Introduction

The year 2007 left an an important mark on the economic history of Vietnam. The country became the 150th member of the World Trade Organization (WTO) on 11 January 2007 after its accession package was approved by the General Council of the WTO on 7 November 2006. For Vietnamese political leaders and the population as a whole, WTO membership was the last hurdle to cross to make Vietnam fully integrated with the rest of the world, particularly in view of the perceived ability of the United States to block Vietnam's WTO membership and thus its path to economic development in order to extract political acquiescence from Vietnam. The admission to the WTO was therefore treated by the leaders of the Communist Party of Vietnam (CPV) as a major victory, and like any victory in the past, be it over France, or the U.S., they became consumed with the elixir of triumph and embraced grandiose plans in disregard of reality.

This time, Prime Minister Nguyễn Tấn Dũng's government came to believe that a quick catch-up with other countries in the region was within grasp. The plan for 2008 was set in terms of achieving a high rate of growth in GDP, in the range of 8.5–9 per cent, by focusing externally on attracting capital inflows through foreign direct and portfolio investment, and internally on expanding the state-owned conglomerates and their subsidiaries with easy credit, public land and public money. Politically, the economic plan was expected to win the support of the party's rank and file and the provincial governments throughout the country as it would provide benefits to them from the growth of the state-owned conglomerates and general corporations in terms of seed money, land-use rights, and shares in hundreds of semi-private enterprises spun out by the conglomerates and general corporations. This plan demised rather quickly in 2008 as inflation jumped, the stock market crashed and the economy was threatened by an imminent balance of payment crisis.