changes in the political economy of vietnam and their impacts on the built environment of hanoi

Cities, Vol. 19, No. 6, p. 373–388, 2002 2002 Elsevier Science Ltd. All rights reserved.Pergamon

Printed in Great Britain0264-2751/02 $ - see front matter

www.elsevier.com/locate/cities

PII: S0264-2751(02)00068-9

Changes in the political economyof Vietnam and their impacts onthe built environment of HanoiNguyen QuangAsian Institute of Technology, Bangkok, Thailand

Hans Detlef Kammeier*648/1 Senanikom, Bangkok 10900, Thailand

The most important changes in the political economy of Vietnam began with the Doi Moi(Renovation) reforms of 1986. The changes in the national economic system have been reflectedalmost immediately in urban development patterns, where the diversification of capital invest-ment (especially the influx of foreign direct investment), the creation of a property market(dealing with land use rights), and the commercialization of the housing sector have createdsignificant changes, while the planning system has not been sufficiently adapted to the newpolitical reality. This article shows how the changes in the national policy framework havetransformed the urban development patterns of Hanoi. Industrial development in the ruralfringe areas, the new dynamics of the private housing sector, and the commercial redevelop-ment of the inner city are described and quantified. While the formerly rigid command-and-control system of urban management has already been simplified to some extent, inappropriatebureaucratic attitudes persist. This has resulted in a lack of authority, communication, andcompetency, while a thriving informal sector of urban development has emerged. In conclusion,there is an urgent need for building new forms of public involvement to ensure social equitygoals and to avoid market distortions. The policy reforms at the national level need to bemirrored by a more capable urban management system. 2002 Elsevier Science Ltd. All rights reserved.

Keywords: economic reform, urban development, housing, land market, urban management

Conceptual background

Changes in the socioeconomic and political environ-ment in the former socialist countries have producedsignificant impacts on the built environment. Theintroduction of market mechanisms, which are replac-ing central planning in the allocation of economicresources, has especially led to considerable spatialtransformation in the cities. One among manyexamples of such rapid changes in eastern Europe isthe city of Lodz (Poland) where manufacturing hasalmost disappeared from the central city while theensuing redundant space has been filled by wholesa-ling, retailing, and offices to meet the rising consumer

∗Corresponding author; e-mail: [email protected]

373

demand (Riley, 1997); similar patterns of transform-ation have been experienced in Budapest (Kovacs,1994). In China, the changing political economy ledto the emergence of new urban elements such as newbusiness districts, gentrified residential communities,urban sprawl, large peripheral residential communi-ties and sub-centers in the metropolitan area ofGuangzhou (Wu, 1998). In the case of Beijing, thetransition toward a market system for the allocationof urban space has resulted in spatial polarization ofsocial groups within the city and the conversion ofagricultural land at the fringe (Leaf, 1995). Veryrecently, Leaf (2002) has also discussed the linksbetween globalization and peri-urban changes in bothChina and Vietnam, contributing to a better under-standing of the urbanization processes in Vietnam that

Changes in the political economy of Vietnam and their impacts on the built environment of Hanoi: N. Quang and H. D. Kammeier

have been less frequently covered than those in China.Describing the results of market-driven economic

competition for urban space, market-based economictheory, as well as human ecological theory, maintainthat each type of land user ends up with the locationthat maximizes efficiency and satisfaction. Bothapproaches have been fundamentally challenged bythe political economy theory, which explains theurban process through the “deep structure” governedby laws of inner transformation and production(Harvey, 1982). The political economy approach hasadded two missing variables to urban change analysis:the influence of powerful political interests (such asdevelopers versus organized interest groups) and theimportance of land use conflicts shaped by differencesbetween places (such as urban versus rural areas).

It is difficult to capture a clear understanding onhow specific socioeconomic processes produce thecorrespondent spatial structure. Based on the narrowfocus of Harvey’s theory on capital circuits, Ball(1986a, 1986b) put forward the concept of “structureof building provision” , a political economy conceptexplaining the process in which different social agentsare interacting in the provision of the built environ-ment. Applying this concept, Chinese researchershave empirically analyzed the rapid transformation ofthe urban spatial structure in Chinese cities (Wu,1998; Wu and Yeh, 1999).

The political economy approach has relevant sig-nificance within the Vietnamese context. Since theintroduction of Doi Moi (Renovation) in Vietnam, thesocioeconomic and the physical systems, particularlyin large cities, have experienced tremendous changesduring a very short period. Several international andnational researchers have investigated the urbaneffects caused by the national socioeconomic reform.However, most of these research studies concentrateon the investigation of one specific sector, such ashousing, urban land system, townscape and heritageconservation (Luan et al, 2000; Gillespie, 1998;Logan, 1994; 1995; Thong, 1997), but only few havereferred to general urban structure as well as citymanagement (Forbes and Le, 1996). Thus, the under-standing of the local spatial manifestation of nationaleconomic restructuring is still limited. More specifi-cally, while there are several analyses of the politicalstructure and its changes, and also many descriptionsof the most visible urban changes, the focus of thispaper is on the cause–effect linkages between changesin the political economy and their manifestations inthe city.

The paper attempts to summarize the changes in thepolitical economy resulting from Doi Moi and theirimpacts on the built environment of Hanoi City. Theunderlying research study1 aims to examine empiri-

1This article is largely based on Nguyen Quang’s Ph. D. disser-tation analyzing the urban changes in Hanoi (complete draft, July,2002). Owing to the limited space available, this journal paper ishighly selective of the much broader scope of the underlyingresearch.

374

cally how mixed market and central planning forceshave been shaping the built environment of Hanoi, asa pertinent example of a city in a transitional econ-omy. This is difficult, especially because even experi-enced researchers of urbanization and urban planningin Vietnam face great problems in collecting the rel-evant data, although they do exist, because data tendto be kept under lock and key. For this reason, evenan “ insider” like Que (2000) was not able to go veryfar in explaining how the changing ideological basisof urban planning has been reflected by the develop-ment of the city. While the city had been governedby a socialist regime for four decades, during the pastfifteen years (since the beginning of Doi Moi) marketforces have begun to overshadow the influence ofcentral planning as a city-shaping force, resulting inmany clearly visible manifestations of the underlyingstructural changes.

Changes in the political economy of Vietnam

During the 1954–1985 period, (North) Vietnam hadadopted and consolidated its own specific version ofa centrally planned economy following the Sovietmodel. The economic essence of the centrally con-trolled planning model is to use a large centralbureaucracy mechanism to allocate resources directlyinto what are seen as priority tasks of national devel-opment, i.e., rapid industrialization, with a commit-ment to eradicate capitalist economic forms and toset up a system based on state-owned enterprises andcollectives. The central planning model applied in theNorth and extended later to the whole country afterreunification in 1975 led to considerable waste. Sinceresources were allocated in accordance to plan direc-tives and instructions instead of market demand, thestate production was run inefficiently; the situationhas been described as an extreme market failure or aclassic characteristic of shortage economy (Ffordeand Wylder, 1988, p. 29).

