AVERAGE VIETNAMESE COMMENT ON ECONOMIC CHANGE IN TWO POOR HANOI NEIGHBORHOODS

UNCLAS HANOI 001615

SIPDIS

SENSITIVE

STATE ALSO FOR EAP/BCLTV, EB, INR, EAP/CM, DRL
UNCLASSIFIED

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STATE ALSO FOR USAID
BANGKOK ALSO FOR RMA/ODP
MANILA FOR USAID/DAVIS
SECDEF ALSO FOR ISA/EA/LSTERN
USDOC ALSO FOR 4431/MAC/IEP/OKSA/HPPHO
CINCPAC ALSO FOR FPA

E.O. 12958: N/A
TAGS: SOCI PGOV PREL ECON VM
SUBJECT: AVERAGE VIETNAMESE COMMENT ON ECONOMIC CHANGE IN TWO POOR HANOI NEIGHBORHOODS


1. (SBU) SUMMARY. OUTLYING DISTRICTS OF HANOI ARE
ATTRACTING LARGE NUMBERS OF "IMMIGRANTS" FROM DEPRESSED
RURAL AREAS SEEKING EMPLOYMENT. MANUFACTURING JOBS
HERE, THOUGH MISERABLY PAID BY U.S. STANDARDS,
NEVERTHELESS PAY FAR MORE THAN THE PEASANT FARMS THEY
LEAVE BEHIND. TO GET A FIRST HAND LOOK AT THIS
PHENOMENON, POLOFF SPENT MOST OF A DAY MEETING
RESIDENTS OF TWO SUCH DISTRICTS, DONG ANH AND SOC SON.
THEY SPOKE OF PROBLEMS WITH YOUTH UNEMPLOYMENT, THE
DIFFICULTY OF OBTAINING GOVERNMENT JOBS, INSUFFICIENT
BENEFITS, AND LONG WORK HOURS. POLOFF ALSO VISITED A
SHOP DOING BRISK SALES OF CHEAP "COUNTERFEIT" CHINESE
MOTORBIKES TO THESE LOW-INCOME OUTSIDERS. DESPITE
THEIR ECONOMIC PROBLEMS, MANY RESIDENTS SAID THEY LIVE
BETTER TODAY THAN FORMERLY BECAUSE OF VIETNAM'S MORE
OPEN ECONOMY. POLOFF WAS IMPRESSED TO LEARN THAT
SEEMINGLY PENNILESS RESIDENTS HAVE NEVERTHELESS MANAGED
TO SAVE ENOUGH FROM MEAGER INCOMES TO SEND CHILDREN TO
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COLLEGE. INDICATIONS ARE THAT THE BRIGHT LIGHTS OF
HANOI WILL CONTINUE TO ATUT THE SOCIO-
ECONOMIC CONSIDITIONS IN WHICH THEY LIVE. WHILE NOT
INTENDING TO BE SCIENTIFIC OR EXHAUSTIVE, WE HOPE TO
GIVE READERS A CLEARER IMPRESSION OF HOW RESIDENTS OF
VIETNAM'S CAPITAL AND SECOND LARGEST CITY FEEL ABOUT
THEIR LIVES IN A COUNTRY UNDERGOING RAPID CHANGE. THIS
CABLE REPORTS CONVERSATIONS OF POLOFF AND FSN POLITICAL
ASSISTANT WITH RESIDENTS OF TWO ADJACENT SEMI-RURAL,
SEMI-INDUSTRIAL DISTRICTS, DONG ANH AND SOC SON,
LOCATED AT THE EDGE OF HANOI ALONG ROUTE 3 LINKING
HANOI TO THE PROVINCE OF THAI NGUYEN.

A NOTE ON DONG ANH
--------------


3. (U) THE DISTRICT OF DONG ANH, POPULATION 258,400,
IS LOCATED 23 KILOMETERS NORTH OF THE CITY OF HANOI.
IT IS DIVIDED INTO 23 COMMUNES, WITH AN OVERALL
POPULATION DENSITY OF 1,346 PERSONS PER SQUARE
KILOMETER. WITH SEVERAL LARGE ENTERPRISES AND FOREIGN
JOINT VENTURES, IT OFFERS JOBS IN THE MANUFACTURING
SECTOR WHICH HAVE ATTRACTED MANY OUTSIDERS. ACCORDING
TO GVN STATISTICS, ANNUAL PER CAPITA INCOME IS VND
2,760,000 (USD 197.)

