Jamie Dunkley: The red flag is still flying high but Vietnam is back on the growth path

 

It has been almost 40 years since North Vietnamese tanks rolled through the gates of Saigon’s Presidential Palace, marking the end of the country’s civil war.

Decades have passed but the red flags still fly across the Socialist Republic of Vietnam and the country is being forced to step up the pace of reform as it tries to keep up with its neighbours in the fast-growing region of South East Asia.

Modern Vietnam is a far cry from the country that emerged from the ruins of war in 1975, although it was not until the mid 1980s that it started implementing the “Doi Moi” reforms designed to part liberalise its economy. Fashion boutiques now sit alongside the Saigon Opera House and McDonald’s is about to open its first outlet in Ho Chi Minh City, the country’s commercial heart.

Dominic Scriven, a 50-year-old Briton, has witnessed the pace of change since he arrived in Vietnam as a language student more than 20 years ago. His company, Dragon Capital, is now a $1bn fund manager that invests heavily across Vietnam, and he believes the country’s economy is poised for an exciting period of growth following a period of overheating.

“After two and a half years of painful monetary and fiscal discipline, inflation is well down in the single digits, the currency is anchored, the trade deficit is modest and forex reserves have tripled,” he says. “However, the flipside of stabilisation has been a growth slump, led by a virtual cessation of new lending but I believe growth drivers remain intact.”

Earlier this year, the International Monetary Fund cut Vietnam’s growth forecasts because of the slow rate of reform across its banks and state-owned enterprises, highlighting what still needs to be done. 

The IMF lowered its projection for Vietnam’s growth rate from 5.8 per cent to 5.2 per cent in 2013, and to  5.2 per cent next year from 6.4 per cent. This cut was one of the biggest for any Asian country, putting it behind regional peers such as Indonesia, Myanmar and Thailand.

“State-owned enterprises have been reorganised as limited liability companies and many top executives have been jailed or disgraced,” Scriven adds. “As a result, they have seen their funding slashed and their borrowing costs move to commercial rates. They are being forced to divest non-core assets, and money that used to flow their way for indiscriminate spending has been throttled very much. They are still here but are a receding force in the economy.”

While Vietnam’s rising middle class may be playing catch-up with other parts of the world, one area in which the country appears to lead the way is in promoting the role of women in corporate life; they now dominate the boards of many of the country’s largest companies. 

Among these women is Nguyen Thi Mai Thanh, the head of engineer Ree Corporation, who spent five years with the Viet Cong in the jungle during the Vietnam war. She is one of the “long-haired warriors” who became soldiers and formed militias during conflicts with US forces; many of them were rewarded for their service with plum roles in post-war Vietnam.

More modern types of female executive include Le Thi Thu Thuy, head of the property company Vingroup, who studied overseas  and became an investment banker at Lehman Brothers before returning to Vietnam. There is a belief across the country that women make less-risky decisions than men, and she believes that businesswomen like her can drive change alongside the Government. 

“The global economy is gaining momentum, and in Vietnam the concerns about weak demand, high inflation and inaccessible credit have been eased out,” she says. “In 2014, the Vietnamese economy is expected to rise up, offering new opportunities for companies that are flexible and have strong capabilities.

“Within Vingroup, we will continue to innovate and improve corporate governance, with a special focus on developing our human resources to differentiate and enhance our competitive ability – to reach new heights.”

McDonald’s is just one of many foreign companies in Vietnam, and British groups such as Topshop, HSBC and Prudential already operate in a country where, in spite of their presence, market penetration remains low.  The country is also set to benefit from the Trans-Pacific Partnership agreement, a controversial trading bloc of 12 members that includes the United States, Japan and Australia, but not China. 

Overall, however, it seems that much will depend on the extent to which the state is willing to advance the pace of reform across the economy, with restrictions such as limits on foreign ownership of domestic companies still in place. Most agree that the omens are good and future growth prospects look brighter than in other parts of the world.

“We used to think of Vietnam as a 7 per cent GDP growth country, but even though it’s currently more about 5 per cent, investors like the return to earth,” says Bill Stoops, chief investment officer at Dragon Capital.

