Thang Long-Hanoi economy through historic stages
Under the feudal regime
Before becoming the country’s capital city, Dai La citadel was a residential area with a developed economy thanks largely to the geographical features it was endowed with – the citadel was located in the middle of a populous delta connecting to both waterways and land transport routes. That’s why King Ly Thai To chose Dai La to become the country’s capital city. In his Edict on the Transfer of the Capital, Ly Thai To declared “The ancient capital... is situated in the heart of our country. Its features resemble a coiled dragon or a crouching tiger. The capital is laid out on a North-South East-West axis, and is favourably situated with regard to the mountains and rivers. The site is large and flat, the fields high and sunny. Everything here flourishes and prospers. In comparison with the rest of our Viet land, this is the most beautiful site, the meeting place for people from all four corners of the kingdom to gather and live together. This vital centre deserves to be chosen as the eternal site for our capital city.”
According to ancient historic records, by late 18th century, the Thang Long citadel covered a total land acreage of 3,500 ha. Besides the King’s palace and the royal court facilities, the citadel boasted two economic zones with one lying along the banks of the Hong (Red) and To rivers, reserved for trade and handicraft business, and the other lying to the west and south of the citadel, dedicated to farming.
However, as the country’s largest urban area, merchant guilds and handicraft making wards developed in a robust manner, gradually crowding out farming-based guilds. Markets and ports were established one after another. The trades that saw the most activity at the time included weaving, dying, bronze casting, blacksmithing, carpentry, jewellery, shoemaking, and products made from bamboo and ceramics. Each trade was centred around a different street in the Thang Long citadel and to this day, many of the streets in Hanoi’s Old Quarter still bear the names of the trade based there.
Until prior to the French colonialists’ arrival (1882), the economy of Thang Long-Hanoi was largely self-sufficient, though it maintained trade ties with other northern cities and provinces. For example, Thang Long traders bought fish sauce from Nghe An province, salt from Nam Dinh province, and forestry products from northern and north western localities to sell in the citadel. They also reached out for trade with foreign partners. From the 16th-17th century, Thang Long saw the presence of shops owned by Dutch, British and Portuguese traders. Chinese traders had already been seen in the citadel for quite a long time ago.
Under French colonial rule (1882-1945 and 1947-1954)
After Hanoi fell into the hands of French colonists in 1882, its economy saw several transformations. The French capitalists established big companies or set up headquarters for enterprises based abroad in the capital city, such as the Dong Duong Mining and Metallurgy Company (1899), the Bac Ky Cotton, Fibre and Cloth Company (1900), and the Dong Duong Electricity and Water Company (1900), among many others. They built power generation plants, water supply facilities, vehicle repair plants, and leather tanning mills in addition to beverage and cigarette production plants right inside Hanoi. Major economic groups like Boy Landry, Poinsard et Veyret, Deni Freres, and LUCI competed against each other by opening their shops in the capital city, which monopolised the goods they traded in. The Bank of France also set up a branch in Hanoi, called the Dong Duong Bank.
In addition to the arrival of the French compradors, Hanoi also saw the presence of Chinese Vietnamese comprador capitalists who held a quite important role in the domains of imports and exports in the city. At the time, the Vietnamese bourgeoisie gradually emerged. They opened shops selling things produced locally or goods they bought from French and Chinese Vietnamese compradors. They also set up production workshops engaged in weaving, carpentry, embroidery, lacquer wares, ceramics, and construction materials. However, the Vietnamese bourgeoisie was hampered by French and Chinese Vietnamese capitalists, except for a few who had risen to become compradors.
Generally speaking, throughout French colonialism (1882-1945), Hanoi’s industrial production was crippled and mainly catered to the colonisers. Since trade was controlled by the French capitalists, Hanoi could only serve as a consumption market for French commodities. The city’s economy was typically colonial in character, being largely dependent on the “mother country”.
In 1941, Japanese fascists entered Hanoi and brought with them a number of Japanese businesspeople, who then quickly grew to monopolise the trade of such commodities as rice, farm products and ion ore. Only when the revolution broke out in August 1945, could the strangle-hold of French and Japanese capitalists and Vietnamese compradors end.
