Vietnam's road to prosperity

Not too long ago, the Philippines served as a launching pad and R&R station for US troops fighting communist forces in Vietnam.

Today the country that defeated two of the most powerful armies on the planet and underwent painful reunification after a bloody civil war is one of the most dynamic in Southeast Asia. Emerging from the ruins of war, Vietnam applied socialist-oriented free market reforms starting in the 1980s. Its GDP grew at an annual average of eight percent from 1990 to 1997, and defied the global recession of the 21st century, growing at 6.8 percent last year.

Prosperity is not enough. In a decade or two, according to Truong Tan Sang, he sees a strong Vietnam (he prefers to use Viet Nam) “with a wealthy people… and democracy, equity and advancement.”

Sang was elected president of Vietnam by the National Assembly last July. His term ends a month after President Aquino’s, in July 2016. At the 11th National Congress in Hanoi last January, the 62-year-old Sang, a lawyer who was imprisoned for two years in South Vietnam in the 1970s, was also chosen as the highest-ranking member of the ruling communist party.

Answering written questions that I sent through their embassy, Sang told me that his government intended to continue implementing its socio-economic development strategy for 2011 to 2020, focusing on the completion of institutions needed in a market economy, development of human resources “especially quality ones,” and installation of a “unified” infrastructure system.

“It is Viet Nam’s policy to promote economic restructuring, raise the quality of growth and competitiveness, and encourage all sectors to participate in socio-economic development,” Sang explained.

In the near term, he said manufacturing would remain a key sector in the economy. But the country is also giving priority to the development of supporting industries and services particularly in agriculture, finance, information, consultancy, tourism, transportation, trade and logistics.

Such pronouncements may be brushed aside as political rhetoric in this country, but in Vietnam, public officials tend to stick to development plans and achieve the targeted results.

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As of 2009, Vietnam’s nominal GDP stood at $92.439 billion and per capita GDP at $1,060. In contrast, the Philippines’ nominal GDP last year was $189 billion and per capita GDP $2,007.

Goldman Sachs, which included the Philippines in its list of the “Next 11” most promising emerging economies, predicted in December 2005 that Vietnam’s economy could become the world’s 17th largest by 2025. Price-waterhouseCoopers also predicts that by 2025, Vietnam will be the fastest growing among the emerging economies. Its deep poverty rate, or the percentage of the population that lives on less than $1 a day, is now reported to be lower than those of China, India and the Philippines.

Vietnam is also competing with China and Thailand in sopping up foreign direct investments in this part of the world. President Sang informed me that his country currently has 13,000 FDI projects with a total registered and realized capital of over $200 billion and $80 billion, respectively. Despite the global economic downturn, the country attracted $9.9 billion in FDI in the first nine months of this year.

Although under a communist system, Vietnam has one of the most open economies in this part of the world.

“Viet Nam always appreciates and considers the foreign-invested sector an important part of Vietnam’s economy,” Sang told The STAR.

What have they done to lure FDI? Sang cited policies that level the playing field for local and foreign investments, infrastructure development, administrative reforms and better quality of human resources.

“We have maintained a frequent dialogue mechanism between government agencies and investors with a view to addressing the latter’s difficulties and problems in doing business in Viet Nam,” he said.

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The country is leaving the Philippines behind not only in FDI but also in tourism. Foreign visitors in Vietnam hit five million last year, way above the 3.52 million in the Philippines. In the first nine months of 2011, 4.31 million foreigners visited Vietnam; our target for the entire year is 3.74 million.

I asked Sang what they were doing to promote tourism. He said they have improved roads and hotels, diversified tourism products, launched tourism promotion programs in many countries and simplified immigration procedures.

Under their tourism development plan for 2011 to 2020, they are focusing on raising the quality of human resource training and tourism services, enhancing communication and promotion, and encouraging investment in tourism infrastructure and support services. They are promoting sustainable tourism development while protecting natural resources and the environment.

Like the rest of the region, Vietnam worries about climate change and food security, and is moving to confront the problems. It has given priority to its agricultural sector, and has become the world’s second largest exporter of rice, with the Philippines among its markets. It is also the world’s largest producer of black pepper and cashew nuts.

Vietnam also worries about energy security, although it has become the third-largest producer of crude oil in Southeast Asia, with a daily output of 400,000 barrels.

Sang said the international community should help developing countries cope with these challenges, not through dole-outs but through technology transfer, human resources training and sharing of experiences.

The country has not been spared from the effects of the global economic downturn, with consumer prices soaring last year. But inflation has stabilized this year, and Hanoi is tightening fiscal policies. 

Sang is expected to discuss one of the threats to its economic growth and stability – potential conflict in the South China Sea – during his meeting with President Aquino, apart from the strengthening of bilateral ties.

He is bullish, and rightly so, about his country’s prospects.

“I have a strong belief in Viet Nam’s bright future for the next 10-20 years,” he said. “Viet Nam will become an industrialized and modern-oriented country… we will continue with the process of comprehensive, strong reform.”

The words remind me most of China (although there’s no love lost between the two countries) and Beijing’s tendency to make good on its promises.

In 10 to 20 years, Sang might even realize his vision of a “strong country, and democracy.”