2.The ease of doing business index for Vietnam is at 69 in 2019. Vietnam has maintained a GDP growth rate of more than 6% since 2000.
3. Many businesses are shifting production to Vietnam to avoid the effects of tariffs. Vietnam has granted investment licenses to about 1,720 projects in the first six months of 2019. The economy has grown at the rate of more than seven percent in 2018, which was a 10-year high.
4. Vietnam's production of phones has gone up to a staggering $49 billion in 2018. The improved performance of Vietnam has not been limited to mobile phones; it has generally excelled in production of all electronic items.
5. Vietnam is going to take a non-permanent seat in the UN Security Council for the 2020-2021 term, and she will also serve as the chair for Asean in 2020. She will be the first chair after the adoption of Asean's outlook paper on the Indo-Pacific.
6. An Australian group, SunRice, has set up its unit in Vietnam and is exporting rice to neighbouring countries. This is because Australia does not have free trade agreements for rice with these countries. This is how Vietnam's free trade policies have helped attract industrialists from Australia.
7. The government of Vietnam has put in a lot of effort into making the country a good host for incoming investment and companies. Several companies have moved their units across the border to Vietnam from China. They include tech companies like Nokia, Samsung and Olympus, as well as shoe manufacturers such as Nike and Adidas.
1. Vietnam’s rapid growth over the past decade is mostly due to the country’s move away from a strict controlled economy to a more liberal system. For the past decade, the country has taken on reforms like deregulation which has seen an influx of private enterprises and foreign investment.
2. In 2018, Prime Minister Nguyen Xuan Phuc revealed that the country would cut corporate income tax rates from between 20 to 22 percent to 15 to 17 percent.
3. In March 2019, the Ministry of Transport proposed to enhance services in maritime areas and multi-modal transportation by easing business conditions and regulations.
4. Another notable step Vietnam has taken to open up its economy is by signing the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which the World Bank has estimated will increase Vietnam’s GDP by as much as 3.5 percent.
STRONG FORECAST
1. The Southeast Asian nation has the potential to grow at a pace of about 6%-6.5% over the next decade, DBS forecasts, citing strong foreign investment inflow and productivity growth in the coming years.
2. Future growth will be boosted as the nation’s favorable demographic dynamic, productive labor force, much-improved infrastructure and stable politics encourage international inflows.
3. If it can sustain that pace of growth, the Vietnam economy will be bigger than the size of the Singapore economy in ten years’ time
LIMITATIONS
1. One major constraint in Vietnam is the lack of human capital, according to analysts from Fitch Solutions. That refers to the economic value of a workforce, which considers factors such as workers’ education level, skills and health.
2. Vietnam has a young and growing labor force – defined as people aged 15 and older who are employed, and those unemployed but seeking work. But the size of its workforce is much smaller than that of China.
3. The Vietnamese workers were really not trained up to the level that the Chinese are, and that starts with the construction of your factory, or the road to get there.
4. Vietnam is roughly the same size of China’s Guangdong province, and while China’s southerly manufacturing base has a population of 104.3 million, Vietnam’s is 95.5 million. But while Guangdong can draw on massive pools of migrant workers from around the rest of China, Vietnam cannot.
5. According to an official Vietnamese government database, there were 9.3 million workers in the country’s manufacturing sector in 2017.
Comparably, Guangdong province alone had a manufacturing workforce of 12.71 million in September 2018, accounting for 58 per cent of the total workforce, according to the Guangdong Statistics Bureau. Guangdong is China’s most populous province, while 10 other provinces have populations greater than 50 million people.
6. As a whole, the Vietnamese economy is much smaller than China’s, which is world’s the second largest. That itself places a limit on the Southeast Asian country’s ability to replicate the scale of China’s manufacturing successes.
Source: bangkokpost, theaseanpost, Bloombergquint, SCMP
