Đổi Mới: The Reforms That Remade Vietnam (1986–present)

By the mid-1980s post-war Vietnam was in trouble. Hyperinflation around 700% in 1986, chronic food shortages, queue economies, mass emigration. The country was at peace but the economic model wasn't working.

In December 1986, at the Sixth Party Congress, the Communist Party of Vietnam launched Đổi Mới — literally "renovation." It was a deliberate shift from Soviet-style central planning to what the Party named a socialist-oriented market economy: free markets and private enterprise allowed, but under continued single-party political control.

What changed

The reform package was extensive:

• Agriculture decollectivised (1988). The disastrous collective farms were dismantled. Land was put back under household management with long-term use rights, and farmers could sell their surplus on the open market.
• Private business legalised. Family enterprises, then larger private firms, were allowed.
• Foreign investment opened. The 1987 Law on Foreign Investment was generous — and got more generous through the 1990s.
• State-owned enterprises reformed — partially privatised ("equitised") through the 1990s and 2000s.
• Currency stabilised. The đồng was repeatedly devalued and the multiple-exchange-rate system unified.
• Trade opened. Vietnam joined ASEAN in 1995, normalised relations with the US the same year, joined the WTO in 2007.

What didn't change

• Political system: still single-party, with the Communist Party of Vietnam as the sole legal political organisation.
• Land ownership: all land is still technically owned by the state; what individuals and companies hold is long-term use rights.
• Press freedom: limited. State and Party media dominate; independent journalism operates under tight constraints.

The results

The economic numbers have been remarkable for forty straight years:

• GDP growth averaged ~6–7% annually since 1990.
• Per-capita income rose from under $100 in 1986 to over $4,000 today (nominal).
• Extreme poverty dropped from over 50% to under 5%.
• Rice — once imported — Vietnam is now consistently a top-three exporter, alongside the US in coffee, and a major exporter of seafood, garments, electronics, and footwear.
• A young, urbanising, increasingly middle-class population of roughly 100 million.

The catch

Growth has come with the usual costs:

• Inequality — urban-rural and regional gaps have widened.
• Land disputes — the unresolved tension between state ownership and 30/50-year use rights drives recurring rural protests.
• Environmental damage — air quality in Hanoi and HCMC is bad and getting worse; the Mekong delta faces rising salinity and subsidence.
• Corruption — a near-constant background concern, periodically addressed by anti-corruption campaigns (most recently the Blazing Furnace campaign that has felled multiple senior officials since 2016).

Where Đổi Mới sits now

Forty years in, the reform model has produced an economy that looks like that of a normal middle-income country. The Communist Party retains political control, has shifted leadership generations smoothly, and has been pragmatic in foreign policy — taking US, Japanese, Korean, European, and Chinese investment without aligning fully with any of them.

The next decade's questions are middle-income transition (can manufacturing-led growth be sustained?), demographics (the country is ageing faster than people realise), and how to keep the political settlement intact through a rising urban middle class.