Here’s the Vietnamese “secret sauce” to become a top emerging economy in less than 30 years. It consists of 3 ingredients…
It was only thirty years ago that Vietnam ranked as one of the poorest countries in the world.* Today, the nation has not only overcome that dark chapter in its history, but is also growing at the fastest pace in eight years, with a GDP growth rate comparable to China’s. So what’s behind this radical improvement?
A recent study** by the World Bank suggested that Vietnam’s economic growth is the result of three major changes: embracing free trade policies, reducing overregulation and costs of doing business, and investing in human capital and infrastructure.
Trade liberalization opened the door to new agreements, lowering taxes for international commerce operations and increasing regional competitiveness. To date, Vietnam has successfully signed sixteen bilateral and multilateral free trade agreements, and it has become a member of the World Trade Organization, the Association of Southeast Asian Nations (ASEAN), and the Eurasian Customs Union.
The deregulation of several key industries also played a crucial role in boosting the country’s business development. By eliminating excessive controls and providing a clearer framework for doing business, more citizens foresaw profitable opportunities in the private sector.
But the increased number of businesses brought several new requirements along with it. Education was needed to elevate quality standards, while infrastructure investments were essential to supply more energy and improve connectivity within the country.
Overall, government efforts paid off. Last month, World Economic Forum (WEF) President Borge Brende praised Vietnam’s economic performance at the Vietnam Business Summit. He pointed out the positive impact of the numerous economic reforms implemented by the government over the last few years to reduce debt and stabilize public finance.
Vietnam Finance Minister Dinh Tien Dung explained that these measures were essential to put the nation back on track with regard to public debt. The country’s public debt had risen to as much as 64 percent of GDP between 2011 and 2015. But thanks to the latest reforms, debt is expected to decrease to 60 percent three years from now.
The new ASEAN member country reached an economic growth peak for the decade by adding 6.8 percent in 2017, outperforming its target of 6.7 percent. Despite these promising figures, the government did not rest on its laurels, and continued to approve pro-business regulations.
“The Vietnamese government did not sleep on victory or be complacent. Moreover, Vietnam is continuing its reforms to ensure growth in the future,” WEF President Brende said.
He also emphasized that Vietnam could benefit from the creation of a friendly environment for innovative technologies, such as the Internet of Things, blockchain, and crypto. In his opinion, countries that quickly adopt these technologies can expect a brighter future.
The government is fully aware of this reality. In fact, Prime Minister Nguyen Xuan Phuc ordered the establishment of a national committee for e-government back in August. The goal: researching and elaborating guidelines, strategies, and policies to create a legal environment favorable for developing digital government.
A Top Emerging Economy and a Technology Hub
Vietnam’s dynamic startup landscape is creating a unique opportunity for blockchain startups to establish their operations in the country, especially considering the rising number of highly-skilled engineers. Every year, nearly 40 thousand information technology graduates join the employment pool.
According to a recent report by the consulting firm AlphaBeta, Vietnam ranks second-best in terms of tech investment climate in the Southeast Asia region and third in digital talent.
Recent events in Vietnam, such as the BlockchainHub-LATOKEN Forum and the LATOKEN Block Summit served to prove the growing interest in the distributed ledger technology and cryptocurrencies. Roman Zhdanov, a Managing Partner at LATOKEN exchange emphasized that many of the projects listed on their platform got strong traction in Vietnam.
While internet connection speed and smartphone use are rapidly increasing, the adoption of new technologies still has a long way to go in Vietnam. For instance, World Bank data shows that only 31 percent of Vietnam’s population holds a bank account***.
Of course, blockchain applications are not limited to the financial sphere. In fact, healthcare, agriculture, and transportation are also seeing the benefits of this technology. As these industries continue to incorporate blockchain into their structures, we could expect a boost in economic growth in Vietnam and all around the world.