As you aware of, Turkey made a landing in Southeast Asia last week with a crowded delegation. While one leg of the landing was Singapore, the other was Vietnam.
Singapore, which ranks high in world lists in terms of income per capita, is, without a doubt, an enviously admired success story. Vietnam, the leg of the story which I will be focusing on today, is another interesting profile. So now, let’s make an economic initiation around Hanoi.
Vietnam has a dynamic economy, which, in recent years, has become used to seeing growth rates of six percent. Thus, we can say it is following in the footsteps of the Asian tigers in its vicinity. Still, it is relatively small in the region in terms of economic size, but it also draws attention with its population of almost 93 million.
Taking a look back, we see that Vietnam, which was in the category of poor countries at the start of the 21st century, has, due to its steadfast strong growth, reached the low-medium income class. It still has some way to go to reach the high-medium income level. In this context, the country is, in a sense, described as the China of two decades ago.
Vietnam is expected to continue its admirable growth performance in the upcoming year as well. The explanation for this expectation does not consist of a strong domestic market alone. As a matter of fact, export is also known to strongly support this performance.
The U.S. is the top country for Vietnam’s exports. It seems that the two countries, whose relations completely turned from foe to friend in the 1990s, utilized the economy well during the cohesion process. Of course, due to their regional proximity, China and Japan are also among the country’s leading export partners.
Electronic goods, with smartphones taking the lead, is the most important component of Vietnam’s exports. At this point, the direct investments flowing into the country from past to present should also be mentioned. Because, while once-upon-a-time Vietnam was known as a low-tech manufacturer with its skills in textiles and shoes, the investments it has received have now made the country a rising value in the electronics and machine industries. We see that in this context, South Korean brands in particular, are eagerly using the country as a production base.
There are a few reasons why Vietnam, which is drawing interest and capital from quite a few other countries, is a focal point. Its competitive price and operating costs is one of these reasons, however, the tax advantages that are now available through the recent reforms can also be included among these.
Even though there is no need to mention the advantages of its geographical position, it would be good to add that the country has been included in the ASEAN Free Trade Area. It should be remembered that Vietnam, which has also signed agreements with different parties, especially South Korea, and quite recently signed a Free Trade Agreement (FTA) with the EU as well. (In this context, we need to roll up our sleeves for the Turkey-Vietnam agreement without wasting any time.)
Meanwhile, if in addition to all this, the Trans-Pacific Partnership (TPP) was also worked out, then Vietnam would have nothing to complain about. However, with U.S. President Donald Trump’s known decision on the matter, both Hanoi and craving foreign investors were disappointed.
The Vietnamese government will take care to ensure the investment flow in question continues. While the population joining the strong workforce is a valuable dynamic in terms of growth, there is no doubt that the strengthening capital and the rise in efficiency will increasingly gain importance. Likewise, the emphasis on modern industry and innovation, and the plan to focus on “skill development” are points that stand out in the government’s development strategy.
Also, it is not hard to guess that in the Vietnamese economy, which presents an advantageous picture, not all is a bed of roses. For example, it seems that the country will have to continue its fight against corruption in particular, a little longer. In this context, in the planned development trivet, pursuing to “improve institutions” is meaningful and significant.
Another leg of the relevant strategy aims to “improve infrastructure investments.” Because on the path to development, it is necessary for Vietnam to rapidly continue investments in fields such as water, energy and transport.
In brief, the need to strengthen the country’s economy, combined with the advantage of being an attractive gate at the heart of the Asia-Pacific, leads to various opportunities.
Our state authorities and companies that examined these opportunities on site last week, opened a different window with this top-level gathering that took place for the first time in years. In terms of a proper initiation in Asia, where the world’s economic center of gravity has set its sights, it is important for the sides that further bonded through the business forum to concretize business from now onward.
