This article was first posted in my blog in 2007. The revised version below covers Vietnam’s subsequent social and economic transformation up to December 2019.
More and more economic gurus in both East and West are increasingly optimistic that the 21st century would be an Asian century. Historically, the West began to overtake the East five centuries ago and has remained the dominant power from then onwards. While it is extremely difficult to foretell with certainty in any crystal ball-gazing, given the various imponderables which could upset the apple cart, these experts’ predictions are not without foundations as there are discernible trends for all to see. We can recall that the 1980s witnessed the emergence of South Korea, Taiwan, Hong Kong and Singapore as the newly industrialising “Tiger” economies of Asia, following in the footsteps of Japan, the world’s second largest economy.
Since the closing years of the 20th century, the unprecedented rise of China, followed by India, as the potential economic superpowers are gathering speed and the whole world is experiencing their vibrant impact. Not surprisingly, they have become the world’s “factory” and “call-centre” respectively.
Malaysia and Thailand, too, are prospering and have moved closer to becoming the next “Tiger” economies in the not too distant future. Are there other likely Asian “Tiger” economies on the horizon? I will bet on Vietnam, despite being a poor country with a per capital income of US$500, based on its strong sustainable economic performance since embracing market-based economy in the 1990s and its admirable national traits. It bears mention that Vietnam, in common with other East Asian nations, share a common Confusion heritage, which places much importance on education, diligence and thrift as a formula for success.
After decades of war and devastation, the Vietnamese are making up lost time with a vengence, quickly picking up new skills and technology and applying their well-endowed intelligence, resourcefulness and business acumen to enhance their national wealth and quality of life. The result is a broad-based economic expansion, culminating in a significant improvement in living standard. Poverty has been drastically reduced and wealth distribution is relatively equitable.
This is made possible largely through the infusion of increasing foreign investments and technology from various countries. It is noteworthy that Singaporean businessmen saw the untapped oppurtunities there first. The Republic is now Vietnam’s largest foreign investor, having ploughed in $13 billion in diversified projects.
On the debit side, Vietnam is rampantly corrupt and bureaucratic red tapes have deterred the less stout-hearted foreign investors from venturing there. Also, their infrastructural capability needs strengthening to support its economic growth These must be addressed urgently. In terms of development, it is probably where Singapore was 30 years ago.
In my visits there, I could feel the pulse of the booming economy, with construction activites everywhere and businesses, big and small, have sprung up in different places. Shops and restaurants abound and stay open till late. However, what impressed me most was the dignity, friendliness and genuine warmth the citizenry showed towards all visitors, including Americans, their erstwhile arch enemy. This is commendable. Our Vietnamese guide summed it up movingly and philosophically: “Its best to let bygones be bygones, bury the past and look to the future unburdened with lingering emotional baggage. Futhermore, US can help us move forward.”
As in China, the acquisition of wealth is gripping the nation and those with entreprenerial drive would prefer to be their own bosses. Many have struck it rich. The unrelenting urge and determination to succeed is palpable. Growing tourism contributes to economic expansion too. Vietnam has much to offer visitors: antiquities, scenic beauty, historical and cultural attractions, upmarket and budget hotels and varied cuisines. Above all, tourists can experience these at relatively low costs.
It is incredible that not long ago it was a poverty-stricken and rigid Communist state, virtually inaccessible to most of the outside world. Its rapid transformation in so short a time is another economic miracle of Asia.
From my knowledge of it, I am confident that barring major unforseen circumstances arising from within or outside the country, Vietnam will be another “Tiger” economy of Asia in due course. I shall watch its progress with more than common interest.
Update of Vietnam’s Current Economic Development
Vietnam’s economic growth in the preceding three decades was quite phenomenal averaging 5.1% year on year, making it one of the fastest expanding economies in the world.
Its GDP per capital growth rate of 5.1% has increased 2.5 times since 1990s, reaching US$2500 in 2018. Its medium term growth prospect remains promising, estimated at about 6.5% in 2020/2021. If this materialises it should become the 20th world economy by 2050, from its current ranking of 45th in the world. It has also raised 45 millions of its overall population of 97 millions out of poverty and has now become a middle income country in the world. This is expected to be improved further in future.
According to the latest IMF report in 2019, Vietnam’s current economy continues to make good progress and now ranks number 6 among ASEAN’s 10 countries. The banking sources, including that of Singapore’s DBS Bank, the top-ranking bank in ASEAN, predicted that, at this rate of growth, it should overtake Singapore’s economy, currently number 5 in ASEAN, in ten years’ time.
Vietnam has benefitted from the ongoing disruptive trade war between US and China as investments have since migrated from the latter to Vietnam because of lower operating costs and other favourable factors there.
On the debit side, corruption in Vietnam is still wide spread in both public and private sectors and needs to be urgently corrected. Added to this are the adverse environmental and other factors prevailing there, which might adversely deter potential foreign investors from going there.
Taking into account all the positive and negative factors, I remain sanguine that Vietnam will become Asia’s new “Tiger” economy in due course, following in the footsteps of South Korea, Taiwan, Hong Kong and Singapore.
Lam Pin Foo