Since 1986, in response to macro-economic insta-bility and stagnation, Vietnam has undertaken the DoiMoi policy, gradually joining the world of marketeconomics. The country is moving rapidly from acommand economy with centralized planning to amore decentralized transitional economy, where theallocation of resources is determined by a mix of mar-ket mechanisms and central state control. The individ-ual household economy is recognized as the basic unitof production in the free market, including the returnof land to family farmers and the provision of secureland use rights (rather than outright land title deeds)to the users of urban land. Both marketization anddecentralization have boosted the foreign and privatedevelopment in the national economy. Over the tenyears from 1986 to 1995, private enterprises in indus-try rose by a factor of eleven, from 567 (1986) to 959(1991) and 6311 (1995). Regarding foreign invest-ment, the total registered capital amounts to over


US$31 billion. According to state statistics, theforeign investment flows have increased from vir-tually zero to about seven percent of GDP in 1997(GSO, 2000), and further up since then.

At present, the country stands at an important stra-tegic crossroads, moving from state-controlled tomarket economy. The present planning culture stillshows the characteristics of a state-controlled econ-omy in which (i) public investments are still the driv-ing and facilitating force behind development; (ii)government intervention has not always occurred inthe most appropriate manner to support marketefficiency and social equity; and (iii) community orprivate-sector interests are supposed to be representedthrough the formal political system. It is true that inseveral respects there have been significant policychanges that have shaped the city, but the reform ofthe planning system has not kept pace. It is thereforein need of real reform.Four significant factors are considered in this reviewof change processes, i.e., the growing diversificationof capital investment; land use rights as commodity;commercialization of the housing sector; and, in con-trast, the slow changes in the planning system. Otherfactors are being referred to more implicitly – forexample, deconcentration of power to local auth-orities2 and concomitant fiscal arrangements in thewake of the 1997 Budget Reform Law (Rao, 1999).

Diversification of capital investmentUnder the centrally controlled economy, the stateplayed the dominant role in urban developmentinvestments. As all types of investment were con-trolled and allocated through the state administrativemechanism, the economic efficiency and effectivenessof investment and construction were low. Accordingto official estimation, about thirty percent of invest-ment value was wasted in state construction projects,making any returns on such investment projectsimpossible (MOC, 1992, p. 12).

The comprehensive economic reform has weak-ened the pre-1986 mechanism of state investmentallocation. The availability of the free market and theproliferation of individual enterprises outside the statesystem have been eroding the state’s dominance, asdifferent sources of investment were mobilized forurban development. The Government has issued dif-ferent documents (i.e., Decree No. 385 HDBT,Decrees 42 CP, 43 CP and 52 CP) to regulate theinvestment procedures from multiple sources. Thesedocuments (that have been updated continuously) setout the principles for capital investment planning,clarified responsibilities among relevant agencies andinvestors, different levels of managing capital invest-

2Dennis A. Rondinelli in his comment on Govinda M. Rao’s articlepoints out that his reference to “ intergovernmental” fi scal arrange-ments is misleading as Vietnam continues to be a unitary state. Soeven the capital city does not have a “ local government” althoughits local authority clearly has considerable powers

375

ments, and removed the discretion of investmentdecision making and licensing. The state also adopteda more decentralized policy to diversify expenditureto localities and giving them a degree of autonomy(although there is no separate local governmentproper). In 1996, the Budget Law of Vietnam waspromulgated as the enabling framework for localitiesto increase their own revenue base, replacing theirprevious heavy reliance on grant-in-aid and transferpayments from the central government. For example,provincial governments are now allowed to set therates and collect fees (or user charges) for public ser-vices that they provide.

As a result of the decentralization policy3, the non-state investment sources increased rapidly. In 1985,the year before the economic reform started, the non-state domestic funds accounted only for 2 percent ofGDP or 15.5 percent of the total investment whereasstate investment dominated the total investment with10.9 percent of GDP or 84.5 percent of total invest-ment (World Bank, 1990, p. 16). By 1997, the non-state sector (including local and foreign sources)accounted for 64 percent while the state-owned sectorwas reduced to only 36 percent of total investment.The economic reform also stimulated the growth oftotal investment, growing from 12.9 percent (in 1985)to 15.22 percent (in 1991) and 27.5 percent of GDPin 1997 (GSO, 2000).

Land use rights as a commodityBefore the August 1945 Revolution, private owner-ship of land was normal practice in Vietnam. Sincethe socialist reform of private production and trade in1958–1960, private properties and land were gradu-ally converted to state ownership. During the 1960–1971 period, almost all the land privately owned bypeasants was progressively brought under collectiveownership and allocated to cooperative farming unitsand state enterprises despite the theoretical recog-nition of individual property ownership by the 1960Constitution.

After the reunification, the 1980 Constitution stipu-lated that the state had the land ownership for thewhole country. Thus, no private rights in land wereallowed, not even in theory. As all land belonged tothe state, any private land transaction was consideredunconstitutional and unlawful. Land allocation wasdone through the central administrative mechanismrather than the market. Land users, mostly the stateorganizations, did not have to pay for the land allo-cated (except for small formal amounts as land-usefees). Urban land practically served as a free good.All premises were developed by the state-owned com-panies under the direction of the authorities, so noproperty market was officially permitted. The selec-tion of development sites was determined between

3Decentralization is defined here as both deconcentration of centralgovernment powers to lower levels and market liberalization.


state land users and planners based on master plans,which in turn were formulated under central economicdecisions. This system of free and administrative allo-cation of urban land was economically irrational andtended to be inefficient since state organizationsreceived more land than was actually needed, andthey had no incentives to use the land efficiently.However, it was an integral part of the overall econ-omic strategy. According to Marxist theory, land wasnot a commodity and thus should be owned by thestate and allocated freely in order to speed up theindustrialization process.

Since the introduction of Doi Moi policies, the landand housing system has been reformed with an orien-tation to market principles. By 1988, the State enacteda land law affirming that all land is owned by thepeople and the State functioned as an administrator,but permitting the grant of land use rights to organiza-tions and individuals. Under the 1988 Land Law,nevertheless, all kinds of land transaction, encroach-ment, or land lease were prohibited. Since 1992, thenewly adopted constitution recognized that the rightsto use land can be transferred to households and indi-viduals even though it was restated that all land isowned by the State as representative of the people.Based on such principles, a new version of the LandLaw was promulgated in 1993 making a significantadvance toward the formulation of a legal frameworkfor land administration, which is similar to those inthe market economies but with continued state owner-ship of land. The new Land Law established a legalbasis for land allocation and lease, securing land userights of landholders including the rights for long-term use, transfer, inheritance, lease, mortgage, andcompensation for expropriation.

The land and housing reform policy introducedsince 1988 has stimulated the formation of a nascentreal estate market in Vietnamese cities in whichproperties with attached land use rights can be trans-ferred freely among state and private owners. Unfor-tunately, this market is biased heavily by the directstate intervention and remains partly informal sincethe necessary legal system and procedures have notbeen adopted to fully carry state policy through tofruition. For example, the system of land valuationand price has been fixed by the Government ratherthan based on market principles. Land price in thereal property market is often three to four times higherthan the prices provided by the Government (GDLA,1996). Without a proper mechanism for land valu-ation and price, compensations for relocated settlersbecome complex and difficult to resolve.

The majority of land users have no legal documentsyet as the administration is ill-prepared for the com-plex procedures involved. So by 1999, about 89 per-cent of urban households had not received land usecertificates (Van, 1999). The land management is alsoconstrained in many respects, and this has resulted ina spate of unauthorized land transfers and illegal con-struction.

