The Next Asian Tiger: Vietnam
Vietnam, once widely anticipated as the next economic “Asian Tiger,” is now emerging as a regional economic power. Today, with more than 8 percent annual growth, this “new kid on the block” is one of Asia’s fastest-growing countries after China. The Vietnam War scarred the country badly and left its economy nearly dead. With its resilience, it picked itself up and managed to revive itself from three decades of war destruction.
Vietnam has come a long way since its early doi moi days after the country took on a vigorous drive to reform its economy. In essence, the reform efforts undertaken were directed at developing a multisector market, and to reform its financial and legal systems, to create an environment conducive for foreign direct investment (FDI). These reforms resulted in a stable economy with rapid growth spurned by large increases in international trade and heavy presence of multinational companies in Vietnam. The punch line is that Vietnam’s economic structure has transformed from an agricultural-based country to one dominated by the industrial and services industries.
This new kid on the block has not sat on its laurels since. Vietnamese people are a dedicated lot who knows what real perseverance is. They know that the country needs to network with others in the region and around the world to sustain its healthy and stable economy. They recognized that the country needed to gain entry as a full member of the association of Southeast Asian Nations (ASEAN), which occurred in 1995, where it would demonstrate its commitment to economic cooperation in the ASEAN region to the opening up of its economy and to trade liberalization.
Fueled with its desire to live up to its title of the “new Asian Tiger,” Vietnam then signed a cooperation agreement with the European Union on economic relations, commerce, and science and technology. In recent years, Vietnam joined the WTO and ended its 12-year communist rule. With a stable foundation now set, Vietnam focuses on its socioeconomic development plans, including building and enhancing its human capital to meet global and regional demands.
Vietnam’s economic progress and prowess has been carefully watched by its Western counterparts and multinational companies. These “observers” were encouraged when the ADB13 forecast Vietnam’s economic growth to be 7 percent in 2008 and to rebound to 8.1 percent in 2009, as compared to 8.5 percent in 2007. In its annual publication, the Asian Development Bank Outlook 2008, Vietnam revealed that its year average inflation is forecast at 18.3 percent in 2008 but will slow to 10.2 percent in 2009.
There are enough opportunities for everyone in Vietnam. Because doing business in China and India is slowly becoming more and more expensive for multinational companies, Vietnam is commonly considered a viable alternative. In fact, Vietnam’s current positive and encouraging economic performance has occurred at an opportune time when FDI in infrastructure, industrialization, and human capital development begins to take center stage.
Indeed, the next Asian Tiger has arrived.