GVN RETIREE: "TODAY, PRIVATE SECTRS. HANG, AT THE TEA STAND THEY
OWN. MR. HANG, 52, IS A RETIRED GOVERNMENT MECHANIC.
MRS. HANG DOES MOST OF THE WORK RUNNING THE STAND. THEY
COMMENTED ON ECONOMIC CHANGES THAT HAVE BEEN OCCURRING
IN THEIR NEIGHBORHOOD.
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5. (SBU) THE HANGS SAID THE BEST-OFF EMPLOYEES IN
THEIR AREA ARE THOSE WHO WORK AT THE LOCAL HANEL PLANT.
ORION-HANEL IS A SOUTH KOREA-VIETNAM JOINT VENTURE
WHICH MANUFACTURES TELEVISION PICTURE TUBES. WORKERS
AT THE HANEL FACTORY EARN VND 1 MILLION PER MONTH (USD
71),ENOUGH TO BUILD INDIVIDUAL HOMES FOR THEIR
FAMILIES. THESE WORKERS ENJOY REAL JOB SECURITY, THE
HANGS SAID, AND WITH LOCAL CONSUMERQRICES LOW, THEY
LIVE RATHER WELL.


6. (SBU) THE SITUATION IS MORE PROBLEMATIC FOR THOSE
EMPLOYED IN THE GOVERNMENT SECTOR. MR. HANG RECEIVES A
PENSION OF VND 400,000 PER MONTH (USD 28) FOR HIS YEARS
OF SERVICE, "ENOUGH TO LIVE WELL AND LET MY KIDS TAKE
CARE OF ME," HE SAID. TODAY, HOWEVER, THE GOVERNMENT
SO,BASIS RATHER THAN AS PERMANENT EMPLOYEES. CONTRACT SALARIES, HE
SAID, ARE NO BETTER THAN THOSE EARNED BY PERMANENT
EMPLOYEES, BUT CONTRACTORS DON'T RECEIVE COMPARABLE
BENEFITS. FOR EXAMPLE, HE SAID, A CONTRACTOR WOULD NOT
RECEIVE HIS SECURE PENSION.


7. (SBU) MRS. HANG ADDED THAT IT IS BECOMING EXTREMELY
DIFFICULT TO GET A GOVERNMENT JOB. INCREASINGLY, SHE
SAID, YOUNG PEOPLE IN THE AREA "LAZE AROUND THE HOUSE"
BECAUSE THEY HAVE NO JOBS. IN MANY CASES, SHE SAID,
THEY LACK BOTH THE CREDENTIALS TO OBTAIN JOBS AND THE
WHEREWITHAL TO OFFER THE BRIBES NECESSARY TO OBTAIN
THEM. SHE EXPLAINED THAT OBTAINING A GOVERNMENT JOB
USUALLY MEANT PROVIDING THE RELEVANT OFFICIAL A SUM OF
MONEY OR A SUBSTANTIAL GIFT.
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8. (SBU) MRS. HANG SAID SHE ENJOYS GOOD RELATIONS WITH
LOCAL OFFICIALS. SHE BOASTED THAT BECAUSE HER TEA
STAND EARNS ONLY A MODEST INCOME, THEY ALLOW HER TO RUN
THE STAND WITHOUT PAYING TAXES, WHILE OTHERS MUST PAY.

SUCCESSFUL YOUTH WORK SEVENTY HOURS A WEEK IN WORKSHOPS
-------------- --------------


9. (SBU) IN THE NEIGHBORING DONG ANH VILLAGE OF DUC
TU, POLOFF CHATTED WITH A GROUP OF MEN AT A MAKESHIFT
OUTDOOR TEA GARDEN. MOST WERE IN THEIR EARLY TWENTIES,
ALTHOUGH TWO WERE IN THEIR FORTIES. THE LEADER OF THE
GROUP SEEMED TO BE MR. LAP, AGE 23.