“Vietnam has turned the corner ... a breakout is coming and it is poised to soon regain its status as Asia’s next ‘Tiger’.”

News
Kenny Ireland, pictured in 2010.
peopleActor, from House of Cards and Benidorm, was 68
News
A scene from the video shows students mock rioting
newsEnd-of-year leaver's YouTube film features staging of a playground gun massacre
Travel
travel
Environment
View from the Llanberis Track to the mountain lake Llyn
Du’r Arddu
environmentA large chunk of Mount Snowdon, in north Wales, is up for sale
PROMOTED VIDEO
Voices
A family sit and enjoy a quiet train journey
voicesForcing us to overhear dull phone conversations is an offensive act, says Simon Kelner
News
i100This Instagram photo does not prove Russian army is in Ukraine
Arts and Entertainment
The cast of The Big Bang Theory in a still from the show
tvBig Bang Theory filming delayed by contract dispute over actors' pay
News
Morrissey pictured in 2013
people
Sport
England celebrate a wicket for Moeen Ali
sportMoeen Ali stars with five wickets as Cook's men level India series
Life and Style
The director of Wall-E Andrew Stanton with Angus MacLane's Lego model
gadgetsDesign made in Pixar animator’s spare time could get retail release
News
peopleGuitarist, who played with Aerosmith, Lou Reed and Alice Cooper among others, was 71
Travel
travel
News
Robyn Lawley
people
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
people
News
i100  ... he was into holy war way before it was on trend
Arts and Entertainment
High-flyer: Chris Pratt in 'Guardians of the Galaxy'
filmThe film is surprisingly witty, but could do with taking itself more seriously, says Geoffrey Macnab
News
people
Life and Style
food + drinkVegetarians enjoy food as much as anyone else, writes Susan Elkin
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

1st Line Support Technician / Application Support

£20000 - £24000 per annum: Harrington Starr: A leading provider of web based m...

Team Secretary - (Client Development/Sales Team) - Wimbledon

£28000 - £32000 per annum: Ashdown Group: Secretary (Sales Team Support) - Mat...

Accountant / Assistant Management Accountant

Competitive (DOE): Guru Careers: We are looking for an Assistant Management Ac...

Senior Investment Accounting Change Manager

£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...

Day In a Page

Dress the Gaza situation up all you like, but the truth hurts

Robert Fisk on Gaza conflict

Dress the situation up all you like, but the truth hurts
Save the tiger: Tiger, tiger burning less brightly as numbers plummet

Tiger, tiger burning less brightly

When William Blake wrote his famous poem there were probably more than 100,000 tigers in the wild. These days they probably number around 3,200
A tale of two presidents: George W Bush downs his paintbrush to pen father’s life story

A tale of two presidents

George W Bush downs his paintbrush to pen father’s life story
Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

The day America’s love of backyard tigers led to a horrific bloodbath

With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

How Samuel Beckett became a French Resistance spy

As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
We will remember them: relatives still honour those who fought in the Great War

We will remember them

Relatives still honour those who fought in the Great War
Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

Kodak's last-ditch bid to keep celluloid alive

Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

Acting in video games gets a makeover

David Crookes meets two of the genre's most popular voices
Could our smartphones soon be diagnosing diseases via Health Kit and Google Fit?

Could smartphones soon be diagnosing diseases?

Health Kit and Google Fit have been described as "the beginning of a health revolution"
Ryanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?

Can we learn to love Ryanair again?

Four recent travellers give their verdicts on the carrier's improved customer service
Billionaire founder of Spanx launches range of jeans that offers

Spanx launches range of jeans

The jeans come in two styles, multiple cuts and three washes and will go on sale in the UK in October
10 best over-ear headphones

Aural pleasure: 10 best over-ear headphones

Listen to your favourite tracks with this selection, offering everything from lambskin earmuffs to stainless steel
Commonwealth Games 2014: David Millar ready to serve up gold for his beloved Scotland in the end

Commonwealth Games

David Millar ready to serve up gold for his beloved Scotland in the end
UCI Mountain Bike World Cup 2014: Downhill all the way to the top for the Atherton siblings

UCI Mountain Bike World Cup

Downhill all the way to the top for the Atherton siblings
Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine