economics

May 17, 2010

Le Monde Diplomatique April 2010 Greater Hanoi swallows the countryside

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Hanoi is now ranked ahead of Shanghai, Beijing, Tokyo and Seoul as the place to shop in Asia. It has annexed vast areas of farmland on which to build suburbs served by motorways. But the lives and homes of ordinary Vietnamese, rural or urban, aren’t improving that fast

by Xavier Monthéard

The Vietnamese architect Hoang Huu Phe made a passionate case for a policy of all-out urban development in Hanoi: “Some people in government still see a city only as an administrative entity. Luckily this backward-looking attitude is on the decline. We need to build an attractive, hi-tech capital with an international outlook. After all, the Americans built Las Vegas in the middle of a desert.”

His opinions carry weight: he is the director of the research and development division of Vinaconex, Vietnam’s biggest state-owned construction firm, typical of the flourishing enterprises of the post-communist era. His sky-blue office is hung with futuristic blueprints alongside photographs of completed buildings and a hi-tech video screen. Phe claimed to have no concerns about property bubbles: “We must use property speculation as a driving force. Our determination will protect this city from the laissez-faire approach that has led to cosmopolitanism in Bangkok or Manila, which you could call westernisation. I am trying to use market mechanisms to make my dream come true.”

Last year, the online magazine Smart Travel Asia ranked Hanoi the continent’s sixth-best city for shopping, after Hong Kong and Singapore but ahead of Bali, Shanghai, Tokyo, Beijing and Seoul. Vietnam is in. In 2008 property projects there attracted more than $28bn, or almost half of all direct foreign investment in Vietnam (1). Property prices in its larger cities have shot up. Can this really be the battered post-communist Vietnam that Noam Chomsky believed would need a century to recover, if it ever did (2)?

In August 2008 Prime Minister Nguyen Tan Dung announced that, with immediate effect, Hanoi would absorb Ha Tay province and a number of adjoining towns. Overnight it tripled in size to more than 3,300km2. According to Laurent Pandolfi of the Hanoi Cooperation Centre for Urban Development, “Even though the decision was made very quickly and has strong political motives, it is not short on logic. It is consistent with a policy of urbanisation, and one hopes that it will supported by large infrastructure projects, such as the future subway.” The government also commissioned a US-Korean organisation to draw up a new urban plan within a short (some would say impossible) time frame.
Decollectivised land

Why the fuss over “Greater Hanoi”? To understand, go back some 20 years. Since 1986 Vietnam has had a policy of economic opening up, similar to China’s doi moi (renewal). In 1990 the political bureau of the Communist Party acknowledged the family as an autonomous economic entity of production and enterprise and proposed the allocation of land to family units. This was the beginning of decollectivisation. A new law in 1993 allowed private individuals to hold land-use rights on renewable long-term leases (initially of 15 years). These rights can be sub-leased, sold and inherited, although the Vietnamese state reserves pre-emption rights to prevent the theoretical possibility of land grabbing by the urban bourgeoisie. Important property reserves remain in the hands of the Communist Party, the army and communist mass organisations such as the Fatherland Front and the trade unions.

In 1993 the market value of land was low but exports have quadrupled in 15 years and some 10,000 foreign companies are now operating in Vietnam. As a result, the old rice paddies have become goldmines. Commercial ambitions are beginning to conflict with historical legacies, such as the allocation of colonial villas to families that distinguished themselves in the war against the US, or the reservation of vast estates for the military. The property developers want land that the city can no longer supply.

According to its advocates, the development of Greater Hanoi will require the construction of satellite towns. This will open up the mountainous areas to the west while reducing population density in the capital, and will connect Hanoi to the flow of international commerce while providing it with modern housing. One name sums up this: Splendora. This complex is under construction in North An Khanh, in the former province of Ha Tay. A motorway will pass close by, leading to the Hoa Lac High-tech Park, where Vietnam’s Silicon Valley is to be built. Vietnam National University, Hanoi, will be transferred to Hoa Lac and provided with a campus. The park is expected to attract a range of high value-added green technological industries.

At harvest time last year, farmers were using sickles to cut rice around where the motorway was still under construction. Children led buffalo and horses and goats roamed among the concrete blocks. Signboards advertised residential complexes in varying stages of completion, including Splendora and the Singapore-designed Tricon Towers, three 44-story buildings offering 732 condominiums with swimming pools, a medical centre and a kindergarten (3). So far nobody had dared touch the village cemeteries that lay scattered among the paddies, mournful reminders of the old Vietnam.

