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IE Banglanam: Vietnam

After a brief break during which I visited 3 more countries I am back with the long-awaited recap on our Vietnam experience. As I mentioned in my previous blog, Vietnam felt like a different world after Bangladesh. A country so close, with similar natural resources was decades ahead in terms of development. One reason may be that there are half as many people living on double the land mass as compared to Bangladesh, but as we soon came to learn - centralized ruling may also have something to do with it. Yes, westerners may cringe at this bold statement, but read on before you blame my communist upbringing.  My favorite meeting – which will come as a surprise to all of my travel buddies – was with the Thu Thiem Investment and Construction Authority (ICA) – a Ho Chi Minh City government unit charged with building the Thu Thiem New Urban Area – yes that says “Area.” While that was our only meeting in Vietnamese and the quality of the discussion was the poorest, despite excellent translation, the presentation of this government initiative blew my mind. In 2001, the Thu Thiem ICA was charged with planning and constructing “The New Center of Ho Chi Minh City” – across the Saigon River from the current downtown area – modeled after the Pudong area in Shanghai. Currently, 95% of former Thu Thiem property users have surrendered their homes to the government and the city has grown so much that the need for this new office and living space is apparent. Why is it that, if land prices are lower in Thu Thiem and construction sites are scarce everywhere else no private developers have taken advantage of this opportunity? One reason is that the government owns all the land in Vietnam and therefore is the most advantageous developer. In addition, bridges across the river, good infrastructure, and the presence of support services increase the desirability of the area. Lastly, private investors strive to maximize return on investment, while the government has other objectives: “We don’t care about the increasing property prices and potential higher profits if we wait, we just want to build a city and have it built as soon as possible,” the Thu Thiem ICA representative said. A few of us caught ourselves discussing the benefits of central planning in significantly underdeveloped countries. The decentralized democracy of Bangladesh was glaringly inefficient in moving development initiatives forward – uncoordinated construction projects in Dhaka inched amidst standstill traffic, active slums and just-built high-risers. Ho Chi Minh City, on the other hand, boasted a Rodeo-Drive look-alike surrounded by manicured foliage and Vietnamese boutiques, salons and restaurants. Herein lies the paradox – our meetings in the two countries gave the exact opposite impression. Bangladeshi officials carried rich and insightful discussions on development, system weaknesses and market failures in fluent English, while anyone even loosely associated with the Vietnamese government barely skimmed the surface of our topics of interest, reiterating parts of their presentations during the brief Q&A sessions. My personal takeaway - while the democracy and underdeveloped state of Bangladesh have fostered thought, the centralized political power in Vietnam has enabled action.