Vietnam is a rising star; an economic giant towering tall over its neighbours Laos and Cambodia, and one of Southeast Asia’s most determined growth engines. After a decade of steady success, this diverse country of almost 90 million now wishes to capitalise on its mighty status, setting its sights on officially becoming a developed country by the year 2020, in a bid to join the likes of wealthy Asian elite such as Japan and Singapore. But is this ambition achievable?
Vietnam carries a troubled past, bursting with hostile wars and communist rule, producing not only human loss but a devastated landscape splattered with lethal mines, crushed forests and chemical contamination. Poignantly, beauty still lingers in the country through a crossroads of ancient heritage, tropical landscapes and glistening modern services that has catapulted the nation to a global tourist hotspot.
As the political system gradually becomes more open to the outside world, there seems to be a strong scent of progress across much of Vietnam, and with an economy slowly opening its eyes to capitalism through sequenced trade liberalisation, a large middle class population has emerged itching for comfortable lifestyles and consumer goods.
In 1993 the nation had a poverty rate of 58%; this is now less than 15%. Export of globally competitive niches such as coffee, from cultivated highlands, and rice from fertile lowlands, have enhanced Vietnam’s GDP, seeing it fly from one of the world’s poorest nations to a lower middle income country.
Despite a decade of brave and persistent growth, Vietnam’s future now hangs in the balance
Massive improvements in health and education have also occurred, along with social safety nets for more of the population than ever before. Inclusion of women and achievement of many of the Millennium Development Goals ahead of the UN’s 2015 deadline has also earnt the nation international praise.
Despite a decade of brave and persistent growth, Vietnam’s future now hangs in the balance. Increasing pressure to reach the next level of economic development has prompted talk of a need for reform as experts suggest that the country is in danger of losing momentum after recent economic inefficiency and high levels of inflation. The latter is generally considered to be the result of a long established existence of structural issues, such as inefficient public spending and local credit fuelled growth, buried at the core of the Vietnamese economy.
Vietnam’s trade deficit is also still a thorn in the side of the nation, while a curiously high level of financial fraud runs parallel to this, deriving mainly from high interest money games and risky equity speculation. Many cite a lack of business education as the catalyst behind such problems with firms making the same fundamental mistakes over and over, through simple ideas like cost-benefit analysis and business operation principles being overlooked.
Worryingly, disparities in wealth are also growing, especially geographically – between the rural poor and wealthy urbanites. Increasing discontent at this socioeconomic gap threatens future political stability, with a possible rise in strike action, like that seen between 2006, when 400 strikes took place, and 2011 which witnessed a shocking 978 strikes in total.
Where tourism is concerned, Vietnam’s mix of vibrant urban centres and rolling rural landscapes captured the attention of over 6 million visitors in 2013, with many of these deriving from global powerhouses such as Russia and the US.
But even with record levels of visitors, the industry still faces challenges; such as a bizarre level of incomplete documentation on Tourism Law, difficulty in preserving natural resources and problems implementing sustainable development.
Vietnam’s mix of vibrant urban centres and rolling rural landscapes captured the attention of over 6 million visitors in 2013
Admirably, Vietnam is dealing with such pressures efficiently by putting monumental energy into the promotion and investment of natural resource value and focussing on the development of sustainable eco-tourism. Meanwhile the volume of UNESCO World Heritage sites has increased also, with national treasures like the Old Town of Hoi An and the Thang Long Imperial Citadel gaining global recognition.
Coupling this with a new tourism development strategy for 2020 that aims to see between 10-15 million foreign visitors and 40-45 million domestic arrivals, producing a turnover of $18 billion, Vietnam appears to be carving out an appealing future where tourism is concerned.
To cater for the projected rise in visitors, Asian carrier Vietnam Airlines has become the latest long-haul carrier to switch its London flights from Gatwick Airport to the capital’s largest flight hub, Heathrow, after finally securing suitable operational slots. Vietnam Airlines currently runs two flights per week to the UK capital from Hanoi and two from Ho Chi Minh City. These will move to Heathrow from March 30th 2015 and a third weekly rotation on the Hanoi route will commence from July 4th.
Yet where one sector thrives, another suffers. In the technology industry, there exists concern that steep governmental regulation on what digital companies can do with their content may hold back innovation and foreign investment.
The Vietnamese technology sector has grown in recent years due to enhanced internet infrastructure, high volumes of smartphone sales and a wealth of skilled coders and designers willing to work for low wages. High growth areas have appeared in e-commerce and mobile games, yet Vietnam’s regulatory systems, both in place and proposed, threaten to quash this growing sector, leaving the country at risk of falling behind more liberal economies.
It is the relationship between economic growth, political change and social stability that will determine the future of the country and its people
For example, certain regulations demand that content administrators must have university degrees, while others require digital providers to have contracts with Vietnamese companies or set up payment systems specifically within Vietnam.
But critics suggest that this is a necessary effort by the government to protect domestic business, and especially Vietnam’s telecommunications sector that has been adversely affected by foreign firms. Whatever the reason, complex regulation makes Vietnam less attractive for international tech firms, leaving many drawn to more liberal nations like Singapore.
Vietnam is a diverse and radiant country; a visual spectacle of golden coastlines, blue waterfalls and thick green mountains, and although this landscape has given birth to a colossal level of potential for tourism and resources for export, it cannot single handedly push Vietnam to the next development stage. Rather, it is the relationship between economic growth, political change and social stability that will determine the future of the country and its people.
Whether the nation will achieve significant progress in the coming years remains to be seen; the gap between searing urban wealth and desperate rural impoverishment needs to be addressed while the regulatory environment must be improved to attract vital foreign investment.
What is certain though, is that this small yet tenacious country has put up a roaring fight for its success over the last decade, and it doesn’t show any signs of stopping just yet.
Images courtesy of Nathan O’Nions, Padmanaba01 and guido da rozze via Flickr