376

Commercialization of the housing sector

Under the central planning system, the state was thesole producer and distributor of housing for mosturban residents. Government staff received housingsubsidies, and another part of the population enjoyedpreferential treatment as the government budget wasused for housing construction. Many state bureausand enterprises used their own resources to providehousing for their employees. Although the govern-ment housing policy did not encourage the privateproduction of housing, part of the population whowere not provided apartments under the subsidizedprogramme built their own housing. Production ofhousing was dominated by technical and economicconsiderations, so most residential construction wasin the form of four- to five-storey apartment blocksin close proximity to workplaces and service facili-ties. The residential quarters followed the Soviet stylewith little comfort and monotonous appearance.Rental rates were set below the level of real cost sothe state could not collect sufficient funds for repairand maintenance. Despite large state investment inhousing programmes, housing supply failed to meetthe demand, leading to extensive housing shortage inthe city. As overcrowding grew between 1954 and1990, the average living area per person in Hanoideclined from 6.7 sq m to 4 sq m per capita (HPC,1997).

Since the implementation of Doi Moi, there havebeen many changes in housing production and distri-bution. The state abandoned its subsidized housingpolicy and created conditions to encourage people tobuild their own houses. The measures included priv-ate housing construction; commercialization of thebuilding materials industry; and dramatic increases inrental prices (in some cases up to 54 times). The newpolicy has stimulated a self-built housing boom in theurban areas. Between 1985 and 1995, about 70 per-cent of new accommodation in Hanoi was constructedby the private sector. In Ho Chi Minh City, 86 percentof the houses and 93 percent of the floor space of allthe housing constructed since liberation in 1975 wereadded in the eight years from 1986 to 1993 (Luan etal, 2000).

Many problems resulted from such a rapid anduncontrolled residential construction. The spon-taneous housing boom has led to illegal occupationof land and chaos in urban development. As a result,the majority of new private houses were constructedillegally (without any type of development control)destroying the urban landscape of Vietnamese cities.In spite of this, the subsidized housing system stillinfluences the public sector’s attitude to management,distribution, and control of housing production. Thelack of regulations, the overlap of functions andresponsibilities, and the existence of irregular prac-tices beyond state control have created many insti-tutional constraints hampering the development of areal housing market.


Limited changes in the planning system

In the old political system, which is still practicedtoday, urban planning was characterized by a princi-pally top-down nature with distribution of resourcesfor the targets defined by Party resolutions. The insti-tutional framework for planning was part of the cen-trally controlled economy, with the following mainplanning instruments: socioeconomic planning(policy and strategy), sectoral planning, and physicalplanning (giving spatial orientation to the investmentdecisions). Investment planning (in the form of soci-oeconomic plans) takes a dominant position as thepublic sector represents the main investment sources.Within this context, urban planning is not seen as ameans of addressing urban social or physical issuesor problems but is rather a process of allocation ofstate resources to meet specified targets. The back-bone of national economic development is an empha-sis on rapid industrialization, particularly the develop-ment of heavy industries. Hence, it is taken forgranted that urban planning should serve the purposesof socialist industrialization, production, and the wel-fare of the working population.

Before 1992, the planning procedures followed theSoviet model with five types of plans: economic–technical feasibility study, general plan, developmentplan for a first stage, detailed plan, and executionplan. Given the cost and the time for the preparationof general plans, there was practically no detailed planin urban areas. Urban planning often focused on newresidential areas, neglecting the old city core and lead-ing to dilapidation of old settlements. As privatedevelopment was not recognized in the investmentplanning, neither land nor detailed plans were fore-seen for privately built activities. During that period,city planners played an active role in the selection offactory sites, the functional division of urban land use,and the design of residential areas. In reality, urbanplanning often resulted in abstract plans withoutimplementation (MOC, 1995, p. 13).

In 1992, the government enacted Decree 91 toimprove the plan implementation under the conditionsof a multi-sector market economy. The previous five-stage planning style was replaced by a shorter processcomprising only two types of plans (master anddetailed plans). Master plans are prepared for a periodof 15–20 years, with updates every five years.Detailed plans are drawn up according to the masterplan and prepared at a scale of 1:500 to 1:2000 forspecific areas. In the new urban planning process,market-led factors are recognized such as private landuse rights, individual commercial activities along thestreets, and zones for foreign capital investment. Inaddition, a regulatory document is attached to the landuse plans to guide the construction management.

However, despite the innovations, planning andmanagement still resemble the past model. All “plan-ning” is viewed as a process of implementing theplanned investment of state resources, and not as a

377

means of guiding and controlling privatedevelopment/investment in the public interest. Thereis no process or mechanism to evaluate the conse-quences or impact of any form of urban redevelop-ment. Priority setting (in the socioeconomic plans)and implementation of physical planning are separ-ated and, therefore, are difficult to coordinate.

There is no institution with the mandate andcapacity to elaborate and enforce planning and devel-opment control frameworks for all stakeholders in thedevelopment process. As a consequence, there is littleor no strategic planning orientation in the preparationof urban plans. Moreover, the “master plans” asvision statements for a distant future tend to be bothunrealistic and unavailable for public inspection. Dataand plans continue to be treated as secret documentswhile “ informal” private-sector action has filled in thegaps left by the ill-equipped public-sector planning,with the local inspectors’ “ informal” blessing at aninformally paid price. Forbes and Le (1996) describedthe inadequate planning and management situationseveral years ago, and at present it still is less than sat-isfactory.

Fig. 1 summarizes the fundamental changes in theurban development processes that have occurred inthe wake of the Doi Moi reforms, while the planningsystem has not been able to become responsive to themuch more liberal economic setting.

Urban economic and physical patterns priorto Doi Moi

Historical sketchEstablished as a city in AD 210, Hanoi grew from

a harbor on the banks of the Red River. In 1010, thecity, then named Thang Long, became the Vietnamesecapital under the Emperor Ly Thai To, the founderof the Ly dynasty. At that time, the city consistedof two parts: the Royal City (Hoang Thanh) and theCommoners’ City (Kinh Thanh).

Beginning in 1873, French colonial forces invadedHanoi because of its strategic importance for overlandtrade with the Chinese market and developed the cityas the capital of the Indochina Union. The colonialregime added the French Quarter as an importantelement of townscape in Hanoi, an area with a chess-board network of wide avenues and boulevards andwith Western technical infrastructure. Under Frenchdomination, Hanoi was a “consumer city” with tradeas a main economic activity and industry limited toa few backward manufacturing plants.Currently, Hanoi has a population of 2.67 millioninhabitants and an annual average growth of 2.9 per-cent. The city is divided into seven urban districts(covering an area of only 84.1 sq km) and five sub-urban districts covering 834.4 sq km. Around 52 per-cent of the population lives in the seven urban dis-tricts (HSO, 2001), but much of the present urbanexpansion takes place in the suburban districts.


Figure 1 (a) Urban development process in the centrally planned economy of Vietnam prior to Doi Moi (before 1986). (b) Mixedfactors in the urban development processes in the transitional economy of Vietnam since 1986

Hanoi under the centrally planned economyAfter the end of the colonial regime, the communistgovernment planned to transform Hanoi into the capi-tal of socialist Vietnam that served not only as a polit-ical and cultural center but also a great industrial city.One of the primary tasks was to eradicate privatelyowned commerce and industry, and collective owner-ship in the metropolitan economic structure was rap-idly achieved during the 1958–1960 period. By 1960,the agricultural output by the collective cooperationmade up 67.5 percent of the total production whilethe state industrial sector produced about 70 percentof industrial output (HSO, 1984).

