Vietnam, the rising tiger economy
VIETNAM, now with a 7 percent GDP, is the fastest growing economy in Asia. The Philippines which is second at 6.9 percent, is predicted to achieve a 7.5 percent growth rate, just so long as the present factors that sustained its growth, are maintained.
This time, our focus is on Vietnam, now classified as a middle-income country. With a population of 94.6 million in 2016, it is the world’s 14th most populous and asia’s 9th most populous country. And everyone wants to know its secret of success which is not that secret anymore. Anyone who has travelled to the country will understand why after watching its people at work and after studying its government policies on the economy, education, and the operation of various government institutions. It is observing the market and the satisfaction customers get through their quality goods. Thus, it has drawn the admiration of many for its emphasis on quality, not quantity; for hard work and entrepreneurship, and its openness towards the world market through its integration with regional economy through the Asian Free Trade Organization and the World Trade Organization. It has been swift in the transfer of its import – substitution to an export orientation strategy. It had established export processing zones, and it is trying to become more competitive. It has kept inflation under control and improved the business climate by simplifying its administrative procedures, reducing production costs and raising productivity through institutional reforms.
Sometime ago, I shared observations about Vietnam’s focus on building of an “entrepreneurial culture” when I participated in a UNESCO intergovernmental meeting on building a business culture. At that time, I had a personal interview with the Vice Premier who showed great interesting in building a culture of excellence. An ISO for building an organizational culture was one such outcome of our workshops.
Analysts point to factors such as its commitment to reforms such as building its national infrastructure through rural electrification and ensuring that more than 97% of households have access to power; extension of the road transport network, and lifting restrictions by encouraging its 63 provinces to compete with each other. Its foreign development investment (FDI) assistance hit a record high of $24.4 billion in 2016. This growth had been ongoing since 1900 when it was considered as one of the world’s poorest. Since then, the country had grown by an average of 6% per year. The introduction of socialist-oriented market economic reforms has made it one of the world’s successful market economies. Private ownership was encouraged and state enterprises were restructured to operate under market constraints. Its manufacturing, information technology, and hightechnology business now form part of the national economy. It is the third largest oil producer in Southeast Asia. Half of its labor force is now in agriculture, but this is expected to shift as one million of these workers are projected to move to other sectors of the economy. Its poverty rate had declined due to equitable policies such as egalitarian land distribution intended to reduce inequality.
A factor that could explain the fast growth in entrepreneurship and productivity is its emphasis on upgrading innovation competencies through emphasis on science and technology, social sciences and the humanities. It encourages experimentation in robotics, space programs, and encourages scientific output on life sciences, physics, engineering, mathematics and physics, climate change, biotechnologies. Although education is not free, the school enrolment is among the highest in the world. Its societal attitude, system of regulation, and entrepreneurial culture are factors that would contribute to making it the fastest growing economy in the world by 2020.
Its Sustainable Development Strategy calls for a highly skilled human resource base, a strong R & D, and fiscal policies to encourage technological upgrading. But it must try to eradicate pervasive corruption such as bribery, illegal privatization of state property, and the prevalence of rent-seeking behavior from some regions.
According to the South African premier of Cape Town who recently visited Vietnam, the latter’s transformation from state dependence to self-reliance is a miracle by itself. It will be remembered that Vietnam emerged from 1,000 years of violent oppression, first at the hands of the Chinese, then French, and later, the Americans in a war that was targeted at the civilian population, through at times the use of chemical weapons. Everyone she had talked to, she says, attributed economic growth to the “equitisation” (privatisation) program. It has a progressive tax program, and citizens are expected to contribute to a pension plan except for a few like the elderly without a family. A 2-child family is encouraged, and everyone works as most services are not subsidized. A much lower level of materialism had been observed In this “motorbike culture.”
Perhaps we may not follow the Vietnam way. But it may be important to pull together some elements of our own culture that can build this culture of productivity, as well as focus on the important elements in human resource development. It should not be difficult since we have a wide resource of human development resource specialists skilled in integrating the necessary knowledge, skills, and mindsets for developing a “culture of excellence.”