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Fighting to preserve commercial rebirth; Vietnam: After rallying from a decade of centralized economy, Ho Chi Minh City's revived business sector is again under siege.

THE BALTIMORE SUN

HO CHI MINH CITY, Vietnam -- Sitting beneath ceiling fans in a rooftop bar, American lawyer Fred Burke gazes out across this former wartime capital and recalls the depressing city he found when he arrived in 1991.

"On the street down there," he says, pointing toward the heart of town, "there were lepers begging for money because they didn't have enough food to eat."

Eight years later, Ho Chi Minh City, which local people still call Saigon, has rallied.

On Sunday evenings, thousands of young people cruise through downtown on motorbikes, the headlights forming an endless strand of pearls around brightly lighted fountains and the newly renovated municipal theater.

It's a tropical "American Graffiti" set to a soundtrack of 110cc engines. Moving at 10 miles an hour, couples cast competitive glances at one another's fashions -- which range from silk dresses to black slacks. Commercial photographers stand on the sidewalks shooting pictures as if it were prom night.

In front of a statue of Ho Chi Minh, who led the socialist revolution against French colonialists and later the United States, vendors sell everything from peanuts and Coca-Cola to inflatable Batman dolls and soft baguettes.

"People have never seen it so good," says Burke, "even during the war years."

Ho Chi Minh City and its people are in the midst of a comeback after more than a decade under the thumb of communist rulers who tried to ram a command economy down the throats of highly skilled capitalists.

After years of rapid growth, though, the city's renaissance now threatens to stall. The culprits: corruption, bureaucracy and the Asian economic crisis.

Many of the foreign investors who helped fuel the city's resurrection have either scaled back or fled. Heavy taxes and bureaucrats at all levels asking for handouts simply proved too costly.

Figures on the exodus are hard to come by, but the evidence of retreat is everywhere.

Last year, foreign direct investment -- which Vietnam first permitted in 1987 -- dropped by more than 40 percent. The cranes working on the new Hyatt hotel fell silent long ago and a room with a view at the venerable Caravelle Hotel costs just $70 a night. One moving company reports that for every foreigner it moved to Vietnam last year, six to eight others moved out.

"People were throwing money in here like it was the last place on earth to spend a dollar," says L. E. "Pete" Peterson, project manager for the city's new U.S. Consulate, recalling the giddy enthusiasm of the mid-1990s. Government officials and Vietnamese businessmen "just figured these foreign investors are stupid with deep pockets and it's our job to take from them."

Three decades ago, Saigon was no less corrupt or free spending. Amid the concertina wire and sandbags lay a city that ran on war, graft, intrigue and pleasure.

American servicemen flooded bars with names such as "The Pink Pussycat" and "Magic Fingers," where they chatted up hookers to the strains of the Lovin' Spoonful and the Mamas and the Papas. At the Continental Hotel -- made famous in Graham Greene's novel "The Quiet American" -- journalists, diplomats and spies pumped each other for information and swapped war stories over drinks on the terrace.

"Liberation," as the Vietnamese refer to the 1975 fall of Saigon to communist forces, led to economic disaster. Leaders in Hanoi imposed a system in which it cost more to buy an egg than a couple of pounds of iron. Hundreds of thousands of people with ties to the former U.S.-supported regime were sent to "re-education camps."

In the late 1970s, the regime tried to crush capitalism and turned on the city's powerful Chinese business community. It confiscated the stocks of 50,000 retailers, banned all private trade and sparked an exodus whose participants came to be known as "Boat People."

After the economy ground to a halt, the government began enacting reforms in 1986. Foreign investors followed and bars with names such as "Apocalypse Now" opened to rekindle the city's night life. By 1995, many believed Vietnam would become Asia's next "tiger" economy.

Despite the regional crisis and the drop in investment, Ho Chi Minh is still an intensely commercial city with a unique blend of East and West.

Puff Daddy's re-mix of the old Police tune "Every Breath You Take" plays on a car radio as a woman in a yellow mini-skirt and white stiletto heels rides by on the back of a motorbike.

Inside the red-brick Notre Dame Cathedral, a white neon sign reads "Ave Maria." Outside, in the sticky, exhaust-laden air, a barefoot boy hammers out a beat on a wooden block, signaling the sale of noodle soup.

