Vietnam’s Outbreak of Measles and Outrage

Says another: “How many more children have to die before you declare an epidemic?  If you still have some dignity, please resign and give the position to someone else with better qualifications and more willingness to do the job so that the people will suffer less.”

Other Internet comments suggest health officials are downplaying the crisis because of Vietnam’s  commitments to eradicate measles by 2017 — inspiring this caustic Facebook post:  “Through this we can see how talented our health minister is—too talented. Her motto is listening to no one, knowing nothing, seeing nothing.”

Criticism escalated when Tien seemed to minimize the undeclared epidemic by contending only 25 deaths were technically attributable to measles, even though scores children have died as a result of measles-related complications such as pneumonia.

The World Health Organization says it is “very concerned” about the outbreak, partly because WHO and UNICEF undertook an apparently less-than-successful vaccination campaign to eliminate measles from Vietnam by 2012.

In the age of the Internet, the message for Vietnam is the same as that for government agencies worldwide:  Google knows and Facebook shares.

 

Another $100 Billion Pipe Dream for Vietnam

Vietnam’s newspapers are reporting that the Hong Kong-based Dragon Best International has agreed to a partnership with a Vietnamese company, Ho Tram Tourism JSC, that envisions investing in: a $32 billion real estate development in Ho Chi Minh City, an $18 billion eco-tourism project nearby Ba Ria – Vung Tau Province, and a $50 billion economic zone.

On a global scale, these are huge projects.  In Vietnam, they are head-scratching, utopian dreams that make experienced developers and economists skeptical about Vietnam investors’ capacity for realism.

Many international investors believe Vietnam is a promising frontier market, but none of them are going to pour an amount of capital into Vietnam that approaches the country’s annual GDP.  Vietnam’s economy cannot absorb $100 billion in capital; moreover, it could not generate a return on the investment any time soon.

For Vietnam, the problem is that this is not the first pie-in-the-sky project that didn’t materialize.  Last year Dubai investor Global Sphere announced its plans to spent $30 billion on the Hanoi Wall Street — 70 apartment blocks at heights ranging from 40 to 70 stories and housing up to 400,000 people with a 102 story central tower.  Hanoi’s planners hadn’t heard about the project, and it has yet to be registered with the government.

In 2007, the US Eminence Group announced its plan to develop a $30 billion economic zone in Thanh Hoa Province.  However, soon after the group made an enthusiastic presentation on the project, the investor vanished.

Ultimately, the investors who will be successful in Vietnam are those patient and disciplined enough to develop realistic, credible plans — not pipe dreams.

 

Vietnam’s Hard Line on Soft Drinks

Vietnam isn’t being very hospitable to two of its most prominent American multi-nationals.  Starting next July, the finance ministry wants to impose a 10%  tax on carbonated soft drinks — which is to say Coke and Pepsi.

The rationale is these beverages are harmful to public health, just like other products consumers want — but which health officials don’t want them to have — like  cigarettes and alcohol.

The new tax is getting criticism from foreigners who are thinking more about profits than health.  A consultancy that focuses on global interests in Vietnam says the tax will hurt consumers and the local sugar industry, retail distribution system and retailers.

The American Chamber of Commerce, whose members include Coke, Pepsi, Miller beer, Philip Morris tobacco, Dow chemical and other companies that give Vietnamese health officials pause, calls the proposed tax unfair to consumers.

Meanwhile, Vietnamese officials aren’t in agreement with each other.  The Viet Nam Tax Consultancy Association favors the tax, but the Central Institute for Economic Management suggests it would be counterproductive — bringing in $8.4 million tax revenue but costing the beverage industry $41 million and Vietnam’s economy $12 million because demand for soft drinks would decline 28%.

The proposed tax is testing Vietnam’s Communist Party ideal of creating an enduring socially responsible free enterprise economy.  That won’t be easy to do as the country opens its door ever wider to the global marketplace.

Is Vietnam’s Economy Doomed?

Japanese economist Kenishi Ohno says Vietnam has fallen into the feared middle income trap — perpetual stagnation after stalling on the past to prosperity.
He says the country faces a social crisis because it failed to heed warnings six years ago.  Vietnam now faces:

  • Slowing economic growth
  • Low investment efficiency
  • Rising production costs
  • Little improvement in competitiveness

Ohno says productivity has grown 3% annually while wages rose 26%.  Competitiveness has dropped at an annual rate of 23%.

