Giving Compass' Take:

• In this interview with David Dollar, Madame Pham Chi Lan discusses how Vietnam's market revolution took place and improved the lives of Vietnamese people. 

• What lessons from Vietnam are applicable elsewhere? How can funders help developing countries to reach their economic goals? 

• Read about achieving economic growth and climate security together. 

DOLLAR: So you've been involved with Vietnam's reform, known as Doi Moi, for 30 years or more. If you were going to pick out two or three key reforms that have underpinned Vietnam success what would you say?

LAN: I think firstly the development of the market in Vietnam, when Vietnam decided to open the market within the country and to the world. The opening up of the market within Vietnam to get free goods circulating among different provinces in Vietnam is a big help for Vietnamese producers at all levels and traders. At the same time, Vietnam removed the dual pricing system, revoked the state and SOE [state-owned enterprise} monopolies in most markets for goods and services, and opened Vietnam to the world markets. That is the first and most important reform.

The second one is to give back the right to do business to the people of Vietnam, for the development of a private sector. Even this was rather late. Only by 1999 we could have the first enterprise law which really provided freedom to run business or private sector in Vietnam. The third one is to develop legal and regulatory framework for the market system in Vietnam. To replace the state-run business in Vietnam of the past.

DOLLAR: Well that's a very clear answer. Opening up space for private initiative, developing the regulations for the private sector, freeing up prices. As you say, 30 years ago there were a lot of dual prices in Vietnam. I remember on my first trip in 1989 the official exchange rate was very, very low, but then the black market rate was ten times higher. So you had this huge difference in the price of a dollar between going to the bank or going around the street, and you saw that for a lot of prices. Now one of the reforms you mentioned there was opening up to foreign trade and investment. So let's talk a little bit more about the role of foreign trade and investment in Vietnam's reform.

LAN: The foreign trade and investment in Vietnam could help Vietnam firstly by getting access to necessary resources for the country. Vietnam was in shortage of almost everything after the war and with the isolation to the world and the trade embargo imposed on Vietnam. So, getting access to necessary resources was so important for the country, including the right to do business and exportimport trade to help Vietnam. To export something, to gain necessary hard currency, to import, there were so many things needed for the country. Help improving the skill of running business, the skill…even the managing of the economy at the macro level. Also, it helped Vietnam to develop the capabilities to explore the untapped resources necessary and available in this country.

Secondly, the liberalization of foreign trade and investment helped Vietnamese enterprises and industries to recover rapidly and develop a future where they could work more with foreign partners. The third area that the foreign trade and investment could help Vietnam in its reform process. Vietnam can conduct learning by doing in relations with the foreigners to learn on our own how a market system can really operate. It could help to have more skill and tools to operate, especially at the macro level.

And it could help also to enhance the confidence and consensus on the reform and the market system in the country and to improve the business environment and the market mechanisms. And last but not least, the foreign trade and investment helped Vietnam to normalize our relations with various countries in the world and international organizations like the World Bank, IMF [International Monetary Fund], ADB [Asian Development Bank], etc. – so that Vietnam could have better and more diversified relations with them.