A little girl selling post cards playfully grabs the hand of a tourist, gently fingering his wedding ring in hopes of a bigger score. At the door to the Brodard Cafe, a restaurant known for its ice cream and gossip during the war, another youth hawks the latest issue of the Economist magazine bearing the headline, "How To Make Mergers Work."

Just beneath the city's vibrant surface lies a painful past.

Climb into a "cyclo" or pedicab -- essentially a bicycle with a lounge chair mounted on the front -- and the man behind the handlebars may be a former South Vietnamese army soldier like Dong The Minh.

At war's end, Minh spent a year in a re-education camp farming rice and beans. Asked how he was treated, he nervously glances over his shoulder to see who might be listening.

Minh's background barred him from any decent jobs, so he took up peddling a cyclo -- exhausting work that he finds degrading. Cyclos were popular after the war because fuel was scarce. Now, the government wants to reduce their numbers because they don't fit the image of a modern Asian city.

Minh, 52, says he is too old and too poor to find new work.

"I feel ashamed of my job," he says, but "it's very difficult to compete with the young people."

For others, the war is now, as it was then, a chance to make money.

Women on the street sell toy Huey helicopters fashioned out of Coke cans. The maze of tunnels the South Vietnamese communist guerrillas, known as Viet Cong, used to mount surprise attacks are now among the country's biggest tourist attractions.

And not every South Vietnamese soldier has failed.

The government likes to cite former Lt. Col. Nguyen Manh Tuan, who pieced together a homemade grinding machine out of old howitzer shells and started manufacturing and exporting scissors. Although Tuan has struggled to broaden his market since the collapse of communism in Eastern Europe, he considers Ho Chi Minh City a much more prosperous and freer place than it was 10 years ago.

"You see, now we have a better life," says Tuan, 64, as he stands on the porch of his countryside villa looking out over an elaborate garden filled with lemon and persimmon trees. The difference between his success and the failure of other soldiers, he says, has been perseverance and hard work.

While many private companies have done well, the Vietnamese government has maintained firm control over most of the economy, with some predictably bad results.

For example, under the administration of the state travel agency, Saigon Tourist, several of the city's most famous wartime landmarks have lost their charm.

The bar at the Continental, once known as "The Continental Shelf," is now a tearoom where you can listen to the pianist playing John Denver tunes and eat caramel custard and honey coconut cake. The rooftop bar at the Rex Hotel, home to the infamous, semi-fictional U.S. military daily press briefings known as the "Five O'clock Follies," is littered with oversized lawn ornaments and has all the allure of a miniature golf course.

Once the economic heart of South Vietnam, the city's Chinese suburb of Cholon has rebounded. The district's Binh Tay wholesale market is a sprawling building with Chinese roofs and a colonial clock tower where people rush around buying and selling everything from "Titanic Cookies" to plastic figurines of Snow White and the Seven Dwarfs. Visitors who step too slowly risk losing their ankles to a speeding handcart.

It's hard to imagine Binh Tay being busier, but those who worked here during the war say it was. The Chinese, who are widely regarded as among the most skilled business people in Asia, dominated the market until they were forced to flee during the confiscations two decades ago.

"When the Chinese were here, they were rich and they spent a lot of money," recalls Ung Thi Lien, 45, who sells soft candies. "Even the Vietnamese [merchants] spoke Chinese."

Today, hardly anyone recognizes the language.

Faced with the new flight of foreign businessmen, the government is trying to stem the flow these days. It now permits some firms to wholly own their subsidiaries, rather than share them with Vietnamese partners as required by law. Foreign companies can also now bypass the central government and ask local officials to approve investment projects worth up to $10 million.

Back at the rooftop bar overlooking downtown, Burke, the lawyer, is polishing off a plate of foie gras. Despite Vietnam's problems, he remains bullish on this country of 75 million people.

Many of the big companies, such as PepsiCo and IBM, appear committed to staying. Many of those who left, he says, were "dreamers and schemers and shouldn't have been here in the first place."

A foreign bank manager arrives with a few friends and joins Burke for a drink. Asked about the evolution of Ho Chi Minh City, the man smiles wearily.

"Come back in 10 years," he says.

Pub Date: 2/23/99

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