Transcript: Overseas Remittances in Vietnam’s Reform Era

00:00:02

Voiceover

This is the Nordic Asia podcast.

00:00:09

Linh Phuong Le

Welcome to the Nordic Asia podcast, a collaboration sharing expertise on Asia across the Nordic region. My name is Linh Phuong Le, a doctoral researcher at the Institute for Media Studies KU Leuven University in Belgium. Today, we have the pleasure of having Hoang Minh Vu, a diplomatic historian of the 20th century Vietnam and Asia Pacific. Hoang is an emerging scholar on Vietnamese modern history, someone whose work I greatly admire. He's currently a visiting professor in history at Fulbright University in Vietnam. So Hoang, thank you so much for joining us today.

00:00:54

Hoang Minh Vu

Oh, thank you Linh and I have some good news. I'm no longer a visiting professor. I'm actually just a faculty member now at Fulbright University.

00:01:01

Linh Phuong Le

Wow, congratulations! Great news. So please tell us what would you like to share with the listeners of the Nordic Asia podcast in this session?

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00:01:13

Hoang Minh Vu

Yes, so I'd like to share some of the research that I have done recently. First of all, it was for a panel at the most recent Association of Asian Studies Conference, which is held in Seattle. But of course, because of the pandemic situation, I attended via Zoom. And it's about the importance of remittances and other sources of income from abroad that mostly came from the overseas Vietnamese community and how important that was for Vietnam's economic renaissance in the late 1980s and early 1990s, the period that is known today as Doi Moi, or renaissance/renewal.

00:01:57

Linh Phuong Le

The reform period, yes. Wow. I am intrigued and I am sure whoever interested in the Vietnamese modern history are too. So before we talk about the importance of the remittance from the Vietnamese overseas society during the 80s and 90s in Vietnam, can you please tell us a little bit about what has sparked your interest in this specific topic? And also, why did you choose this specific period?

00:02:25

Hoang Minh Vu

Yeah, so I started working on this period ever since I was an undergraduate at the London School of Economics, and then I continued working on it in my Ph.D., and I mainly worked on diplomatic relations issues surrounding the third Indochina War, which is the war between Vietnam, Cambodia and China in the 1980s and 90s and all the way leading up to the end of that war and Vietnam's opening up to the world. And so this is the period that I'm already working in. And one thing that I noticed while I was doing this diplomatic history is that there's a very interesting confluence of diplomatic issues and economic issues and particularly having to do with the Vietnamese diaspora, that's really not well understood, that's not been written about in great detail. And then I ran across some very interesting documents in the Vietnamese archives as part of my dissertation work that never made it into the dissertation. So when some colleagues wanted to do a panel on, I guess it was like the third, fourth or the third way in the Vietnam conflict and basically non-state actors that were not on either side that did not simply easily fit on the communist anti-communist side. Essentially, narratives that complicate the actors that complicate the narrative of the Cold War is just between two sides that hate each other. I just thought that the story of the Vietnamese diaspora, many of whom left Vietnam as refugees but still contributed quite a lot to the renewal of communist Vietnam, essentially. I thought that this story would fit in very well with this theme.

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00:04:18

Linh Phuong Le:

Wow. I can see that you have a very keen interest because you have started it during your Ph.D. and you continue it now, so it has been at least five, six years. So Hoang, we know that the Vietnamese diaspora at some point in the Vietnamese history, as you mentioned yourself, was a relatively sensitive topic to speak about because of the historical relation relating to this specific group. So why is it important for us to know now about the contribution of these diaspora to the country economies during the 80s in the 90s?