During 1947-1954 period when Hanoi was temporarily occupied by the French, its economy did not see any fundamental change, and, in fact, depended more than ever on the economy of the colonising country.
The economic restoration period (1955-1957)
After its liberation, Hanoi immediately faced numerous challenges. At that time, Hanoi’s economy was ‘consumption based,’ with trade being a main activity. In early 1955, Hanoi had only 18 enterprises operating stably. In 1957, the electricity output increased 32 percent compared to 1955. The water company installed an additional 28 km of pipes. Several new factories were built, including the Cau Duong Plywood, Thong Nhat Match and Hanoi Mechanics Factories. By 1957, the total number of state-owned businesses in the city rose to 45 with more than 9,000 workers. Private handicraft and industrial establishments received State encouragement through the provision of loans, materials and machines. Hanoi was home to 13,516 handicraft households employing 42,000 people and 957 private industrial establishments with more than 8,000 workers. At this time, several craft cooperatives were also established.
In 1955, Hanoi reorganised its private trading system through setting up distribution agents or encouraging small traders to shift to production. The State-owned trading sector gradually dominated the market with 10 companies and 55 shops in 1957 compared to three companies two years before. In 1956, many trading cooperatives were established in outlying districts.
For the agricultural sector, the suburbs of Hanoi completed land reform in early 1956 with 30,000 hectares allocated to farmers. The areas of growing rice and other crops were continuously expanded with increasing productivity and output. Compared to 1954, the area of rice cultivation increased by 126 percent; potatoes, 127 percent and vegetables, 298 percent.
The rice output reached over 14,300 tonnes in 1955 and 24,000 tonnes in 1956. The output decreased to over 11,700 tonnes in 1957 due to prolonged droughts.
Together with the restoration of production, farmers in outlying districts started to work together under the form of mutual aid teams.
Economic development and renovation (1958-1960)
Private capitalist industry developed during the 1958-1969 period. In 1958, Hanoi was home to 499 private industrial establishments in various industries who employed more than 5,000 workers and were mainly involved in producing consumer goods. The transformation of private industry was conducted from 1958-1960. In joint state and private business enterprises, production materials and assets were nationalised but their former owners enjoyed dividends and they and their families were provided with suitable jobs.
Regarding trade, private trading businesses made many positive contributions to production and to people’s lives, but they also bred negative phenomena such as speculation and price-fixing. In early 1959, six businesses were brought into the state and private joint venture system on a trial basis. At the end of 1960, the transformation was completed with all 412 family trading businesses included in the state and private business system.
Handicrafts and small traders were also collectivised with the inauguration of the handicraft cooperative mobilisation committee in 1958. The number of cooperatives rose from 164 in 1958 to 476 at the end of 1959. In 1960, 95 percent of the handicraft industry workforce followed the collective business model, working in 900 cooperatives.
For small traders, Hanoi had 815 cooperative groups made up of 8,511 households by the end of 1958. In 1960, the city launched five campaigns to mobilise small traders to join cooperatives, resulting in 95 percent of small traders working in collective businesses.
In agriculture, after land reform, farmers on the city’s outskirts were instructed to join collectives. At the end of 1958, the outskirts of Hanoi boasted 30 agriculture cooperatives, representing 3.87 percent of all farming households. In 1960, there were 279 agricultural cooperatives composed of 19,521 households, accounting for as much as 89 percent of all labourers in the sector, cultivating up to 82 percent of the city’s farm lands.
Regarding industry, the facilities and equipment of many enterprises and factories were renovated and many new establishments were built such as the Dong Xuan knitwear and the Thuong Dinh industrial zone. Most of these enterprises successfully fulfilled planned production targets. The State-run industry’s production value recorded a year-on-year rise of 49 percent in 1959.
The re-arrangement of joint state and private business enterprises helped boost the city’s industrial growth with its total production value rising by 24.6 percent compared with 1958. In 1960, enterprise management continued to be renovated together with the promotion of emulation movements to increase productivity and fulfil planned targets. The Thong Nhat Match Factory fulfilled its three-year (1958-1960) plan six months and three days ahead of schedule and won the title of the leading unit of the emulation movement of Hanoi’s industrial sector.
