Vietnam before economic reforms (Đổi Mới) 1975-1986

This post is desired to giving an overview of the reforms in the economic system in Vietnam since 1976, the year of reunification. Since the second half of the 1980s, the reforms have been known to achieving a transition process from the centrally- planned economy to a market economy. The post doesn’t aim to criticize any side but it only reflects a period of time from collection of official local newspapers recently.

Root of centrally planned economy from North of Vietnam since 1950s

North of Vietnam adopted central planning in the 1950s after defeating the French in 1954 and applied it during war time with American from 1945 to 1975. The basis of economy model was Soviet-style central planning which was focusing on heavy industry and collectivization of agriculture.

“Subsided Economy” (1976-1986) (Thời kỳ bao cấp)

In fact, it was centrally plan economy but Vietnamese used to call it “subsidy economy” (bao cấp), it means all sources of goods and raw materials are in the hands of the central State. Government coordinated all steps of economy from planning, collecting, circulating to distributing to end user (consumer). Each person was delivered with standard distributions which depended on working level, age, rank and position in government or professional. Production prices were strictly controlled by state, regardless of the market law  known as demand and supply.

The typical of centralized economy was  contrary to market law that made national economy facing with dramatic decline. Despite of government  tried to praise a new system and the good result would come to the country in long run, however, the outcome was very low in production and the management method was very discouraged to majority of people. Authority tried to control every aspects from production to circulation, for example, any person who wanted to bring a little rice, meat from his home to other areas was extremely difficult. Everything had been checked, caught, confiscated or even put in jail because it considered as illegal activity.

During this period, family background was very important for seeking job, promotion and entering university. With a “good back ground” you are favor to get more10-14 points from your actual points! Beside the gap of knowledge in the class was different, it also caused extremely ill feeling for young who had “bad back ground” and as matter of course it was very discouraged for self development and obviously led to disappointing feeling and lost of hope in their future. Fortunately, this period was not last long, it seemed dismissal year after year after of renovation time and seem going to disappear today. However, working for government you should know some key person in stead of your real capability!

Food stamp and family rice booklet

Sharing essential supplies had many problem as well as producing, for example four people shared a pair of bicycle tires, even a blanket! or some time 1 pig is shared among 20 households, everyone wanted to take the good parts and very difficult to divide fairly. A side from that, because of bad storage and complicated delivery, many supplied foods arrived to hand of people were in bad condition such as broken, rotten or even poisonous. Each family got their own “rice booklet” (sổ gạo) shown date and number kilos of rice During this time, Vietnamese had a famous saying” your face looks sad like loosing rice booklet”! (buồn như mất sổ gạo)!

State department store

At the state department stored, there was very regular scene of long queue, anything could be used for marking of their turn such as brick, newspaper, basket…etc. When queuing, people were pushing, arguing or even fighting each others. The food ration system mostly hated and made people loosing their temper and regardless to standard moral. The food rations are categorized into A, B, C, D, E which were depended on ranking of officers, professionals and ordinary people were the lowest.  There were some specific stores for high officers only like in Russia, where you even found imported liquors!


For transportation, severe  lacking of vehicles and gasoline were a real problem during this time.  If you worked for government, you needed to show “introduction letter” issued by your director and most effective way was showing “hand letter” of knowing some important person. Ordinary people had to queue 1 or 2 days at the ticket counter, overnight on queue was normal in order to get a ticket for your seat. Drivers were very rich man and most beloved job because they could sell gasoline to the black market. Illegal commercial checking points were set up at the major points for inter-province transportation and that made your trip duration was indefinable because it depended on how long of your vehicle could be checked up each time! Sometime, students were misunderstood by governors, their belongings were confiscated everything they brought from home for living such as rice, bean, meat, oil…etc.

Agriculture Economic reforms

Collective farm

During the 1976-1980 period, the Vietnamese government pursued a collective farm to control 90% of people in country side. Under this regime, agricultural production took place in compulsory cooperatives that were supposed to control 95 per cent of agricultural land. All production and distribution decisions were made by the state. After harvest the state took out a the consumption of worker and rest had to sell to the state at a low price. The distribution agricultural products were based on work points.

What is work point?

The work-point system works as follows. A working day that a member of a cooperative spent working for the cooperative is counted as one work point. At the end of a certain period the work points of all members are added up. Total production will be divided by the total number of work points. Each member would receive an amount of output equal to the number of work points he/she has received. The problem was that the smart and cunning people got work points but actually didn’t work hard and the hard working people could be get the same as lazy ones. This matter caused very discouraged and unfair to certain people in collective farm!

Private trade in agricultural products was officially banned. Farming households could only use the remaining 5 per cent of land for the breeding of pigs and chickens and for vegetable production. Private trade in these products was allowed in small village but restricted to trade out at local markets. During the collective regime, rice production was marked with reduction, especially in 1977 and 1978 . Although the year of 1979 witnessed a recovery of rice production, rice production in this year did not reach the enough for self sufficient in the country. This situation forced Vietnam to import a large amount of rice so as to meet the domestic demand. Many families had to eat rice mix with tapioca, green banana or sweat potato. Wheat grain from Russia (Soviet Union) was imported but didn’t make situation better. Since the collective regime was seen as unworkable, in the country, farmers were resisted collectivization by “fence breaking” (xé rào) for example some provinces allowed farmers could farm on their own land with a small sized or increase number of their castles.

In summary, Economy before reforms had good and bad in people views today. The bad side of it was terribly wrong with free market philosophy and management. It provided what people were not in need but on other hand it impossible meet basis demand of people. The one-way thinking of state economist who wanted centralized economy as quickly as possible over free enterprise particularly in the South that led to terrible destruction of economy infrastructure before, waste people’s skill, denied professionalism and devaluation of  capital. Collective farm was unworkable because it distracted farmer’s working attitudes and promoted bad working behaviors. It created a good environment for evil thinking of privilege, corruption and advantaged person that they could get better income than hard workers and the problem is still going on until today in society. On the other hand, the good side of this period could be seen from less competitive in life, people didn’t have to mange to fight for luxurious life. People were supplied with free education, health care and basis food ration. Social problems were much less than now because of simple life and lacking of luxurious facilities.

However, it’s difficult to say this period is better than now because living standards and incomes are much improved since reforming. At least, it was a big lesson learn for  present governor that when they apply any new policy, they should have put in all account of side effects and carefully learn and research before operation.

Thank you for your reading!

Hong Duc


About Insiderjourneyguidehelpdesk

Local guide manager-Vietnam
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