Ho Chi Minh, Vietnam's founding father, would have been appalled. After the North won the civil war in 1975, its leaders renamed Saigon after the Communist leader and cracked down hard on what they considered its bourgeois decadence. But today billboards advertising MasterCard and Toshiba overshadow fading portraits of Ho. At a tony new restaurant in a restored colonial villa, a Japanese businessman murmurs into his cellular phone while dining with a young Vietnamese woman. The Floating Hotel, filled with guests paying $150 a night, features a weekly Texas Barbecue Night. High-school girls venture forth wearing the delicate ao dai-a traditional silk tunic worn over nearly transparent pants, still officially banned as indecent. Cranes and pile drivers are everywhere. And Vietnamese children once again greet Westerners with a friendly hello, rather than the taunt, "Lien So"-Soviet. Says a French banker, "When you're drinking, eating and enjoying yourself, you can easily forget there's a Communist regime in place."
Saigon was conquered in 1975, not converted. Its people never accepted the city's new name, let alone Hanoi's efforts to impose Soviet-inspired collectivism. So it's no wonder that South Vietnam's former capital has roared back to life since the threat of economic collapse forced the regime to adopt a series of free-market reforms in 1986. In effect, Hanoi agreed to let Saigon be Saigon. Politics gave way to the pursuit of profit.
The result has been a sustained burst of productivity. Already, the city of 4 million-7 percent of Vietnam's population accounts for a third of the country's industrial production. "Saigon is the engine of Vietnam's economic growth," says Nguyen Xuan Oanh, director of Indovina Bank, an Indonesian-Vietnamese joint venture. "People had to start empty-handed but have quickly renewed their old business ways and contacts." In their patois mixing Vietnamese and French, Saigonese talk incessantly of lam affaires, or dealmaking. The buzz is contagious. Says one Communist Party cadre: "Everybody's caught the Saigon virus."
The turnaround began with Saigon's web of small, family-run businesses. Newly reopened shops and factories line every street. More than 600 new firms making clothing and other products for export have opened. That has piqued the interest of the overseas Vietnamese, the Viet Kieu, who are visiting in droves to check out the opportunities. Northerners and Communists, too, are joining in. "Everyone wants to get rich, to eat beef and drink beer," said Vu Kim Giao, 22, who moved from Hanoi to Saigon three years ago to open a restaurant with his father, once a truckdriver on the Ho Chi Minh trail.
Even the military has been drawn in. More than 300 firms within the Defense Ministry bid on everything from commercial construction to hotel deals. In partnership with a group of former Viet Cong generals, former U.N. ambassador Ha Van Lau has gone into the business of taking foreign veterans to visit their old battlefields (box). "The same people who fought the GIs are now trying to make money off of them," marvels a political cadre.
A U.S. embargo still blocks American firms from investing, and President Bill Clinton has not yet announced whether he will lift it, though most diplomats in the region expect him to do so within a few months. Meanwhile, capital is pouring in from Japan, Taiwan, South Korea and Europe. And such eager U.S. firms as the Bank of America and General Electric are opening offices and signing contracts for future business, permitted under relaxed rules approved by the outgoing Bush administration in December. "I'd rather be here than in London," says Alain Chaillet, general manager of Banque Nationale de Paris's representative office. "The potential and the challenge are here." Foreign investors are building two large export-processing zones. Holland's Heineken is about to open a $50 million brewery. South Korea's Samsung industrial giant has moved from trade to offshore oil exploration and is planning new investments in manufacturing. Office space now costs more in Saigon than it does in Bangkok, and dilapidated villas rent for up to $4,000 a month. Says one Bangkok-based lawyer, "The Japanese, especially, are grabbing up everything at any price."
The boom has made life easier for many ordinary Saigonese. "We are not as poor as we were last year or the year before," says Nguyen Van Hoa, 29, who runs a small coffee shop in a working-class alleyway. Government reform cut inflation from 700 percent to less than 20 percent last year. Not only is there more prosperity, there is less discrimination against people who worked with the Americans.
Some of Saigon's old problems are making a comeback, too. The wide-open vice that once lured off-duty GIs and made Saigon notorious to millions of Americans is on the rise. Nearly eradicated a decade ago, prostitution, drug addiction and petty crime are rampant. And fundamental problems aren't even being discussed. The country's economic renaissance has done nothing to increase political freedom. "People tend to tolerate, if not ignore, the government, now that they're making money," says one Vietnamese economist. Vietnam's security forces, fearing internal threats to Communist Party rule, haven't dropped their guard. And official corruption permeates daily life. Most government clerks won't consider requests for services-issuing a passport, installing a telephone line-without a kickback. "There's just as much corruption now as before 1975," says one ethnic-Chinese businessman. "Only back then you got better service for your money."
Hanoi hopes that Saigon's new wealth will slowly spread to the hinterlands. Most Vietnamese agree that this will happen, but only after the United States lifts its trade ban, which discourages international lending. Such hopes may be unrealistic. A new rush of investment would create more jobs but could also increase the widening divide between haves and have-nots. Who could Ho Chi Minh's heirs blame then? "The government can't control what's happening now in Saigon," says a party member in the city, "so I don't know how they'll manage after the embargo is lifted."
It's a risk the entrepreneurs of Saigon are more than willing to take. What they want, after all, is precisely that: less government control and more freedom.