Beyond Hanoi: Local Government in Vietnam

11. Push, Pull, and Reinforcing: The Channels of FDI Influence on Provincial Governance in Vietnam

Push, Pull, and Reinforcing 285© 2004 Institute of Southeast Asian Studies, Singapore 11 Push, Pull, and Reinforcing: The Channels of FDI Influence on Provincial Governance in Vietnam Edmund J. Malesky For five months at the beginning of 2002, I visited ten provinces across Vietnam, interviewing local government officials and collecting data on provincial governance and economic performance. It was quite an experience, sampling the many local dishes and cultural events, but it was also a revelation on the different modes of provincial leadership. Same-level officials described their jobs and their days quite differently and the same institutions worked in unique ways. My attempts to collect the Ten-Year Master Plan (2001–2010) (Quy Hoach Tong The) in each province illustrate these differences.1 I managed to obtain one plan in each province, but was shocked at how differently provincial administrations viewed this critical document. One province saw it as their accomplishment of six years of hard work and presented it to me proudly. Another province was highly secretive, declining to acknowledge its existence until they saw I had others. A third province’s Deputy People’s Committee Chair refused to give it to Reproduced from Beyond Hanoi: Local Government in Vietnam, edited by Benedict J Tria Kerkvliet and David G Marr (Singapore: Institute of Southeast Asian Studies, 2004). This version was obtained electronically direct from the publisher on condition that copyright is not infringed. No part of this publication may be reproduced without the prior permission of the Institute of Southeast Asian Studies. Individual articles are available at 286 Edmund J. Malesky© 2004 Institute of Southeast Asian Studies, Singapore me, but the Director of the Department of Planning and Investment (DPI) handed it over later. A fourth province was willing to let me see the document but not copy it or take it away. Finally, the fifth province released it, but only in exchange for a number of documents on crossnational studies of industrial zone performance. In attempting to collect the Ten-Year Master Plan, I had encountered a variety of reactions: openness; secrecy; local institutional conflict; and mutual self-interest. The preceding anecdote highlights a larger issue: provincial governance varies, sometimes considerably, within Vietnam. This chapter is a preliminary explanation for such differences among Vietnam’s provinces. After considering geography, infrastructure, and provincial culture, foreign direct investment (FDI) helps to explain differences in provincial economic governance. In general, foreign investment has a positive impact on governance. I develop the analysis in four steps. First, I review earlier work on provincial economic governance. Second, I look at the channels of FDI influence on provincial governments. Third, I explore how large FDI inflows can alter legal relationships, solidifying the connection between the DPI and the People’s Committee and limiting the reach of central institutions.2 Finally, I use micro case studies of four provinces at various levels to test my theories. The existing literature Several authors have noted differences in the quality and character of provincial governance in Vietnam. Literature on the subject can be divided into three broad groups. One group usually directs the reader to the famous proverb, “Phep vua thua le lang”, or the “King’s laws stop at village gates”, as evidence that local government’s ability to stymie central authorities has a long history. Unfortunately, analysis of the phenomena stops at the provincial boundaries or, at most, with a detailed description of the sources of local power.3 Other pieces on Vietnam examine the particular local area dynamic which led to experimentation in economic renovation.4 This group of writings clarifies the complicated channels of central-local relations which allowed such experimentation to take place. It provides us, however, with an incomplete understanding of the mechanisms which are at play and limits predictability in new situations.5 What is it that has allowed some areas to push forward with innovative economic solutions, while others have remained followers, heavily dependent on central Push, Pull, and Reinforcing 287© 2004 Institute of Southeast Asian Studies, Singapore government transfers and multilateral aid? Regionalism, historical autonomy, culture, and personal relations with key central actors have played significant roles, but to what extent and at what point do they impact on local economic development? A third body of information on provincial governance in Vietnam uses certain subjects (provincial GDP growth, private sector performance, success in implementing central initiatives, poverty alleviation, and so on) as the reasons for categorizing...