State-run trade continued to dominate the market, with its turnover rising from 145 million VND in 1957 to 173 million VND in 1958. Since 1959, State-run trade expanded its commerce in essential goods such as agriculture production and construction materials and rudimentary transport vehicles.
Hanoi implements first five-year action plan (1961-1965)
Despite the lack, and the untimely supply, of materials, State-owned industrial production value increased in 1961. The centrally-run and locally-run industrial sectors recorded year-on-year increases of 42 percent and 17 percent, respectively, compared with 1960. In the context of poor management phenomena, violations of labour regulations, embezzlement and wastefulness in enterprises, the State launched a campaign to renovate management and technology, rationalise production and fight against corruption and waste. In 1962, the city’s industrial production continued to develop with its value growing by 32 percent over 1961 through a diverse range of products in the fields of agriculture, transport, consumer goods and machine tools, among others. Although the US war in the north forced its evacuation in late 1964, Hanoi’s industrial production value increased by 112 percent in 1965. A number of new enterprises were established across the city, namely Hanoi Refrigeration Equipment, Rang Dong Bulb and Thermos Flask, Van Dien Phosphate Fertilizer, March 8 Weaving, Thong Nhat Electro-mechanics, Mai Dong Mechanical Engineering and Cu Chinh Automobile Repair.
Regarding handicrafts, cooperatives were consolidated and expanded. In 1961, 1,367 cooperatives and production groups were merged into 161 cooperatives, including 96 classed as high-grade. One year later, the remaining 400 cooperatives were merged into 199 cooperatives, helping to boost production. Meanwhile, however, weak management of craftsmen and production groups was reported. In late 1963, small industrial and handicraft production developed strongly in different professions, but, in some places, artisans abandoned their cooperatives to set up their own businesses. Handicraft and small industrial production value started to drop in 1964 from 270 million VND in 1963 to 179 million VND in 1964 and 168 million VND in 1965. This was attributed to sluggishness in directing orientations for each sector’s production development, the slack pace of reforming outsourcing mechanisms and discrimination between collective economy and State-owned economy, among other reasons.
In terms of agriculture, after it was expanded for the first time in 1961, the outskirts of Hanoi comprised four districts with 36,000 ha of cultivatable land farmed by 101 cooperatives. Pig and dairy cow farms were set up as well. The city also paid attention to irrigation work with a sewer through Cong Thon dyke completed in 1962 to supply water to more than 10,000 ha of rice crops in Gia Lam district and a project in the Hong North-South village in 1963 to irrigate thousands hectares of rice crops in Dong Anh district. The To river was deepened in 1964. Irrigation teams were set up in almost all communes. Electricity was brought to the outskirts to prevent droughts and tools were improved as well such as ploughs, rudimentary transport vehicles, etc. Since 1961, agriculture cooperatives were expanded, bringing the scale of the cooperative from 70 families to more than 100 families and merging small cooperatives into big ones and from the scale of the whole village into the whole commune. In 1963, the city launched a campaign to renovate the management of farm cooperatives in a bid to help them define production orientations, making plans and renovate labour and financial management, etc.
Concerning trade, the city paid attention to socialist trade development with the enhancement of market management and goods supplied by the State-run sector.
The export goods business company was founded in 1962 to collect sundries, handicraft products, processed foodstuff, and other goods. By the end of 1965, trade by the State-owned sector made up 85 percent of the circulation of retailed goods. The distribution network of State-owned businesses and trading cooperatives was expanded. Hanoi’s trading activities during the 1961-65 period made active contributions to securing the relationship among residential areas and economic centres as well as between urban and rural areas.
The war of resistance against the US (1965-1975)
In the context that the US shifted to the “limited war” in the South and launched savage bombing of the North, the Vietnamese people placed top priority on mobilising the entire nation’s forces to step up the war of resistance and defeat the US aggressors.
To achieve this, the North served as a huge rearguard and needed to consolidate the country and grow stronger in every aspect to support the South. Continuing to build up socialism was the best way to strengthen forces in the North.
