Golf course debate reflects Vietnam army's capitalist streak
Apr. 29, 2015
HO CHI MINH CITY, Vietnam (AP) — Vietnam's busiest airport, once a major gateway for thousands of U.S. troops headed for battle, is now the scene of a slow-burning controversy linked to the commercial clout of the country's powerful military.
To alleviate congestion at Ho Chi Minh City's Tan Son Nhat International Airport, top officials in the ruling Communist Party have proposed building an airport costing a whopping $15.8 billion about 40 kilometers (25 miles) away. But some city residents and aviation experts say it makes more sense for the airport to simply expand onto some adjacent land managed by the army. They wonder why the property is being used for a new golf course.
Using the adjacent land for golf is "irrational," said Le Trong Sanh, former head of the airport's flight management department. "We should take back the course."
The debate sheds light on a rarity in Vietnam: The appearance of conflict between the army's considerable financial interests and the public's interests.
The Vietnam People's Army — which on Thursday is celebrating its 40th anniversary of defeating the Americans — was for decades a rag-tag but tenacious military that also fended off France and China in the last century. Since the Vietnam War, it has added to its portfolio a dizzying array of enterprises and subsidiaries that span construction, airport services, shipbuilding, garment manufacturing and other sectors. Two of the best-known are cellphone operator Viettel and Military Bank.
According to government estimates, military enterprises had a before-tax profit of 46 trillion dong ($2.14 billion) in 2014. But analysts say the enterprises operate to some degree outside the Communist Party's control, and that the exact scope of their commercial dealings is unknown.
The army declined a request for an interview and did not respond to emailed questions about its commercial activities sent by The Associated Press.
Many armies around the world have corporate portfolios, and Southeast Asia's are no exception. Andrew Wood, the head of Asia country risk analysis for BMI Research, an international consultancy, said army enterprises play a smaller role in Vietnam's domestic economy than they do in military-dominated Myanmar, but a larger one than such enterprises play in China and Indonesia.
Viettel earned nearly $2 billion in pre-tax profits last year, or 85 percent of all profits reported by military enterprises, the state-run Zing News quoted the company's general director, Nguyen Manh Hung, as saying in January. Viettel has also expanded to nine markets across Asia, Africa and Latin America.
Many Vietnamese see military-linked companies as having more integrity than other government institutions, particularly state-owned enterprises. Financial scandals are common in Vietnam, but they rarely involve military personnel.
"This bank belongs to the military, so people trust it more" than other Vietnamese banks, said Vo Van Tam, a Ho Chi Minh City real estate developer, on a recent afternoon at a branch of the bank. Tam said he had a Viettel mobile phone subscription for the same reason.
Vietnam's banking sector has some of Asia's highest levels of bad debt. But Military Bank is among the sector's best performers and appears to be a relatively conservative manager of non-performing loans, said Peter Sorensen, managing director at ABB Merchant Banking, a Hanoi-based consulting firm.
Vietnam is one of 12 countries in the Trans-Pacific Partnership, a U.S.-led free-trade group that is currently being negotiated. American officials have said the TPP would likely include provisions designed to force government-owned enterprises to be more transparent.
Sorensen said military enterprises may feel pressure in the long term from that and other trade deals Vietnam is negotiating this year. But he doubted whether any specific effects would be clear in the short term.
In 2007, the Communist Party's powerful Central Committee ordered the military's 140 declared companies to divest from sectors that were not directly related to national security. That number declined to 98 within two years, according to an analysis of public records by BMI Research. But otherwise there have been few tangible results, said Carl Thayer, a Vietnam expert in Australia who has studied the army since the 1980s.
"Over time the government tried to push the military out of purely commercial activities," he said. "It looks like the impetus has died off."
Le Thi Thanh Hoa, who sells birds on a road beside the new golf course adjacent to the airport, said the army is the landlord for her business and dozens of others in the area.
"Doing business with the army is good because its prices are stable," she said, adding that she has paid the same rent — 30 million dong ($1,389) per month — for about five years. "The army's very powerful, and it controls this whole area."
The Tan Son Nhat Golf Course is about one mile (half a kilometer) away, on the other side of a security checkpoint. Its focal point is its clubhouse, the Him Lam Palace, a palatial building with marbled floors and an eight-tiered, gold-plated chandelier in its lobby.
On a recent weekday afternoon, workers were installing lighting and hoisting palm trees on the course as a smattering of golfers tried their luck at the tees and putting greens. A plane thundered by every few minutes on the nearby runway.
Him Lam, the private company whose logo is on the course's clubhouse, has "significant" Ministry of Defense contacts and participates in several large-scale projects on military-owned properties, an American diplomat wrote in 2006, according to a U.S. Embassy cable released by WikiLeaks. The cable said Duong Cong Minh, who is now Him Lam's board chairman, told the diplomat that land and property rents are among the ministry's primary sources of "off-budget" revenue. The company declined to comment.
The airport currently handles 20 million passengers a year and is projected to max out at its design capacity of 25 million by 2017. Vietnam's transport minister, Dinh La Thang, has said building a new airport is the country's only feasible option because expanding the airport would increase traffic, pollution and the potential for air accidents while requiring the relocation of 140,000 families that occupy 541 hectares (1,336 acres) of adjacent land.
But Sanh, the airport's former flight manager, said building another runway and terminal and some parking lots next door could boost the capacity to 45 million passengers a year. He added that the price tag of a new airport — nearly a tenth of Vietnam's $184 billion gross domestic product — would be too big a financial strain.
Last year he and a retired military pilot, Mai Trong Tuan, sent a letter to Prime Minister Nguyen Tan Dung outlining that position. They are still waiting to hear back.