10. (SBU) THE YOUNG MEN WORK AT A NEARBY STEEL
FABRICATING WORKSHOP. THESE WORKSHOPS HAVE BECOME A
SPECIALTY OF THE VILLAGE, AND ONE SEES THEM ALMOST
EVERYWHERE. MR. LAP SAID THAT HE AND HIS COLLEAGUES,
ALL OF WHOM HAVE EIGHTH GRADE EDUCATIONS, ARE HAPPY TO
HAVE WELL-PAYING JOBS THERE (THEY EARN ABOUT VND 2
MILLION A MONTH, ABOUT USD 142),BUT WORK VERY LONG
HOURS FOR THEIR SALARIES: TEN HOURS A DAY, SEVEN DAYS A
WEEK. STILL, THEY CONSIDER THEMSELVES PARTICULARLY
SUCCESSFUL BECAUSE MOST OF THEIR PARENTS ARE RURAL
PEASANTS WHO EARN LESS IN ONE YEAR THAN THEY EARN IN A
MONTH. MR. LAP, LIKE MOST OF HIS COHORTS, IS SINGLE
SINCE HE HAS NOT YET REACHED THE AGE OF 25, CONSIDERED
THE IDEAL MARRIAGE AGE FOR A MAN IN SEMI-RURAL DUC TU.
(NOTE: THE IDEAL MARRIAGE AGE FOR A WOMAN IN THIS AREA
IS CONSIDERED TO BE ABOUT 18. END NOTE.)
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11. (SBU) ABOUT HALF THE LOCAL WORKERS ARE FROM DUC TU
ITSELF, BUT THE OTHER HALF HAIL FROM STILL POORER
NEARBY VILLAGES, OR FROM THE NEIGHBORING PROVINCE OF
THAI NGUYEN, SAID THE WORKERS. THERE ARE ALSO SOME
TRAINED TECHNICIANS FROM SAIGON AT THE VARIOUS
WORKSHOPS, THEY ADDED. THESE OUTSIDERS ARE WELCOMED
BECAUSE THE WORKSHOPS NEED LABOR. SEVERAL OUTSIDERS
HAVE MARRIED WOMEN FROM THE VILLAGE. STILL, ALTHOUGH
THEY ARE WELCOMED, THEY ARE STILL CONSIDERED OUTSIDERS
WHO WERE NOT BORN IN DUC TU.


12. (SBU) THESE YOUNG MEN SEEMED HAPPY ABOUT THEIR
CURRENT ECONOMIC CONDITIONS, FAR BETTER THAN THOSE OF
THEIR PARENTS. BUT AMONG THE GROUP WERE TWO OLDER MEN
WHO WERE MORE CIRCUMSPECT, BOTH WAR VETERANS IN THEIR
FORTIES WHO ARE TOO OLD OR WEAK TO WORK AT THE STEEL
WORKSHOPS. ONE OF THE VETS, IN HIS MID-FORTIES, HAD
BEEN STATIONED WITH NORTH VIETNAMESE FORCES FOR FIVE
YEARS IN THE AREA AROUND THE THEN-U.S. BASE AT BIEN HOA
(FORMER SOUTH VIETNAM). THE OTHER, IN HIS LATE
FORTIES, HAD SERVED AS A NORTH VIETNAMESE SOLDIER
PRIMARILY IN THE SOUTHERN PROVINCE OF TAY NINH. THE
SECOND VET CANNOT WORK IN THE STEEL WORKSHOPS BECAUSE
HE HAS A BRAIN CONDITION STEMMING FROM THE WAR. HE
SAID A U.S. BULLET ENTERED HIS TEMPLE DURING COMBAT
NEAR THE CAMBODIAN BORDER, SHOWING POLOFF THE STILL-
VISIBLE SCAR. HE CARRIES SHRAPNEL INSIDE HIS HEAD.
CHANGES IN THE WEATHER, HE SAID, CAN CAUSE DEBILITATING
PAIN. THEREFORE, HE WORKS AS A MOTORBIKE DRIVER, AND
EARNS NO MORE THAN VND 10,000 TO 15,000 (U.S. 70 CENTS
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TO ONE DOLLAR) PER DAY.

