Abstract
The number of the cities has been drastically increasing for the last three decades in Vietnam. The aftermath of industrialization and urbanization, especially during the Doimoi (Reform) which was initiated in 1986 with the goal of creating a “socialist-oriented market economy” in the country is largely responsible for this increase. However, the rapid change of the cities is due to not only economic development process but also the administrative decision of the government, which I call “administrative urbanization.” This paper first aims to explain the effort of the Vietnamese government in pushing urbanization in the country, especially after the Doimoi. Secondly, this paper argues that the rapid urbanization in the countries can be explained as the result of combining several economic theories, such as Marx-Lenin’s and their successors’ theories, Keynesianism, and the East Asian development model.
A brief history of urbanization in Vietnam after the World War II
1945-1954: The Indochina War
The Indochina War refers to the war between France and its own former colonies, including Vietnam, Laos, and Cambodia, from1945-1954. Ho Chi Minh read the Declaration of Independence, claiming that the Democratic Republic of Vietnam has been decolonized from the French in September 2, 1945. However, as the result of World War II, French troops came back and the Indochina War happened during 1945- 1954. The Dien Bien Phu event marked the failure of French in Indochina, leading to the adoption of the Genève Agreement in 1954, which divided the two countries into two parts: the North (Democratic Republic of Vietnam- DRV) and the South (Republic of Vietnam- RV). This division resulted in another war in the next 20 years in Vietnam: The Vietnam War.
There were a few urban cities in Vietnam at that time. Hanoi in the North, Hue in the center, and Saigon in the South are the three biggest cities in the countries. In addition, there are a few smaller urban areas in each geographical area. In general, the number of urban areas in Vietnam from 1945-1954 was limited.
1954-1975: The Vietnam War in the South and the first stage of building facilities for socialism in the North
There were two centrally-controlled cities, Hanoi and Hai Phong, and four provincial-cites, Nam Dinh, Thai Nguyen, Viet Tri, and Vinh, in the North from 1954-1975. Because of the Genève Agreements in 1954, the north of Vietnam is under the control of the Communist Party, and the south, with the support of the United States, developed as a capitalist country. During this time, the Soviet Union, China, and some Nordic countries supported Vietnam in operating some manufactories, including heavy metal, textile, and consumer goods factories. They called this period the “first stage of building facilities for socialism in the North”(Doan and Doan, 2011).
From 1954-1975 in the South of Vietnam, Saigon was the primary city and Hue, Danang, Quy Nhon, Nha Trang, Cam Ranh, Dalat, Vungtau, Mytho, Cantho, and Rachgia were autonomous towns (BTKDSVN). The United States sponsored to the South of Vietnam, called the Republic of Vietnam in various sectors, such as economic development, financial aid, and military aid (Trong, n.d.).
During this time, the Vietnam War happened in the South, but the North also paid significant attention to economic development in order to maintain the military troops in the South’s battlefield.
1975-1986: the cautious expansion of the cities
After taking over the South, the communist government maintained the socio-economic situation of the Northern cities and applied the model to the South. Saigon became Ho Chi Minh City during this time, and the autonomous towns became provincial cities. By 1986, there were three centrally controlled cities, Hanoi, Hai Phong and Ho Chi Minh City, and eleven provincial cities, Thai Nguyen, Viet tri, Nam Dinh, Vinh, Hue, Da Nang, Nha trang, Da lat, Bien Hoa, Can Tho, and My Tho. The number of the cities remained constant during this time. The Soviet Union and the socialist block had gradually increased technical and economic aids and support to Vietnam to build the socio-economic Soviet- model after 1975. Under the central planning economy, the country faced with a serious economic crisis. Specifically, the inflation soared to over 700 percent, economic growth slowed down, and export revenues covered less than the total value of imports. This resulted in intense debate about past faults under the central planning system and the need to introduce a major change in the run up to the 6th National Congress of the Communist Party of Vietnam (Arkadie and Mallon, 2014).
1986- Present: the rapid industrialization and urbanization
After the Doimoi, Vietnam has achieved a significant change in its socio-economic situation. The country had to call for humanitarian aids and import foods during 1980s. However, Vietnam became the leading rice-exporting country in 1989 (Hai Quan Newspaper, 2013). In fact, Vietnam has remained amongst the top three biggest rice-exporters in the world during the last two decades.
Regarding urbanization, there has been a rapid change in the country. According to the Urban Development Agency, on December 31st, 2014, there were 774 cities and towns total, including different grades of the cities divided by number of population and some indicators. Particularly there are 2 cities at Special grade Hanoi and Ho Chi Minh City, 15 cities at grade I, 21 cities at grade II, 42 cities and towns at grade III, 68 towns and townships at grade IV, and 626 townships at grade IV. However, 50% of Vietnam’s urban population is concentrated in 16 big cities (Nguyen, 2015).
