Interview
Can Vietnam be the new Singapore?
- A proposed 46% U.S. tariff on exports, which represent approximately 30% of Vietnam's GDP, is identified as a fundamental threat to the current foreign direct investment-driven economic model.
- The government is pursuing a massive restructuring of the bureaucracy under the general secretary, marked by a shift toward tolerating errors and raising risk appetite to reduce regulatory fear for the private sector.
- Economic strategy aims to transition from control and stability to innovation, including raising economy-wide R&D spending to lift the private sector's contribution to 70% of GDP, up from the current 50%.
- The export-led model utilizing rural labor surpluses is expected to lose steam as agricultural job destruction slows and wages have risen for several decades to become competitive with or exceed those in India, Bangladesh, and Cambodia.
- The national objective is to achieve upper-income status by 2045 by emulating Singapore's shift toward higher value-added foreign direct investment, despite the domestic market of 100 million people not being comparable in absolute size to China's.
- Future growth is predicted to rely on capitalizing on new emerging technologies from a lower baseline rather than carving out niches in industries dominated by Asian tigers and China, as climbing the development ladder becomes harder for middle-income nations.
- Significant employment challenges exist for a population of 100 million as the manufacturing model absorbs less labor, with uncertainty regarding whether advanced manufacturing utilizing robotics can employ a broad swath of the workforce.
- Performance of listed Vietnamese companies is described as "absolutely terribly," implying a disconnect from broader growth prospects without intervention, while questions remain regarding the implementation of rules requiring foreign investors to hire senior management or train specific skills.
- No definitive solutions have been identified for building a domestic consumption economy, and there is no guarantee that the current economic trajectory can successfully generate sufficient employment through advanced manufacturing processes.