The promotional videos I saw showed big developments with green spaces and lakes, all in 3D. Fast roads would allow traffic to flow through a mix of skyscrapers, smaller buildings and detached houses. The videos depicted a serene shopping experience in superstores, far from the tumult of the city centre or the boorishness of the suburbs. “But do you see any nurseries or schools or sanitation equipment in these videos?” asked Pham Van Cu, a geographer at Vietnam National University, Hanoi. “Where are the ordinary people, where is the economic activity? Such projects put the investors’ interests first. The state will lose resources, services will be privatised and people of modest means will become dependent on the service companies… rich people pay other rich people: they’re the only winners.”

These medium- to high-end developments do target the well-off, the 10% who earn 30% of the national income and like to stroll around Hanoi’s West Lake on Sundays. Developers hope they will leave the city centre for more spacious accommodation and the calm of the suburbs, in the US sense of the word. There is one problem: the farmland between the residential developments, motorways and industrial zones will be cut off from its irrigation systems. The new developments are built on mounds, which heighten the risk of floods in the lower-lying villages of this densely populated alluvial plain. And as Vietnam is in a monsoon zone, it rains a lot. Regulations governing construction of such mounds in built-up areas require developers to install drainage systems. But when the state withdraws to the point of transferring control of urban and rural planning to investors, who is to keep watch? In return for building road infrastructure, the government rewards the developers with parcels of adjacent land. It even delegates the compulsory land purchases to them.

This was the case in Hoa Muc, a village closer to the centre of Hanoi affected by an earlier redrawing of administrative boundaries. When it was reclassified as an urban district in 1997, land prices rose. Three years later the authorities – that is, Vinaconex – began construction on the Nuong Chin-Trung Hoa residential development. “Hoa Muc was one of the many villages in Vietnam whose inhabitants pursued both agriculture and crafts. Here it was brick-making,” said the Canadian sociologist Danièle Labbé. “When the state decided to build Nuong Chin-Trung Hoa, it issued compulsory purchase orders for the villagers’ agricultural land, leaving them just their houses and a small patch of ground to cultivate. The state negotiated the level of compensation via the People’s Committee (the municipal authorities) and the mass organisations. The inhabitants knew that villagers in other newly urbanised districts who had resisted had been treated badly, so they gave in. Since 2003 the state has directly entrusted the developers with the task of making these compulsory purchases. There have been promises of new jobs and vocational training, which have not generally been kept. At Hoa Muc the financial compensation, though far below market rates, was decent. But in other places the conflicts have reached deadlock.”
Social transition

The Hanoi People’s Committee, whose members are urban, is trying to deal with problems of which it has little understanding – those of rural districts. The social risks are considerable. “It’s not easy to make the transition from country to town without preparation, especially when it happens quickly,” stressed Labbé. “It’s very hard to find a new job. And we’re talking about a village that’s only four kilometres from the city centre and has been linked to it for centuries. What will it be like for those living further out?”

The destabilisation of peri-urban areas also threatens the commercial city centre, whose development has relied, since at least the 17th century, on continual exchange with a peripheral belt rich in agriculture, crafts and industries. At the end of the 1980s, this traditional arrangement, which had been shattered by the Communist period and the war, was revived, and the city with it. The “36 streets and corporations” quarter is typical. Famous for its commercial vitality, it draws vital components from the countryside into the city. Ornate and brightly coloured residential buildings, surrounded by a maze of structures with many internal courtyards and hidden floors, overflow with merchandise. Each street has its speciality and often its own smell: coffee roasting, the odours of traditional pharmacopoeia (with spices such as cinnamon, aniseed and ginger beside medicinal ingredients). There are streets for office equipment, second-hand clothes and cut steel. Restaurants alternate with businesses, many of them the “dust restaurants” that offer a typically Southeast Asian sociability: Hanoi people like to eat outdoors, in spite of the noise, and crowded conditions. They sit on low stools to be as close as possible to the ground. The traffic roars and the division between the pavement and the roadway is notional. Cars (still few in number) jostle for space with thousands of motorcycles.
Number-one employer

The emergence of family micro-units working in services and retail has just about made up for the loss of jobs in the public sector and farming. A poll of several thousand households found that the informal sector is now the number-one employer in Hanoi (30%) and operates as an enclave economy, relatively cut off from formal business channels (4). I saw some of this informal sector. It included an old itinerant saleswoman trotting along so as not to bend under the weight of her wares; two stately women on bicycles, carrying star fruit and custard apples; and Man, a young moto-taxi (motorcycle taxi) driver, providing a vital service in a city where public transport is in its infancy. He spends 10 hours a day in heavy pollution – and danger, given Hanoi drivers’ idiosyncratic interpretation of traffic rules. During a break, he treated himself to a lungful of smoke from a beautifully decorated pipe. A pouch of low-quality tobacco only costs a few US cents. But, like everything else, it has become more expensive. “I can still manage two meals a day. But I have to be careful. My partner does manicures; she’s not rich either. I don’t have enough money to get married, so I smoke and drink less. But it’ll take years to scrape enough together.”