Researchers say that Vietnam is of the most dynamic countries and has received the distinction of being called one of the new “Asian tigers” or “Asian dragons” because of its economic achievement (Hayton, 2011). This achievement has been possibly because of flexibility in economic policies under the theories of Marxist-Leninist economic theories, Keynesianism, and the East Asian development model.
However, Vietnam has not strictly followed any of these theories. The changes of the political and economic situations in the country led to the changes in the mindset of the political leaders, who also decided the policies of economic development. All combinations and changes in the history of economic development have led to the current situation of urbanization in the country. This paper will examine the effects of these economic theories in the next part of this paper.
Administrative Urbanization in Vietnam after 1986
According to the World Bank, the urbanization in Vietnam after 1986 was rapid. However, this phenomenon is likely the process of administrative decisions applied by the political leaders rather than the “regular logic” of urbanization. This “regular logic” is the process of the development of infrastructure and cities, leading to the increase in city populations. This section of the paper states that urbanization in Vietnam seems to be the result of administrative processes rather than the natural motivations of socio-economic conditions.
First, Spatial Plan in Vietnam is regulated in the Constitution, the 10-year old “Socio-economic Development Strategy,” and the corresponding consecutive two “Five-year Socio-economic Development Plans:” the Law on Urban Planning and the Construction law. All construction plans/projects are required to take into consideration the Vietnam Socio-economic Plan and the spatial plan.
According to Article 110 of the Constitution 2013(enacted on January 1st, 2014), Vietnam consists of provinces and centrally-controlled cities. A province consists of prefectures, prefecture-level cities, and towns, while a centrally controlled city consists of districts, prefectures, and towns. A prefecture consists of townships and counties, a prefecture-level city or a town consists of wards and counties, and a district consists of wards.
The National Assembly establishes special economic-administrative units/areas.
According to Article 4, Provision 2, Chapter I of the Law on Urban Planning (2009), urban centers are classified into 6 Grades, including Special Grade and Grades I, II, III, IV and V:
– Centrally-controlled cities must be an urban center of Special Grade or Grade I.
– Prefecture-level cities must be an urban center of Grade I, II or III.
– Towns must be an urban center of Grade III or IV.
– Townships must be an urban center of Grade IV or V.
The details of the spatial plans under the purview of the Ministry of Construction are conceived through four administrative mechanisms: The Master Plan Orientation for Vietnam’s Urban System Development (national plan), the regional plans, (Ministry of Construction / provinces), the master plans (cities / provinces), and detailed plans (districts, wards, industry zones, or development projects) (Nguyen, 2015).
In general, Vietnamese planning is prescriptive in character, laying out specific ways to use land in specific locations. It is relatively different from the regulative nature of Western land use planning.
Urbanization and urban sprawl, secondly, emerged in Vietnam, especially after 1986. Duong (2008) argues that urban sprawl mainly takes place rapidly because liberal policy for immigrant’s increases in response to the labor need for the booming investment industries, construction, non-state retail market, and urban services. Immigrants often find better income in cities compared to farming work in the countryside. He continued to say that urban sprawl can be seen in both positive effects. However, he did not examine the main political and economic motivations leading to the sprawl. The lack of this could lead to a misperception because the urban sprawl in Vietnam is caused by not only an objective logic of the market but also subjective desire of the political leaders.
Finally, there are five main transitions in urbanization in Vietnam: administrative, democratic, economic, physical, and welfare. Administrative urbanization is relative and critically influences the other four transitions. The administrative transition in urbanization in Vietnam refers to “the overarching policies, institutional and management practices central to urbanization” (WB, 2011, p.16).
There is no way to deny the role of policies, especially economic and spatial plan-related ones, in pushing the speed of urbanization in Vietnam. The development of cities has generated an impressive achievement in the economy and vice versa. However, alongside the debate of whether or not the state should interfere in the economic development progress, the debate of whether the government should use administrative tools to intervene in urbanization has also emerged in Vietnam for several years. In the next section, this paper will discuss the economic theories, which serve as the ideological basis for the governmental urbanization policies in Vietnam.
The basic theory of Administrative Urbanization in Vietnam after 1986
Socialism political economic theories in Vietnam
According to the Marx-Engel and Leninist political and economic theories, there are two main sides of the social production of habitat, including the force of production and the relations of production. Marx, in Capitalism, The Poverty of Philosophy, and the Manifesto of Communism, discussed the historical theory of Communism, the relationships between proletarians and the bourgeoisie, communist and proletarians, communists and other parties, and the flaws in other socialist literature.
