Manufacturing in Vietnam after reunification followed a pattern that was initially the reverse of the record in agriculture; it showed recovery from a depressed base in the early postwar years. However, this recovery stopped in the late 1970s as the war in Cambodia and the threat from China caused the government to redirect food, finance, and other resources to the military. This move worsened shortages and intensified old bottlenecks. At the same time, the invasion of Cambodia cost Vietnam urgent foreign economic support. China's attack on Vietnam in 1979 compounded industrial problems by damaging important industrial facilities in the North, particularly a major steel plant and an apatite mine.
National objectives
National leadership objectives during the immediate postwar period included consolidating the Northern factories and workshops that had been scattered and hidden during the war to improve their chances of survival and nationalizing banks and significant factories in the South to bring the financial and industrial sectors under state control. The government's continued use of wartime planning mechanisms that prioritized output targets over production or long-term costs caused profits to erode and increased the government's financial burdens.
Economic reforms
The economic reforms undertaken in 1977 gave factory management some independence in formulating production plans, arranging production resources, and containing production expenses. Additional pragmatic steps were also considered, such as adopting incentive-structured wages and realigning prices to reflect production costs better.
This first experiment with reform was relatively short-lived. This was partly because it ran counter to the overriding policy of socializing the South and integrating it with the North by reducing the centralized administrative control needed to do the job. However, some reform measures stayed on the books and were revived in the 1980s.
Statistics
Vietnamese statistics indicate that the gross value of industrial output in 1980 was not much higher than in 1976 and that output per capita declined more than 8 percent. For example, cement production was relatively stagnant; it averaged 1.7 million tons annually during the Second Five-Year Plan, but only 1.4 million tons in 1985.
Industrial production
Some light industry and handicrafts sectors mirrored the difficulties experienced in agriculture because they used agricultural raw materials. By 1980 the Vietnamese press reported that many grain, food-product, and consumer-goods processing enterprises had reduced production or ceased operations entirely. Although detailed statistics on sector performance were insufficient to show annual results, the total value of light industry output peaked in 1978; by 1980, it was nearly 3 percent lower than in 1976. Increasingly severe shortages of food (particularly grain and fish) and industrial consumer goods lessened workers' incentives.
Total industrial production during the Third Five-Year Plan reflected high levels of investment, averaging some 40 percent of total annual investment during the plan period. In 1985 the industrial sector accounted for some 32 percent of national income, up from approximately 20 percent in 1980.