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Vietnam ready for APEC Year 2017

Vietnam has become an important link in an extensive economic connectivity network of 59 partners, including APEC members, Deputy Foreign Minister Bui Thanh Son says

Vietnam is ready to host the Asia-Pacific Economic Cooperation (APEC) Year 2017 with all preparations being basically completed on schedule, Deputy Foreign Minister Bui Thanh Son was quoted by the Vietnam News Agency (VNA) as saying in an interview to the press.
Mr. Bui Thanh Son, who is also Vice Chairman of the National Committee on APEC 2017 and Chair of the Senior Officials' Meeting (SOM) APEC 2017, said after nearly two decades of joining the APEC Forum, this is the second time Vietnam has been assigned to host the event, reflecting the international community’s trust in the country.

The hosting of the APEC Year 2017 creates a great opportunity for Vietnam to strengthen relations with regional partners and enhance its role and position in the international arena, he said, describing the APEC Year 2017 as the largest external event hosted by Vietnam from now to 2020.
According to the Deputy Foreign Minister, close to 200 activities of different scales focusing on the theme “Creating a new driving force for a common future” will take place across 10 cities and provinces from the north to the south during this year, with the most important event – the APEC High-level Week – to be held in the central coastal city of Da Nang in November.
Vietnam embarked on the preparations for the event three years ago, Son said, adding that the country had actively exchanged views and coordinated with the previous hosts of APEC in 2014 and 2015 to learn their experience in the field.
The National Committee on APEC 2017 was established in July 2015 under the chair of Deputy Prime Minister, Foreign Minister Pham Binh Minh and the involvement of 24 ministries, agencies and localities.
Mr. Bui Thanh Son also highlighted challenges in the APEC Year 2017 amid regional and global complicated and unpredictable developments.
According to the official, the biggest obstacle for APEC members in general and Vietnam in particular is how to maintain the APEC Forum’s role as a leading economic connectivity and cooperation mechanism in the region to fuel the growth and prosperity in the Asia-Pacific.
The other challenge is to accelerate trade and investment liberalisation in the region, including the realisation of the “Bogor Goals” by 2020 as scheduled, in the context that protectionism is emerging in a number of economies.
Another defiance is to increase the forum’s contributions to the settlement of global challenges such as generating jobs, narrowing inequality, coping with climate change, preventing terrorism, ensuring food security, and addressing aging population and migration crisis.
However, the above-said situation will also open up new opportunities for cooperation among the APEC member economies, Mr. Son said, noting that the demand for cooperation and connectivity between regions and between Asian-Pacific countries is increasing as the regional and world peaceful environment and development are being threatened.
The Asia-Pacific has remained a leading region in terms of dynamic development with many member economies playing a key role in boosting global economic growth and connectivity, he said.

With the principles of win-win and voluntary cooperation, the APEC Forum is pioneering in the liberalisation of trade and investment, which supports small-and medium-sized enterprises to increase their competitiveness and join global supply value chains and digital economy.
The regional trade facilitation has also reaped positive results, helping to reduce trade transaction costs between the APEC member economies by 12 percent between 2010-2014, he cited.
Vietnam is one of the leading APEC member economies in terms of economic growth and regional connectivity, Son said, adding that despite the global economic downturn in the first eight months of 2016, Vietnam was still among few APEC economies which successfully maintained the export growth.
The Vietnamese Government is comprehensively and synchronously speeding up reform and economic restructuring in combination with changing the growth model.
With the engagement in such large-scale free trade agreements as the Trans-Pacific Partnership (TPP), Regional Comprehensive Economic Partnership (RCEP), and Free Trade Agreement (FTA) with the Eurasian Economic Union, Vietnam has become an important link in an extensive economic connectivity network of 59 partners, including APEC members, he stressed.

Vietnam's economic growth in 2017 is fastest in Southeast Asia

Vietnam's increasingly diversified and rapidly growing economy has grown at a sustainable rate - over 6% a year in the past two years and is expected to retain its position as the fastest-growing Southeast Asian nation this year.

Impressive “performance”

While the Vietnam economy is growing at 6.21% in 2016, other ASEAN countries such as Indonesia, Thailand, Malaysia and Singapore have slower growth rates as a result of the global recession and China's slow growth and demand. Vietnam is not only the fastest growing country in the region but also ranks second in the list of fastest growing economies in the world, after only India, the only country with a growth rate of 7% in 2016.

