SEP 7, 2016 @ 12:39 PM
Vietnam Poised To Be Asia's Next Economic Tiger
Ed Fuller ,
CONTRIBUTOR
I write about global tourism, hospitality and business.
Opinions expressed by Forbes Contributors are their own.
Ho Chi Minh City (Shutterstock)
For many of my generation, Vietnam remains a complex enigma, depending on our personal experiences and memories of the country.
I arrived in Vietnam in 1970 as a U.S. Army captain and was immediately overwhelmed by the country’s natural beauty and the genuine warmth and hospitality of the local Vietnamese. I was a member of MACV, the U.S. Military Assistance Command, and had many opportunities to work with the Vietnamese military and other Allied countries.
At the time, I was based in an area called the Vietnam Central Highlands (Military Region Two) which covered Cam Rhan Bay, Nha Trang, Qui Nihon, Ban Me Thout, Pleiku Phan Rang etc., all names that became familiar to anyone at home who watched the evening news or one of Bob Hope’s iconic USO Christmas tours on TV.
My responsibilities took me to many cities and bases throughout the country and whetted my lifetime appetite for learning about Asian cultures, people and countries.
With a history that can be traced back roughly 4,000 years, I discovered Vietnam offers a rich tapestry as the basis of its culture. I learned that the Vietnamese believe in the teachings of Confucius which emphasizes the importance of relationships, responsibility and obligation. As I became further acquainted with Vietnam’s history, what stood out for me was its more than 2,000-year struggle against foreign invaders and, possibly more importantly, the ability of the Vietnamese people to learn from their occupiers and finally overcome foreign rule.
After the war, the Vietnamese explained their apparent lack of resentment toward the U.S. this way: “Why should we resent the Americans? We fought the Chinese for 1,000 years, the French for 100 years and the Americans for 10 years.” Is it any wonder then that, today, the U.S. is Vietnam’s main trading partner?
I returned to Saigon, Vietnam out of curiosity in 2006. Marriott was working on a hotel but negotiations were going badly, so I paid my own way over. It was an eye-opener for me. That visit was the first of about 14 trips I have made to the country since, including one in 2008 on which I accompanied U.S. Secretary of Commerce Carlos M. Gutierrez on an official Mission to Vietnam.
Asia’s Next Economic Tiger?
Today, Vietnam is poised to become Asia’s next economic tiger. Like South Korea, Taiwan and China before it, Vietnam is piecing together the right mix for rapid, sustained growth.
As was reported in the Economist this past August, “foreign direct investment in Vietnam hit a record in 2015 and has surged again this year. Deals reached $11.3 billion in the first half of 2016, up by 105% from the same period last year, despite a sluggish global economy. Big free-trade agreements explain some of the appeal. But something deeper is happening.”
Since 1990, Vietnam’s economic growth has averaged nearly 7% a year, second only to China. This growth has propelled the country from among the world’s poorest to middle-income status. If the Vietnamese can turn in an annual 7% growth rate for another decade, it would be similar to that of China and the other Asian tigers. But today Vietnam stands at the crossroads. As the
Economist noted, should its annual growth rate fall back to 4%, Vietnam could “end up in the same league as Thailand and Brazil.”
What Vietnam has going for it
What Vietnam has going for it are its 92 million people, most of which are young (median age is 30.7) and skilled. Public spending on education is about 6.3% of GDP, higher than the average for most low- and middle-income countries. Spending is focused on ensuring high enrollment and achievement and it’s paying off handsomely. In global rankings, 15-year-old Vietnamese children regularly beat those in America and Great Britain in math and science. All this comes in handy in Vietnam’s factories where workers must handle complex machinery.
Another positive factor is the country’s geography. Its border with China, once a fierce military foe, is now a competitive advantage because, as the
Economist notes, no other country is closer to the manufacturing heartland of southern China, with connections by land and sea. Rising Chinese wages make Vietnam an obvious substitute for firms moving to lower-cost production hubs.
Finally, Vietnam is party to a number of trade deals. The
Economist reports that it will be the biggest beneficiary of the Trans-Pacific Partnership, a 12-country deal that includes the U.S. and Japan, should it be enacted. But even if the pact fails, Vietnam has other agreements with the EU in the works and one with South Korea that went into effect last year.
What About Tourism?
Today, tourism is playing an increasingly significant role in Vietnam’s development, contributing more than $16 billion to the local economy last year, or about 9.3% of GDP, according to the World Travel & Tourism Council (WTTC).
With its goal of attracting 55 million domestic and foreign tourists a year by 2030, Vietnam introduced a visa exemption policy last year, offering waivers to travelers from 22 European and Asian countries, including Great Britain, France, Germany, Russia and nine ASEAN member states, among others. The rule allows these visitors to enter Vietnam without a visa, provided their stay is for 15 days or less.
Additionally, a raft of major infrastructure and transport projects are planned over the next 15 years including seven new tourist development areas as well as waterways in Haiphong City and Quang Ninh Province and a rail link to China’s Yunnan Province. Plans to target regional infrastructure upgrades are expected to be advanced further, thanks to a series of bilateral agreements signed with Laos, Cambodia and Myanmar last year to work on joint regional tourism initiatives.
As a result, analysts predict the hotel rooms supply will increase over the next three years. Property consultancy CBRE expects the number of hotel rooms in Ho Chi Minh City (Saigon) and Hanoi to grow by 8% a year through 2018. The WTTC is equally optimistic with its most recent report predicting annual industry growth of 6.2% over the next decade. Job creation is also expected to expand with direct tourism employment growing about 2% a year through 2025.
It’s been almost 50 years since I first walked on Vietnam’s soil. While the circumstances in those days were less than ideal, I’m thrilled by what’s transpiring today. In the hotel business, when we evaluate a property for development, we first look to see if it has “bones.” Vietnam always has had the “bones.” It’s great to see the development vision bringing Vietnam’s economic future to its fullest potential.