Vietnamese economist Nguyen Minh Phong says it’s too soon to conclude his country has fallen into the middle income trap.  He contends the government deliberately slowed Vietnam’s growth to enable economic restructuring to take place.

To stay out of the middle income trap, Phong says Vietnam needs to:

  • Prioritize development of information technology
  • Reduce exports of natural-resources
  • Support enterprises with market research
  • Explore niche markets
  • Help small enterprises get loans
  • Expand bilateral trade agreements
  • Reform education and training

Vietnam also needs to follow the examples of Japan, Taiwan, Singapore, and South Korea — all of which cultivated the private sector on their way to full economic development.

For several years, it has become increasingly obvious that Vietnam’s escape from economic mediocrity depends on the capacity of its own government to surrender control and permit the private sector to flourish.

 

 

 

Vietnam’s Capitalism Learning Curve

Vietnamese authorities are disappointed by the results of this year’s initial public offerings of state-owned enterprises.  The companies were able to sell only 27% (84 million) of the more than 300 million shares offered –and foreigners bought only 10 million.  Proceeds totaled $49 million.

The lack of enthusiasm among investors is being attributed to the offerings being mostly companies doing public works business in the property sector that has experienced falling prices.  Also, Vietnam’s economic recovery has been relatively weak so far, and the government is not expected to boost public works spending.

But that doesn’t explain why investors are repelled by Vietnam’s state-owned companies at the same time they have driven up Vietnam’s stock prices by nearly 20%.

The explanation may be simpler:  The companies are pricing their shares higher than the market wants to pay for them.

Vietnam’s government will have more success privatizing their businesses once it fully accepts the way capitalism works.  In capital markets, the government doesn’t get to decide how much a company is worth; the market does.

When Vietnam lowers its expectations in pricing its IPOs, the country will successfully sell shares in the 432 state-owned enterprises scheduled to be privatized by 2015.

Will Vietnam Achieve 14% Annual Growth?

Vietnam’s economy has grown 5% this quarter, slightly faster than the first quarter in 2012 and 2013, with a $1 billion trade surplus and growth especially robust in the Saigon region.  But the striking economic news in a country that was experiencing runaway inflation in recent years:  Vietnam’s consumer price index declined in 0.4% in March and now is below an annual rate of 5%.

The data suggest Vietnam is on an economic path toward reaching its long-term potential.  But what is its potential?  Some economists think Vietnam is headed toward the middle-income trap that stalls many developing countries, such as the Philippines, Indonesia, and Thailand.  Others see Vietnam as the Japan (or South Korea) of the 21st Century.

The latter viewpoint got a boost in a forum in Hanoi this week that featured Harvard’s Robert Lawrence, who forecast 13.5% economic growth for Vietnam in 2025.  That’s assuming implementation of the Trans-Pacific Partnership (TPP) agreement that is expected to dramatically increase Vietnam’s global trade.

Lawrence projected many other TPP partners (the US, Canada, Mexico, Peru, Chile, New Zealand, Australia, Singapore, Malaysia, Brunei, and Japan) would experience significantly slower growth.  His numbers suggested Vietnam’s exports would increase 37%, compared to 14% for Japan and 12% for Malaysia, and 4% for the US.

The TPP has yet to be completed, so Vietnamese officials were quick to point out their country would not necessarily benefit the most from it — because its economy is starting far behind the other partners.

 

 

Just How Determined Are the Vietnamese?

In the 20th Century, the West learned a lot about the tenacity of the northern Vietnamese, whose determination repelled the American military and drove out European colonialists.  Now comes a story from a village near Dien Bien Phu, where France surrendered in 1954, that shows the enduring power of Vietnamese will.

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Delivering a bagged and dry pupil

When recent storms caused flooding in Dien Bien Province, a raging river took out the suspension bridge that separated Sam Lang village  in the far northwestern corner of Vietnam from its schoolhouse.  Anyone else would have postponed classes, but not the Vietnamese.