According to Bloomberg, the "economy performance" of Vietnam is reflected in the year-end data collected by leading economy forecasters. Disbursed FDI increased by 9% to a record $ 15.8 billion in 2016; Manufacturing increased by 13.61% from the end of 2015. Imports increased by 4.6% while exports increased by 8.6%, contributing to a trade surplus of about $ 2.68 billion.

There are many reasons for the strong development of Vietnam in recent years, especially in relation to other ASEAN countries.

Firstly, the resilience of Vietnamese trade can derive from the diversity of the economy - in terms of the range of manufactured goods and destination countries of exports. Vietnam is now exporting to more markets than ever and rapidly expanding its exports to manufacturing and electronics, reducing the dependence on exports of agricultural products.

Secondly, Vietnam is becoming an attractive investment destination due to rapid population growth (about 91 million people) and young population structure with large workforce, including skilled and unskilled laborers. Vietnam's geographical location is also an important factor, with its long coastline allowing free-trade maritime trade with neighboring countries and outside the region.

Thirdly, labor and production costs in Vietnam are always low - especially when compared with the giant neighbor in the north, China. This has boosted production, as Vietnam is considered an attractive destination and a profitable opportunity for multinationals and foreign investors. Many companies have adopted the "China plus one" strategy in their efforts to reduce risk and diversify their operations in East Asia and more than ever, international companies are choosing Vietnam as the "number one ".

Affirms its position in the global economy

While Vietnam's growth is accelerating in recent years, this is not a new phenomenon: Vietnam's economy has been growing at a rapid pace for decades, since its opening after Doi Moi in the mid-1980s. The market economy reforms were adopted to remove the country from poverty after the landscape was destroyed, infrastructure devastated by prolonged wars.

In the postwar years, Vietnam struggled to recover, suffered from high inflation and low production levels. Vietnam's recovery has also been hampered by diplomatic isolation, which forced multilateral agencies such as the International Monetary Fund (IMF) and the World Bank to refuse aid to Vietnam for the reconstruction of the country. The 20-year US trade embargo also undermined Vietnam's trade potential with the world.

The change of situation began in 1986, when Vietnam applied the idea of ​​a market economy while maintaining the socialist principles. Foreign investment and private business were encouraged, opening up new periods of business and economy liberalization.

Vietnam has rapidly become the world's second largest rice exporter. In 1995, Vietnam recovered strongly: diplomatic relations with the United States were restored; multilateral donors began to provide major development assistance. The level of poverty has diminished considerably, while the provision of services nationwide has provided access to education and health care for the Vietnamese people.

Vietnam has recently joined the World Trade Organization (WTO), and developed a modern electricity network covering 90% of the country's area. The tourism industry is also taking off and expanding, creating new opportunities and income for millions of Vietnamese.

These achievements show a successful transition from a low-income country to a middle-income one and affirm Vietnam's position as a full-fledged member of the globally integrated economy - the economy that Vietnam has taken advantage of in recent years.

At present, the miraculous development of the Vietnam economy does not show any signs of slowdown. Over the past 40 years, Vietnam has undergone significant transformation from a war-torn and destructive developing country into a diversified and vibrant economy in Southeast Asia.

Political stability has made Vietnam an attractive destination for foreign investment, putting Vietnam in a favorable position to hold the title of the fastest-growing Southeast Asian nation in 2017 and beyond. .

Russian expert: The development of Vietnam as an example for many countries

In recent years, Vietnam's economy has maintained a growth rate of over 6%, the fastest in the world. The country has risen to the top spot in volume exports of electronics, clothing and footwear.

There has been a global trend in Vietnam - the wave of production shifted to Vietnam from countries with less favorable conditions, including from China, because there is a cheap, youthful, and highly-skilled labor force available in Vietnam. It can be concluded that Vietnam will soon become the new "Asian tiger". Russia's leading expert on the Vietnamese economy, Prof. Vladimir Mazyrin, director of the Center for Vietnamese and ASEAN Studies at the Institute for Far Eastern Studies at the Russian Academy of Sciences, wrote about Vietnam's path to this goal in the book "Vietnam's economy today - The results of the 25 years of transition to a market economy" published in 2012." I think that in the next five years - up to 10 years in the future - Vietnam will achieve this goal, "- Said Mazyrin.