378

In line with the communist development theory thestate allocated large national resources and foreign aid(from the socialist block) to boost the industrial sectorin Hanoi. The share of the industrial sector to totalsocial output increased rapidly from 52.8 percent in1960 to 78 percent in 1978 but reduced to 53.8 per-cent in 1985 owing to the economic crisis. Despiteserious damages to the city infrastructure and econ-omy, the bombing of 1965–1972 could not stop theeconomic development of Hanoi. The value of fixedassets of the material production sector in the 1966–1972 period increased six times over the 1961–1965period (HSO, 1984; 1989).


By 1960, the private sector virtually ceased to exist,but, given the social needs arising from the wartime,the state faced difficulties in retaining its monopolyover the economy. So it had to accept the operationof a number of small individual businesses to meetthe people’s demand. As a result, private sector con-tribution to national income increased from 6.04 per-cent in 1970 to 18.6 percent in 1985, i.e., just beforeDoi Moi (Table 1).

Considered as non-productive activities, commer-cial functions were not highly appreciated in a societywhich offered full employment, housing, health care,and education. The contribution of commercial activi-ties to national income declined from 32.4 percent in1960 to 20.9 percent in 1978. Since the liberation ofHanoi, the authorities reorganized the private small-scale traders and shop owners in cooperative groupsand developed a network of state commercial storesfor retail and food service. So the proportion of stateretailing to total trade increased from 16.2 to 65.6 per-cent from 1956 to 1985 (HSO, 1984; 1989).

Socialist patterns of urban structureAs a result of the centrally planned economy duringthe more than thirty years till 1985, the urban spatialstructure of Hanoi developed features similar to thoseof Soviet or Chinese cities. Such spatial patternsreflected the common ideology and political economyadopted by Vietnam and the other socialist countries.The socialist cities relied on models of production andsocial organization in which major emphasis wasplaced on industrial development and self-reliantforms of urban social life. Places of employment andliving were encouraged to be closely connected in theform of self-contained communities within the city,providing not only employment and housing but alsofood, health care, education, and other basic services.

Industrial zones: The socialist patterns of Hanoiwere reflected first by the linked development of anumber of Soviet-type industrial zones and residentialneighborhoods. Since the 1960s, industrial develop-ment has been concentrated on the fringe areas to real-ize the economic goal of rapid industrialization. By1985, there were nine industrial zones constructed,with about 150 central and local state factories (JICA,1995). Each of those zones was specialized in a parti-cular sector of manufacturing. Unlike the Chineseindustrial areas, which contained large self-sufficientresidential communities, the industrial zones in Hanoi

Table 1 Economic contribution to national income of Hanoi City in 1960–1985

Economic Sectors 1960 1970 1975 1980 1985

State sector 83.8 74.55 75.26 64.5 66.2Collective sector 16.20 18.91 15.68 15.5 15.2Private sector - 6.54 9.06 20.0 18.6Total 100 100 100 100 100

Source: Hanoi Statistical Office (HSO, 1984 and 1989)

379

are of smaller size (the largest being 80 ha),developed independently, but with close connectionto residential communities. Economic difficultiesfaced by Vietnam at its early stage of economic resto-ration as well as the American attack on Hanoi con-strained the construction of large-scale industrialtowns that could become bombing targets.

The industrial zones are located in the urban fringeof the old city along the main axial road and the cross-ing between these and the ring road (Map 1). Locationcriteria were, among others, good accessibility totransportation (responding to the need of resourcemobilization), availability of land (minimizing thecost of resettlements when land allocation was freeof charge) and pollution prevention (avoiding winddirections that would bring industrial contaminationto residential areas). The strategy of industriallocation at the fringe also allowed restriction of thesize of Hanoi, preventing its further expansion, whichwas considered as too large for good management.

Residential quarters: Another dominant patternwas the development of Soviet-type residential neigh-borhoods or “ living quarters” in the surroundings ofthe inner city and industrial zones to accommodateworkers from the manufacturing plants and offices.Organized according to Soviet urban principles, a sin-gle living quarter contained a number of four- to five-storey collective walk-up flats that were connected inwalking distance to small shops for the basic needs,kindergartens, primary schools and recreation areas.

The homogenous appearance of industrial and resi-dential patterns in Hanoi’s urban structure was poss-ible owing to the command-type planning in the cen-trally controlled economy. Main sources ofinvestment (state budget, foreign aid, as well as stateenterprises’ sources) were allocated by top-downdevelopment initiatives and canalized through statecontrolled investment procedures for development.By 1981, the state sector owned about 4,200,000 sqm, representing 60 percent of the total housing areaof Hanoi (HPC, 1997). Urban plans were preparedunder Party and state guidance (in the form of direc-tives and resolutions) and subjected to developmentstrategies relying on rapid industrialization and socialreorganization. Land was allocated to industrial andhousing development without charging land rent andaccording to central planning rather than marketdemand.

Inner city developments: Excessive land supply


Map 1 Spatial structure of industrial zones and living quarters in Hanoi before Doi Moi (compiled data from Hanoi ChiefArchitect Office)

led to rapid expansion of industrial zones outside thecity center, which was in sharp contrast to the limiteddevelopment in the inner city. Government policyfavored the development of industrial zones while itneglected commercial services. Because of the dis-crimination toward the “consumer city” , the tertiarysector was relatively small and there was littledemand for shopping centers, offices, and hotels thatmight need the central sites. Commercial service waslimited to a network of about 300 state and collective

380

retailing stores located throughout the city (HSO,1984).

There was little land redevelopment in the citycenter because the government could not afford thecost of relocating the residents in this densely popu-lated area. The built up fabric of the city as a whole,which was characterized by low-rise buildings andrelatively low construction density, grew slowlybecause the state limited migration and urban devel-opment. Within the city, there was much vacant land


as well as water bodies because development wasconcentrated on industrial and residential zones. Oldresidential areas were neglected due to financial con-straints. Land use change was difficult due to the lackof a land market and the the land user had to continuewith the status quo use or what was determined bythe command planning system. The absence of a for-mal land market led to inefficient structure of landuse and inequality among land users. Subjected toinsufficient development of housing and urban facili-ties, the old center suffered from high population den-sity and decaying built environment.

Economic reform policies and citydevelopment patterns, 1986–2000Multi-sector economyThe economic reform opened a completely new erafor developing the non-state economic sector. Despitestill being discriminated, the local private sector(including the household economy) achieved a rapidexpansion. In 2000, the registered number of Hanoi’snon-state enterprises accounted for 5869 units,included among them 961 private enterprises, 4643limited liability companies and 265 joint-stock com-panies. More than 90 percent of these enterprises arenewly established while the rest resulted from thechange of the state and collective ownership inresponse to the demand of the market mechanism. Inthe ten years up to 1995, the number of individualsinvolved in private commercial activities increasedrapidly from about 36,000 to 81,300.

In Hanoi’s reformed economy, foreign directinvestment (FDI) has been playing an increasinglyimportant role. By December 2000, about 430 foreignfunded projects have been licensed with a total invest-ment of US $ 8515 million. FDI enterprises accountfor 32 percent of the total industrial production valueand 33.7 percent of export value. During the period1988–1994, FDI projects have been concentrated inthe real estate development and telecommunication,but after 1994 they shifted to industrial and other sec-tors. FDI in hotel, office, and urban development rep-resents nearly 60 percent of total capital investment(HSO, 1999; 2001). Douglass (2002) pointed out that90 percent of all non-energy FDI in Vietnam is con-centrated in Hanoi and Ho Chi Minh City.

