Vietnam’s Slow March to Economic Reform : Commerce: A Southern California trade conference last week brought optimistic news of Vietnam’s emerging investment opportunities.

Vietnam in the 1990s is gradually emerging from a “twilight zone” where things aren’t always the way they are supposed to be, says Pham Chi Lan, secretary general of the Chamber of Commerce and Industry of Vietnam.

Addressing a gathering of Southern California business people last week--a day after the United States eased its trade embargo on Lan’s country--she acknowledged that economic reforms started in the last decade have been stymied by vestiges of the old system of central planning.

Over the last three years, however, Vietnam has been going through a “transition stage,” she insisted.

A legal infrastructure is being introduced that will make the socialist country a better place for a market economy, Lan said--and a safer bet for foreign investment.

“We hope the embargo can be fully lifted in the not so distant future,” said Lan, noting that Japanese and European companies are getting a strategic head start on business opportunities. “The attitudes of the Vietnamese government and the people are very positive toward America. Nowadays, we don’t like to talk about the past.”

Last Tuesday, when the Vietnam trade embargo came up for its annual renewal, the Clinton Administration eased the ban, the latest in a series of incremental steps linked to Hanoi’s cooperation in resolving the issue of military personnel missing in action since the Vietnam War.

This time, U.S. businesses were allowed to participate in projects funded by international lending institutions such as the World Bank.

American firms have been lobbying for a complete lifting of the trade ban, which dates from the end of the Vietnam War, so they can take advantage of the country’s booming economy. Veterans organizations and groups in the Vietnamese-American community oppose an end to sanctions.

Last week’s conference, sponsored by USC’s International Business Education and Research program, featured much bullish talk about opportunities for U.S. trade with Vietnam, as well as a few negative sparks.

Diem Do, an Orange County financial analyst and a member of the National United Front for the Liberation of Vietnam, rose from the audience during the question-and-answer session and challenged panelists over Hanoi’s human rights record.

Do, 32, a native of Saigon, cited recent demonstrations by Buddhist monks in the central Vietnamese city of Hue--protests that reportedly were quelled by government troops who fired on crowds, resulting in casualties.

“It’s not good business practice to shoot civilians and religious demonstrators,” said Do, adding that political instability should be taken into account when evaluating the risks of investment.

Panelist Stanley Rosen, associate professor of political science at USC, compared Vietnam’s human rights problems to those in China.

“Obviously, Vietnam is in a transitional situation,” Rosen said. Like China, Vietnam has a government maintaining “neo-authoritarian control, tight state control, while liberalizing the economy.”

Rosen thinks the most likely source for political instability in Vietnam is the widening gap between the rural poor and wealthier urbanites.

He also sees the government’s halfhearted efforts to crack down on official corruption as potentially destabilizing.

But Phillip Grub, a Vietnam specialist at George Washington University, was upbeat in his appraisal of the atmosphere for foreign investment.

Recent labor unrest at foreign-owned factories, he said, can be attributed to a lack of cultural sensitivity on the part of foreign managers.

The potential market for U.S. goods in Vietnam, Grub added, is greater than it may appear.

“Don’t buy the official figure of $200-a-year per-capita income,” he said. “There is a huge underground economy and people have purchasing power. There are millionaires in Vietnam.”