V.

Economy

Ho Chi Minh City is a major producer of processed foods, such as rice, coffee, and frozen shrimp; glass, plastic, and paper goods; textiles; machinery; chemicals; and building materials. The city has been the most important commercial and industrial center in Vietnam since the beginning of the 20th century, when French colonists and local businesses began to export rice, rubber, and other tropical products. During the Vietnam War, the city benefited economically from a massive U.S. military presence. When the Communists took Saigon in 1975, its commerce was largely unaffected because the new regime did not initially interfere with private profits. That policy, however, came to an abrupt end in March 1978, when the central government in Hanoi announced that all private businesses would become state- or collectively owned. The decision sent the national economy into a rapid descent, and thousands of people fled the country.

In 1986 the government reversed course and launched a reform program called doi moi (economic renovation), which sought to create a mixed private-public economy. A small but active sector of private businesses was restored throughout the country, and during the next few years Ho Chi Minh City became the driving force in the reviving national economy. Private enterprises, many of them managed jointly with the government or foreign businesses, began to spread throughout the city. By the early 1990s the city produced 30 percent of the country’s manufactured goods, handled 25 percent of its retail trade, and was home to nearly half of its private factories. In the early 1990s private businesses generated 43 percent of Ho Chi Minh City’s industrial output. The city was given an extra growth stimulus when the United States ended its economic embargo against Vietnam in 1994.

Like the rest of the country, one of Ho Chi Minh City’s main obstacles to economic growth in the 1990s was its underdeveloped infrastructure. During the colonial era the French built an extensive road and rail network, and during the Vietnam War the United States helped further develop rail, air, and port facilities. But conditions deteriorated after the war’s end in 1975. The large air base at Tan Son Nhut, located northwest of the city, is in need of modernization, and the port facilities on the Sai Gon River are badly overcrowded. Rail links between Hanoi and Ho Chi Minh City have operated since 1976, however, and the main highway running northward along the coast from Ho Chi Minh City was improved in the 1990s. Still, the city in the mid-1990s was well behind other economic competitors in the region.