There are considerable changes with regard to thecity’s economic structure and development (Fig. 2).The state-owned sector still plays a dominant role inthe city economy but has been reduced from 72.9 per-cent of GDP in 1990 to 63.1 percent in 2000. Thelocal non-state sector has a relatively minor role, con-tributing 27.1 percent of the municipal GDP in 1990and reducing to 21.5 percent in 2000. The foreigndirect investment increased from zero in 1987 to 13.3percent of the city’s GDP in 2000 (HSO, 1995; 2001).

The state capital lost its absolute dominance.Between 1990 and 1997, total mobilization of invest-ment in Hanoi was about US $ 4.76 billion with 14.6

381

percent from non-state sources and 56.3 percent fromforeign sources. The state sources represented only29.1 percent of the total investment. Industrializationstill continues to be a focus state strategy for develop-ment with a high level of 27.3 percent of the statebudget allocated for industrial investment (Chau,1998, p. 3).

The renovation process has liberalized the economyby recognizing the importance of trade and serviceand opening the tertiary sector to investment of non-state enterprises. As Table 2 shows, the city economyshifted towards an increasing role of services. Thecontribution of commerce, service, and tourism to thecity’s GDP increased to 62 percent in 1990 but fellagain slightly to 58.2 percent in 2000. Industrial shareto GDP fell initially up to 1990 due to the economicdecline at the beginning of the reform but rose againto 38 percent in 2000 with the active contribution offoreign capital. Meanwhile, the agricultural portion ofGDP sharply declined to 3.8 percent in 2000 becauseof low investment priority. Hanoi has increased itsGDP 11.2 times between 1985 and 2000 and currentreal income per capita has reached about US $ 990(HSO, 1999; 2001).

Commercial activities in Hanoi expanded rapidlywith different types of commodities and service tosatisfy increasing demand of the population. The capi-tal city has become a huge commercial retailing centerwith more than 75,000 sales points, mainly in theprivate sector. Private retailing increased from 38.7percent of total sales in 1985 to 63.8 in 2000 (HSO,1984; 2001).

Urban transformation processesThe city spatial structure has experienced consider-able transformation as central planning influences arebeing replaced by market mechanisms. Urban patternsdivorced the self-reliant but often monotonous formof industrial–residential linkages of the pre-reno-vation period. What was new after 1986 was theappearance of foreign-invested industrial zoneslocated in rural outskirts and the rampant irregularresidential expansion into the suburban villages.There have also been considerable spatial changes dueto accelerating commercial redevelopment in the citycenter. Such new patterns are described in the nextfew paragraphs before commenting on the new chal-lenges to urban planning and management that havearisen. The point here is not so much to provide adescription of the more significant changes in the city,but to look for the causes of “what we see” , i.e., themanifestations of the underlying changes in the polit-ical economy.

New industrial zones in isolated rural areas Becauseindustrialization is still a priority policy under theeconomic reform, the city started to construct sevennew industrial zones apart from rehabilitating someof the old industrial zones established in the 1960s.Six of these have been developed with foreign capital.


Figure 2 Distribution of Hanoi Economic Structure in 1990–2000 (HSO, 1995–2001).

Table 2 Sectoral distribution of Hanoi economic structure in 1985–2000

Economic Sector 1985 1990 1995 2000

Industry 37.2 29.0 33.1 38.0Services 55.5 62.0 61.5 58.2Agriculture 7.3 9.0 5.4 3.8

Source: Hanoi Statistical Office (HSO, 1999 and 2001)

Almost all new industrial zones are located on theother side of the Red River in isolated areas of therural districts of Gia Lam (see Map 1) and Dong Anh(further north of Gia Lam, not covered by Map 1).Although they have modern infrastructure and stan-dardized waste treatment facilities to minimizeenvironmental pollution, they have attracted only 22plants, all of which are foreign owned or joint ventureenterprises (Quang, 1999).

Two contradictory forces –state policies and marketdemand – have been playing mixed roles on drivingthe industrial location process: On the one hand, thereis the market-driven choice of industrial zones, buton the other hand, there is the influence of state-determined land prices.

1. The choice of industrial zones is responsive to mar-ket demand because it is made by foreign investorsbased on an analysis of the whole cost. Such mar-ket-driven decisions are also matched by city plan-ning since the local authorities plan to relocate pol-luting factories that affect the community’senvironment. A master plan for industrial develop-ment in Hanoi prepared with JICA assistance in1995 proposes to move all polluting industries tothe outer ring road or the city boundary. Accord-ingly, new industrial zones have been shiftedtoward isolated rural districts where land valuesare lower.

2. Nevertheless, decisions for manufacturinglocations are also influenced by the state policieson land pricing. Industrial zones are not attractivefor the local enterprises given their relative highcost of rent compared with land prices decided bythe government. For example, the market cost for

382

renting land in the foreign-funded industrial zone“Sai Dong A” varies between US $ 2 and 2.7 persq m per year while the land rent determined bythe state in the old industrial of Thuong Dinh islower, oscillating between US $ 1 and 1.4 per sqm per year. State intervention in the land marketby fixing land values is distorting the land and pro-perty market. Given the state subsidy in land costand the lack of pollution charges, the majority oflocal factories apparently have not decided to moveout of the city center. Hanoi inner still retains ahigh number of factories (i.e., 40 percent of allindustries). These concentrations of industryexplain the unfavorable living conditions, whichbadly affect the health of workers and other peopleliving in the surrounding areas (Quang, 1999).

Diversification of housing models and patterns Soonafter launching the new policy, there was a boom inhousing construction by both private and state sectors.The state introduced an open-to-market housing pol-icy with a favorable enabling framework. Fueled bymultiple sources of capital investment (state, collec-tive, and private), housing has now diversified indesign and spatial patterns.

In the public and collective sectors, four successivehousing models have been adopted for residentialdevelopment in Hanoi, i.e., (a) state and people part-nership, (b) self-built housing by state organization,(c) self-built housing on subdivided land, and (d)comprehensive housing projects.

Under the first model, the household contributesfunding while the state provides the basic infrastruc-


ture and organizes for construction arrangements. Inthe second model, the government allocates land tostate institutions and then these have responsibilitiesto mobilize funding for the construction of theiremployee’s houses. In the third model, the construc-tion companies develop the infrastructure and subdiv-ide the developed land for sale; after that, buyers areresponsible for building the houses by themselves.Despite contributing to easing the housing shortage,these models have created a number of urban prob-lems, such as inconsistent designs, lack of infrastruc-ture and inefficiency of land use. Free handling ofland and housing development by the public organiza-tions and individuals led to chaotic situations of urbandevelopment with inefficient provision of infrastruc-ture and property speculation.

Since 1996, a new housing model in the form ofcomprehensive projects with the coordinated develop-ment of housing, technical and social infrastructurehas been introduced. This housing model is reportedto be suitable for the development of residential areas,with improved facilities as well as better landscaping.

Since the reform, the family households have beenplaying a crucial role in housing production. Accord-ing to official statistics, between 1985 and 1997, about70 percent of new accommodation in Hanoi was con-structed using the financial capital from householdand private sources (Luan et al, 2000). Spontaneousdiversity and irregularity are common features of thisso-called self-built (or informal) housing develop-ment. It is estimated that as much as 80 percent ofnew housing is in the self-built sector. Most privatehousing construction is undertaken even withoutofficial land use right certificates, and certainly with-out building permits, but nevertheless, it is recognizedby the public and, informally, by the government.Buying and selling of both land and housing throughthe informal market have become common place.

