👉Can Vietnam become The New China ? -- Vietnam Economic Report

Although Vietnam remains a one-party communist state, it's liberalizing rapidly. Vietnam is transforming from one of the world's poorest economies to an economic success story. Vietnam is today one of the Fastest Growing Economies in the world. Opening up to trade and reforming the economy has helped Vietnam lift 40 million people out of poverty over the last three decades. The Vietnamese people managed this remarkable fast transition from low-income to middle-income status. Vietnam joined the WTO only in 2007. This naturally creates economic growth after ten years or so. China joined in 2001 and reached its highest growth in 2007. WTO membership imposes standard rules which have to be followed by all countries. China's Deng Xiaoping was quicker to embrace capitalism than Vietnam, which is still an agricultural country. Deng changed China in 1980, and Vietnam changed itself in 1986. The downside is that Vietnam will get all the headaches associated with growth, such as expensive real estate, traffic caused by cheaper cars, and pollution from industrialization. Business in Vietnam is booming, but its success has raised a few eyebrows in Washington, with US President Donald Trump complaining that Vietnam's trade practices are worse than China’s. Vietnam is emerging as a winner of the trade war but could become a potential new target of Washington. Today, China invests in labor-intensive enterprises in Vietnam and use Vietnam as a transit point as more companies consider Hanoi as a new hub of manufacturing. Viet Nam is today emerging as an alternative to Chinese manufacturing in the face of a trade war. But it's still an agrarian economy, the world's third-largest exporter of rice. Vietnam is one tenth the size of China. Vietnam still got a lot of work to catch up. Vietnam is still one of the poorest and most corrupt countries in the world. It is ranked 125th in GDP per capita and 117th in the corruption perception index. Vietnam looks set to confirm a widening trade surplus, with the latest estimates putting the amount at $9.9 billion for 2019, compared to the $7.2 billion recorded in 2018. Initial numbers have shown exports up 8.1% to $263.4 billion, with imports up 7% to more than $250 billion. Smartphones and garments were amongst the largest income earners, while fabrics and electronics were major imports. Meanwhile, the industry and construction sector accounted for 34.4% of Vietnam's economy. Welcome to The Atlantis Report. Despite that, Vietnam had only 20 years of peace. It has transformed its communist economy to become one of the world's fastest-growing nations. While the reforms are incomplete, multinational corporations see a profitable future in Vietnam and have made major investments. Vietnam is coming of age. Attracted by its favorable demographics dynamic, productive labor force, much-improved infrastructure, and stable politics. Viet Nam is a fast-growing and ever-changing place. #1. Land and Infrastructure: An example of Viet Nam's quick growth is its highways, which you can see being built all over the country, yet still few can afford a car to drive on them. The country, with its many landscapes, mountains, and rural areas, is looking to provide electricity to all its people - setting the goal to be fully electrified by 2020. In between, the country is also opening doors for outsiders to be able to buy property. China is expected to buy most of this available land. #2. Quality of Life: With such ambition, it is no surprise Viet Nam is also said to be the first emerging economy to achieving most of the UN Millenium Development Goals. But as of 2018, for the exact reason stated above, major NGOs doing Development Work or bringing in Foreign Aid will be pulling out. This does not mean Vietnamese people do not need support, nor that all will have the same living standard. One department that still requires good improvement, from my experience, is the health sector (health care, hospitals, pollution control, and resource management). #3. Market and Labour: Its cheap labor makes the country attractive to anyone wanting to move to manufacture offshore, including Viet Nam's northern neighbor, China. Some say Viet Nam is the next little China in this department. Tourism is another growing industry, with its beaches being the prime vacation spot for many Russians. #4. Financial Institutions: Reliable banking systems are still a work in progress, and red tape a crutch to private sector development. The use and trust around credit cards and online shopping is also a challenge. Similarly, insurance companies are struggling to penetrate the market (and the mindset of the people) - to the exception of great car insurance — more work needed on this front. #5. Commodities: When it comes to food, Viet Nam is considered the rice bowl of Asia. It is a major exporter of commodities such as rice and coffee, and this will continue to grow over the coming years. Interesting enough, when it comes to diversity in groceries, many may consider options are still limited to local dishes, but supermarkets are slowly seeing the light of day with an influx of packaged or processed goods expected to come in primarily from Korea. While it can be seen as progress, this also competes with traditional markets and small family businesses. With such rapid progress, there is also a loss of culture, and unfortunately, I expect these small shops and markets will become more scarce. #6. Foreign Interests: Whether it is for oil, manufacturing, commodities, political accords, military, the country seems to be in a good strategic place with superpowers such as the USA, China, Russia, and Japan. #7. Vietnam 2035 Vision: A recent post by Jim Kim, president of the World Bank, has highlighted the progress made by Viet Nam these past decades, but also the key challenges to come in order to reach their 2035 vision (to become a modern industrialized nation in one generation). These challenges include. 