Never Let A Crisis Go To Waste, Vietnam Edition
In light of economic worries in Vietnam, the WSJ reports that the country is soon likely to impose a widespread set of price controls and restrictions on political activity after an encouraging move toward freer markets:
Carlyle Thayer, a veteran Vietnam watcher and professor at the Australian Defense Academy in Canberra, says conservative factions in the ruling Politburo are tightening their grip on the country as Vietnam’s economic worries—especially inflation and fallout from currency devaluations—grow. He says he expects more crackdowns and arrests to come in the run-up to the country’s 2011 Party Congress, a major political event that will aim to map out Vietnam’s political and economic direction for the following five years. In turn, the crackdowns threaten to curtail investment and economic growth in the country…..
Now, the price-control unit of Vietnam’s Finance Ministry is drafting proposals that, if implemented by the government, would compel private and foreign-owned companies to report pricing structures, according to documents viewed by The Wall Street Journal and corroborated by Vietnamese officials. In some cases, the proposed rules would allow the government to set prices on a wide range of privately made or imported goods, including petroleum products, fertilizers and milk to help contain inflation as Vietnam continues pumping money into its volatile economy. Typically, the government applies this kind of aggressive measure only to state-owned businesses, and it is unclear whether Vietnam will write the wider rules into law.
Somewhat relatedly, here is one of my favorite papers about the economics of contractual relationships and enforcement institutions in Vietnam (McMillan & Woodruff).