Lenin criticised the monopoly of capitalism, imperialism, and the general crisis of capitalism. He also provided the theoretical basis for and indicated the path of economic policy in the transition period from capitalism to socialism. Moreover, Lenin “put forward the co-operative plan of gradually drawing the peasants into the stream of socialist construction, at first on “the basis of a trade bond then also by a bond between industry and agriculture in the field of production” (Political Economy, n.d, para. 9). In addition, Lenin worked out the foundations of the basic economic law of socialism, the law of planned development of the national economy, and other laws (para.10).
Furthermore, these social theoreticians argue that socialism is built on the public ownership of the means of production, according to Gasper (2005) and Gidden (1998). This is the main theoretical basis of the socialism-building theories in Vietnam. Particularly, the idea of public ownership leads to the maintenances of Vietnamese Communist Party (CPV) on the idea that “land is owned by public,” as regulated in the Constitution. This regulation thus stems from the role of the government in confiscating and switching the purpose of land using in urbanization. This paper will further discuss the regulation in the next section.
Vietnamese state-orientation market economy
Vietnamese political economic theories have inherited Marxist and Leninist perspectives to build the general theoretical framework for the society and economy, such as the relationship between the forces of production and the production relations, the idea of public ownership of the means of production, and the transition to a social economy. Furthermore, they stated that there is the “creative handling the Marxist Leninist to adapt to the situation in Vietnam,” with four five main characteristics as follows.
First, the ownership regime: In the country, according to the Law on Land 2013, the land is publicly owned. Therefore, individuals are allowed to own the rights of land use. Whenever the government implements a new project, they can confiscate land in exchange for little compensation, especially for the agricultural land. Consequently, the government practices land confiscation more frequently than would be necessary for various cities. Many provinces have confiscated agricultural land to build housing areas, industrial zones, and economic zones. According to NIF (2015), there are approximately 85.000 hectares of land intended for building industrial zones by March 2015. NIF also claimed that “In Tay Ninh province, there are 550 hectares of agricultural land that have been confiscated to build the Moc Bai Industrial Zone (ten times more than in the Construction Permit), while there is a lack of land for farmer to cultivate.” However, the project was postponed for over ten years. This situation is also happening in many other areas in the country.
Second, the class nature of the state and the purpose of the state management: The Communist Review (2013) said that:
“In the market mechanism of capitalism, state intervention is of bourgeois nature and within the framework of the capitalist regime. The state management aims at ensuring the socio-economic environment favorable for the rule of bourgeois class and the sustainability of capitalism exploitation. In the market mechanism with state management under socialist orientations, the socialist state intervention in the economy aims at protecting the legitimate interests of the entire working people and achieving the goal of a prosperous people, strong country, democracy, equity and civilization.”
In addition, the state-orientated market in Vietnam is also determined by other characteristics in Communist Review, 2013, such as:
- The social progresses and equity in each of the steps and development policies and distribution are made according to labor results and economic efficiency as well as capital and other resource contributions and through social welfare;
- The promotion of the right to mastery of the people to ensure the economic management and regulation of the socialist state under the leadership of the Communist Party
- The market economy which integrates into regional and global market economies, under different forms of multilateral and diversified relations and linkages”
These self-determined characteristics explain the intervention of the government in all sectors of the society and economy, especially in urbanization.
Keynesianism
In the General Theory of Employment, Interest, and Money, Keynes’ economic theories said that there are three prescriptions for a successful economy: low interest rates, government investment, and redistribution to the poor (Aaron, 2009). Keynes provided both a specific rationale for government taking on a bigger role in the economy and a more general confidence in the ability of government to intervene and manage effectively. Despite Keynes’s fascination with uncertainty and his speculative talents in the market place, Keynesians deemed “government knowledge” to be superior to that of the market place (Yersin and Stanislaw, 1998).
In Vietnam, the Reform (Doimoi) has marked an important milestone for economic development in Vietnam. Three political movements urged Vietnam’s leaders to take reforms at that time. First, the strong pressure of the technocrats and pro-market reformists for a final solution to the Democratic Republic of Vietnam model, based upon the political collapse of hard reform socialism after the 1985 debacle, was the first movement. Secondly, those benefiting from commercial activities thanks to partial reforms were in favor of further reform as reform brought economic benefits. Finally, southern liberals supported reform as they wished to return to the pre-1975 system (Fforde and Vylder, 1996).
These political movements are rooted in the gradually increasing acceptance towards a market economy in the country. During the transitional period beginning in the early 1980s, state enterprises had access to cheap resources and earned profits by diverting them onto the free market, which were shared among various groups including workers, manager, and higher levels. This profit sharing provided a power basis for reform and commercialization in the party, which was pushing for a market economy (Fforde, 1993).
For the next two decades, the Vietnamese government took further steps in reforming the economy, focusing on increasing public investment and taking the main role in attracting and using official development aids (ODA) in economic development.