Vietnamese newspaper Tuoi Tre published pictures showing what happened next:  The father of one of the children grabbed a large plastic bag, instructed his child to get into the bag, and then swam across the river with the bag to deliver his child to primary school.  Then he returned and repeated the process for every child in the village.

The children arrived safe and dry.  School went on as usual.  Despite nature’s inconvenience, the children of Sam Lang walked a day further on the road to prosperity.  If you think this event showed unusual commitment to education, you don’t know the Vietnamese.  

 

 

 

The Americanization of Vietnam’s Food

McDonald’s has been in business for one month in Vietnam, and it’s already clear the culinary culture of this leading producer of rice and seafood has changed forever.  Just one restaurant served 400,000 customers in the month after the grand opening on Feb. 8.

So far, the Saigon McDonald’s served 61,980 Big Macs for $2.84 apiece, well above the daily income of a typical Vietnamese rice farming family.

This is just the beginning.  McDonald’s is the latest chain to join the fast-food reformation of Vietnam’s diet, but it should have no problem surpassing Burger King, Domino’s Pizza, Popeye’s Louisiana Kitchen,  KFC, Subway, and others.

In part, that’s because the owner of the McDonald’s franchise has the political clout to get things done; he’s the prime minister’s son-in-law who, like McDonald’s itself, is a Chicago native.

McDonald’s Vietnam owner Henry Nguyen spent two summers as a teenager working at McDonald’s in Chicago before moving to Ho Chi Minh City a decade ago and ultimately impressing McDonald’s as “the ideal mix of business acumen, proven record, passion, and ability.”

Similarly, Vietnam’s hunger for American products and culture makes it an ideal market for McDonald’s — as it is for American soft drink, alcohol, tobacco, and other brands that are contending with legions of skeptical consumers at home.

The Race to Satisfy Vietnam’s Hi Tech Hunger

Vietnam’s science ministry reports four technology exchanges accounted for 5,482 service and equipment transactions worth $129 million last year — 34% more than a previous year, and far exceeding expectations.

In Haiphong alone, 40,000 people exchanged scientific views and searched for  technologies.  The Danang exchange has recorded 5,321 domestic businesses and 153 foreign companies registering 7,754 technology transactions over the past five years. 

These are signs that Vietnam is serious about being a global technology leader and consumer.   The government projects a 15% annual increase in technological product and service sales through 2020 as exchange projects expand countrywide and universities grow the country’s tech expertise.  

 These developments have generated a growing awareness among global technology leaders about Vietnam’s potential.  This week’s examples:

  • On Thursday the Vietnamese and Finnish governments signed a $14 million agreement to implement the second phase of their joint innovation partnership to enhance the capacity of Vietnam’s information technology system and increase activities in scientific research and technology development.
  • On Friday Microsoft formally agreed to a long-term partnership with Vietnam to focus on four technologies (1) IT infrastructure, (2) cyber security, (3) cloud apps development and (4) IT human resources.

The race is on to capitalize on hi tech hunger in a promising frontier market of nearly 100 million people.  

Dreaming in Vietnam on $1 a Day

Vietnam’s statistics office and the World Bank shed new light on income in the country — and quantify the  rural-urban gap.  They say the typical city dweller earns $142 a month compared to $76 for rural residents.  Average earnings for Vietnam’s poorest citizens are estimated to be $24 per month, a 39% increase over the highly inflationary period between 2010 and 2013.

This helps explain two things: (1) why the world’s multi-national manufacturers are flocking to Vietnam to source their products, and (2) why entrepreneurial dreams are flourishing in the world’s 13th most populous country.

Vietnam has a young, educated, eager — and, most important, plugged-in — workforce accustomed to wages far behind its peers in China and elsewhere in Southeast Asia.  Even citizens who earn $1 a day tend to be literate and have someone in the family who is connected to the Internet.

And despite urban migration that is spurring explosive growth in Hanoi, Saigon and other cities, Vietnam’s population remains mostly rural and the employment mostly agriculture.  In this sector, $1 dollar a day remains the standard wage — and a job offer from a Japanese or German widget-maker looks like an attractive stepping stone to the entrepreneurial dreamland that is the World Wide Web.