Vietnam set to be next Asian growth miracle

Editor's note: Vietnamese Prime Minister Nguyen Xuan Phuc said at the World Economic Forum in Davos, Switzerland, in January that Vietnam will expand its opening-up, transform to an innovation economy and establish fair and transparent rules based on international standards. A WeChat account owned by Qin Shuo, a business commentator, comments:

It is noteworthy Vietnam's foreign trade hit $428.8 billion last year, twice its gross domestic product, with the ratio being second only to Singapore in Asia. Its GDP increased 7.08 percent last year, a record high since the global financial crisis in 2008. And in January, its actual use of foreign direct investment increased 52 percent year-on-year, demonstrating the great potential of the emerging economic engine in Southeast Asia.

Although there are still some problems with its market and governance systems, Vietnam's robust growth momentum has been unleashed with ruthless reform of its State-owned enterprises, the fast rise of FDI, and its wholehearted embracing of free trade.

The number of SOEs in the country has dropped from 12,000 in 1986 to less than 500 last year, boosting the efficiency of the Vietnamese economy and the market. FDI reached $19.1 billion last year, up 35.46 percent year-on-year, showing foreign investors' confidence in the prospects of its economy. Half of its industrial output, and about 70 percent of its exports are produced by foreign enterprises. Vietnam has signed 16 free trade agreements with other economies, including the European Union, Japan and the Republic of Korea. Its exports grew 7.77 percent last year, markedly higher than the global average of 3.9 percent.

The Communist Party of Vietnam has guaranteed a stable domestic political environment for the country's reform and opening-up, improved government efficiency, curbed corruption and enhanced the business environment and rule of law. And the authority has built up its learning curve quickly in improving the efficiency and responsiveness of its macrocontrol policies, which is crucial to help the country overcome a series of challenges caused by the exchange rate fluctuations over the past few years.

The government canceled its household registration system on Jan 1 this year, a welcome reform to entitle its young population more freedom to move around the country, which promotes social justice and fairness. The median age of its 95.5 million population is only 30.5 years old, in contrast with China's 37.4, and the average monthly salary in manufacturing industries in Vietnam is about $238, less than one-third of that in China, speaking volumes of its future potential.

To sum up, Vietnam has a number of favorable conditions to become a new member of the emerging economy club.