclusion decreased during the assessment period. The representation of women in leadership positions increased, particularly at low and middle levels, and in politics as well. Political participation by women is greater in Vietnam than in any other country in Asia. Vietnam ranks 19th in the world for number of parliamentary seats held by women (27.3%).
Vietnam ranks 41 of 95 countries in the 2004 Human Poverty Index report. During the period from 1990 to 2002, 17.7% of the population was living below $1 per day. On the one hand, the government has recognized the need for targeted interventions in favor of disadvantaged groups including ethnic minority groups. Among key national poverty reduction programs, the "Poor Communes with Extreme Difficulties in Mountainous and Remote Areas", known as Program 135, coordinated by the Committee for Ethnic Minorities and Mountainous Areas, directly targets the 1,000 poorest communes in remote and mountainous areas. On the other hand, despite the country's rapid economic growth and government's efforts to improve living standards, poverty is still very high and persistent among ethnic minorities, which constitute only 14% of the population but account for more than 30% of the poor. Geographical isolation and limited access to credit, to productive assets and to quality social services are the main causes for poverty among ethnic minorities.
Income disparity and social exclusion have slightly increased. The Gini coefficient changed from 35.7 (1998) to 36.1 (2002). While regional differences have to be taken into account, the regional Gini coefficients remained remarkably stable. The data suggest that interregional income differences have become more important than intraregional income differences.
2.2. Organization of the market and competition
The turning point for Vietnam's development towards a market-based economy was the implementation of the new Enterprise Law in 2000, which simplified the process of founding a new business by easing application procedures. In December of the same year, the National Assembly approved an amendment to the constitution granting the private sector the same status as Vietnam’s public sector. Party members are also allowed to engage in private business. Both the new legal conditions and a changed political climate have triggered a boom in the founding of new businesses. From 2000 to the end of February 2004, more than 88,000 newly established private enterprises were registered. From 2000 to 2003, the total amount of registered capital held by private companies was $10.1 billion. The year 2004 was a boom year for private sector expansion. Between January and October 2004, around 27,000 new enterprises were registered, with total capital of 53 trillion dong ($3.4 billion), up by around 24% in number and 25% in capital value compared with the totals recorded in the same period of the previous year. In 2004, the National Assembly passed a competition law, which will strengthen regulations covering business competition when it comes into effect in May 2005.
However, many obstacles to the development of the private sector remain. Discrimination in the implementation of state policies regarding credit, real estate and training result in the private sector and the public sector receiving different treatment. State monopolies are still common in the Vietnamese economy. While some forms of pricing have been liberalized, the state still sets many important prices, including the (foreign) exchange rate, interest rate and the prices of some goods. Some sectors of the economy are directed by the market, but many branches still depend on state plans (telecommunication, finance and banking, transportation, electricity and water supply).
The national currency, the dong, is not convertible. The rapidly proceeding international opening of the country that began in the late 1980s has gone hand in hand with growing trade liberalization. The following were key events in this process: joining ASEAN in 1995, joining APEC in 1998, the lifting of the U.S. trade embargo in 1994 and the concluding of a bilateral trade agreement with the United States in 2000 that gave Vietnam most favored nation status.
Vietnam is currently negotiating to join the World Trade Organization (WTO) and has completed nine negotiation rounds with the WTO accession working party. The most important achievement so far was the conclusion of bilateral negotiations with the European Union. As a result, the European Union has lifted all quota restrictions on imports of garments and textiles from Vietnam, even before the latter becomes a WTO member. However, important tasks still need to be completed before Vietnam can join the WTO, including the revision of at least 30 laws and ordinances. Vietnam also has to reach a number of bilateral agreements and is likely to face substantial difficulties in its negotiations with China, Japan and the United States.
As a member of ASEAN, Vietnam is obliged to join the ASEAN Free Trade Zone (AFTA). However, Vietnam has been granted a transitional period until 2006. By that time, it will have had to reduce all its import taxes to a range of 0% to 5% (“Sensitive product groups” will only be included in 2013). It appears unrealistic for the country to meet the deadline, however, because conservative actors continue to show protectionist tendencies due to most SOEs’ lack of international competitiveness. The relatively low average tariff rate of 16% covers high tariff and non-tariff customs barriers for key categories of goods. Thus, tariff rates for standard consumer goods can amount to anywhere from 60% to 200%, the latter being for motor vehicles. Non-tariff barriers mostly result from foreign-exchange restrictions, whereas import licenses have been abolished, with only a few exceptions such as motorcycles and cars. Despite impressive growth in exports — export proceeds rose by 10% year-on-year in 2002, 20.8% in 2003 and 28.9% in 2004, reaching nearly $26 billion – Vietnam’s trade regime is still considered to be largely inefficient. The government controls trade through a licensing system. Restrictions also include quotas, excise taxes, reference prices and direct import bans.
