Doi Mòi in Viet Nam
Alarger-than-life concrete statue of the Blessed Virgin Mary stands on the rotunda just beyond the Thành pho? Ho Chí Minh, the City Hall, more formally called the People’s Committee Building. It is as if the Holy Mother had stepped out of the Basilique-Cathédrale NotreDame de Saigon behind her, the twin-belfry cathedral built by the French colonizers between 1863 and 1880. Noisy vehicles and pedestrians swirled around her to the main artery road Nguyen Thi Minh Kai and its tree-lined tributary roads. But there are only about six million Catholics in communist Vietnam, representing just 7% of the total population.
Is there even a statue of the Blessed Virgin Mary standing practically on ground level, anywhere on a busy intersection in Metro Manila — where 84 million Filipinos, or roughly 82.9% of the population profess the Catholic faith? Perhaps more than the comparative statistics, the durable presence of the centuries-old Catholic symbols in Ho Chí Minh City alongside the less-conspicuously displayed but more prevalent Buddhist (10 million followers), Hindu and other affirmations only showcase the deep religiosity of the Vietnamese as they survived wars and occupations by foreigners. And the communist government knows this basic emotional and spiritual need of its people. Today the Nortre Dame cathedral is being restored to its awesome glory in the more than 400 years of French influence and rule. Restoration is a key word even in the economic dreams of Viet Nam.
At the International Association of Financial Executives Institutes (IAFEI) 2018 World CFO Congress held in Ho Chí Minh City last week, Prof. Dr. Nguyen Thien Nan, member of the Politburo of the Communist Party of Viet Nam (CPV), Secretary of the Ho Chí Minh City Party Committee and keynote speaker, talked about the restoration of the Vietnamese socialist-oriented market economy via its Doi Mòi strategic plan.
Doi Mòi literally means “renovation” in common-usage English, or in economics, an “open door” policy as that purposely adopted by communist Viet Nam in 1986, when the command-economy stance since its 1975 victory over the US in the Viet Nam War faltered and failed amidst world economic crises of that critical first decade of independence. True to socialist ideals, central planners of the CPV focused on people as the primary concern of the state — for individual welfare as well as for the common good of society.
Dr. Nguyen cited the continuous addition of the labor force by around one million a year as one of the seven driving forces identified to be behind Viet Nam’s remarkable economic achievements since 1986. For the 18 years from 1999 to 2016 (to now), the fertility rate has been maintained at 2.1 (two babies, to replace husband and wife, plus at least one more), much like the goal set by sister-state in ideology and trade, China. Dr. Nguyen publicly chided and warned Japan about its long-lasting low fertility rate (average about 1.44 for the most recent 14 years), way below the replacement fertility rate of 2.1. A steady replacement of the labor force sets absolute labor cost with relative world average cost.
Consistency and reliability of delivery in trade and commerce is the key principle of doing business in Viet Nam. And tandem to the innovative economic reforms under Doi Mòi is the political and social stability as driving forces behind Viet Nam’s rising global economic and political position, Dr. Nguyen points out. Proudly, he declares that this particular ingredient of stability (one-party political system, with no political noise to alarm local enterprises and foreign investments), much like China, has powered the growth of Viet Nam. He calls it a unique “democratization” that although all decisions and policies are decided at the highest levels of the Politburo, all these are with the oversight powers of the people in actual practice and sustainability versus world standards.
In an on-the-side interview at the IAFEI conference with
a business development officer of one of the largest local commercial banks (listed with Ho Chí Minh Stock Exchange [HOSE]), she said that the State Bank of Viet Nam (its Central Bank) has efficiently and precisely implemented the Banking Law. It is the clearing house for money activities — a powerful regulatory body co-equal to and separate from the Ministry of Finance which handles tax, fiscal policy and administration. She pointed out that 50% of the population of more than 96 million have bank deposits and access to credit. Banking laws are strict and unbending with bank secrecy (depositor rights) and anti-money laundering.
A speaker at the IAFEI conference, Dr. Ian Alexander Eddie, professor of Private Equity at the Australian research university, the Royal Melbourne Institute of Technology (RMIT), in Ho Chi Minh City and Hanoi (the first completely foreign-owned university granted permission to operate in Vietnam since 2000), cited the relatively stable currency vs. the US $ at -3% YTD Viet Nam Dong (VND) depreciation, and stable inflation at 4% in 2018 giving Cash Flow (FDI + Current Account) of 13% of GDP, the strongest in a group of eight developing economies monitored for comparison. The Philippines, fourth after Vietnam, Thailand and Malaysia experienced -9% (depreciation) in 2018, and critical cash flow of only 1.5% of GDP.
Again, Dr. Eddie, as with the banking practitioner earlier interviewed, corroborated CPV Politburo member and Doi Mòi
True to socialist ideals, central planners of the Communist Party of Viet Nam focused on people as the primary concern of the state — for individual welfare as well as for the common good of society.
implementer Dr. Nguyen’s basic premise that the consistency, the predictability of government thinking and action on economic and fiscal policies has contributed much to the economic boom in Viet Nam. Yet Dr. Eddie stressed that the national priority is for economic stability over higher growth. Remember that current policy settings were shaped in response to the global financial crises when the stock market in Viet Nam fell 80% (2008-2009), the VND fell 25% and inflation hit 23%, he said. GDP growth rose from 3% at that time, to close to 7% in 2010, maintained with small ups and downs to catch almost 7% today (2018).
Dr. Eddie agreed that social development has nurtured economic development in Viet Nam. With the reorientation of some of the agriculture and commodity exports (100% of GDP previously) to manufacturing, which now targets 30% of GDP (currently 16% of value, growth of 12%), the quality of life has improved by leaps and bounds for the new, broader middle class moving towards the urban centers where 33 % of citizens flock to — offering 40% more incomes than the rural areas. Upgraded incomes have raised consumption, growing 8.8% and contributing 65% of GDP as a sure boost to the economy.
The Vietnamese people seem happy with their present state. On the way back to the hotel after a gluttonous dinner hosted by a kababayan Hanoi-based Filipino company CFO, the Financial Executives of the Philippines (FINEX) delegates to the IAFEI CFO conference marveled at the extreme jubilation on Nguyen Hue Boulevard. With City Hall majestically glowing and beaming down the kilometer-long walking plaza strip that ends at the edge of the Saigon River, thousands of people roaring their pipes on motorcycles and cars were tooting their horns and flashing their lights. It was some two hours of delirious, noisy happiness.
From six giant video screens set up in the plaza, it was just known that Viet Nam beat Malaysia 2-0 in the 2018 ASEAN Football Federation Championship, following a comfortable openinground win over Laos last week.
Faith in themselves, and the indefatigable effort to achieve — that is the secret of the Vietnamese.