Courtesy of Vietnomics
This fall 2011 update is from Vietnomics, a global sourcing consultancy that links US and Vietnamese investors and companies. Thanks, Jeff!
Summary
The Vietnam opportunity in the 3rd quarter attracted more attention from global investors, who now have a catchy acronym to go with their enthusiasm: CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey, and South Africa) is replacing BRIC (Brazil, Russia, India and China) as the promising new frontier. Vietnam belongs in this emerging group because of its demographics (young, ambitious, entrepreneurial); its political and social stability; its sustained pace of growth; and its emergence as a manufacturing hub. For early adopters with long-term objectives, these strengths trump concerns about high inflation for 2011 and the related issues of currency instability, slower growth, and imbalances in trade and government spending
3rd Quarter Developments in Vietnam
Underlining the Vietnam opportunity are reports that surfaced in summer and early fall. Among them:
Commodities Exports. Vietnam continues growing as a dominant global trader in commodities – especially coffee, rice, and cashews. Nestle plans a $270 million coffee factory near Ho Chi Minh City, and intends to purchase 30,000 tons of coffee annually from 16,000 farmers. This fall, Vietnamese farmers are expected to harvest a record 1.3 million tons of coffee (worth $3 billion) – enough to lower prices of Robusta beans on the global market. Also, Vietnam is positioned to overtake Thailand as top exporter of rice, the staple that feeds almost half the world. Vietnam may exceed 8 million tons of rice exports in the coming year.
Green Technology Leadership. Vietnam is positioning itself as a destination for clean energy and biotechnology investors. Among them: US-based First Solar investing $1 billion, IC Energy $390 million, and German Roth & Rau $14 million in solar factories; GE and Germany’s EAB investing in wind power; Germany committing one-third of its official development assistance in Vietnam’s energy sector; Indochina Capital planning to mobilize $200 million for wind, solar, and energy projects; and Dragon Capital committing $45 million to recycling and clean water. Also, Vietnam committed $17 million to build the country’s largest biotech complex to focus on agribusiness R&D — such as high-quality mushrooms and genetically-modified plants.
Architectural Achievements. Vietnam is experiencing a spectacular physical remake. CapitaLand, Southeast Asia’s largest property developer, is completing its first project in Vietnam: The Vista, 750 luxury apartments in five 28-story towers across the Saigon River from Ho Chi Minh City’s downtown. And the American Institute of Architects highlighted Vietnam as a new frontier — showing projects of more than 20 firms, including: Chicago-based Carlos Zapata Studio’s 68-story Bitexco Financial Tower, and the 450-room waterfront Marriott under construction in Hanoi. Planned projects include cities within cities and conversion of Phu Quoc Island into Vietnam’s Macau.
Online Commerce Growth. E-commerce is projected to reach $6 billion over the next three years as 30 million internet users get comfortable with online purchasing. And Vietnam’s trade ministry is planning an import-export website starting next year to support the country’s textile, seafood, agriculture, wood, rubber, footwear, leather, steel, fertilizer, plastic and handicrafts industries that together have 9,300 websites that produce $2 billion in revenue annually.
Overseas investment. Another sign of Vietnam’s emergence on the global stage is its investment abroad. Vietnamese businesses registered to invest $25 billion in 600 foreign projects this year – primarily mining, energy, water, and agriculture – mostly in Laos, Cambodia, Venezuela and Russia.
3 Important Issues Affecting Long-Term Prospects for Business in Vietnam
Social capital. Investors need to watch the interplay of workforce, wages, and inflation. Family planning underlies Vietnam’s remarkable progress as fewer births meant more resources for education and investment; but now Vietnamese mothers are giving birth to 11% more boys than girls – a trend likely to increase social instability. Meanwhile, as Vietnam faces one of the world’s highest inflation rates, the minimum wage rises 29% in Saigon. That could lead to higher unemployment.
