Two realities and the same ideology

On February 2, the XIII National Congress of the Communist Party of Viet Nam (PCV) ended. In mid-April of this year, the Communist Party of Cuba (PCC) will hold its VIII Congress. What could the Viet Nam Congress teach us?

There are great differences between the two countries. For starters they are in different regions of the world and have different cultures. However, their conflicts in the last 200 years ties them historically and show some important similarities. Viet Nam and Cuba have had to face the dominance of European metropolises and, later, beyond the incomparable differences of war, aggression by the United States of America. But what links them is that both opted for socialism as a system and were left without the help they received from the socialist camp when it collapsed. Also, at different times, they have been blocked by the United States: Viet Nam’s blockade lifted years ago, but Cuba’s continues and gets worse. However, they undertook reform processes to defend the model they had chosen.

Viet Nam carried out its Renewal Process (Doi Moi) with a clear vision of the path to take: construction of a Market Socialism. There were many stages and setbacks in its transformation, however, 30 years after that beginning, the country reached its XIII Congress with excellent results in the social and economic life of the country. While Cuba arrives at its VIII Congress with the worst economic situation in recent history, and whose causes are varied and real: the blockade under the Trump administration was tightened, the pandemic has meant the expenditure of considerable resources, etc., but the cause of Cuba’s economic reality are not external. There have been internal marches and countermarches, with a suspicious eye toward the non-state sector of the economy, among many other things.

How did Viet Nam arrive at its XIII Congress?

Despite the impact of the devastating natural disasters that hit the country and the COVID-19 pandemic, the Asian nation emerged with positive results in the current gloomy global economic outlook. The economy grew 2.91% in 2020, becoming one of the fastest growing in the world. It should be noted that for more than 20 years that country has grown between 7% and 9% annually.

Their successes are not only reflected in a positive growth of the Gross Domestic Product (GDP), but also in the improvement of the quality of life of the population, the reduction of the poverty rate, and the increase in life expectancy.

GDP per capita reached $3,521 in 2020, ranking sixth in the ASEAN (Southeast Asian Economic Association). The budget deficit and inflation are at a very low level. The money and currency market is basically stable.

The trade surplus reached $19.1 billion in 2020, the highest in the last five years, while the international balance of payments registered a surplus and foreign exchange reserves increased by more than $90 billion. In 1986, exports of goods and services represented less than 7% of GDP. In 2019, they exceeded 100%.

In 1960, life expectancy was 59. In 1980, it had risen to 65 years of age. It later became 69 in 1986 and in 2019, it registered at 75. All ascending results.

In 1992, the poverty level in Vietnam, as estimated by the World Bank (percentage of the population living on less than USD 3.2 in PPP per day) reached 80%, but by 2018 it had declined to 7%.

As has been usual in other high-growth experiences in Asia, the increase in the investment rate played a significant role. Between 1986 and 1990, it averaged less than 15% of GDP. Between 1996 and 2000 it reached 28.5%. For 2006-2010, the average was close to 37%, and in 2019 it continues to rise.

As for the infant mortality rate per thousand live births, it was 56.8 in 1964, falling to 41.7 in 1986, and 15.9 in 2019, which denotes the effort in the area of health for the Vietnamese government.

An interesting fact: Vietnamese emigration (4.5 million), has been an important component of the nation. In 2000, the country received $1.34 billion in remittances and in 2019 the figure rose to more than $17 billion. These remittances have not been exclusively destined for the consumption of the beneficiaries, a good part is invested in the creation of businesses and in real estate.

What were some of the proposals of the Resolution of the XIII Congress of the PCV?

The Congress Resolution stated that the country should specify firm policies and actions from the upper levels to the grassroots helping people to improve their living conditions and prosper. Only then will it be a real success.

They were based on the Resolution of the XII National Congress of the PCV issued five years ago. But they reviewed 35 years of the implementation of the Renewal (Doi Moi), the 30 years of the observance of the 1991 Platform for national construction, as well as a decade of the deployment of the Platform developed in 2011, and the socio-economic development strategy of the decade, 2011-2020. They also drew up guidelines and objectives for national socio-economic progress in the five years between 2021 and 2025, in addition to goals until 2030 with a vision until 2045.

When evaluating the results of the XIII Congress, the Secretary General stated:

“The Party must reinforce its guarantee in order to build a really honest political system. In this way it will continue to increase its courage and leadership capacity, and it will plan and implement the most appropriate policies according to the reality of Viet Nam and world development trends. The great success of this Congress is encouraging for the entire Party, the Army and the people to continue to overcome difficulties and challenges, and to seize opportunities to turn Viet Nam into a developed, high-income, socialist-oriented country.” 

