Business: Defiant Saigon

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Free enterprise lives

More than five years after the fall of Saigon brought South Viet Nam under the banner of socialism, private enterprise survives there. Indeed, the free-market system that Hanoi vowed to crush accounts for 60% of the South's economic activity. Out of necessity, the regime has tacitly accepted the fondness that the entrepreneurial Saigonese have for profits—and even the still treasured U.S. dollar. Following a visit to what is now officially called Ho Chi Minh City, TIME Correspondent David DeVoss filed this report:

Early one morning in March 1978, residents of Saigon were jolted awake by something eerily reminiscent of the city's "liberation" three years before: the growl of tanks on the broad boulevards. This time, the goal of Hanoi's forces was to stamp out capitalist trade in the Cholon business district. Squads of Communist Youth League zealots searched every shop and warehouse. Merchandise was seized; stores were padlocked. Employers of more than five people were denounced as exploiters of the working class. Family-run produce markets were allowed to stay in business—but only if they held their profit margins to 10%.

Over the next year, competing entrepreneurs were ordered to form collectives, and longtime-resident Chinese traders were advised to flee altogether. The regime dealt with rising unemployment by packing some 250,000 people off to rural work camps called "new economic zones."

Yet Hanoi did not break the market economy. Small merchants gradually returned to Saigon to sell their wares, even though they had to do so on the streets and bribe local officials for the privilege. By last year the regime had abandoned its aim of completely crushing Saigon's entrepreneurial spirit.

Today street vendors sell wares that on any given day may include French bicycles, Australian butter and Japanese beer—all at princely prices. A single can of root beer may fetch $6, a carton of cigarettes $140. The main source of the imports is an Air France flight that arrives every Friday from Bangkok with 45 tons of cargo. Vietnamese who live abroad but still have relatives back home send a steady stream of packages loaded with food, clothing or medicine that can be quickly sold on the black market.

During the war, Saigon became hooked on the inflow of U.S. dollars, and now the city is broke. More than 25% of the 3 million residents have no job. Says one high official: "Saigon needs $200 million a year to survive. The money should come from Hanoi, but this year Hanoi sent only $100 million and suggested we find the balance wherever we could."