Hoang Minh Vu:

Well, in the past decade, and especially in the past few years, there's been a huge flourishing of Vietnamese-American literature, and people would have Ocean Vuong, you know, Viet Thanh Nguyen, and these things have become household names. And it's not just Vietnamese-Americans, but also just the Vietnamese overseas community in many Western countries have been writing about their experiences. I mean, they've been writing since the 1980s and 1990s, but in the most recent years, some of the best writing came out, and some of the most popularly recognized writing came out. And of course, it came out in a certain political context in the West with new flows of refugees from the Middle East and was recently also from Syria and Afghanistan. So these are issues that once again attract a lot of people's attention. So these are communities that have also been hurting for a long time whose status as refugees from Vietnam had not been recognized by the Vietnamese government. So that tension has never been completely resolved. Actually, I was approached by a major Vietnamese newspaper for writing this research out as a major newspaper piece for the anniversary of what the communist Vietnamese called the liberation of Saigon, or what the refugees called the fall of Saigon. And just try to write a story that I think it helps us understand that it was not so black and white that it wasn't just winners and losers. Of course, there was conflict between the refugees and the government of Vietnam. But there's also this other aspect where the contributions which people don't know so much about were so critical to the building of a successful Vietnamese economy today. And I think in some ways that scholars haven't properly explored. So in my work, I actually I started with some very eye-opening statistics that I found in some of the documents in Vietnam. And the biggest statistic to start this off is that between 1989 and 1992, I believe, yeah, just in a three year period, Ho Chi Minh City by itself imported seventy seven point two tons of gold. I mean, that's crazy. That's that's a very significant amount of gold however you count it, and around 80 percent of the total gold in the whole country was in Ho Chi Minh City, and all of the gold was going through state companies, state jewelry companies, essentially. And I was going through these old company documents to figure out, number one, why they were bringing so much gold back. Where was this gold coming from? And what was the impact of all this gold? Because in this period, it was also when Vietnam was experiencing hyperinflation in the late 1980s. So between 1987 to 1990, which is the first part of Doi Moi. People think of Doi Moi as economic renewal, and it's like things before that were very bad, but once the 1986 happens – well, everything is rosy, everything is beautiful, you know, we open up the economy and then we get prosperity. But it's not so simple, right?

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00:08:15

Linh Phuong Le:

Just one second for our listeners who are not familiar with the concept of Doi Moi or the reformation of the country, this happened in 1985/86, and this is the moment when Vietnam opened itself to foreign trade. Is that correct?

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00:08:34

Hoang Minh Vu:

Well, it's often seen that way, but in effect it is a more bottom up series of reforms in Vietnam that actually started around 1981/82, starting from what the famous economic historian Duc Phong called Pha Rao or ‘breaking down fences’. So essentially, the fences that the government built up and the socialist economy built up. Basically, some people were really suffering economically, and there's just people from below, essentially it is reforms from below that eventually the central government took heed of and these small local experiments actually convinced the national government, which was having a lot of economic problems at the time, in the 1980s, to make reforms, and then when it comes to opening up to the world, it’s not so much that Vietnam wasn't open to the world as much as Vietnam was the target of sanctions essentially from the Western world because of its involvement in Cambodia, because of its army's occupation of Cambodia, which had been done initially in self-defence, but also to get rid of the Khmer Rouge regime, which killed up to two million Cambodians. And the United States, which was working with China at the time, were actually supporting the organization, the coalition government of Democratic Kampuchea that was militarily controlled by the Khmer Rouge. It was a Cold War conflict where the US, I believe, was was on the wrong side of it. But because Vietnam was fighting with these Khmer Rouge, it faced international sanctions. I guess what I'm trying to say is it's not so much Vietnam opening up to the world as much as that in 1991, when that conflict was finished, the world again invested in Vietnam or removed those sanctions on Vietnam.

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00:10:26

Linh Phuong Le:

Yeah, I think this reform is such an important moment in the Vietnamese modern history. So please, can you tell us a little bit more about the contribution of the Vietnamese diaspora during this period?