However, on this road, there are many pitfalls that Vietnam is trying to overcome. Now Vietnam takes full advantage of competitive advantage - cheap labor. Vietnam's human resources increase by 2% per year, faster than population growth, with an average annual growth rate of about 1%. The average age of Vietnamese workers is 38 years, which is called "golden age" in the world economy. High average life expectancy, organizational rigor, labor discipline, employees’ motivation, ability to perform sensitive tasks, especially electronic assembly jobs, with low wages: This creates favorable conditions that foreign companies chase. However, those are only temporary advantages.

The population of Vietnam is "aging" very quickly. 10 years ago, the average salary in businesses, even businesses with the participation of foreign, was 30-40 dollars; now the index is 300-400 dollars. If this trend continues, foreign investors will no longer pay attention to human resources in Vietnam after 10 years. In particular, Vietnam wants to develop advanced technologies and improve the education level, resulting in in the next 5-10 years, cheap labor sector will be shrinking and there will be more high level professionals in the labor market.

The volume of foreign investment in Vietnam is rising, and the country's economy is not even capable of "digesting" huge capital flows, Prof. Mazyrin said. The high volume of investment, especially foreign investment, causes macroeconomic imbalances, such as persistent budget deficits, public debt, and huge external debt. Vietnamese government is concerned about that fact; therefore, it has approved the decision of restricting foreign investment. In addition, in the next 2-3 years, Vietnam's economy will surely be recognized as a market economy, and the country will no longer receive non-refundable aid and preferential loans. All of this will reduce the attractiveness of the Vietnamese market to foreign investors. In addition, transnational corporations have in fact have started to enter the Vietnamese economy. This trend has started with light industry, and is spreading to the service sector, on which the reform of Vietnam's economic growth model depends. After the transnational corporations take a big piece of cake, the attractiveness of the Vietnamese economy will be reduced.

However, in the opinion of Prof. Mazyrin, even if foreign investors are less interested in Vietnam, that will not hurt the economy of this country. Thanks to effective reforms in Vietnam, a solid foundation of a market economy has emerged - these are small and medium enterprises, some of which are growing well enough to supplant multinational corporations. It is no coincidence that Vietnam billionaires have been listed as the richest people in the world of Forbes. Promoting internal strength and national strength is a decisive factor that can replace the advantages of cheap labor. As a result, there will be more successful companies in Vietnam, and this is the secret of Vietnam's economic miracle.

Meanwhile, the effectiveness of the market economy is being strengthened by the measures taken by the state and the ruling party; Vietnam is flexibly applying principles of planned socialist economy. To this extent, Vietnam is a model for many countries. According to experts, in 2030 Vietnam's economy will rank 29th, and by 2050 will reach the top 20 economies in the world. According to the opinion of the Russian economist, given the current pace of development, thanks to the wise economic policies of the Vietnamese leadership, there is every reason for this forecast to become reality.

Achievements after 30 years of renovation

After 30 years of renovation, Vietnam has achieved many important achievements in socio-economic development, national defense - security and foreign affairs. The economy has maintained a relatively high growth rate with increased potential and scale of the economy. The people's life has been improved. Foreign activities, international integration are strengthened and expanded.

Economic boom

In developing the economy, Vietnam government has decided to abandon the centralized subsidy model, shifted to developing a socialist-oriented market economy, considered as a general economic model of the transitional period, with various forms of ownership, economic components, business organization and distribution.

Thanks to the right way of economic development and appropriate solutions, over 30 years of renovation, Vietnam has achieved many achievements in economic development, which is highly appreciated by the world. The remarkable achievements of the Vietnam economy after 30 years of renovation are the high GDP growth associated with the economy restructured in the direction of industrialization and modernization.

In the first five years from 1986 to 1990, the average annual GDP growth rate was 4.4%. Agricultural production, especially food production had a new development. In 1989, Vietnam exported 1.42 million tons of rice, marking the transition from self-sufficiency to commodity production associated with rice exports.

Industrial production has a new development. Some key sectors of the economy have grown quite well. Trade, service recovered and grew quite well. Economic structure shifted towards progress. In the 1990s, the economy began to accelerate. In the period of 1991-1995, the average GDP increased by 8.2% per year, doubling that of the previous five years.

