Growing Vietnam
Listed as one of the Next Eleven countries to watch for investment opportunities and accepted into the World Trade Organization, Vietnam has been dubbed the New Asian Tiger. But can it live up to the world’s expectations?
By Jack Boulware
It’s a three-hour drive from Ho Chi Minh City to the catfish-farming area of the Mekong Delta. As you leave the city, the urban topography falls away and is replaced by a lush green landscape dotted with workers in rice fields who are wearing the familiar conical hats.
Vietnam is still a Communist country, one of a handful remaining in the world. And so, along the road, loudspeakers blare a series of motivational messages.
“ ‘Everyone needs to rise up and be productive and be for the betterment of the Vietnamese country,’ ” repeats Tom Frese. “It’s like a pep rally every day.”
An aquaculture consultant based in Florida, Frese came here to observe Vietnam’s ancient business of raising fish — because it’s changing the way the world eats seafood.
“Vietnam’s aquaculture went from essentially zero in the 1950s to its current production, which is 1.15 billion metric tons,” says Frese. “It’s been on a steady climb, and it’s expected to grow.”
Recent figures say Vietnam fisheries now export more than $2 billion worth of goods, destined for 65 countries. It’s now the nation’s third-largest industry.
Most aquaculture farms raise fish in giant standing ponds, but the Vietnamese have cultivated a unique and ingenious method: The fish are grown in cages beneath floating homes on the Mekong River. These dual-purpose structures are stationed up and down the river, with one person living inside each home and managing the fish 24 hours a day.
The Mekong’s strong current and the volume of water that flushes through the cages allow farmers to put more fish inside each cage and to group the floating homes close together, so that they’re almost like little villages. “It’s also one of the reasons why the Vietnam catfish has a pretty good flavor,” explains Frese. “You don’t get the off flavor of pond-raised fish.”
When the fish reach an acceptable size, fishermen haul them onto a boat and head toward a processing plant. Certain species are shipped fresh; the rest are frozen and exported across the ocean. A plate of fish and chips at a pub in London may well have had its beginnings in a floating fish cage in the Mekong Delta.
It’s not just the fish that’s putting Vietnam back on the global map, though. The country has experienced an extraordinary surge in international trade, affecting everything from product exports to the construction of new factories. Gross domestic product growth has nearly doubled every decade in the past 20 years, and it consistently hovers at about 8 percent — the second highest in the world, behind China. Goldman Sachs has listed Vietnam among its Next Eleven countries to watch for investment potential. And in late 2006, the New Asian Tiger was accepted into the World Trade Organization, guaranteeing the nation a solid financial foundation for the future.
If there were a single photograph that encapsulated Vietnam’s remarkable economic renaissance, it would show an aerial view of Ho Chi Minh City’s harbor. The capital city (which locals still refer to as Saigon) sits astride the Saigon River, some 50 miles inland from the South China Sea. Nearly all of Vietnam’s exports and imports come through this deep-water riverway, and it’s already filled to capacity.
With container traffic growing at 20 percent per year, cargo ships often have to wait for a space among the limited berths. To reduce congestion, the country is developing four new additional port projects, the first of which is opening sometime next year.
So, besides fish, what’s in all those shipping containers? Many of those leaving the port are carrying rice. Vietnam is the world’s second-largest exporter of rice (the predominant crop in nearly every region) and this year possibly the largest single producer of cashew nuts. The country also exports significant amounts of pepper, coffee, tea, clothing, furniture, oil, rubber, and high-tech products.
“China tends to flood markets with [lower-end] goods, your dollar-store variety, if you will. Vietnam has focused more on niche areas that tend to be on the higher end,” says Robert K. Brigham, a Vietnam scholar and a professor of history and international relations at Vassar College.
“Ford, General Electric, Nike, and other big U.S. manufacturing concerns have joined European and Japanese and South Korean companies in making Vietnam a high-end, high-tech manufacturer,” Brigham adds. “Some of the more advanced technology plants in Asia are now in Vietnam.”
One such plant, currently under construction at Saigon Hi-Tech Park, north of Ho Chi Minh City, is destined to be a whopper. Intel has announced that it’s investing $1 billion in the new 500,000-square-foot test-and-assembly chip facility, which will eventually employ 4,000 people. Canon Electronics has embraced Vietnam, too, and has built three manufacturing plants there, including the world’s largest ink-jet printer factory, capable of producing four million printers a month.
All of this seems even more astonishing when you realize that in 1990, Vietnam was ranked one of the poorest countries in the world.
Following the end of the Vietnam War, the nation’s economy basically collapsed. Food and even bicycles were rationed. A government program to collectivize farms and factories limped along for the next 10 years but suffered from a variety of problems that ranged from corruption to economic restrictions and embargoes. Onetime Vietnam-based journalist David Lamb has called the period of 1975 to 1985 the dark years, a time of widespread famine, when Vietnam was basically shut off from the rest of the world.
