Vietnam likely to be among fastest-growing economies in next decade: East Asia Forum

Vietnam has uniquely positioned itself to be among the fastest-growing economies in the coming decade, according to an article published recently on Australia-based website eastasiaforum.org.

The article said that Vietnam’s success in managing the COVID-19 pandemic as Asia’s top performing economy during the pandemic has strengthened the country’s statism and reputation as a safe and friendly environment for foreign direct investment.

Amid the pandemic and rising US–China trade tensions, Vietnam leapfrogged the Republic of Korea (RoK) to become the US’s sixth largest trade partner by import value in 2022, it stressed, adding that this jump represents an important pivot in Vietnam’s economy - Vietnam’s biggest export to the US is no longer textiles and garments, but high-tech products.

By the end of 2023, many flagship Apple products will have been assembled in Vietnam. Rather than competing against China’s ‘world factory’ tag, Vietnam has branded itself as an additional manufacturing destination to China within the global supply chain ecosystem, the article said.

According to the article, Vietnam has provided a much-needed ‘neutral’ environment for foreign fintech firms to de-risk and reroute their exposure from the US–China great power rivalry. The Southeast Asian nation is also welcoming back China’s Huawei - the leading global provider of information and communications technology infrastructure and smart devices.

Vietnam has the potential to become the fourth largest exporter of high-tech goods behind China, Taiwan (China) and Germany. Though Vietnam currently holds seventh position, its growth has no rival - high-tech goods as a share of Vietnamese exports hit 42% in 2020, up from 13% in 2010.

The Vietnamese government’s intervention in opening the country up for free trade and foreign direct investment can be seen as overwhelmingly positive and non-threatening to the global trading system, the article said.

“While Vietnam’s high-tech exports are fuelling the country’s growth, there is an overreliance on foreign innovation inputs, with about 70% of Vietnam’s total export value driven and captured by foreign companies”, it noted.

However, there is a significant bright spot - the current FDI inflows from fintech companies are giving Vietnam more time to address its dependency on foreign innovation inputs. For instance, the Vietnamese government could entice Apple to invest in research and development and deepen its relationships with Vietnamese universities and students, as Apple did in China.

Vietnam’s race to become the next Asian tiger has its challenges, including the question of how to reduce the country’s overreliance on foreign innovation inputs. However, it appears that core elements of an innovation ecosystem are taking root as Vietnam establishes itself as a high-tech export power./.         
VNA