From 1965, while creating the necessary armed forces to counter US bombings, Hanoi actively sped up the transformation of its economy and increased production, while ensuring it provided adequate protection.
Many businesses were evacuated and re-located elsewhere. A number of others that had been hardest hit by the enemy, such as the Yen Phu power station, the Gia Lam locomotive factory, the Hoa Binh plant and the Dong Anh transformer station, still successfully protected their workforce and maintained their production levels. Several enterprises also shared their equipment and employees with surrounding provinces to set up new facilities.
Despite the difficulties resulting from the war, the capital city’s industrial sector developed remarkably. Twenty-eight new businesses were established and a series of others were expanded and upgraded.
In 1968, Hanoi was home to 96 state-owned and state-private joint ventures and 331 cooperatives producing handicrafts. In particular, the manufacturing industry developed strongly, while the transport and food processing sectors gradually met the city’s growing demands during wartime.
From just a repairs workshop, the transport industry has expanded into a network capable of producing many components, equipment and vehicles which the sector had previously failed to manufacture, such as motorboats with 90-150 horse power engines, 100-tonne barges, coaches and trailers.
In agriculture, the farming cooperatives on the capital’s outskirts had improved their output and were using much more advanced techniques and production technologies.
New and innovative methods of farming were applied widely and many agricultural facilities were built. Dykes were reinforced and electricity networks expanded to supply power to 70 communes.
With these concerted efforts, the suburbs gradually became the capital’s garden growing fields of vegetables and rearing livestock, increasing its food output substantially. Hanoi emerged as one of the North’s two localities which harvested an average yield of five tonnes of rice per hectare.
During the 1969-1971 period, when attacks from the enemy had temporarily ceased, Hanoi restored and rebuilt its infrastructure, under especially difficult conditions. The war had disrupted the city, caused great losses and left heavy consequences in its wake. At the same time that the restoration was underway, the United States reopened the war.
The United States was defeated. On April 30, 1975, with the victory of the Ho Chi Minh Campaign, the south was totally liberated and the country was reunified after many years of separation. In celebration of the great festival of the nation, Hanoians tried their best to work and contribute to the country in order to adapt themselves to the new chapter in the nation’s history.
The post-reunification period (1975-1986)
Rising from the ashes of the war, Hanoi brought all its strengths into full play, including a political consensus, the spirit of the people and their revolutionary pride, its economic potential and abundant labour force, as well as economic cooperation and mutual assistance.
The initial results were very encouraging. In contrast to 1973--the first year the US invaders were forced to stop bombing in the north, and the beginning of the country’s economic restoration--1976 was the year economic restoration and development began in earnest, in the context of national unification, during which time the capital’s economic sectors experienced remarkable growth.
The majority of central and local factories destroyed in the war were rebuilt and expanded. The number of workers serving industries increased in both quantity and quality. The central factories’ industrial production capacity increased. The capital city’s management capacity and technical infrastructure were much improved.
The production of essential goods, including garments, clothes, bike parts, electric fans, cloth shoes, sewing machines, alarm clocks and bread was sped up.
The city’s mechanical engineering sector developed in the direction of satisfying society’s needs both by using traditional tools such as ploughs and rakes and by producing small-sized machines for agricultural cooperatives, including rice husking and water pumps. Hanoi also manufactured several machining tools, machines for special use and vehicles.
The handicraft industry has overcome difficulties related to sources of raw materials, employing more workers. In 1976, the industry’s output increased by 35 percent.
Agricultural production in the suburbs focused mainly on foodstuffs, meeting the city’s demands vegetables and supplying 40 percent of eggs and 30 percent of pork for the municipal dwellers.
The total agricultural production output was valued at 108 million VND in 1976, up 24 percent over the figure in 1973. Areas specialising in growing vegetables were mainly in the outlying districts, including Tu Liem, Dong Anh, and Thanh Tri.
