May proved to be a bad month for dictatorships in East Asia. The arrest of hundreds of political activists by the ruling State Law and Order Restoration Council in Myanmar in a preemptive strike against the democratic opposition caused a wave of outrage in various Asian capitals. The arrests, in the words of Japanese Prime Minister Ryutaro Hashimoto, "run counter to the democratization process."
Meanwhile, much concern was given to the escalation of daily terrorism in Cambodia. Harassment and abuses against political opposition, reportedly committed by Second Prime Minister Hun Sen's soldiers and police, are rampant in both the cities and countryside. French MP and former Secretary of State for Human Rights Claude Malhuret summed up the situation in a recent interview with RFI: "The Cambodian People's Party (CPP), who lost the election, has power in all areas--army, administration and at the local level. Today, the opposition is muzzled, there are more and more attacks against the press, Phnom Penh has become a major drug trafficking center in South East Asia. The Western donor countries must be concerned. If they are not yet aware, they will have to face the problem very soon." Malhuret noted that the dismissal of former finance minister Sam Rainsy from parliament and the "rigged trial" of former foreign minister Norodom Sirivudh's have been maneuvers for a final takeover by the communists.
Further north, Beijing lost a gigantic foreign project. The U.S. Export-Import Bank decided against providing loans or guarantees to American companies to build China's giant Three Gorges Dam out of concerns for environmental damages (flooding, threat to endangered species, etc.) and human rights abuses, including the use of forced labor and the displacement of millions of people.
In Vietnam, more curbs were introduced on the Internet, and travel has been increasingly restricted prior to the 8th Congress of the Vietnamese Communist Party.
Politburo member Dao Duy Tung was reported by multiple sources from Vietnam to have slipped into a coma soon after the Vietnamese Communist Party Central Committee's 10th Plenum. At this April meeting, Mr. Tung's right hand man, Nguyen Ha Phan, was expelled from the party and his own power base was mostly destroyed. While some believe that the illness could be the work of Mr. Tung's opponents, others doubt whether his illness is real. Historically, it has been quite common for communist political leaders in Asia to fake serious illnesses to make themselves innocuous to the enemy and avoid further attacks.
Following the expulsion of Nguyen Ha Phan from the Vietnamese Communist Party and politburo, a systematic purge of Dao Duy Tung's supporters was observed at various provincial Party commands, including Saigon. The heads of the party commands in Saigon and Hanoi were replaced, though, for different reasons. Truong Tan Sang and Le Xuan Tung, the two new Party bosses for Saigon and Hanoi respectively, are seen by foreign observers as reform-minded officials. Often cited are Mr. Sang's contribution (as Chairman of the Ho Chi Minh City People's Committee) to economic development in Saigon and Mr. Tung's years of assistance to the originator of "doi moi," former General-Secretary Nguyen Van Linh.
Interviews with retired high-ranking cadres familiar with Mr. Sang and Mr. Tung, however, suggest these conclusions by outsiders are doubtful at best. Most major business contracts signed with foreign companies in Saigon and Hanoi have been directed by the Ministry of Planning and Investment which, in turn, is under direct control of the Prime Minister office. People's Committees at the city level are left with minor deals, mostly involving the sale of land. Regardless of their former positions and background, neither Truong Tan Sang nor Le Xuan Tung was allowed into Vo Van Kiet's circle of "technocrats." In fact, Truong Tan Sang has had a long history of siding with Vo Van Kiet's opponents. As for educational history, Mr. Sang and Mr. Tung, by several accounts, were quickly conferred the degrees and credentials applicable for their new offices. Sarcasm filled the street cafes when newly installed Saigon party boss Truong Tan Sang issued his very first order to replace "incompetent" officials who are "professionally weak."
But public servants are not the only officials with reason to be nervous. The 11th Plenum of the Party Central Committee was held behind closed doors from June 3-10 to settle the power struggle before the 8th Party Congress. >From the same source that leaked news of the 10th Plenum, delegates at the 11th Plenum decided to go ahead with the Party Congress, scheduled for June 28 to July 3, without a settlement on the top leadership positions. The fight for the top three chairs will be dragged onto the floor of the Congress.
Without warning, the Hanoi government has stopped issuing entry visas to Vietnam for any purpose and will continue the ban till the end of the 8th Party Congress in July. Businessmen with offices inside the country and other prearranged appointments for June had no place to turn but their helpless embassies. At the same time, foreigners and expatriates currently inside Vietnam began to wonder about their exit if the political situation gets more tense before and right after the Congress.
Meanwhile, the Quan Doi Nhan Dan (People's Army) and Nhan Dan (People) newspapers posted editorials and reports warning against foreigners as often as three times a week. President and former general Le Duc Anh called on the communist country to arm itself and fight off foreign investors who intend to control Vietnam economically. "We should look beyond the short-term economic benefit," he said, "to the risk of losing our independence, damaging the country's long-term and basic good and leaving invisible dangers for future generations." The same general, in March, warned that all foreigners, "even backpackers," were potential spies trying to subvert the regime.
To prove it means business, the government already has launched several orders aimed at direct harassment of foreigners. A number of foreign business offices have been raided without warning. Most noticeable was the office of Hongkong-based Peregrine Investment Holdings, searched on May 30th for four hours. A number of Vietnamese expatriates have recently been questioned or arrested for "tax problems." Various night clubs where foreigners frequent were raided by the police. At one site in Saigon, female customers were indiscriminately arrested for "prostitution." A number of indignant foreigners were beaten for resisting the sweeps. All foreigners are now kept longer at airports before domestic flights for "identification and the purpose of checking travel."
The government also issued new regulations regarding Internet accounts and their usage. No individual will be allowed personal access to the information superhighway. Each company will be held responsible for the contents of the messages it sends and receives. The Ministry of Interior, in charge of internal security, was officially given the task of monitoring all information exchange.
Given this atmosphere of intense paranoia and outburst of new regulations, the international business community is having second thoughts about Hanoi's advertisement of political stability and legal protections as strong points for investing in Vietnam. Ron Moreau of Newsweek Magazine summarized the sentiment among investors at a recent panel discussion in Bangkok: "Vietnam's communist party has always been and remains a reluctant reformer and is opening up the system only wide enough, ratcheting it a little bit open, to overcome pressing economic problems. But the bottom line is always the same--for the party to remain firmly in control of all aspects of Vietnamese life--especially politics. This I think combined with the frustration many business people feel as a result of the red tape, corruption, regulation changes, lack of law, and glacial pace of doing business in Vietnam, has brought a sea change I think in the attitudes of foreign investors. Sympathy and enthusiasm are giving way to doubt. Is the hassle of investing in Vietnam worth it, when other Asian countries have a more investor-friendly business climate, many investors must be asking?"
Despite the political turmoil, the government continued to pump out rosy forecasts for 1996 and 1997. Unfortunately, the numbers for foreign and domestic consumption contradict each other too frequently.
On the same week the deputy minister of Planning and Investment announced that licensed foreign direct investment reached $1.15 billion for the first quarter, a rise of 27% from the year-ago period, the state-run Vietnamese-language Youth magazine reported that the government expected foreign direct investment to fall throughout 1996. International investors estimate a drop of 50% in licensed investment for the first quarter of 1996. And less than a quarter of the $19 billion licensed so far has actually been realized.
Meanwhile in another sign of foreign investor dissatisfaction, Mandarin Oriental International, a major player in the hotel industry of Southeast and East Asia confirmed recent reports of slow business and room oversupply by backing out of a major hotel deal. Current hotel room occupation rates on average run below 30% of capacity.