There have been many violations of land use regu-lations by both household construction and even stateprojects in the city, particularly in peripheral areas.Very limited sanctions have been imposed againstsuch violations. The regulation enforcement has beenweak while the pressure of development is immense.In addition, many local authorities lack the humanresources and a sufficient development control frame-work to implement the construction regulations. Theabsence of planned affordable new housing is leadingto further congestion and growth of illegal settle-ments.

Broken industrial and residential linkages Under theinfluence of market forces, the previously close link-age between industries and residential developmentwas broken. Current decisions for a new residentiallocation are not subjected to a public assessment ofits connection with work places as in the past but toprivate checks of land availability and cost. Opport-unities for business and service development in thecity center have led to a rapid increase in land prices.

383

Housing and land prices in Hanoi have increased somuch that many low-income families sell housing inthe central city locations and move to the outskirts.

Because of lack of space for development in thecentral area, residential development is shiftingtoward vacant land inside old villages and the out-skirts where rural land use is relatively inexpensive.According to statistics covering 837 housing projectsundertaken during the 1986–1997 period4, 60 percentof these, representing half of the total developed land,was located in the zone 2–5 km from the city centerwhere many old villages are situated (Table 3).

The urban fringe has also become attractive forstate projects and household-initiated construction.(The term urban fringe is used here to define a tran-sitional rural–urban area lying immediately outsidethe boundary of an urban area and characterized bya diversity of land uses). Rural to urban land conver-sion is taking place largely in the urban fringe zone 5–8 km from the center, with 26.5 percent of the projectsnumber and 30.4 percent of the total land area. Therural area is rapidly being transformed into residentialuse, replacing agricultural cultivation. From 1988 to2000, Hanoi has lost an average of 268 ha of ruralland annually, which constitutes an increase of 35 haper year compared with the rate experienced in1978–1988.5

Commercial redevelopment in the central area Dur-ing the central planning period, Hanoi had not seen aconcentration of business activities in its center.Socialist cities are often characterized by featuressuch as inefficient use of land (from the point of viewof a market economy) and the absence of a centralbusiness district (CBD). With the advent of economicreform, service and trade activities have been intensi-fied in the capital city. Indicators are the increasingnumbers of tourists, local and international compa-nies, as well as the establishment of joint ventures.Between 1990 and 2000, the number of foreign visi-tors to Hanoi has grown from 47,000 to 320,000 peryear, while domestic tourism increased from 22,000to 530,000 annual visitors. Foreign representativeoffices increased from 72 to 717 units during the1988–2000 period (HSO, 1995; 2001). Accordingly,there is an increasing demand for the construction ofhotels and other commercial and residential facilities.

The return to commercial enterprises led to areinforcement of a nearly monocentric model for thecity’s spatial structure. Hanoi’s central area is fastbecoming a dynamic scene of business activity,reducing its previous planned residential and adminis-

4Database on residential projects, private and state-owned hotels,and foreign funded property projects collected by Nguyen Quangfrom the Hanoi Chief Architect’s Office and verified by fieldwork,and then processed using MapInfo Software. It is the first time thatsuch data are available in the form of thematic maps.5Detailed data (that are not normally available) collected fromHanoi Cadastral Department.


Table 3 Spatial distribution of residential projects in 1986–1997

Distance Housing Project Land AllocatedNo. Percentage Area (sq. m) Percentage

0--2 km 39 4.66 107,802 2.912--5 km 499 59.62 1,841,720 49.735--8 km 222 26.52 1,126,299 30.41�8 km 77 9.20 627,592 16.95Total 837 100.00 3,703,413 100.00

Source: Data compiled from Hanoi Chief Architect’s Office (HCAO)

trative profile. The term central area is used here torefer the historic core of Hanoi which was built upunder the imperial and colonial domination. This areacomprises three components: Ancient Quarter, Cita-del, and French Colonial Quarter (included in thisarea is a southern colonial extension belonging to HaiBa Trung district). Their boundaries have beendelimited tentatively by several local and foreignresearchers (Logan, 1995; AusAID, 1996; Thong,1997).

The Ancient Quarter (36 Old Streets) is the historiccommercial core of Hanoi that had grown outside thewalls of the ancient citadel since the imperial period.This traditional trading quarter covers an irregularnetwork of relatively narrow specialized businessstreets flanked by traditional narrow shophouses (theso-called “ tube-houses” ), temples and pagodas. Theoriginal commercial function of this area that hadbeen discouraged under the central planning period,has become dominant again, with a rampant expan-sion of small-scale private businesses and new struc-tures most of which do not have construction permitsalthough they have been “ tolerated” by the inspectorsin charge. The most visible change consists of four- tosix-storey privately owned mini hotels that are beingerected on the small plots previously occupied by theshophouses. These changes have already altered thecharming historical fabric of the area. According to arecent survey6, about 40 percent of the total of 202private hotels that have been constructed in Hanoisince 1986 have been built within the limited area ofthe Ancient Quarter (Map 2).

The French Colonial Quarter now plays the role ofan incipient Central Business District (CBD) inHanoi. The French urban fabric with its broad tree-lined streets previously flanked by luxury villas andpublic buildings makes this area the most attractiveplace to live and do business. Since the reform, thecentrally located and highly accessible land in theFrench Colonial Quarter (FCQ) has become the mostexpensive property in the city. The great majority ofheadquarters of representative offices, embassies,joint ventures and newly established privateenterprises is concentrated here, creating high demandfor office and hotel space. In response to such demand

6The survey was carried out by Nguyen Quang in 2000–2001

384

and facilitated by the introduction of the land law,privatization and foreign investment policy, both priv-ate local and international investors have redevelopedparts of the FCQ for commercial activities. The trans-formation in the built environment is reflected by theaccelerating construction of large hotels, office andapartment buildings (typically with foreign finance)and the development of low-rise mini hotels, smalloffice and business buildings (funded mainly by Viet-namese private investment). Half of all propertyinvestment projects with foreign capital in Hanoi areconcentrated in the FCQ. Between 1988 and 1997,88 buildings with more than eight storeys have beenconstructed in the city of Hanoi, and 36 percent ofthese are located in the FCQ.7

More than 55 percent of the foreign investmentprojects related to property in the whole city andnearly 30 percent of the total capital investment areconcentrated in the innermost zone (with a radius of2 km) of Hanoi (Table 4). Many of these projectshave been completed recently or are still under con-struction. High-rise structures with foreign capitalwere primarily erected on land previously occupiedby factories, public buildings, or open space, to avoidresettlement costs. The high-rise buildings have con-struction permits, but their locations have not beencoordinated between the agencies that are in chargeof city planning and development control.

Local-investment projects were financed by twosources: state enterprises and the private sector. Alongwith the new market economy, the state is graduallyceasing or reducing the subsidy to public enterprisesso these have to shift to profit activities. Many statecompanies have made use of their land assets byrestoring and reconstructing their headquarters forcommercial, tourist, or other economic activities.Similarly, private companies and households havereconstructed old residences to accommodate theirbusinesses in the form of mini hotels, shops, offices,shophouses, and others. Compared with the foreigninvestment proposals, local businesses are smaller inproject scale and size of capital investment. A fewyears ago, it was estimated that there were about16,000 private businesses in the Hoan Kiem district,of which at least 50 percent were located in the

7Data from Nguyen Quang’s survey.


