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?
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.