Hoang Minh Vu:

Yeah. So as I was saying, people today think, when they look back at the reforms, there's a lot of amnesia. There's this idea. And the textbooks try to do it in a very simplistic way, which just like before 1986, we made some economic mistakes. There were some issues and so we were poor. And then after 1986, after the reforms, everything is rosy and great. But as anyone who studies economic reforms know, it's not ever that simple or that easy. Otherwise, every country would just do it. In fact, in the early days of reforms, actually, Vietnam was in a lot of crises. Number one, there were structural crises from before, but number two, its biggest ally and supporter, the Soviet Union was in deep economic trouble, and Vietnam had been really reliant on Soviet aid. So in the late 1980s and early 1990s, when that dried up, Vietnam was in big economic trouble and when it was still facing sanctions from the West. So those first few years of reforms had extremely high inflation. We had by World Bank figures around 350 to 400 percent inflation between 1986 and 1988. But somehow, by 1989, inflation went down to 70 percent by 1990 to 42 percent, and by 1996, it goes down to below 10 percent, which is officially Vietnam was out of hyperinflation. And if you know anything about inflation, you'll know that it's really hard. There’s an economist, Karl Otto Pöhl, who says inflation is like toothpaste. Once you get it out of the tube of toothpaste, is really hard to put it back in. So the question is how Vietnam was able to rein in this hyperinflation and what's the connection with all this gold that was coming in at the time? So the answer that I found is that in times of inflation, when money is losing its value so much, one thing that could help stabilize things is if you can bring in either foreign exchange to defend your currency or, failing that, bring in gold. And how was Vietnam able to bring in gold? Well, a lot of this gold came in as remittances from overseas because it was harder sometimes to send foreign currency in. And a lot of currency was also sent in clandestine ways, in illegal ways. So a lot of the time being able to send gold back is actually the best way to support your relatives back home. And that's what a lot of the overseas Vietnamese communities did, and these government companies turned this gold into jewelry that they could then export and try to get foreign currency forex. There's also some forex that came back as remittances, and that helps stabilize the currency a little bit. That helps stabilize the macro economy and provided the foundations for the success of the Vietnamese economy that we see today.

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00:13:43

Linh Phuong Le:

Wow. I am amazed at the findings of your research because we usually speak of this period as such a difficult period, but we think that it's Vietnam, it’s the people who were inside Vietnam that made peace, but we don't often put a lot of thought on the overseas community. So this is really an eye opening piece of research for me. Just to ask you another question. Why do you think the government at that point got their inspiration to try to draw in the money and the gold from these Diaspora communities?

Hoang Minh Vu:

Well, I also look at the longer relationship between how the government essentially viewed remittances in these years, and there was a lot of change. So when significant numbers of Vietnamese started leaving Vietnam in 1975 and then up to 1978/79 and then throughout the 1980s, in the beginning, actually the government was quite concerned. First of all, about the people leaving because many of the people that left earliest were the people most disaffected with the government. And when they tried to send money back, they're also really, really worried for a few reasons. Number one, Vietnam was still very poor country, and if they had relatives that had gone to the U.S. and are sending all this money back and they allow it, then the neighbors will see that, Oh, the U.S. is such a great place. We should all leave, you know, we should all try to take to the sea on these rickety boats and potentially die. And that would look pretty bad for the Vietnamese government. I mean, it did. That’s a refugee crisis. So that first they tried to limit the amounts that each household could get. There's a law that was passed in 1982 where each family in the two major cities could only get six thousand dong every three months as remittances. And if you live outside the two major cities, then you can only get four thousand five hundred dong in remittance value. So they limit those numbers because they don't want to increase, I guess, instability within the country and make people lose faith in the country almost, and upset social order. The other thing is, they're really worried that this money goes to those families that tend to be most disaffected by the government, and they could use this money in a way that undermines the government. So they also make sure that if you have family that's on some sort of blacklist, then actually you can't get any money at all. Those were kind of the early policies that they vacillate a lot as the country obviously needs to bring in foreign currency. And also they realize that a lot of foreign currency comes in anyways through illegal channels. And it might be just easier to allow money to come in and be able to tax it, be able to get some control over it than to ban it altogether and then lose total control over it. So policy kept changing a lot in these years, and these are always issues that they had to wrestle with. But when Doi Moi happened, it became really clear that they needed a lot of foreign currency, and they really need that to buy capital goods in order to jumpstart the factories, even consumer goods, in order to provide basic necessities for the people. So I think towards the late 1980s and 90s and also as the relationship with the overseas community improved somewhat and the political climate within Vietnam also changed a lot as part of Doi Moi that also allowed for freer flows. But there was always a very significant illegal flow of foreign currency into Vietnam, and I also found some fascinating documents about that. Like there were detailed records of all the people that were convicted of illegal money movement into Vietnam, including how many of those people were actually communist cadres who got disciplined. There are all of these accounts from Vietnamese-Americans that were talking to the government, and they were telling them, you know, Oh, you know, even though you think that there's only eight, 8-9, nine million USD coming back each year, actually, we moved $300-$350 million back each year, and this is how we do it. We do it by a fast boats. We do it using the latest technology at the time, which is using fax machines and all these very 80s technology in order to move money back. So it is pretty cool to learn about this stuff.