The environment. Vietnam wants to balance environmental sustainability with economic growth. Currently at issue: (1) contracts with Chinese companies to mine a million tons of Vietnamese bauxite annually; (2) 12 hydroelectric projects along the Mekong River, home to 60 million people in six countries. A report says the projects would supply less than 5% of Vietnam’s electricity and would eliminate $1 billion in revenue for fishing families and $2 billion in food production and aquaculture.
Trust. As a newcomer to the World Trade Organization, Vietnam has yet to demonstrate that it can effectively control corruption, and honor intellectual property rights, brands and patents. Adidas, Gucci, Honda, Microsoft, Louis Vuitton, and Kimberly Clark are among companies trying to protect their brands from counterfeiters. Violators face minimal fines and get back in business quickly, so the government needs stronger penalties and vigilance.
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Key Data
First 3 quarters 2011 vs. first 3 quarters 2010 from government monthly statistical reports
- Gross Domestic Product – $83.0 billion, up 5.8%
- Consumer Prices – up 22%
- Exports –$70 billion, up 34%
- Imports — $77 billion, up 27%
- International Visitors – 4,312,100, up 15.5%
- Foreign Investment –$9.9 billion, down 28%
- Internet Subscribers – 4.1 million, up 18%
- Stocks — Closed at 437.47, down 3.7%
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Jeff Browne, President – Email: jbrowneATvietnomics.com - Website: www.vietnomics.com
This year’s report, released early this month, revealed that the number of Vietnamese studying overseas had increased to 106, 104 in the 2011/12 academic year. The top host countries included the US, Australia, New Zealand, the UK, Singapore and China - not necessarily in that order. About 35,900, 34%, studied in Asian countries, while nearly 40% were in Australia and the US. The Ministry of Finance estimates that Vietnamese spend $10,000-$15,000 a year on average for each student, which adds up to between $1-1.6 billion. 
“50 percent of Vietnamese teachers regret their career decision”
27/08/2012An e-card for Teachers’ Day
This is one of the highlights of a survey conducted by the Vietnam Institute of Educational Sciences (VIES), a damning indictment of the working conditions of Vietnamese teachers. The survey of 526 teachers from 27 schools in five provinces asked primary, secondary (junior high) and high school teachers this question: Would you still choose to work as a teacher, if you could make the decision again? 40.9% of primary, 59% of secondary and 52.4% of high school teachers said “no.”
Teachers in Vietnam are some of hardest-working and lowest-paid educated members of society. As in most countries, schools are on the receiving end of criticism for much of what ails society. In a Confucian culture that places a premium on education and in which there is an urgent need for a high-quality workforce against the backdrop of a ticking clock – in reference to the “demographic dividend” - there is even more pressure on teachers, as some of the most visible representatives of the education system, to perform against formidable odds.
The sad reality is that many teachers have to moonlight to make ends meet, which leaves them stressed out and uninspired. Those who are lucky and talented enough to develop a reputation as tutors are able to make significant amounts of money doing what they’ve been trained to do. (One of the ironies is that parents who can afford it send their children to private tutors to supplement what they’re learning in school and to give them a competitive edge in an exam-driven system.) Others have to find work that is totally unrelated to their chosen profession. For some, it’s a moot issue because their spouses make a good income.
In a related op-ed piece from 15 August 2012, the author, Mai Linh, advised her younger sister, a recent university graduate with an English teaching diploma, not to become a teacher if she wants to buy a house and a car in Hanoi. The reason is that a friend is working at a private high school in another province, where she is paid 45,000 VND ($2.2) for each 45-minute class. With an average of 40 classes per month, she earns 1.8 million (VND ($85.7), with no salary during summer vacation. The salary of recent graduates is not much higher.
One expert, quoted in Mai Linh’s article, stated the obvious: ”We will not have good education without good teachers.”
Categories: Articles, Commentary
Tags: education reform, emerging economies, knowledge-based economy, teacher salaries
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