Since 1988, and particularly since 1992, Vietnam has moved to a diversified system in which state-owned, joint stock, joint venture and foreign banks provide services to a broader customer base. However, the four main state-owned commercial banks account for around 80% of all loans. Restructuring of the banking sector is proceeding slowly—mostly under pressure from the IMF—but it has not been able to keep pace with the market economy reforms. Bank lending is often treated as an arm of government policy. Banks are regularly directed to offer preferential interest rates and debt relief to farmers (Economist Intelligence Unit).
2.3. Currency and price stability
Inflation control has been recognized as an economic-policy goal. Shocked by the hyperinflation of the middle of the 1980s, the government has made fighting inflation its highest priority and has been able to keep the inflation rate under 10% since 1995. However, inflation reached 9% by the end of 2004 because of higher food prices and the impact of rising international commodity prices. Concerned about the rise in inflation and rapid expansion in net domestic credit, the government sharply raised the reserve requirement ratio for commercial banks in July 2004 to slow down lending.
Exchange rate policy primarily serves political purposes. Although the State Bank of Vietnam (SBV) expanded the dong’s exchange rate band by a fluctuation value of 0.25% in July 2002, the room for floating is still very narrow. The exchange rate is managed by heavy intervention from the SBV. This method is supposed to prevent the dong from weakening against the dollar, which would increase the dollar debts of SOEs. In January 2005, the IMF called on Vietnam to increase the flexibility of the system, but the SBV mounted a strong defense of its foreign exchange policy.
Public debt decreased from 69.4% of the GDP (2000) to 67.0% (2003) while total external dept fell from 41.6% to 32% of the GDP during the same period. The current debt service ratio of 6% (down from 7.5% in 2000) is manageable and is expected to fall to 5% by 2005. Vietnam's financial fundamentals are relatively strong in relation to comparable emerging markets.
2.4. Private property
The pace of privatization (the Vietnamese term is “equitization”) was rapid in 1999-2000, but it has slowed since then. While the number of state-owned enterprises (SOEs) has fallen from 12,000 in 1998 to below 4,000, most of the SOEs that have been privatized are small, and the most important large companies are still government controlled. The Economist Intelligence Unit (Country Profile Vietnam, 2003) estimates that almost 90% of current SOE assets will remain under government control.
Property rights and regulation of the acquisition of property are formally defined by law, but are not yet sufficiently protected from intervention by the state. According to the Heritage Foundation’s 2005 Index of Economic Freedom, interference in the legal process and the bribing of judges to serve particular interests are widespread. Contractual arrangements are backed by the force of law, but the legal system is complicated. Contractual disputes often involve a prolonged period of negotiation preceding any attempt to resolve the matter in court. In addition, because of the lack of faith in the Vietnamese legal system, many foreign investors include clauses in their contracts allowing disputes to be dealt with by the Singapore Court of Arbitration. The state owns all the land and grants land-use rights to farmers, businesses and homeowners.
2.5. Welfare regime
Largely because of improved coordination of state activities, NGOs and international actors involved in development, substantial progress was made in fighting poverty during the observation period, progress reflected in an increase in GDP per capita and improved HDI and Human Poverty Index ratings. At the Consultative Group meeting in December 2004, Vietnam’s foreign donors acknowledged the “pro-poor orientation of government investment”. Like other communist countries, Vietnam has established above average social networks and health care structures in comparison with other countries of a similar level of development. In addition, Vietnam has a pronounced tradition of education, which does not necessarily show in outstanding educational institutions, but in its comparatively high literacy rates.
Access to social, educational and health care institutions is, however, not available to all groups of the population equally. While gender-based discrimination is less common (woman have better access to higher education and public office than in any other Southeast Asian state), ethnic minorities and those living in isolated mountain regions are particularly disadvantaged. Economic reforms have led to, among other things, a commercialization of the health care system, resulting in a “two-class medical system”. In keeping with the communist ideal, Vietnamese society still has many very egalitarian characteristics in comparison to other Southeast Asian countries, but the introduction of new inequalities proceeded with increasing speed during the evaluation period. Access to public services, higher education, advancement mechanisms and public office is frequently dependent on ethnic, and increasingly, socioeconomic background. Mechanisms meant to prevent this (for instance, entrance exams for universities) have only a limited effect on balancing out social differences.
2.6. Economic performance