Things began to brighten economically in the mid-1980s as the Communist blocs throughout Europe began to crumble.
“There is no doubt that Vietnam’s current economic growth is attributed to changes made at the 1986 Sixth Party Congress of the Communist Party,” says Brigham. “At that meeting, party officials agreed to liberalize Vietnam’s economy through a series of reforms known as doi moi, or renovation. They established liberal rules for trade and investment, [which opened] Vietnam up to the outside world.”
In a reversal of policy, Vietnam’s Communist government encouraged private ownership within industries, agriculture, and commerce. President Clinton lifted the United States embargo in 1994, and the following year, two decades after the fall of Saigon, a new era of normalized relations began between the two nations.
In 1995, Vietnam took another step forward by joining the Association of Southeast Asian Nations (ASEAN), a group that promotes economic growth, cultural progress, and peace and stability in the region.
“The fact that Vietnam is part of the ASEAN network is very important,” says W.J. Morgan, a University of Nottingham professor and the UNESCO chair of the Political Economy of Education. Morgan also attributes the economic boom to the changing demographic of the Vietnamese people.
“There’s a good level of basic education among the population — a young and vigorous population of which a high percentage is under age 25. Many Vietnamese [speak] English and other European languages.”
Of this eager, young workforce, rooted in tradition yet impatient for the future, an estimated 1.5 million enter the job market every year. When a national stock market debuted in 2000, the floodgates of investing opened not just for other nations but also for the Vietnamese themselves, who sit in Internet cafés and trade stocks online.
As with any emerging economy that has a population willing to pursue a capitalistic lifestyle, Vietnam has reached the next logical step in development: a growing middle class. Although the average income is still less than $700 a year, more and more people now have money to spend.
The streets of Ho Chi Minh City are filled with waves of motorcycles, luxury items that were once unattainable to everyone but the wealthy. Shopping malls boast the latest from Gucci and Prada. Club kids gather in swanky hotel bars, guzzling $7 cocktails and talking on cell phones. The Hanoi Sofitel Plaza Hotel hosts Vietnam Fashion Week each year, during which models parade the latest couture designs of raw silk, which cost the equivalent of hundreds of U.S. dollars.
The nouveau riche head for a four-star resort at the Mui Ne beach, nicknamed the Hamptons of Vietnam. Children are now enrolling in international schools that formerly catered only to expatriates. Families shop for groceries in bulk at supermarket chains owned by French and German companies. Cemeteries are boasting larger and more elaborate monuments atop graves. And a guaranteed indicator of affluence: Sales of ice cream continue to grow.
Vietnam’s tourism bureau has picked up the baton, and the country anticipates four million visitors this year. Whereas 20 years ago, there was little or no tourism, today, cruise ships packed with Europeans and Americans pour into the harbors, and international flights arrive from cities like Moscow and Paris.
Even when faced with momentary downturns, the Vietnamese are not deterred. A particularly tense situation occurred in 2002, when catfish exports to the United States were so pervasive that they threatened the U.S. domestic catfish industry. Pressured by lobbying from catfish farmers, the International Trade Commission imposed stiff tariffs on Vietnamese catfish — of as much as 64 percent — effectively pricing Vietnam out of the U.S. market.
The impact was felt throughout Vietnam’s economy and, more specifically, by the 400,000 people whose income relied on the catfish industry. Farmers and processors were stimulated to seek new markets, and as a result, they restructured their industry to produce different species and expanded exports to Japan and Europe.
“They seem happy; they don’t complain,” says Frese. “The Vietnamese people are truly amazing. I’ve never seen a work ethic [like theirs].”
It’s exactly this determination and willingness to work, some say, that is the key to Vietnam’s attractiveness for investment. “Chinese work five-day weeks, but Vietnamese work six,” says one Taiwanese businessman. “That’s a 52-day difference every year.”
Experts feel that this strong work ethic, combined with foreign investment and an ever-improving infrastructure, will sustain Vietnam’s economic boom for some time.
“Vietnam has been experiencing steady growth now for over a decade,” adds Brigham. “I think it is safe to say that the economy, with its new stock market and new banking system, is poised for more growth.”
However, Adam McCarty, chief economist for Hanoi’s Mekong Economics, cautions that this economy is very young and that time is still needed. “Vietnam is an emerging Asian Tiger, but we need to remember that it’s still decades behind the level of development of regional neighbors like Thailand, China, and even Indonesia.”
Nor does Vietnam’s new emergence as an economic and cultural presence come without a few caveats. The Communist government still exercises strict control over freedom of speech and expression of religion. But Vietnam can’t turn back now — the momentum has been established. Perhaps in a future generation, with a population ever curious about the rest of the world, the freedom we know in the West will be part of everyday life in Vietnam.