Interview with Melissa Merriwether

Melissa is an architect from the United States, graduated from Yale, studied architecture in England, and somehow 12 years ago ended up in Vietnam. Her primary interest is in sustainable building, which means trying to make energy (and other resource) efficient structures. She is both an independent consultant and also works for Green Consult Asia. We met with her this morning at a café called Things Café.

Before I tell you about the interview, I want to say something about the Café. It reminded me of a speakeasy. You had to walk down an alley and into an old, rundown building, the type building a movie director might identify as a great setting for a horror movie. You go up a couple of flight of stairs, around a corner and over a little bridge. The walls are covered in old paint, electrical wiring pulled together in bundles and attached at the corners. The floor is old concrete and torn up tiles. And suddenly, a nice café with jazz music playing, chairs and sofas, shelves of books – definitely not what you were expecting. I think that there are probably a lot of these type of "informal" businesses, places that only insiders would know about. I'm pretty sure this place wasn't in any of the travel guides...

I have to admit that my expectations were pretty low when I saw that we were going to be speaking with an architect. I couldn't tell you much about what "green building" was, and wasn't sure how it was very relevant to the economic development of Vietnam. It took Melissa about 2 min. before I had to adjust my expectations. She covered everything from energy demands, the conflict between the government GDP growth goals and preserving historical structures, infrastructure constraints, and the tax base to externalities and pollution, price ceilings, the long-term impact of the sanctions after the war on the labor market, labor supply, flooding issues in Saigon, the lack of legal structure and enforceable contracts, and corruption. In the 90 minutes that she spoke, we covered a lot of territory. I took pages and pages of notes.

I thought it was a pretty incredible way to begin our interactions with the business community in Vietnam. Most of what you read emphasizes the success that Vietnam is having and the growth that has been achieved. This interview emphasize some of the struggles and potential problems that may arise from that rapid growth. For example:

• Price ceilings on electricity means that Vietnam suffers from rolling blackouts. (Price controls almost always lead to a mismatch in supply and demand.) Every place has backup generators, which increases pollution, are very inefficient, and, if you have to use it, not very convenient (although probably more convenient than sitting in the dark). The government is emphasizing hydroelectric power and coal burning power plants. However, Vietnam doesn't have a lot of coal. Where do they get it from? China. Which makes you wonder what's going to happen when China needs all of the coal for its own use... (Australia will not be for sale forever.)
  
• There's been a lot of development in Vietnam, and skyscrapers are going up at an unbelievable rate. But they don't have the infrastructure to support all of the skyscrapers. Saigon was built anticipating a population of 250,000. On any given day there may be 7.5 to 12 million people in the city. There's almost no public transportation. There's not many streets that can handle that volume of traffic. All the skyscrapers are being built in a relatively small area – the city center. How are all these workers going to get to the city center and where are they going to park? How will they be able to handle the sewage? What about electricity demands?
• One of the areas that interested me was the problems they're having with drainage. Ho Chi Minh City is at sea level, and already suffers from flooding. Any changes in water levels could mean a Katrina-like problem in the city of 8 million people or more. And it's not just Ho Chi Minh City. Hanoi also has this trouble, as do the cities in the central area of Vietnam.

This interview highlighted some of the major issues rapidly growing economies face. For a long time, Japan was the poster child of high growth sustained over a long time, but then fell on a 20 year GDP flatline. China seems to be able to break the record, but China is taking a giant leap forward to catch up to the not-to-distant past. It needs this growth just to get even on the playing field. Here in Vietnam, you get the sense that the economy might be pushing the limits, about to cause the country to burst from it's own skin as it outgrows its governing capacities. Will all these developing economies face some limitation that, as they outpace the infrastructure of the country, force them to also have sustained periods of low growth?