First, with respects to public investment, according to the Industrial Policy and Strategy (IPS), the total public investment is approximately 286 million trillion VND, equal to 23% of the total social investment capital. In addition, there are 194 industrial zones with 46.600 hectares and 1,643 groups of industry with 73,000 hectares. However, just 50-60% of the total acreage have been used for industrial operation. It might take 50 million USD in the next 10 years to invest to these areas. The figure shows that the Vietnamese government has actively interfered in the economy.
Second, Vietnam is also one of the most active countries in terms of mobilizing ODA. According to the Trading Economic, Vietnam recorded a Government Debt to GDP of 50.50 percent of the country’s Gross Domestic Product in 2014. Government Debt to GDP in Vietnam averaged 39.28 percent from 2001 until 2014, reaching an all-time high of 54.98 percent in 2013 and a record low of 31.90 percent in 2008.
Business Times (2013) presented the Vietnam’s Decree on management and use of ODA, which came into effect on June 6, 2013, listing nine preferential sectors for ODA access as follows:
- Developing a modern, big size, and comprehensive infrastructure including road infrastructure, urban infrastructure, IT and communication infrastructure and drainage system,
- Developing social infrastructure such as culture, education, healthcare, vocational, social security, population and development;
- Science and technology, source technology, intellectual economy, and high-level human resources;
- Agriculture and rural development, social and economic infrastructure in rural areas, developing new rural areas;
- Improving governing and innovating administrative works;
- Environment and natural resource protection, natural disaster protection and reduction, responding to climate changes, green and sustainable development;
- Boosting trade promotion, investment, finance, banking, tourism and selective productions, improving economic competitiveness;
- Supporting for national aimed programs;
- Others by Prime Minister’s decision.
It is clear that ODA’s preferential use is for industrialization and urbanization. However, ODA is one of the most controversial recent issues in the country, especially regarding the efficiency of using this sort of capital, because ODA is not a free one.
East Asian Model of capitalism
The East Asian Model of capitalism, also known as state ‘development capitalism” or “state sponsored capitalism,” refers to an economic system in which the government invests in certain sectors of the economy in order to stimulate the growth of new (or specific) industries in the private sector (Chun, 2013). This model can be seen in Singapore, Japan, Taiwan, South Korea, and mainland China (Krunes, 1998 and Baek, 2005).
According to Le (2013), this model has also been applying in Malaysia, Indonesia, and Thailand (known together as ‘MIT’). The author also analyzed the tendency of Vietnam to follow the MIT’s trajectory. However, Le also said, “The rise or fall of Vietnam’s state capitalism will likely depend on the government’s ability to fully employ its geopolitical resources.”Known as one of the “new Asian dragons,”, Vietnam has performed numerous positive achievements in terms of economic development, especially urbanization. However, the author contends that economic development is considered as the method to maintain the politic power:
“Because state capitalism serves the interests of those in power, the Vietnamese leadership’s agenda is not about maximising the quality and productivity of the country’s labour force. Rather, it is about attaining an equilibrium that, on the one hand, allows the Vietnamese state to maintain its vertical and horizontal power over society and, on the other hand, maintain economic development” (Le, 2013).
Urbanization, as a result and as a catalyst of economic development, hence is a subjective process rather than an objective one.
However, in many cities, the growth rate of the mechanic population is high. The proportion of urban citizens has increased by 3.5% per year from 2005-2013, while the growth of the non-agricultural sector is 8.8%. The factor/coefficient of the growth of population/ the growth of non-agricultural sector is 1: 2,56. Moreover, the number of the urban citizens increased by 6.5 million people during the 8-year period. However, the mechanic increase was 3.6 million people, while the natural increase was 2,9 million people. This means per every single current urban citizen, there are 1.24 citizens transitioning from rural to urban. These statistics clearly show that urbanization in Vietnam does not only depend on the development of non-agricultural sectors but rather on the administrative decisions and subjective thinking (Ngo & Ngo, 2015).
Conclusion
Urbanization is as a progress of the size, structure, and quality of the population and a progress of economic development. In addition, this is a centrally invested morphology, which brings high-efficiency effects. Urbanization process needs to rely on the requirements of economic development, particularly the development of non-agricultural sectors such as industry and services.
However, it appears that urbanization in Vietnam is overly based on the administrative decision. This is the result of applying various economic theories such as Marxist-Leninist theories, Keynesianism, and the South East Asia model. This paper focuses on using these theories and the related policies, which are rooted in the process of urbanization in the country.
Administrative urbanization may lead to the in-between situation of people who live in the outskirts of the cities. In-between situations happen when the citizens live in the area, which belongs to the urban administration, but the infrastructure and lifestyle actually belongs to the rural area.
I hope that I will have the opportunity to research the socio-economic effects of administrative urbanization on the citizens living in an in-between situation in the outskirts of the cities in Vietnam.
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Nhung Nguyen 
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