WILL UNIVERSITY STUDENT SON GRADUATE TO UNEMPLOYMENT?
-------------- --------------


13. (SBU) DASHING INTO A TINY STAND FOR BEEF NOODLE
SOUP, POLOFF MET THE OWNER, MR. DUY. MR. DUY EARNS VND
700,000-800,000 (USD 50-57) PER MONTH FROM THE STAND,
BUT ALSO EARNS ABOUT VND ONE MILLION (USD 71) PER MONTH
FROM A SIDE JOB AS A MOTOR SCOOTER REPAIRMAN. HE SAID
THE LOCAL ECONOMY IS DOING WELL, BUT HIS STAND IS
SUFFERING. IT USED TO BE THE ONLY ONE IN THE AREA, BUT
WITH SO MANY OUTSIDERS MOVING IN FOR JOBS, ESPECIALLY
FROM THAI NGUYEN, OTHER SOUP STANDS HAVE OPENED UP TO
COMPETE WITH HIS.


14. (SBU) HE SAID THAT DOING BUSINESS IS EASIER IN
VIETNAM TODAY THAN EVER BEFORE, WITH FEWER RESTRICTIONS
ON BUYING AND SELLING. BUT THE BIG PROBLEM IS
UNEMPLOYMENT, ESPECIALLY AMONG YOUTH. HE OFFERED HIS
SON AS AN EXAMPLE. HIS SON IS CURRENTLY STUDYING
EDUCATION AT THE UNIVERSITY IN HANOI (MR. DUY HIMSELF
IS NOT COLLEGE-EDUCATED). BUT HE BELIEVES JOBS ARE
SCARCE IN EDUCATION IN THE HANOI AREA. HE EXPECTS HIS
SON TO BE UNEMPLOYED WHEN HE GETS HIS DIPLOMA.

A NOTE ON SOC SON
--------------


15. (U) SOC SON, LOCATED ABOUT 40 KILOMETERS NORTH OF
THE CITY OF HANOI, IS CONSIDERED HANOI'S POOREST
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SUBURBAN DISTRICT. IT IS BELIEVED TO CONTAIN THE
HIGHEST NUMBER OF POOR FAMILIES OF ANY HANOI DISTRICT.
ITS 243,300 RESIDENTS LIVE IN 25 COMMUNES ON A TOTAL
AREA OF 306 SQUARE KILOMETERS. JOBS ARE PROVIDED BY
1,850 PRIVATE INDUSTRIES, AS WELL AS BY THE INDUSTRIAL
ZONF HANOI'S
LABORING CLASS. ACCORDING TO GVN STATISTICS, ANNUAL
PER CAPITA INCOME IS VND 1,700,000 (USD 121).

WOULD YOU BUY A "HONG DA" DREAM?
--------------


16. (SBU) PASSING DOWN HIGHWAY 3 TOWARDS SOC SON,
POLOFF STOPPED OFF AT THE SMALL MOTORSCOOTER SALES LOT
OF MRS. HUONG. THE TWENTY OR SO MOTORBIKES ON DISPLAY
ALL LOOK LIKE HONDA DREAMS AND HONDA WAVES AT FIRST
GLANCE. BUT CLOSER INSPECTION REVEALS SHODDY
WORKMANSHIP, AND TRADEMARKS THAT SAY "HONG DA" OR
"HUNDA" RATHER THAN "HONDA," "DREAMY" RATHER THAN
"DREAM," "WAVY" RATHER THAN "WAVE."


17. (SBU) MRS. HUONG EXPLAINED THAT THE BIKES WERE
MADE IN CHINA. PURCHASED NEW, THEY SELL FOR ABOUT VND
11,000,000 (USD 785),VERSUS THE VND 33,000,000 (USD
2,400) NECESSARY TO BUY A NEW HONDA DREAM, THE MOST
POPULAR MOTORBIKE IN VIETNAM. SHE OPENED HER LOT ON
THE FIRST OF THE YEAR, AND, SHE SAID, SALES HAVE BEEN
BRISK, ABOUT 15-20 BIKES A MONTH, FROM WHICH SHE MAKES
ABOUT VND 100,000 (USD 7) PROFIT ON EACH ONE. THEY ARE
SOLD MOSTLY TO THE OUTSIDERS WHO HAVE BEEN MOVING IN
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FROM POOR RURAL AREAS. SHE SAID THAT SHE PAYS ABOUT
VND 300,000-400,000 (USD $21 TO 28) A MONTH IN TAXES.