The amount of meat sold to the State reached nearly 8,100 tonnes in 1976, an increase of 59 percent as compared to 1973. Chicken and poultry breeding businesses provided more than 10 million eggs and over 500 tonnes of meat in 1976. The output of fish supplied to the State reached 2,000 tonnes in 1976, an increase of 32 percent over 1973. Rice productivity constantly reached 5 tonnes per hectare and the food output was 114,900 tonnes in 1976, a rise of 15 percent in comparison with the 1973 figure.
Agricultural facilities were upgraded and all districts were equipped with tractors, water pumps and pesticide sprayers. Most of the cooperatives had access to electricity and small workshops servicing the agricultural sector.
The trading sector tried its best to control the supply of goods. It also sped up the processing industry and boosted the purchasing and exchanging of goods, which helped to boost production. The volume of farm produce and foodstuffs purchased in 1976 increased by 32 percent over 1973 and the volume of purchased technological products rose by 26.7 percent.
The Hanoi authorities sent 2,500 labourers belonging to 300 households to the central highlands province of Lam Dong to build new economic zones on an area of nearly 50,000 hectares. With over 30,000 sq.m housing area and other facilities provided by the city, workers reclaimed 500 hectares of land. Sending workers to Lam Dong and other provinces was an important move by the Hanoi authorities. The policy was carried out in parallel with the building of the capital city, giving Hanoi people a sense of citizenship.
In 1977, all economic sectors in the city obtained important achievements despite of their difficulties. They began to produce a number of new products, such as fruit juice, sauce made from wheat flour, spare parts for clocks, woollens for export and various high-grade products made from glass.
Despite several natural disasters, especially consecutive floods in 1978, the four old outlying districts raised their productivity with rice reaching 5.4 tonnes per hectare. In 1979, rice produced in the newly expanded outskirts reached 4.6 tonnes per hectare, helping to increase food production output in general by 31.1 percent as compared to 1978.
Vegetable-growing and industrial crops areas have been developed. In 1979, the city’s livestock breeding sector raised its number of pigs to 39,000.
The year also saw new difficulties arising in the political and defence areas. In the early 1980s, the city’s industrial sector and handicraft industry were given the task of providing enough energy to meet defence needs and step by step build up the capital’s industrial sector in line with the state’s plans. Despite difficulties in accessing raw materials, the industrial sector and handicraft industry provided many essential products and developed new products, thus maintaining and developing production.
The agricultural sector’s main task in the period 1979-1984 was to produce enough food to satisfy the city’s demands. Rice-growing areas were re-planned and efforts were made to raise the average annual production rate.
Irrigation works were expanded and upgraded and in 1980, 4,500 hectares of cultivated land were provided with water, including 1,950 hectares of vegetable-growing areas in Thanh Tri, Gia Lam and Tu Liem districts and 3,900 hectares in Thach That, Soc Son and Ba Vi districts.
There was also progress in ensuring people’s jobs and their standards of living. The city also chose the right policy when it sent young and healthy workers to new economic regions or key industrial areas, for example Quang Ninh coal province.
From 1980 to 1985, 95 central and local enterprises in the city had been upgraded and expanded and many transport projects had also been completed, such as Duong bridge, Pha Den port, Noi Bai airport, Thang Long bridge and the Hanoi – Ha Dong road.
In 1982, food production reached 360,800 tonnes, the highest level since 1975. The year also saw an increase in the production of soya beans, peanuts and medical herbs. In 1983, the average rice productivity was 5.8 tonnes per hectare over two crops, increasing production to 400,000-420,000 tonnes. High-productivity areas were set up to grow corn in the city’s outskirts and played an important role in the city’s agricultural production.
In “Doi moi” (renewal) and open-door process (1986 to now)
The sixth National Party Congress (December 1986) initiated the Doi Moi (renewal) policy. With it, Hanoi and the whole country entered a new stage of challenges and opportunities. The Hanoi municipal Party Committee’s 10th congress, which convened from Oct. 17-23, 1986 at the Viet-Xo (Vietnam-Soviet) Friendship Labour-Culture Palace, was a milestone in the transformation of the political ideology of the Committee under the guidance of the Party Central Committee’s view on renewal.
