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Could Vietnam’s political clamp down threaten its economic growth?

37 13 20

VIETNAM has been on average the most rapidly growing economy in Southeast Asia for more than a decade. Its economic growth of 6 to 7 percent a year over the past half-decade rivals that of China and its exports are worth just over the total value of its GDP.

Anything from Nike sportswear to Samsung smartphones are manufactured in this hub of ASEAN global production networks.

As the United States has put the screws on trade with China, Vietnam has benefited from increased interest from multinational investors as an alternative location for low-cost production.

Thirty years ago, Vietnam was one of the poorest countries in the world. Last year, its per capita GDP at current exchange rates was just over US$2,500. Vietnam appears to be headed rapidly towards achieving middle-income levels.

SEE ALSO: North Korea seeks to model Vietnam’s economic development

Three main factors account for the rapid turnaround in Vietnam’s economic fortunes.

It has embraced international trade liberalisation with enthusiasm. It brought down barriers to trade after its commitment to membership of the Association of Southeast Asian Nations (Asean) group in 1995, gained accession to the World Trade Organisation (WTO) in 2007 and signed on to free trade agreements along the way, most recently the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP-11).

It’s complemented foreign trade liberalisation with domestic reforms through deregulation and lowering the cost of doing business. And it has invested heavily in human and physical capital, predominantly through public investments.

(L-R) Singapore’s foreign minister Vivian Balakrishnan, Thailand’s foreign minister Don Ramudwinai, Japan’s foreign minister Taro Kono, Brunei’s second minister of foreign affairs and trade Erywan Yusof and Vietnam’s foreign minister Pham Binh Minh pose for photographs during the Association of Southeast Asian Nations (ASEAN) – Japan Ministerial Meeting in Singapore on August 2, 2018. Source: Mohd Rasfan/AFP

While the country continues as a one-party state under the political........

© Asian Correspondent