Date: 2018-03-18
Vietnam calling
It has been few months since I have actively sought to understand the geography, national mood, psychology, economy, general workings of Vietnam, and the implications. This is my current take on the country and the basis.
Personal association and the bias
Vietnam is best known for The Vietnam War. Like most other foreigners, I got to study about this country first in the context of The Vietnam War, as a part of the elementary history education curriculum. Because Korean education system intends to produce patriots, the focus of the topic was misleadingly on how mightily and skillfully many Korean soldiers fought in the war. The soldiers and the country (South Korea) were paid by the US, and this was supposed to have helped South Korea in the post-war (Korean War) reconstruction period. Then I got to read little more about the DDT and what it did to the soldiers, and also about the phenomenon of relatively old Korean farmers’ marriage with Vietnamese brides and subsequent formation of multi-cultural families. After I left Korea (2002), I did not get to hear about Vietnam for about 4 years.
Then, fortunately, I met my mentor at college who happened to be one of the leading experts in the development economics specifically in the context of Vietnam. I frequented his office because I really enjoyed learning from him. Naturally, he shared with me whatever came to his mind about Vietnam, and so I got to study little more about Vietnam especially in the context of industry developments and currency managements. Later, I also got to learn little bit about the country’s shrimp industry because of one of my friend’s proposal on frozen food business. Then in the graduate school, I got to study little more about Vietnam in the context of the US foreign policy in Asia. This seminar was led by a professor who specialized in this topic in his very long teaching career, and also it was accompanied by two bright Vietnamese classmates, so I got to interact with them. That very year, I ended up visiting Vietnam more than 5 times as a tourist. Then again, I left it behind.
Soon after, I got to meet someone who is passionate about the countrymen and its economic development, and I took interest in his project; this is the principal reason why I am looking into the country more in depth. Also, it so happens to be that one of my friends from high school has been living and working in Vietnam for a number of years by now, so I got to speak to him every now and then to ask questions.
Domestic and international politics
On a relative basis, Vietnam’s regional governments seem more important than the federal one, at least for the domestic politics. While the party’s political leadership is unchallenged, north-south division seems clear. HCMC seems ‘better’ located in many ways, and the city should be able to grow more organically than Hanoi can. It must be a bit of a dilemma for the communist party to figure out how to go about Hanoi, because Hanoi is way too close to the PRC, and also it is much more difficult to grow the port capacity in the north, even though it is the party’s original support base where the actual party is based. HCMC has obviously been outperforming Hanoi in many ways, but the two cities’ developments will probably go hand in hand. I would view the relative performance of the two cities as a competition between nature (market forces) and human will (policy will). If it were in the PRC, I would definitely count more on the human will (I find the location of Beijing and its terrains very interesting!), but I am still not sure about Vietnam.
I find it particularly interesting how the US and Japan have not been very active in investing in Vietnam. My best guess is: it is because Vietnam is adjacent to the PRC and if the PRC decides to influence Vietnam in a more meaningful way, the US (hence Japan) would be in a difficult position to deal with the situation in multiple dimensions. The PRC has never been shy about its willingness to use force against Vietnam, and Vietnam has been listening to the PRC’s instruction quite well up to this point. Even so, the PRC probably will not invade Vietnam unless it’s absolutely necessary, given Vietnam’s impressive record in war situations against both the PRC and the US. It also helps that Vietnam can easily influence Cambodia and Laos, hence a little stronger international standing. There were some who argued that Japan has not been active in Vietnam because Japan already has a long working relationship with Thailand as its manufacturing base, and there probably is some truth to it too. Korean corporates have been especially active in Vietnam. There has been clear shift of focus from south China to Vietnam as a most favored manufacturing base; apparently Vietnamese cabbages are better for kimchi making than the Chinese ones, too. In terms of geopolitics, Vietnam and Korea share something in common in that both of them are useful buffer zones for the super powers, hence The Korean War and The Vietnam War. Maybe South Korean corporates gained confidence with Vietnam partly because they view Vietnam as a country that will follow South Korea’s suit in terms of the economic development. Vietnam and South Korea do not seem to be intimidated by each other, and that is a special relationship for both parties.
Infrastructure
Vietnam still seriously lacks infrastructure. What I am unimpressed and unnerved about Vietnam is the project delays in the infrastructure space and the lack thereof. What I read on the web significantly differs from what I hear on the ground, and the momentum and the pace of infrastructure development should have been much stronger and faster than what I currently see. I do not observe any significant sign that this will change soon, but there are reasons to be hopeful on this front because Vietnam is heavily influenced by both the PRC and South Korea, who are experts in rapid infrastructure building.
Education and human capital
I have read and heard mixed stories about the education scene in Vietnam. Overall, I have a positive view on Vietnam’s development of internationally competitive human capital base. Usually, after a closed country surpasses certain threshold in its economic development and pass some stress tests, previously disappointed hence emigrated overseas population tends to come back to the motherland to invest and resettle, and I view this as a good timing indicator. There is absolutely no shortage in overseas Vietnamese population thanks to its history, and the networking effect that this environment brings about will be interesting to observe. Additionally, due to Chinese influence from the ancient times, Vietnam seems to enjoy Confucius emphasis on education which is very helpful in the early- to mid- stages of economic developments.
Caveat
I tend to believe that history does not repeat; it only rhymes. So understanding this caveat is important. I am of the view that a commonly used economic development model with emphasis on manufacturing, from light to heavy industry, will be seriously challenged due to the level of automation that is only getting more sophisticated. Everything has prices, so cheap-labor-driven manufacturing is likely to be around in any case, but the labor cost will need to be continuously lowered to compete against the affordability of robots, and this means ever widening gap between the wealth of the two groups. Given that technologies, hence the affordability of automation, can only improve over time, if Vietnam does not put its action together quickly, it is possible for the country to be permanently trapped. My contrarian view goes: large population base will become more of a burden than resources, going forward.