Learn from the success of Vietnam

The National Editorial

PAPUA New Guinea would do well to look to the small Southeast Asian country of Vietnam for some lessons in economic planning, execution and growth.
There are powerful lessons to come from there.
As PNG sailed peacefully into Independence in September 1975, Vietnam was a torn-up and divided country.
Between November 1955 and the middle of 1975, Vietnam, Laos and Cambodia – sometimes referred to as Cochinchina – was a theatre of war.
China, France, Cambodia, Laos, South Korea, the Soviet Union, United States and its allies – the world, no less – rampaged through there.
With the fall of Saigon on April 30, 1975, the 20-year war ended. Some four million people had perished there. The country was torn and divided. The economy was in shreds, and supported by foreign aid. In a word, it was destitute.
PNG, on the other hand, was a country full of promise. It was a huge nation with a small population. It had tremendous agricultural potential, resources galore whichever industry you chose to look at.
Yet, between 1986 and 2023, Vietnam has risen out of the ashes from being one of the poorest nations to a middle-income nation, rubbing shoulders with Singapore and Indonesia in terms of trade.
PNG, on the other hand, is weighed down with socio-economic problems, with aging and failing infrastructure, with rampant corruption and failed governance structures, living off borrowed money and aid, with no trade to speak of and a dumping ground for rejects of every kind.
By 2045, Vietnam intends to become a high-income nation and, by all indications, it looks set to accomplish its goal.
PNG has set 2050, five years after Vietnam’s goal mark, as its date with destiny when it should become an industrialised nation where its citizenry is happy, healthy, wealthy and living in harmonious bliss.
That goal was set in 2008.
Sixteen years on and just 26 years short of that deadline, PNG does not appear to have made any inroads nearer that goal. For all intent and purpose, Vision 2050 seems unachievable.
It is instructive, therefore, to look at how countries in similar or worse positions have fared and done so successfully to get lessons on what to do and what not to do.
Vietnam is a fine example.
Today, Vietnam is one of the stars of Southeast Asian economic prowess. Its economic growth at an annual 6-7 per cent rivals only China in the region and economic commentators say its total value of exports are equal to its total worth in Gross Domestic Product.
Anything from Nike sportswear to Samsung smart phones are manufactured in Vietnam.
Vietnam is the largest exporter of clothing and second largest exporter of electronics after Singapore. Whereas its GDP per capita was barely US$230 in 1985, it had climbed to more than 10 times that in 2017 at $2,343.
So how did Vietnam do this in half a lifetime?
According to the World Bank, Vietnam’s phenomenal growth can be attributed to three factors:

  1. IT embraced trade liberalisation;
  2. IT complemented external liberalisation with domestic reforms through deregulation and lowering the cost of doing business; and
  3. IT invested heavily in human and physical capital, predominantly through public investments.

Vietnam did not pay lip-service to its various trade agreements. It lived the talk. The cumulative effect of becoming a member of Asean, WTO, Apec and multiple bi-lateral trade agreements has been to lower tariffs on both imports and exports.
The World Bank has reported that Vietnam has “made progress on everything from enforcing contracts, increasing access to credit and electricity, paying taxes and trading across borders”.
With a large population of 95 million, half of whom are under 35, Vietnam made large investments in universal primary education and in public infrastructures ensuring that 98 per cent of its population has access to electricity and mass access to cheap internet.
Armed with the necessary infrastructure and with market-friendly policies, Vietnam has become a hub for foreign direct investment and manufacturing in the whole of Asia and the Pacific. Japanese, Korean and European companies such as Samsung, LG, Olympus and American apparel companies are setting up shop there.
In a future conversation, we shall have a closer look at Vietnam’s energy and electrification policies which were the engines responsible for the economic miracle that has transformed this once war-torn and impoverished nation.