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Field Notes: Hanoi and Ho Chi Minh City

Of all the countries I visit each year, Vietnam always stands out as the place where the most change occurs in the least amount of time. The skylines of both Hanoi and Ho Chi Minh City (HCMC) are under rapid development (see nearby photos). Yet for all the change, I was also struck by how both cities – especially Hanoi – seem to be doing a remarkably good job of preserving the quality of life for average citizens. I was so pleased to see multi-generation families gathered in various parks in the evening, or sitting by the banks of “Sword Lake” in downtown Hanoi. One of my favorite discoveries in Hanoi was what the painted squares on the sidewalk were for: pop-up public badminton courts. In the hours between dusk and dark, citizens set up nets spanning these makeshift courts, and played with family and friends – usually multiple generations surrounding one court.

I am also always impressed with the sheer entrepreneurial drive of the Vietnamese: pop-up stores for goods and services were everywhere along the roadside. Individuals bring fresh produce to the market, fix shoes, repair scooters, make keys, or outfit your wardrobe, all from the back of a bicycle.

Contrasted against that honest, entrepreneurial drive, I saw signs of hubris among a handful of corporate entities. In particular, I visited one formerly sleepy, government-run company that had been transformed under new private ownership. The new managers – formerly investment bankers, I understand – were pushing their new subsidiary to boost production capacity to an absolutely shocking extent. The management at the parent company told the subsidiary not to worry about the prospect for excess capacity, as they would find new markets for their wares, mainly overseas. On one hand I could not help but admire the ambition this represented; but on the other, the drive for expansion seemed so extreme as to be irresponsible. There is a chance this will work, but my best guess is that the expansion will end in financial disaster. Yet the managers of the parent company are astute when it comes to investor relations, and I am sure they will market their plans well among investors who are hungry for growth. I wonder how sustainable that growth will be in the end.

I am pleased to see that after several false starts, Vietnam has undertaken the first (and most critical) step to clean up its banking sector: the government has launched a special purpose company that will carve out the bad assets in the sector from the good. In the process, the scheme is designed to effectively re-capitalize and re-liquefy the banks. Details can be found in this news report from Bloomberg.1 I may be missing something, but personally I think this is the cleverest scheme to manage bad assets that I have seen in my career, for reasons too long to address here. In fact, I think the Eurozone could learn a thing or two from the Vietnamese about how to heal an insolvent banking sector. Though the road to reform in Vietnam is a bumpy one with many detours, this sort of clever plan illustrates why I am so hopeful for the country’s future.

Andrew Foster

Hanoi

The local grocer
A roadside "pop-up" shop - making keys, repairing scooters
An entire garment store on wheels
Hanoi's street markets
Global brands and trappings of conspicuous consumption have found their way to Hanoi
A parade of Chinese tourists
Japanese brands, on display in Hanoi
Vietnam may be a one-party state, but that party is raucous enough to experience public, internal dissention
The austere facade to the Hanoi stock exchange
Hanoi's opera house, celebrating the sixtieth anniversary of Vietnam’s film industry
Hanoi's colorful streets
Hanoi's streets are (mostly) clean
Birdcages on wires in Hanoi
Colonial architecture
Colonial architecture in decline
A busy day in a downtown park
Chinese checkers in the park
Young couples posing for traditional pre-wedding-day photos
Turtle Tower in Sword Lake, in downtown Hanoi
A quiet day by the lake
Hanoi skyline at night

Ho Chi Minh City

HCMC's rising skyline
New housing blocks on the rise
HCMC Airport advertising - no longer dark, like it was last year (see "dark advertising space in the airport" photo in HCMC Field Notes, Q4 2012)
Frozen food aisle at the HCMC Airport (including frozen snake, in the center)
Communist propaganda, alive and well
Mid-price range apartment block in HCMC, with fancy pool
Scooter traffic
Battery maker headquarters
Baby batteries waiting to be born
Taking the ferry to get to the plant
Coffee plant tour in the outskirts of HCMC

The views and information discussed in this commentary are as of the date of publication, are subject to change, and may not reflect the writer's current views. The views expressed represent an assessment of market conditions at a specific point in time, are opinions only and should not be relied upon as investment advice regarding a particular investment or markets in general. Such information does not constitute a recommendation to buy or sell specific securities or investment vehicles. It should not be assumed that any investment will be profitable or will equal the performance of the portfolios or any securities or any sectors mentioned herein. The subject matter contained herein has been derived from several sources believed to be reliable and accurate at the time of compilation. Seafarer does not accept any liability for losses either direct or consequential caused by the use of this information.

  1. Bloomberg News, “Vietnam to Force Banks to Sell Bad Debt to Asset Company,” 16 May 2013.