18. (SBU) AREN'T YOU BREAKING THE LAW BY SELLING THESE
COUNTERFEIT CHINESE-MADE KNOCKOFFS?, ASKED POLOFF. NOT
AT ALL, REPLIED MRS. HUONG. THEY ARE CLEARLY LABELED
AS "HUNDA" OR "HONG DA", NOT "HONDA," SO NO LAW IS
BROKEN, SHE ASSERTED. (NOTE: CUSTOMERS ARE AWARE THAT


19. (SBU) FURTHER DOWN THE ROAD IN THE VILLAGE OF PHU
LO, A "TUC TUC" (THREE-WHEELED MOTOR CAB) DRIVER AT A
TEA STALL SAID THAT THE KIM ANH TEA PROCESSING PLANT
OPENED IN 1990 HAD ATTRACTED "A LOT" OF LOCALS TO THE
AREA, ESPECIALLY FROM NEARBY THAI NGUYEN. HE SAID THE
THAI NGUYEN WORKERS SOMETIMES RETURNED TO THEIR
PROVINCE FOR WORK DURING THE VARIOUS HARVEST SEASONS.
HE SAID THE LOCAL ECONOMY TOOK A NOSE DIVE SOME YEARS
AGO FROM WHICH IT IS STILL RECOVERING DUE TO THE
PRESENCE OF THE TEA PROCESSING INDUSTRY: THE RAPIDLY
URBANIZING AREA USED TO BE A CENTER FOR TOBACCO
CULTIVATION. BUT WITH THE GOVERNMENT'S ANTI-SMOKING
CAMPAIGN, THE DEMAND FOR TOBACCO DIMINISHED AND LOCAL
PEASANTS WERE LEFT WITH NO LIVELIHOOD UNTIL THE KIM ANH
PLANT OPENED.

PEASANT FAMILY OF EIGHT LIVES ON 17 DOLLARS A YEAR
-------------- --------------


20. (SBU) ALTHOUGH THE SOC SON AREA, LOCATED CLOSE TO
NOI BAI INTERNATIONAL AIRPORT, IS RAPIDLY URBANIZING,
THERE IS STILL CONSIDERABLE AGRICULTURAL ACTFRUIT OFF THE
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VINES, WHICH HE SAID HAD BEEN ATTACKED BY MICE.
ALTHOUGH MR. BAO'S MELON PLOT IS 450 SQUARE METERS IN
AREA, HE SAID HIS EIGHT MEMBER FAMILY HAS BEEN
ALLOCATED A TOTAL OF 3,500 SQUARE METERS OF
AGRICULTURAL LAND OVERALL. MOST OF THE REST IS DEVOTED
TO PADDY RICE.


21. (SBU) MR. BAO SAID THAT IN RETURN FOR THE LAND, HE
MUST PAY THE LOCAL COMMUNE 30 KILOGRAMS OF RICE PER
YEAR. HE GETS A BETTER RETURN FROM HIS MELON PLOT THAN
FROM HIS RICE PADDIES, ABOUT VND 250,000 (USD 17) PER
HARVEST. DURING THE SECOND HARVEST, HE PLANTS
CUCUMBERS.


22. (SBU) MR. BAO SAID THAT THE LAND HE HAS UNDER
CULTIVATION BRINGS IN ABOUT VND 650,000 (USD 45) PER
YEAR TOTAL, OF WHICH VND 400,000 (USD 28) MUST BE PAID
OUT IN TAXES. (NOTE: WE BELIEVE BAO AND HIS FAMILY
HAVE ADDITIONAL SOURCES OF INCOME, BEYOND THE USD 17
PER YEAR WE CALCULATE THIS LEAVES HIM FROM AGRICULTURAL
SOURCES. END NOTE). HE SAID GOOD WEATHER IN RECENT
YEARS LED TO GOOD HARVESTS AND MORE INCOME. HE HAS
ALSO BORROWED ABOUT VND 2-3 MILLION (USD 142-214) IN
VARIOUS LOANS AT 15-20 PERCENT INTEREST.