His worst problem, besides the inflation that keeps raising the cost of basic essentials, was accommodation. He was renting a cubbyhole of 10m2 for $52 a month, water and electricity included. Coming from the provinces, Man had little hope of finding anything better: everything had been taken by native Hanoians. A young woman about to complete a doctorate in sociology was in a similar predicament. She bowed her head in embarrassment, so acutely did her social circumstances contrast with her professional aspirations. She was still living in shared accommodation with a communal toilet and shower. “I’ve studied for 10 years, I do research for a prestigious institute, but nothing is coming onto the market. In fact it’s the opposite. For the past two years, it’s been impossible to find accommodation. The university’s halls of residence are jam-packed. It’s not right that the government should give students so little support.”

According to Nguyen Thi Thieng, of the population department at the National Economic University in Hanoi, “Studies show clearly that migrants now settle in the outlying districts whereas, until 2007, they gathered in the central districts of Ba Dinh and Hoan Kiem. They can no longer find housing in the areas where they work.” Dispossessed farmers sometimes turn makeshift landlords. As Danièle Labbé explained: “On the little patches of land they have been left with, the inhabitants of Hoa Muc have erected simple buildings to rent to students and workers who don’t have the means to live in the centre. It’s very big business.”

This is because demand is rising while developers’ projects make it ever harder to get access to property by causing prices to rise. According to the April 2009 census, the city now has 6.5 million inhabitants – as many as the whole of neighbouring Laos. Even though the basic family unit has stabilised at four people (5), demographers expect a national population increase of about one million a year over the next few years, most of the growth in cities.
Everyone for himself

At a conference in Hanoi in September 2009, Martin Rama, the World Bank’s chief economist for Vietnam, was enthusiastic about Vietnam’s progress in poverty reduction, which he pronounced to be even faster than China’s, claiming that the ratio of the population under the poverty threshold had fallen from 58% in 1993 to only 16% in 2006 and even lower since. Nguyen Nga, who was involved in humanitarian and economic development projects for 20 years, was less sanguine: “To understand Hanoi, you have to remember the misery of the 1980s. When I looked at children then, I used to tell myself they were learning to cope with inequality along with hunger and that they were making it part of themselves. And that’s what happened. Those children are 20 now, and know no other culture than ‘everyone for himself’. They want their share of material wealth, but their sensitivity is atrophied; their dreams are impoverished.”

When autumn comes to Hanoi, it’s wedding season, because the moon, a symbol of fertility, is at its purest and most brilliant. It’s customary at this time of year to give presents of little round biscuits representing the celestial body. The origins of the custom are lost in antiquity, but last year, the 4646th of the traditional calendar, the most highly prized biscuits were those bearing the logo of the Sheraton Hotel. Have the Americans finally conquered Vietnamese hearts and minds, 35 years after the war? The time of ideological divisions is long past. Nationalism, abandoning its Communist past, is going back to its roots. According to the historian Nguyen The Anh, “the country is returning to a time before French colonisation. Especially where the structure of government is concerned. The ruling caste, whatever you want to call it, can be compared to a self-proclaimed mandarinate, minus the Confucian virtues. As for the people, they are reviving the old cults.”

I noticed a group of workers from the provinces who had been restoring a 17th-century temple. Surrounded by the mud and the incessant noise of the capital, their makeshift camp was built around a statue of the local guardian spirit, a deified popular hero, which generations of squatters had left intact. Flowers, fruit, cooked food and joss sticks were heaped up at its feet.

Translated by Tom Genrich

Xavier Monthéard is a journalist

(1) See Hanoi Statistical Office, Hanoi Statistical Yearbook, Hanoi, 2009.

(2) See Noam Chomsky, Understanding Power: The Indispensable Chomsky, edited by Peter R Mitchell and John Schoeffel, New Press, New York, 2002.

(3) See Minh Ky, “Tricon Towers: A New Face for Hanoi”, Vietnam Economic News, 11 September 2009;

(4) See Jean-Pierre Cling, Le Van Dy, Nguyen Thi. Thu Huyen, Phan T Ngoc Tram, Mireille Razafindrakoto and François Roubaud, “Shedding Light on a Huge Black Hole: The Informal Sector in Hanoi” (PDF), GSO-ISS/IRD-DIAL Project, Hanoi, April 2009.

(5) With 2.08 children per woman nationwide and 1.83 in urban environments; see United Nations Population Fund, Viet Nam Population 2008, Hanoi, April 2009.

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