Einstein was surely farsighted when he fantastically preferred immeasurable imagination to measurable knowledge by advocating “The true sign of intelligence is not knowledge but imagination”. Truly Vietnam has speeded up its economy on the arc of Doi Moi’s imagination it characteristically envisioned not long ago. The Economit has declared Vietnam the dynamo of the continent because of its remarkable economic performance since 1986.
Vietnam has roared ahead over the past quarter of century, with millions of its people escaping grinding poverty it inherited owing to a long war it fought for decades and was as poor as Ethiopia. Vietnam took some daring steps. Its amended the constitution of 1992 and recognised the role of the private sector in economy. Vietnam joined ASEAN in 1995. It signed US-Vietnam Trade Bilateral agreement (US-BTA) in 2001, burying war history. Country’s stock market emerged by making a debut trading in 2000. Finally in 2007 it got the membership of WTO. The plethora of consistent governmental actions fetched $71.1 billion of foreign direct investment in 2008. Pakistan’s CPEC promises $55 billion including soft loans and is spanning over decades. India is still hankering after giant investors to bring sizable FDI. World Bank President Mr. Jim Yong Kim in his February 2016 visit of Hanoi expressed his satisfaction on the performance of Vietnam, his admiration was spontaneous “Vietnam is a remarkable development success story. In a short time, the country has charted a course if rapid, inclusive growth, delivering higher living standards for the majority of its people”. Voice of America’s Jim Randle (2016) sees a stable political environment as one of the primary reasons for companies to invest in Vietnam than in other emerging markets.
Some seven years ago on the eve of my visit, I had analysed how Singapore transformed from a fishermen’s slum to one of the most industrialised economies of the world and now again I have chosen its neighbouring economy but why Vietnam this time? Two years (1975 and 1986) will be noted down as the years of watershed in the history of Vietnam. In 1975 the country witnessed unification and erased the interventionist designs of the cold war politics. What we see today’s industrialised Vietnam is exclusively owed to the Doi Moi (renovation) of its political and economic institutions. Launched in 1986, Doi Moi based reforms catapulted Vietnam from one of the world’s poorest to a lower middle-income country. Earlier Vietnam’s economic decision making was a centrally planned and top down primarily. Under Doi Moi it saw a colossal change with following main elements: a radical shift from a planned centralised economy attached with government ownership to a multi-sector economy on market based mechanism, democratisation of the whole social life by establishing a state on the basis of a strict rule of law and by strengthening external cooperation with foreign economies especially the US.
Many public sector reforms were initiated in Pakistan and India typically in that period but hardly any went as successfully as Doi Moi performed in Vietnam persistently and for decades. According to the United Nation’s data (2016) from 1990 to 2010 the size of Vietnam’s economy swelled to triple with annual average growth rate of GDP at 7.5% up till the global economic crisis hit it too but with not that severity it plagued many other economies including the US. Vietnam’s GDP grew at the rate of 9.5% and 9.3% annually in 1995 and 1996 respectively as a result of strict adherence to the fundamentals of Doi Moi. Growth suffered but not massively and in 2008 it grew at 6.2%, for 2009 it further slowed at 5.3%. In 1993 its 58% population was below poverty line that dropped to less than 12% in 2009 and the people with extreme poverty were reduced to 3% only by 2012.
According to the reports (2016) of the World Bank’s Vietnam Resident Mission, Vietnam GDP has grown at the rate of 6.7% in 2015, though it slightly moderated in the first half of 2016 when GDP expanded at 5.5%, compared to 6.3% over the same time span in 2015. Vietnam’s per capita income growth (averaging 6.4%) since 1990 has been fastest in the world till 2005. In Vietnam per capita income has rocketed from less than $100 in 1986 to about $2100 in 2015 and in urban areas it reached $4600. The country’s own resources for development have been tapped and have increased to further supplement the economy in addition to the massive expansion of international trade volume and of the foreign direct investment. UN’s Human Development Report (2013) bracketed Vietnam among those 40 countries that grew more than expectations in terms of human development. By increasing with 41% on human development in past two decades, Vietnam was ranked at 127th among 187 countries with a medium category of human development. Though it did not happen in Pakistan’s case but Vietnam achieved many MDGs much ahead of time. Mortality rate after five year has been reduced by 50% till 2015. Provision of uninterrupted electricity is available to almost all households, up from less than half in 1993. On the access of clean drinkable water and modern sanitation, its 75% households are now availing compared with 50% in 1993. Here in Pakistan on the provision of clean water Punjab is leaping forward but on sanitation substantial homework is required even in small cities not to speak of the rural areas. Currently Vietnam is vigorously pursuing its third nine years Socio-Economic Development Strategy (SEDS 2011-2020). Previous SEDS’ germinated seeds of well-being now have grown into a stable economic defence, profile this country never had.