Map 2 Distribution of priviate and state-owned hotels and foreign funded property projects in Hanoi after Doi Moi (compileddata from Hanoi Chief Architect Office)

Table 4 Spatial distribution of FDI property projects in Hanoi, 1988–1997

Distance from center FDI Property Projects Capital Investment LandNo. % (million US $) % Area (sq. m) %

0-2 km 27 55.10 750 54.95 80,354 29.632-5 km 20 40.82 536 39.27 144,630 53.335-8 km 2 4.08 79 5.79 46,200 17.04�8 km 0 0.00 0 0.00 0 0.00Total 49 100.00 1,365 100.00 27,1184 100.00

Source: Data Compiled from Hanoi Chief Architect’s Office (HCAO)

385


Ancient Quarter and another 30 percent in the FCQ(AusAID, 1996). This trend has since continued.

Large and attractive villas built from the late 1880sto the 1930s are the prevalent urban form of the oldcentral area. Foreign firms and embassies that preferestablishing their residences and offices in those villasrepresent a new demand for renovation and resto-ration work (Parenteau et al, 1995). Koperdraat(1998) found that the number of residential villas wasreduced from 435 in 1986 to 358 in 1997, and in themeantime, more conversion to commercial or admin-istrative use has taken place. It may be argued thatthis form of “commercial gentrification” is far betterthan redevelopment (which is usually insensitive tothe character of the area), as it maintains, and evenimproves, the historical setting, albeit at the price ofsocial change.

The inner city changes have produced positive andnegative aspects. On the one hand, there is the econ-omic growth of the area and the newly created localemployment. On the other hand, however, the unor-ganized changes without proper planning and regu-lations have already led to overcrowding and trafficproblems, loss of open space, and damage to thearchitectural and environmental values of Hanoi’sheritage that has been deplored by many critics(Logan, 1995; Austin, 1996; Thong, 1997).

A comparison of the change in the two parts of thecity core reveals the differences in the driving forces:The area of the “36 Streets” with its fragmented pat-terns of land parcels and ownership lends itself tosmall-enterprise investments in mini hotels and smallretail stores. The French Colonial Quarter, however,with its larger parcels that are often in public owner-ship, provides ideal locations for company offices andlarger-scale commercial land use, apart from insti-tutional uses including foreign missions. What ismissing in the underlying “perfect logic” of a newlyliberated urban land market is the guidance by aninformed and capable city planning system whichwould have to balance the interests of the residents,new land users, urban design, and historical identityin shaping the city.

The need for adjusting and strengthening urban man-agement functions The changing urban patternsreflect the mixed influences of the new market forcesand the old government interventions. Privateenterprises, foreign investors, and individual house-holds have emerged as new development actors. Thecommercialization of land and housing has introduceda new mechanism for urban development with broadpluralist participation. In spite of still being heavilycontrolled by state intervention, land (or more pre-cisely, land use rights) and housing have becomecommodities and their transfers respond to price sig-nals. Urban development has accommodated private-sector participation and the state has reduced its directcontrol, but urban planning as a whole has not beenadjusted to the new economic system.

386

Land prices and land allocation continue to bedetermined by established government control ratherthan in response to market demand. Without strategicfocus, the current master urban planning methods arenon-participatory, rigid and thus generally discourageformal non-state contributions in urban planning.Therefore, from the deficiencies of the formal plan-ning sector, a large “ informal sector” of urban devel-opment has emerged that is very visible, wasteful inusing land resources at the periphery, and incompat-ible with the historic fabric of the inner city, but toler-ated (even supported) by the inadequately functioningpublic sector. This is neither satisfactory in terms ofefficiency criteria nor is it acceptable on the groundsof social equity.

Two main mechanisms of urban development haveco-existed in the transitional period since 1986, (i)the return to market forces determining the choice ofprofitable locations for private property development,and (ii) the continuance of a largely inflexible andinefficient system of state interventions that are notattuned to the new market-based framework. As aresult, urban development is moving ahead in a lessthan satisfactory way, where many “bad” private pro-jects have slipped through the controls while some ofthe “good” projects are held up by the cumbersomeapproval system. The rampant “ informal” redevelop-ment of the inner city, especially in the area of the“36 Streets” has already changed the character of thehistorical core beyond recognition. The same can besaid about most of the large commercial redevelop-ment projects in the French Quarter where some ofthe significant elements of Hanoi’s townscape havebeen lost. On the other hand, factories located in thecity center have not moved away to provide space formore suitable development because the state con-tinues to subsidize their operations.

Findings and conclusionsThe reforms introduced since 1986 in response to themacroeconomic crisis have produced radical changesin the political economy of Vietnam. The centrallycontrolled planning model has been replaced by thetransitional model, where the free market has increas-ingly influenced resource allocation. The economicreform has brought radical changes toward privatiz-ation and decentralization.

Since the promulgation of laws and regulations onforeign investment, increasing amounts of foreigncapital have impacted on urban development. Withthe introduction of the 1988 and 1993 Land Laws andrelated regulations, land has largely become a com-modity in practice. A property market has emerged,even though the price framework is determined by thestate and land transfers are constrained by the regulat-ory system. However, the urban planning system isonly beginning to play a more flexible role withrespect to major market determinants and it has notyet adopted a strategic planning framework.


The relationships between the changes in the polit-ical economy and their spatial manifestations in thecity (with a focus on two typical areas in the citycenter and in the fringe areas) may be visualized bythe diagram in Fig. 3. The diagram indicates the inter-play of factors arising from the legal and economicframework (on the left side of the diagram) as theyrelate to the specific changes observed in differentareas of the city (on the right side). While it is difficultto quantify the various types of linkages, the thicknessof the arrows in the diagram conceptually reflects thefindings of the empirical research that has been sum-marized in this paper.

For example, the main factors responsible for thetransformation of the historical city center (36 Streetsand French Colonial Quarter) are the sharp increasein the demand for small and large-scale commercialfunctions due partly to the influx of foreign directinvestment as well as growing domestic capitalinvestment. Furthermore, the new private propertydevelopers have logically concentrated on the cen-trally located urban land with the best accessibility,but the weak city planning administration has failedto guide the process by appropriate incentives, designguidelines and infrastructure investments in alterna-tive CBD areas nearby.

Similarly, the transformation of the formerly agri-cultural fringe area has been spurred by the demandfor affordable residential land that had been generatedby private housing investments and home ownership.Meanwhile, the government planning machinery hasnot been able to keep pace with the rapid increasein peripheral urban development by issuing land usecertificates and by coordinating construction permitsand infrastructure provision and financing.

Figure 3 Impacts of Doi Moi in the built environment of Hanoi

387

In both cases, the gaps between the dynamic mar-ket-driven demand for urban development and theslow and unresponsive bureaucratic functions havebeen bridged by a thriving “ informal” (or “ illegal” )management sector that is known to, and used by,all parties concerned. It delivers the required servicessomehow, with delays and in less than optimallocations, with social costs involved that are notcovered by the informal payments that change handsin the process.

When urban development was under absolute statecontrol, land and capital resources were not usedefficiently. The opening to market forces has led to asomewhat better use of resources given the compe-tition among multiple development actors, but it hasalso led to unwanted effects on the city’s culturalidentity, as the public management system did notchange fast enough.

