ECONOMICS / VIETNAM: THE NEW ASIAN TIGER ?
Thirty-two years. That is how long it took for Vietnam to go from being one of the poorest countries in Asia to becoming a middle-income country today with a booming economy, which is predicted to become Asia’s “next tiger”. Examining the south-east Asian country’s rich history can help us understand how it has contributed to its economic transformation: following nearly ten centuries of Chinese domination, as well as French colonization and American war during the twentieth century, Vietnam’s political independence was gained, and the country now rises economically. Indeed, I believe the S-shape of this country may stand for “survival” or for “success”, more precisely economic success.
Image: Bến Thành Market Ho Chi Minh City – Image from: https://www.youtube.com/watch?v=Uc_JkphCe3k
A MAJOR ECONOMIC REFORM
It all began in 1986 when the Vietnamese communist government launched the “Đổi mới” (new change in Vietnamese) economic reform which propelled this centrally planned economy towards a market economy. The war against the United States of America from 1963 to 1975 had vastly affected the economy and it was time for a rebound. Throughout the 1980s and 1990s, the agrarian reform led to agricultural privatisation and allowed farmers to develop and cultivate their own land, thus increasing their wages. This was accompanied by an increase in both domestic and foreign investment as well as the government’s support of private ownership. Regarding trade, barriers of import and export were lifted which eased international trade and foreign investment by making Vietnam a gradually more open and globally integrated economy.
A BOOST IN FOREIGN INVESTMENT
With a population of 92 million, Vietnam is considered today to be the second fastest-growing economy, behind China, since the 1990s. More recently, it recorded a GDP (Gross Domestic Product) growth of 6.5% in 2017 and foreign direct investment has increased by 44%, coming from neighbouring countries such as South Korea, Japan, China and Singapore. Indeed, Vietnam is a highly attractive investment opportunity for these countries due to its cheap labour force and resource-intensive land. Additionally, recent considerable enhancements of infrastructure, along with a young and eager growing middle-class accounting for 13% of the population have given rise to promising economic development.
TWO FLOURISHING SECTORS
While driving through the countryside, I kept marvelling at the water buffalos treading on the rice paddies. Nowadays, rice and coffee production are two of the major drivers of Vietnam’s economic flourishment and contribute to approximately 17% of the country’s GDP. Indeed, since 2010, Vietnam is ranked second in world exports of rice, behind Thailand, and third in the international coffee industry, thus highlighting its leading role in international trade. Likewise, Vietnam’s industrial sector, which represents 33% of GDP, has also been booming lately. Indeed, Vietnam’s construction industry has been on the rise recently and the country’s steel demand has significantly expanded by 18% from 2011 to 2016. However, although it is the third most significant oil producer in South-East Asia, Vietnamese crude oil exports have been declining as they were of 365 barrels per day in 2006 and of 143.6 in 2016.
THE NEXT PALM BEACH ?
Da Nang beachside - Image from: http://www.vietnambeachholiday.com/resorts/Da_Nang_tour/About_Danang.htm
This breath-taking land will never cease to fascinate me with its culture, history and magical wonders that the human eye is worthy enough to witness. Vietnam continues to prosper economically today as tourism increases considerably year on year. Between 2010 and 2015, the country experienced a rise of 9.5% in this sector and in 2016, tourism growth contributed to 6.8% of GDP. Da Nang, a coastal city of central Vietnam, has been attracting thousands of international visitors and is currently developing its airport and building new seaside hotels. Will it soon become the next Palm Beach? Yet, it is important to consider Vietnam’s surrounding countries which also attract thousands of visitors. For instance, Thailand was ranked 27 out of 95 countries whereas Vietnam was only ranked 90.
Nevertheless, we must also keep in mind that progress can still be made in areas such as environmental protection, hygiene, waste and clean water supply to everyone. Pollution is indeed a major problem: having observed a constant flow of hundreds of motorcycles swarming the roads of Hanoi and Ho Chi Minh City, I can easily understand why Vietnam is ranked 170th out of 180 in a PM 2.5 index world ranking (pollution particles smaller than 2.5 micrometres).
These economic aspects are only a handful of other elements that contribute to this thriving country. Vietnam has shown phenomenal progress in other areas such as education, unemployment, industry and international trade. Although there is still room for improvement in areas like ecology and gender equality, we must forget our vision of a poor and far-off land known only for its history, and instead, we ought to recognise the drastic but rewarding changes it has made and upholds to be successful. What is clear is that Vietnam is a country to watch out for and not miss out on whether it is for business or leisure.
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