On provision of electricity, the Ministry of Water and Power Pakistan looks professionally promising, giving clear indications of generating surplus electricity by 2018 up to 1600 megawatts. The top management of the ministry has proved its mettle since October 2014. Surplus generation of power needs equally well-articulated usage policy and one of the options is of export to the neighbouring countries. In the period of 1997-99 Pakistan’s offer of exporting electricity to India turned out an artless exercise. Mr. IK Gujral, the then Prime Minister of India has given a detailed account of the offer from Pakistan to India in his autobiography “Matters of Discretion”. Mr. Qaiser A Sheikh Chairman National Assembly Standing Committee on finance sees a proportionate growth in country’s exports with a steady power generation.
As a part of Doi Moi, Vietnam’s policy of openness has paid her substantively. Sitting on the doorsteps of China it has enchased policy of producing goods at low cost, leaving far behind other regional competitors. Since 1990s it has dramatically simplified its trade regulations and now trade accounts for almost 150% of the GDP, highest than any other regional small or big economy at its income level. As a policy Vietnam has disallowed officials forcing foreign investors to buy local inputs in contrast with local-content rules being enforced in Indonesia. Foreign investors have flocked to Vietnam and now constitute about 70% of Vietnamese exports.
Concomitant to openness is the flexibility of the government in encouraging competition among its 63 provinces. Ho Chi Minh City has leapt forward with establishing industrial parks, Danang has excelled in high tech industry whereas northern provinces are heading with manufacturing as they exit and look forward to China. Resultantly the economy is now much diversified and has withstood resiliently shocks including the property bust of 2011.
Most importantly Vietnam has focused on education as how to increase enrolments and how to train teachers. Education development is one of the most reliable and time-tested tools of economic development. UNDP (2016) Data show that in Vietnam the percentage spending of GDP on education has ascended from 4.8 in 2008 to 6.6 in 2012. Vietnamese students in the US universities are now 18,722(more than neighbouring Mexico), they were just 6000 in 2008. China with 304,040 students and India with 132,888 are leading among all other countries. Pakistani students in US institutions are 5,354 for academic year 2014-15. According to UNSECO (2016) for the year of 1999 it was 2.6% of GDP, which declined at 2.2 % in 2011 in the case of Pakistan. Similar is the case of Sri Lanka that spent 2.7% of its GDP on education in 1980, has frozen it at 2% from 2008 to 2012. In Indian context it too has slashed from 4.3% of the GDP in 2000 to 3.3% in 2012. In South Asian context education remained one of the low priority areas. India’s ignited weaponry race has forced other adjoining states to place various cuts in spending on social sector.
Like every economy, Vietnam too cannot disentangle it self from the baggage of unfinished agenda. On the socio-economic fronts of water and sanitation, maternal mortality, malnutrition, corruption, highly inefficient public sector enterprises, vulnerabilities of the ethnic minorities and poor environmental governances, such issues require utmost attention of the government. Mr. Nguyen Xuan Luu ambassador of Vietnam in Pakistan does not lose hope and thinks that under ongoing SEDS, these lumbering legacies will be handled with iron fist and “I am quite sure that the government is capable enough to settle all these concerns sooner”. SEDS (2011-2020) envisions three breakthrough areas: promoting human resources/skill development, improving market institutions and infrastructure development.
Economist (2016) compares Vietnamese students of 15 years old with German peers in their competence in natural sciences and in mathematics. On right skills development Vietnam is far ahead of its wealthier neighbouring-Thailand, Indonesia and Malaysia. One of the most relevant areas of mutual learning can be the skills development and Pakistan’s NAVTTC must be proactive in knowledge sharing and more in learning from Vietnam model of TVET sector.
Economist (2016) sums up Vietnam’s miraculous modeling “Vietnam is a model for countries trying to get a foot on the development ladder. With luck, it will also become a model for those trying to climb up it”. Global Peace Index (2016) has ranked Vietnam among those 10 countries completely free from conflicts, not enough to induce Pakistan and India? Definitely it is more relevant for bellicose India than forward-looking Pakistan.