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00:18:24

Linh Phuong Le

Absolutely. Yeah. First of all, about the fact of how much money and gold has been moved back to Vietnam and how were they moved back to Vietnam, both through official and unofficial channels. Now Hoang, I am going to push a little forward towards some speculations because I know that you are a historian, not the economist, who can forecast economic growth, but I'm going to push it anyway. I know and I am sure that we will learn a lot from modern history. So what are the lessons that the current government right now can learn from this transformation of the national economy in your research, especially in the context of the COVID-19, where Vietnam is now struggling to cope with maintaining role while keeping the number of cases low and what role is the Diaspora playing at the moment?

Hoang Minh Vu

Well, let me start that with the lessons that they have actually written down. So in 2004, there was a law that was passed on dealing with the overseas community where they acknowledged that the Vietnamese community overseas has a large economic potential and has many connections internationally. And they also have many skills and a high level of education, and they are a great source of human capital that can help Vietnam. And the other thing they acknowledge in writing in this law is that many of the policies of the government up until that point had not always treated them well, had not tried to take good advantage of this great resource and that this a very concerted policy to try to get them to come back, to welcome them back to Vietnam, to make things easier for them to move money and to have remittances and to help family in Vietnam. So since 2004, that's been the lessons that they had learned at the time had basically been written down in this law and acknowledging also the mistakes of the previous years. And I think that strategy has continued until today that there's a very welcoming message out to overseas Vietnamese that you know, you're very much welcome back in Vietnam and there's certain laws that make it easier if you can prove Vietnamese ancestry to get a Vietnamese passport and so on. In terms of the current pandemic, I would say I haven't actually seen too much of that potential actually being used. For example, the vaccines that Vietnam got are either through COVAX or through direct donations from the United States or Germany or Japan were more government to government relations. I haven't seen any significant movement in the overseas Vietnamese communities in any of these countries to say, Oh, you know, to pressure the governments who like donate vaccines in Vietnam or things like that. So it's not something I would say that is so direct. But I would say that the pandemic has certainly interrupted some of the connections some of the movement of people back and forth between Vietnam and the overseas communities. And in some ways, it has interrupted some of the existing flows of human capital of financial capital as well. And I think we do need to study it systematically after all of this is over to even appreciate the impact of these disruptions. Certainly, the impact in terms of student exchanges, in terms of movement of Vietnamese students to study overseas is something that's already very apparent. But I think in terms of these existing efforts since 2004, you know, to to reach out to the overseas Vietnamese community, I'm not really sure exactly how these communities have been disrupted. I think it's a really wonderful topic of study for a project.

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00:22:34

Linh Phuong Le

Absolutely. I know the Diaspora contributions in Vietnam is rarely recognized, let alone studied at such depth, like you have done so wonderfully. So thank you so much Hoang, for your insight for research on such an important event in the Vietnamese history. And I especially has to emphasize this that I really appreciate your effort in doing this research in order to reconcile the country, because this is a very important factor that we absolutely need to look at in present day Vietnam. For those who are interested in Hoang's work, which also covers the broader periphery of Southeast Asia, Hoang has recently published a chapter in an edited book; Political Violence in Southeast Asia since 1945, and his chapter, titled; Those who Learned from History can Still Repeat it; the Challenges of Learning from the Cambodian Genocide. And you can find the link to the book in the description of this podcast. Thank you Hoang again for today. My name is Linh Phuong Le, thank you for joining the Nordic Asia podcast, showcasing Nordic collaboration in studying Asia. Thank you.

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00:23:53

Voiceover

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