Vietnam: Staying on a Growth Course
In Vietnam, the Communist Party re-elected 71-year-old General Secretary Nguyen Phu Trong (pictured above) to head the state for the next five years. The message from Hanoi for the decision revolved around a particular word: “stable.” In Vietnamese, it would be ổn định — “stability.”
In English “stable” has two meanings: one is the noun; a place where you keep horses, or a group of people (such as a “stable of reporters”). The other is the adjective: to be firmly fixed, balanced and not subject to change or failure. This sense of stability is the critical idea Vietnam is focused upon. For instance, while China enjoyed a 6.9% growth rate in 2015, the Chinese stock markets roiled. While there were attempts at recovery, Chinese stocks are still off 40% from their 2015 highs.
Meanwhile, Vietnam is enjoying steady, stable, moderate growth. Unlike in the west, in Vietnam, the opposite of stable is not characterized by the positive adjectives “dynamic,” “changing,” or “revolutionary” but by the unpleasant appellation “unstable.”
— Nguyen Phu Trong
As Nikkei’s Asian Review notes, Vietnam and Bangladesh “demonstrated some resilience in trading and economic performance — they should expect to pick up the low value export business which is being passed gradually from China, for example.” This has led to businesses looking to find new sources of production dubbing Vietnam the “New China.” The Trans-Pacific Partnership (TPP) will also likely advantage Vietnam more than any other country in the 12-nation trade deal. Even Moody’s has rated Vietnam’s banking sector as, you guessed it: stable.
There are still challenges, especially around Vietnam’s complex relationship with China, the moribund nature of some Vietnamese State-Owned Enterprises (SOEs), as well as endemic issues of corruption. Reforms will continue across Vietnam, and its burgeoning middle class will demand even more as it doubles, and nearly triples in size between 2014 to 2020, from 12 to 33 million. But always remember: for Vietnam, stability comes first.