The resolution of the XIIII Congress stated that the country should focus on the construction of a market economy with a socialist orientation and economic openness, because that is what transformed Viet Nam from an isolated country to an open economy which broadly connects with the rest of the world. The successful decision of the PCV to open the national economy contributed to economic prosperity and the elevation of the country’s position in the international arena.

Viet Nam set out to go through three strategic stages. The first covered the period from 1991 to 2000 in which the PCV sought to get the country out of the crisis and achieve an average annual growth of 7.56%. In the second, it pushed Viet Nam forward excluding itself from the group of lower-middle-income countries. In the third (current) period they will strive for advanced industry and towards modernity. On the other hand, during the period from 2021 to 2030, on the basis of the three previous phases, the Party wishes to motivate the aspirations of its people in order to achieve more rapid and sustainable development.

Especially in the economic sense, Viet Nam went through a period of broad development and then one of breadth and depth, before concentrating on a deeper and greater progress and sustainability, based on science and technology, innovation and digital transformation.

Among the main tasks, for the future of the Congress Resolution, are to continue renewing their plans, while building and perfecting institutions for the sustained development of the economy, politics, culture, society and the environment, completing in an integral and synchronous way institutions in favor of a market economy with a socialist orientation.

Interestingly, the Secretary General’s statements regarding the reform and improvement of the quality of the institutions of the market economy with a socialist orientation, and the effective and efficient enforcement of the law, are very important prerequisites for promoting the national development to which they aspire.

The Vietnamese appreciate that the market plays a key role in the effective mobilization, distribution and exploitation of productive resources, especially land, and from there concrete solutions are adopted.

It also underscores the importance of drastically and effectively reforming administrative procedures, eliminating barriers to business freedom, and improving the quality of the business environment in order to ensure fair and transparent competition.

How does Cuba arrive at its VIII Congress of the Communist Party of Cuba in April 2021?

Cuba comes to the Congress with the worst economic situation in recent years, with an average GDP growth rate, between 2016 and 2019, of 1.01% annually, with a decrease in 2019 of 0.2%, and an 11% decrease in 2020.

It is not necessary to raise the serious effects caused by the Covid 19 pandemic, nor that of the ruthless U.S. blockade, and those derived from the internal inefficiencies of the Cuban model, which are known. But they are not the only causes that affect Cuba’s economic growth.

There is a complex currency situation which has led to a 30% cut in imports in 2020 related to a fall in exports of more than 40%, to which is added the fall of the export earnings of the health professionals’ workforce, which decreased by 16% in 2019. There’s also the almost non-existent arrivals of tourists which has strongly affected this source of income.

It all is happening when the country shows a very high budget deficit, around 18% with respect to GDP in 2020, related to among other things the cost of the Financial Regulations undertaken in January 2021.

Although the authorities are trying to curb the current inflation, it is very high compared to previous periods, and at the same time, Cuban society suffers from generalized shortages of essential products for daily life. An example of this are the queues or crowds found in shopping centers. There is also little supply of agricultural products in existing establishments, both in the state and private sectors. And that very shortage contributes to the liquidity in the hands of the population being 58% of GDP.

Foreign direct investment (FDI) advanced very discreetly in 2019 and 2020, with a priority in the Mariel Special Development Zone, which has some 54 approved businesses, but with very insufficient investment volumes for the country’s needs.

According to estimates made by Dr. José Luis Rodriguez, the foreign exchange that Cuba received in 2020 was almost 50% of what had been planned for the year, a figure that once again demonstrates the country’s critical economic situation.

We should take into account that in social indicators — life expectancy, infant mortality, level of schooling, and many others — the country ranks up there with developed countries, which shows the priority that has been given to it by the Cuban State.

So what will be discussed in the VIII Congress of the PCC?

In the absence of public information, but analyzing what was discussed in the Vietnamese Congress, and taking into account the economic situation of the country, knowing that changes have been proposed in the Party’s leadership and listening to the state of public opinion, I can infer the following:

That a critical report should be presented on the social and economic guidelines reached, or not, since the VI and VII Party Congress.

That the Party present new annual guidelines, which involve increasing the well-being of all citizens — not concentrating only on the middle class that has emerged and should grow through its own undertakings. For those who have been left behind, create new economic and financial instruments.

It should be understood that the market is a regulatory entity in a society, and its harmful effects can be addressed without social conflicts. The Vietnamese experience demonstrates this.

For those who do not share these ideas, I must clarify that I am not proposing a neoliberal path, nor a disarmament of state companies, nor the arguments that are always used. I simply believe that the Vietnamese experience is worth studying. How a socialist society with a single party and centralized institutions has led their economy to rank among the leaders of the most dynamic region in the world.

Dr. Omar Everleny Pérez Villanueva is a Cuban economist. He lives in Havana.