There is an urgent need for turning the old com-mand-and-control system into new forms of stateinvolvement to ensure social equity goals and to avoidmarket distortions. It is now necessary to deepen theinstitutional reform with regard to the urban planningand management system. Hanoi as the capital citywith a relatively well preserved historic fabric and along period of Socialist governance is more visiblyaffected by the rapid changes than Ho Chi Minh City(where the strict Socialist period lasted for just aboutten years after the unification in 1975). However, theimpacts of the new political economy on the builtenvironment apply equally to the growing medium-sized and smaller cities all over the country wheremajor reforms in the institutional and legal frame-works are needed.

The overdue reform of the urban management and


planning system must address the issues that haveemerged from the unresolved competition betweenthe old command-and-control system and the newmarket-based system: Inappropriate regulations andconflicting goals; lack of authority leading to uncer-tainty about official procedures and corruption; andthe lack of constructive communication mechanismsbetween the private and public sectors involved inurban development.

ReferencesAusAID, 1996. Hanoi Development Controls. Hanoi Planning

Development and Control Project. Hanoi: Prepared by OverseasProject Corporation of Victoria Ltd. for Australian Agency forInternational Development (AusAID).

Austin, G., 1996. Planning for the French Quarter. Hanoi Develop-ment Control Project. Hanoi: Chief Architect Office (CAO).

Ball, M (1986) Housing Analysis: Time for a Theoretical Refocus.Housing Studies 1, 147–165.

Ball, M (1986) The Built Environment and the Urban Question.Environment and Planning D(4), 447–464.

Chau, N. M., 1998. Financing for Investment and DevelopmentProjects Hanoi City. Internal Report. Hanoi: Hanoi People’sCommittee (HPC). (Vietnamese Language).

Douglass, M (2002) From global intercity competition tocooperation for livable cities and economic resilience in PacificAsia. Environment &Urbanization 14(1), 53–68.

Fforde, A and Wylder, S (1988) Vietnam – An Economy in Tran-sition. In Swedish International Development Authority(SIDA), Stockholm.

Forbes, D and Le Hong, Ke (1996) A City in Transition: SocialistReform and the Management of Hanoi. In The Dynamics ofMetropolitan Management in Southeast Asia, (ed.) J Ruland.Institute of Southeast Asian Studies (ISEAS), Singapore.

GDLA, 1996. Report of Seminar on Urban Land Administration.Hanoi: General Department for Land Administration (GDLA)and Royal Netherlands Embassy.

Gillespie, J (1998) Land Law Subsystem? Urban Vietnam as a CaseStudy. Pacific Rim Law & Policy Journal 7(3).

GSO, 2000. Statistical Yearbooks 1975-2000. Hanoi: General Stat-istical Office (GSO). Vietnamese Language.

Harvey, D., 1982 Limits to Capital. In University of ChicagoPress, Chicago.

HPC, 1997. Program on Hanoi Housing Development to the Yearof 2000 and 2010. Hanoi: Hanoi People’s Committee (HPC).

HSO, 1984. Hanoi in Thirty Years for Construction and Defenseof the Socialist Regime. Hanoi: Hanoi Statistical Office (HSO).(Vietnamese Language).

HSO, 1995. Statistical Yearbooks 1991–1995. Hanoi: Hanoi Stat-istical Office (HSO). (Vietnamese Language).

HSO, 1999. The Capital of Hanoi in Forty Five Years for Construc-tion and Development. In Hanoi Statistical Office (HSO).(Vietnamese Language).

HSO, 2001. Statistical Yearbook 2001. Hanoi: Hanoi StatisticalOffice (HSO). (Vietnamese Language)

388

JICA, 1995. Master Plan of Industrial Development in the HanoiArea. Hanoi: Japan International Cooperation Agency (JICA) -Nippon Koei Co., Ltd.

Koperdraat, A., 1998. Hanoi’s Colonial Villas in Transition – Func-tional Change and The Impacts on Villa Residents. An unpub-lished research study, University of Amsterdam.

Kovacs, Z (1994) A City at the Crossroads: Social and EconomicTransformation in Budapest. Urban Studies 31(7), 1081–1096.

Leaf, M (1995) Inner City Development in China: Implications forthe City of Beijing. Cities 12(3), 149–162.

Leaf, M (2002) A Tale of Two Villages: Globalization and Peri-urban Change in China and Vietnam. Cities 19(1), 23–31.

Logan, W S (1994) Hanoi Townscape: Symbolic imagery in Viet-nam’s capital. In Cultural Identity and Urban Change in Sou-theast Asia, (eds) M Askew and W S Logan., pp 43–69. DeakinUniversity Press, Geelong, Victoria.

Logan, W S (1995) Heritage Planning in Post Doi Moi Hanoi. Jour-nal of the American Planning Association (APA) 61, 328–343.

Luan, T D et al. (2000) Urban Housing. In Socioeconomic Reno-vation in Vietnam – The Origin, Evolution, and Impact of DoiMoi, (eds) P Boothroyd and P X Nam. International Develop-ment Research Center (IDRC) and Institute of Southeast AsianStudies (ISEAS), Singapore.

MOC, 1992. Renovating the Mechanism for Management of Capi-tal Construction. A Research Project Prepared by Institute forthe Construction Economics. Hanoi: Ministry of Construction(MOC). (Vietnamese Language).

MOC, 1995. Renovating and Modernizing the Urban Constructionand Management. KC 11 - 02 Research Project Hanoi: Ministryof Construction (MOC). (Vietnamese Language).

Parenteau, R et al. (1995) Impact of Restoration in Hanoi’s FrenchColonial Quarter. Cities 12, 163–173.

Quang, N., 1999. Main Problems for the Relocation of Dirty Fac-tories. Case Study Report for Project VIE/ 97/007 Environmen-tal Issues in Investment Planning. Hanoi: MPI - UNDP - SDC.

Que, H. V., 2000. The Changing Indeological Basis of PlanningPractice in Hanoi, Vietnam. Unpublished M.A. Thesis.Geelong, Victoria (Australia): Deakin University.

Rao, G M (1999) Intergovernmental fiscal arrangements in a tran-sitional economy. Regional Development Dialogue 20(2), 119–131with a comment by Dennis A. Rondinelli, pp. 132-133.

Riley, R (1997) Central Area Activities in a Post-communist City:Lodz, Poland. Urban Studies 34(3), 453–470.

Thong, N. Q., 1997. Planning Model and Method for Renovationand Development of the Central Area of Hanoi. Doctoral Thesisin Urban Planning No. 2.15.05. Hanoi: Hanoi ArchitecturalUniversity. (Vietnamese Language).

Van, H. H., 1999. To Complete the Grant of Land Use Certificatein Urban Areas by the Year 2001. Hanoi: Youth Paper, April4, 1999. (Vietnamese Language).

World Bank, 1990. Vietnam Stabilization and Structural Reforms.An Economic Report. Hanoi: World Bank.

Wu, F and Yeh, A G O (1999) Urban Spatial Structure in a Tran-sitional Economy – The Case of Guangzhou, China. Journal ofthe American Planning Association (APA) 65, 377–394.

Wu, F (1998) The New Structure of Building Provision and theTransformation of the Urban Landscape in MetropolitanGuangzhou, China. Urban Studies 35(2), 259–283.

changes in the political economy of vietnam and their impacts on the built environment of hanoi

Documents