Liberal, open policies and guidelines paved the way for the capital’s economic development. In 1991, the municipal Party Committee’s 11th congress redefined the city’s economic structure in terms of industry and trade, tourism, services and agriculture. As a result, since 1992, the city has been able to ward off recession, and has grown at a stable high rate. Throughout, its political system, as well as its national defence and security have also enjoyed stability. For the majority of residents, life has much improved.
In 2000, the municipal Party Committee’s 13th congress kept the economic structure, but laid stress on the development of labour force in close connection
with building socialist-oriented labour relations, thus ensuring a rapid, sustainable economic growth rate. In the following period, the economic structure would be shifted towards services-industry-and agriculture.
The key task throughout the capital’s renewal process has been economic development towards a socialist-oriented market economy. Thanks to the implementation of Doi Moi, the municipal economy managed to rise out of crisis, and has continuously obtained high growth rate. Its GDP, on average, increased by 7.1 percent each year in the 1986-1999 period, and 11.1 percent per year in the 2001-2005 period.
The year 2007 saw the city’s comprehensive development with high growth rates in most sectors. Its economy expanded by 12.1 percent, 1.42 times of the country’s average rate, the highest ever for a decade. Industrial production posted a year-on-year increase of 21.1 percent in value.
In addition to the nine industrial parks already present, the city built four other large-sized and 11 medium- and small-sized IPs.
Thanks to the reorganisation of production management reform, and investment in new technology, the city’s industrial sector continued to develop, with higher productivity, better quality of goods and the expansion of markets. Many enterprises affirmed their position and prospered in the market economy. Such new industries as software processing and modelling were created.
Trade, tourism and services also developed strongly. Various types of goods at stable prices satisfied demand from local people in the city.
Tourism, insurance and information services played an important role in the city’s economic structure.
The finance and banking sector did well in mobilising domestic and foreign capital for investment and development. The stock market was formed.
The year 2007 also saw a record export value of 4.28 billion USD, a year-on-year increase of 20 percent, coupled with expanding external economic activities.
Meanwhile, the tourism sector made positive strides forward. The number of foreign and domestic tourists visiting the city increased 15 percent over the previous year. Notably, in January 2007, the US Travel and Leisure Magazine selected Hanoi one of the 10 most attractive cities in Asia.
In this year, the city successfully hosted a business forum for ASEAN capital cities and a Hanoi international trade fair.
The finance and credit sector achieved high growth rate. Finance and banking posted a year-on-year increase in value of 20.1 percent, the highest since 2004, while total capital mobilisation reached 400 trillion VND, increasing 64 percent over December, 2006.
In terms of agricultural production, the reform of the management mechanisms was undertaken, in accordance with the Party Politburo’s Resolution 10, restructuring planting and breeding activities towards producing high-value commodities, and developing trade. The rural infrastructure and living conditions in the city outskirts have been steadily improved.
All economic sectors have been growing strongly. State-owned enterprises have been restructured and re-arranged in order to better uphold their leading role, while the non-State and foreign-invested sectors are rapidly developing and the cooperative sector is transforming itself.
Comprehensive and stable socio-economic development has brought a modern and prosperous facelift to Hanoi. From its original four urban districts, the capital city was expanded to nine. Numerous new urban residential areas have sprouted up at its entry gates such as Linh Dam, Dinh Cong, Trung Hoa-Nhan Chinh, Trung Yen, South Thang Long, My Dinh, Me Tri and Viet Hung.
Within the past five years, Hanoi built 7.4 million sq.m of housing, including 1.5 million sq.m in 2007 alone. The city plans to have an average space for housing of 9 sq.m per capita by 2010. It has been carrying out more than 80 urban residential projects on a total acreage of 2,500 ha of land.
Together with the development of urban areas, the city has also poured investment into its traffic system. The Thanh Tri bridge spanning the Red river, the longest in Indochina, was put into operation on February 3, 2007, helping to reduce traffic jams at the southern gate of the city.
The Government has ratified a revised master plan for the city’s development until 2010, and basically completed the socio-economic development plan through 2010 as well as detailed building plans for 12 districts. The urban infrastructure system has been steadily developed, with many roads and important traffic points enlarged and upgraded. The information and communications network has been modernised.-Enditem