Good Exporting Vietnam

The program focussed on the challenges facing Vietnam Regional and Local Government in areas such as economic development, climate innovation, education and training, transport and regional development and lessons learned in Australia. The delegation travelled to Sydney, Wollongong and Queanbeyan and spoke with local government leaders in each areas. It was a very productive exchange with deep engagement on critical issues of interest between Australia and Vietnam.

My participation in the IPPG Specialist Training Program, as the Institute’s Chief Economist, brought back many memories of my diverse experiences with Vietnam and the Vietnamese people.  When growing up in South Australia in the 1970s, I experienced the first contributions of the Vietnamese community to Australian life. In Year 11 at Unley High, a large cohort of Vietnamese students joined my French class. I was lucky enough to sit next to one of the new classmates, Du who was fluent in French and he helped me raise my standards! I not only leant French but Du also told me the harried tale of how he’d arrived by boat after being attacked by pirates and surviving stormy seas.

He wasn’t the only one to experience this. In fact, the former Governor of South Australia, Hieu Van Le, himself arrived in Darwin as a refugee forty years ago, before settling in South Australia. A leading academic and successful business figure in his own right before becoming Governor, he lead regular trade missions to South East Asia on behalf of South Australia. His popularity ensured that after being appointed Governor by Labor Premier Jay Weatherill, he was reappointed by Weatherill’s Liberal successor Stephen Marshall, serving from 2014 to 2021. 

My experience of making Vietnamese friends in high school and hearing their tales really made me want to visit Vietnam. And their explanation of the differences between north and south at that time really hit home from my first visit to the country. 

Indeed, if ever there was a ‘tale of two cities’ to be told in modern 21^st century Asian economic history, it would be in Vietnam. After all, Ho Chi Minh City (or Saigon) is a buzzing modern entrepreneurial city much like many in South East Asia, with a young population zooming around on motorcycles ready to get the past behind them. By contrast, Hanoi, the home of government, is mystical and enchanting (like the old pipe smoking goatee bearded intellectual playing board games in the town squares surrounded by colonial French architecture) with a strong sense of proud nationalism. 

And that’s no surprise because historically, the Vietnamese have a lot to be proud of. Vietnam has a long history of defeating foreign colonists. In AD 939 it broke off from Imperial China who had ruled Vietnam for a millennium. Almost 1000 years later, it defeated its French colonisers in 1954, after Japanese occupation in World War 2. This was significant, as the French had ruled Indochina since the 19^th century. After expelling the French, Vietnam was split into the North and South, culminating in the Vietnam War that preoccupied the United States in the 1960s and early 1970s and of which Australia was a part. The Vietnam War ended in 1975, three years after Australia withdrew from the conflict, and Vietnam was reunified, with Hanoi in the North as the capital. 

Vietnam was largely isolated and poor after the war ended but in 1986, the government initiated a series of market-based reforms known as ‘doi moi’ or ‘renewal’. As a result, Vietnam enjoyed one of the fastest rates of economic growth in the world. It joined ASEAN and the World Trade Organisation (WTO) and established diplomatic relations with all nations, including the United States. Since joining the WTO Vietnam is becoming a fully-fledged trading nation. Vietnam’s main export destinations are the USA, China and Japan and they import most heavily from their North East Asian neighbours China, Korea and Japan.

Vietnam still has its difficulties in terms of infrastructure and institutions, and the small task of looking after over 90 million people. 

Vietnam is the 8^th most populous Asian nation and the world’s 14^th – but it’s economic story in the 21^st century has by and large been a good one.

Vietnam has now become one of the emerging ‘second generation’ tiger economies of Asia. Vietnam has a young population, is the new poster child for attracting foreign investment and is starting to deliver much needed infrastructure to get the developing economy moving.

Vietnam is considered to be a ‘transition tiger’ economy, moving from a planned economy to become more open and market orientated. Despite healthy growth rates above 5 per cent per annum on average over the past decade it’s still a relatively poor economy – ranking in the top 50 in the world in terms of GDP but just outside the top 150 in terms of GDP per capita. Inflation and unemployment are both low at just over 2 per cent, but there is still a lot of underemployment and rural poverty outside the bigger towns and cities – where three quarters of the Vietnamese population still live. This is reflected in per capita income too, where people in rural areas earn half of their counterparts in Hanoi and only one third of what they’d make in Ho Chi Minh City. It’s no wonder most young Vietnamese get on their motorcycles and move to the bright lights of the big city.

Of course, one marked aspect of Vietnam has been the success of the ‘Viet Q’ – Vietnamese living abroad – who have formed vibrant communities in Australia, Canada, the USA and elsewhere. We know about the distinguished Vietnamese born Governor of South Australia, Hieu Van Le, but another successful Vietnamese Australia at the other end of the age spectrum is ‘Cat’ Thao Nguyen, who came as a child refugee with her family, grew up in Bankstown in Western Sydney before returning to Ho Chi Minh City to establish the Australia Vietnam Youth Leadership Dialogue. Thao believes Vietnam’s demographics help the economy, but that’s it is not the full story. ‘It’s not just a young population, that helps, many countries in Africa and Asia have young populations, it’s Vietnam’s entrepreneurial spirit that matters. There are more start-ups per capita in Vietnam than China, India and Indonesia,’ she says . Thao also believes that Vietnam’s education and skill levels are important too.

‘Vietnam is an alternative to the China option. Not just in terms of labour costs for Nike and Foxconn, but you are dealing with a nation with 90 per cent literacy. That’s why the Commonwealth Bank of Australia has its innovation centre in Vietnam. Not India, but here in Vietnam,’ she explains.

Blackmores has also been attracted to Vietnam for similar reasons. Vietnam Country manager Phan Van Cuong explains that ‘Vietnam has a young emerging middle class that is increasingly health conscious as the economy develops.’ But he warns ‘distribution is difficult as Vietnam is a long thin country and our marketing strategy varies according to different regions. In Hanoi, people are conservative and traditional and very status conscious, whilst in Ho Chi Minh City they are open and always want to try new things. And are very open to foreign brands as a sign of high quality.’ 

One again, whether it’s economic development, political culture or consumer marketing Vietnam is very much different between urban and rural areas and when it comes to urbanisation it’s very much a tale a of two cities. 

By Tim Harcourt

Tim Harcourt is Industry Professor and Chief Economist at the Institute for Public Policy and Governance UTS.

Learn with experts and peers about the principles of governance and the practice of ethical leadership in our professional development leadership courses and post-graduate programs specifically tailored to local government.

Centre for Local Government