1) Increased efficiency for private sector growth. 2) Resilience building and extreme poverty alleviation. And 3) Comprehensive governance reform. Considering inefficient cooking fires and related indoor air pollution kills more people prematurely worldwide then Tuberculosis, AIDS and Malaria combined, the need to support those in extreme poverty with clean solutions is essential for the country not to fall back on their progress. So can Vietnam become the world's new factory? For all industries? Nope. In the present, only India and China have the capacity, resources, manpower, political influence, large enough market, economic strength, and space for industrial infrastructure to do that. Vietnam, even in the best-case scenario, can't ever become that. It simply doesn't have the human resources and the natural resources to be so. Size does matter in this regard. For some specific industries, yep. If they don't f up in their steps and the political climate doesn't suddenly plunge into World war three or an actual Cold War, Vietnam, along with the rest of ASEAN, can replace China as the manufacturing base in some supply chains. That's all they need to be anyway. China wants to be a superpower to rival the US and redefine geopolitics. To accomplish that goal, they need to have enough economic clout, which they decided to gain by integrating themselves permanently and irreplaceably into the global supply chains of every industry. That's what they need to do to accomplish their goals. In contrast, as an average middle-sized country, Vietnam has determined that its only goal is to integrate itself into some global supply chains of some strategic industries. All to gather enough political and economic clout to ensure its interest won't be easily walked over by the more powerful countries. To make any foreign invasion more costly to the invaders and to the global supply chains than it's worth. Standard poison shrimp tactic, basically. This is what they need to do to accomplish their goal. Vietnam was 80% of the 20th century in wars and colonial times; 20 years in trade embargo from the US, 1975-1995. So Vietnam had only 20 years to develop. So before we compare Vietnam with other neighboring countries that had a long time in peace and never had trade embargo, we need to take note of this. So Vietnam is a very new industrialized country. The Philippines is a high middle-income country with a higher GDP and economic power, while Vietnam is a lower-middle-income country. Both Hanoi and Ho Chi Minh really reminded me of China in the 1980s. Vietnam has only started experiencing economic growth as of recent, many years too late compared to the Philippines and other Asian counterparts. Vietnam's cities tend to be more agricultural and less developed, areas with one tall building that look out of place, and very few high rises are a common sight and eyesore. Ho Chi Minh and Hanoi were comparable to Manila in 1999. The Philippine's economic GDP figures are expected to double in 5 years time to 600billion, and by 2029 it will be a trillion-dollar economy with Malaysia, while Vietnam will still remain a fairly newly industrialized country and expected only to surpass Singapore in 10 years while the Philippines in 2 years time. Vietnam is doing very well in terms of economic GDP growth and exports, but they still need some time to catch up with the five powerhouses of ASEAN, Thailand, Indonesia, Philippines, Malaysia, Singapore. In my opinion, in the short term, Vietnam's economy will boom because Trump's trade war forces Chinese manufacturers to move to Vietnam. That's why the Vietnamese government made some laws against protests this year (because Vietnamese are generally anti-Chinese), and that's why Vietnam's GDP is high. An estimated 1.5 million Vietnamese fled to the U.S. after the fall of Saigon in 1975, seeking a better life for their families. But as memories of the war fade and as business opportunities expand in the communist country, some children of those immigrants are moving back, drawn by Vietnam’s new economy and old culture. I am optimistic about Vietnam in the short term, but pessimistic in the long term because it ties the Vietnamese economy too much with the US. After Trump's term, the trade war will end, and the foreign investors will easily leave Vietnam, causing a crash like during the Asian Crisis, and their government will not be able to withstand it. This was The Atlantis Report. 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