LOTS OF BUSINESS REPAIRING CARS
--------------


23. (SBU) IN SOC SON, POLOFF VISITED A CAR REPAIR SHOP
OWNED BY MR. SON. HE AND HIS STAFF WERE WORKING ON
PAINTING A 1989 HONDA FROM BLACK TO WHITE. MR. SON'S
UNCLASSIFIED

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SHOP EMPLOYS NINE MEN, MOST OF THEM LOCALS BUT A FEW
WHO HAVE "IMMIGRATED" HERE FROM NAM DINH.


24. (SBU) MR. SON SAID HIS SHOP IS VERY BUSY BECAUSE
TAXI SERVICES AT NEARBY NOI BAI AIRPORT NEED TO KEEP
THEIR CARS IN LIKE-NEW CONDITION. HE SAID HE IS NOT
AWARE OF MANY PEOPLE MOVING INTO THE AREA BECAUSE
THERE IS ALREADY CONSIDERABLE UNEMPLOYMENT AMONG AREA
TAXI DRIVERS. HE SAID THAT HE PAYS OUT ABOUT VND
100,000 (USD 7) A MONTH IN TAXES, WHICH, HE SAID, IS
LOW BECAUSE THE LOCAL TAX AUTHORITY GIVES FAMILY-OWNED
BUSINESSES SUCH AS HIS PREFERENTIAL TREATMENT. HE SAID
THAT MANY HANOI CAR OWNERS, SUCH AS THE OWNER OF THE
HONDA HE WAS PAINTING, COME OUT HERE FOR REPAIRS
BECAUSE PRICES ARE CHEAPER THAN IN THE CITY.

WILL ELECTRICIAN SON LEAVE THE FARM FOR HANOI?
-------------- -


25. (SBU) WHILE EATING LUNCH AT A RUSTIC RICE SHOP,
POLOFF STRUCK UP A CONVERSATION WITH MR. LUONG. MR.
LUONG IS A PROVINCE OF NGHE AN RICE FARMER UP FOR A FEW
DAYS TO ACCOMPANY HIS SON WHILE HE TAKES AN EXAM. MR.
LUONG'S SON WANTS TO ENTER ELECTRONIC SCHOOL NUMBER ONE
IN SOC SON, ONE OF ONLY TWO VOCATIONAL SCHOOLS IN THE
COUNTRY TO TRAIN ELECTRICIANS. (THE OTHER IS IN HO CHI
MINH CITY). TO DO SO, HE MUST PASS AN ALL DAY TEST IN
MATH AND PHYSICS.


26. (SBU) IF HIS SON PASSES THE EXAM, HE WILL ENTER A
TH~ THE
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MONEY? "YES, I'VE BEEN SAVING MONEY ALL MY LIFE FROM
THE SALE OF CHICKENS AND DUCKS ON THE SIDE OF RICE
CULTIVATION." LUONG IS A CATHOLIC, AND IS PROUD THAT
HIS SON MAY BE GETTING THIS ADVANCED EDUCATION,
SOMETHING FEW NORTHERN CATHOLICS OF HIS GENERATION
COULD OBTAIN.


27. (SBU) COMMENT. WHILE THE INCOME AMOUNTS CITED
ABOVE APPEAR IMPOSSIBLY MEAGER BY U.S. STANDARDS, THEY
ARE CONSIDERABLY HIGHER THAN WHAT THE MAJORITY OF THE
VIETNAMESE, A MOSTLY AGRARIAN PEOPLE, EARN. THIS IS
WHY AREAS LIKE DONG ANH AND SOC SON ARE FILLING UP WITH
"IMMIGRANTS." SOME FOREIGNERS AND VIETNAMESE
INTELLECTUALS WAX NOSTALGIC FOR THE SMALL, QUIET HANOI
OF YESTERYEAR. BUT THAT HANOI HELD LITTLE ATTRACTION
FOR POOR FARMERS FROM THE HINTERLAND, SINCE THERE WERE
FEW JOBS. TODAY, WITH GOVERNMENT CONTROLS ON INTERNAL
MIGRATION PRACTICALLY A DEAD LETTER, IT IS HARDER FOR
THE RURAL POOR TO RESIST THE ALLURE OF A HIGHER INCOME
IN THE BIG CITY. END COMMENT.

HARTER