Trade rules where guns once blazed

HANOI, VIETNAM - Destitute and war-ravaged a generation ago, Vietnam today boasts a fast-growing economy and a youthful workforce that has helped propel two-thirds of its 85 million people out of poverty since 1986.

The United States, which restored relations with Vietnam in 1995, 20 years after the "American War," is one of Vietnam's largest trading partners and investors. In the process, Vietnam has become one of Asia's economic stars, surpassing neighboring Thailand by some measures.

"The Vietnamese are extremely hard-working and positive about their future," said Marianne Smallwood, 26, a University of Minnesota business school graduate whose father fled South Vietnam as the Communist north advanced on Saigon. She is one of several Minnesotans with a Vietnam connection I met on a March visit to the country.

Marianne Smallwood works for ChildFund in Hanoi, which advises the government and promotes sustainable development and public health. "Vietnam is headed toward a very exciting time, considering where it was 20 years ago."

In March, I toured Saigon, the Mekong Delta and Hanoi with Marianne's parents, Paul and Anita Smallwood of Maple Grove; and Bob and Joan Carlson of St. Paul.

Paul Smallwood, born Nguyen Thai Ha in Saigon in 1960, immigrated to the United States in 1974. He is an engineer and CEO of FlowSense, an engineering-services company that focuses on energy-retrofits of buildings and equipment. Smallwood plans to expand to Vietnam.

Carlson, 66, retired CEO of Reell Manufacturing of St. Paul, was an Army captain in the Mekong Delta, south of Saigon, in 1967-68. At first, he wasn't sure he wanted to return to the scene of tremendous destruction and despair.

"I marvel at their spirit, energy and charm," Carlson said as he hiked around a small lake in downtown Hanoi. "Considering what they have been through, it is amazing to find them this way."

A country, not a war

In one sense, the Vietnam War of 1965-75, or what the Vietnamese call the "American War," was the final act in the country's century-long revolution against occupiers from China, Japan, France and America.

"They say here that 'We are no longer a war, we are a country,'" said Pham Sinh Huy, Vietnam director of Save the Children. "'We are friend to everyone. And we want to be a player.'"

Pham, a Minnesotan who spent six years as an executive at Minneapolis-based American Refugee Committee, moved his wife and two children to Hanoi last year.

"The first economic priority was production," said Pham Van Hai, an environmental scientist who is director of Hanoi's Center for Environmental Science and Sustainable Development. "But we have to invest some of the benefit of economic development growth in environmental protection."

Vietnam boasts a literacy rate of 97 percent. The communist government is pragmatic. It barely taxes small business, but is getting serious about taxing affluent individuals and corporations up to 40 percent of their income, less investment credits, in part to finance improved electrical systems, roads, transit, water treatment and waste-management.

Vietnam was the subject of an April special report in The Economist magazine, which concluded, "Private firms are bounding ahead despite bureaucracy, corruption, poor regulation, a feeble legal system and creaking infrastructure."

A country once on the brink of famine has turned itself into one of the region's biggest exporters of rice and other farm products.

Vietnam, a fast-growing vacation spot and destination for multinationals, also is a member of the World Trade Organization.

Vietnam fully expects to be an affluent, high-tech country that meets Western environmental standards by 2020. That will be a stretch.

Still, everything gets recycled in Vietnam and sold for another round of industrial production.

Ask the folks at Lemna, a Minneapolis-based company that's building a waste-management plant that will turn 1,200 tons daily of Saigon organic garbage into fertilizer, which will substitute for imported fertilizer.

While the communist government has opened up the economy, it tolerates little political dissent.

The Economist opined: "Like South Korea, Taiwan and now China, Vietnam has shown it is possible to escape poverty under an authoritarian system. Political freedom is a right in itself and it does not need to be justified by arguing that it has economic advantages. But it does have them."

Investment in the country is outstripping its ability to provide safe streets and clean water.

"At the risk of putting the country's rapid growth on hold for a temporary period," she said, "I think it would be beneficial to strengthen the human and structural infrastructure so that it can adequately support the growing investment."

Neal St. Anthony • 612-673-7144 • nstanthony@startribune.com