During the next five years 1996-2000, despite the impact of the regional financial crisis, Vietnam’s GDP still maintained at 7.6% average growth per year. In the period of 2001-2005, GDP increased by 7.34% on average. In the period of 2006-2010, GDP growth rate was 6.32% per annum due to global economic recession. In the coming years, due to the impact of the global financial crisis in 2008 and the public debt crisis in 2010, Vietnam's GDP growth rate in the 2011-2015 period has slowed down, yet still reached 5.914% per annum, which is high compared to other countries in the region and the world.

Together with the fast growth rate, the economic structure of Vietnam has also changed positively. Before, agriculture, forestry and fishery dominated the economy; however, by 2015 the proportion of industry and services in the GDP was 83%.

The size of the economy has grown rapidly. In 2003, after 16 years of renovation, the size of the economy was about 40 billion USD, by 2015, the size of the economy was about 204 billion USD. Production forces have improved in both quantity and quality.

The quality of growth and the level of production technology have been improved. Contribution of TFP productivity growth to growth in the period 2001-2005 reached 21.4%, in the period 2006-2010 reached 17.2%, in the period 2011-2015 reached 28.94%. Macroeconomic stability was basically maintained, inflation was under control.

Attention paid to social security; life of the people is improved

In the renewal years, Vietnam has paid great attention to the implementation of social policies for the well-being of the people, as a sign of the superiority and nature of the socialist regime and minimization of the downside of the market mechanism. Social policies ensure and improve the physical well-being of all members of society in terms of food, accommodation, travel, labor, study, rest, medical treatment and physical improvement. Every year, an average of 1.5 to 1.6 million new jobs is created, reducing the unemployment rate.

Through 30 years of renovation, Vietnam’s consistent policy is sustainable poverty reduction coupled with the promotion of legitimate enrichment and to attach importance to poverty reduction policies for poor districts, giving priority to the ethnic minorities.

The rate of poor households in the whole country decreased by 1.5-2% per year. In 2011, the rate of poor households in the country decreased from 60% before the renovation to 9.5%, in 2013 to 7.5%, in 2015 to less than 5%. Vietnam's achievements in poverty reduction have been recognized and appreciated by the United Nations. Average income per capita increased from 471 USD in 2003 to 2,228 USD in 2015.

People’s health care has made great progress; the system of medical facilities has been formed widely throughout the country; Number of doctors, the number of beds per ten thousand people increased rapidly. The medical service system has been increasingly improved. Preferential policies for people with meritorious services to the revolution have been paid special attention to ensure that people's living standards are equal to or higher than the average living standards of the population in their localities.

Our country has built up and perfected a diversified, expanding and effective social security system; strengthened the insurance system such as social insurance, health insurance, unemployment insurance, occupational accident insurance and occupational disease insurance; encouraged and created favorable conditions for the laborers to join different types of insurance.

Expansion of external relations

Vietnam has consistently implemented the foreign policy of independence, sovereignty, peace, cooperation and development; multilateralization, diversification of relations, active and positive integration into the world; to be a friend, a reliable partner, and a responsible member of the international community for the benefit of the nation and the people, actively contributing to the struggle for peace, independence, nationalism, democracy and social progress in the world.

Thanks to active and positive international integration with appropriate policies, Vietnam has brought into full play its internal strength, taking advantage of external forces, absorbing achievements in science, technology, intellectual economy, and business international experience, civilization of humanity ... to develop and modernize the production force and build the country.

In the years of renewal, Vietnam government has adopted a number of policies, measures to enhance and expand international cooperation, bilateral and multilateral relations such as ASEAN and APEC. , ASEM, WTO, European Union, TPP ... strongly attracted foreign direct investment (FDI), promoted trade and investment, expanded import and export market, international cooperation, capital resources, science and technology, advanced management skills and experience.

To date, Vietnam has established diplomatic relations with 170 countries (15 of which Vietnam has established strategic partnerships with), trade relations with 230 countries and territories, signing more than 90 trade agreements bilateral agreements, nearly 60 agreements to encourage and protect investment. Vietnam's international integration has been further deepened; its status and international prestige have been raised. To date, 59 countries have recognized Vietnam's economy as a market economy, including its major trading partners.

Hwi Won  edt@koeapost.com

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