Is Vietnam the Next ‘Asian Miracle’?

The country is making autocratic capitalism work unusually well.

Hang Ma Street in Hanoi, last month. Linh Pham/Getty Images

This 13.10.20 New York Times op-ed by Ruchir Sharma, the chief global strategist at Morgan Stanley Investment Management, is a decent analysis for someone who is probably writing about Viet Nam from his perch in New York City.

Here are two excerpts that smack of armchair journalism. They are written from the perspective of someone who is not on the ground, is not thoroughly familiar with the system he’s attempting to describe, and does not have all of the facts at his disposal. The bias is standard fare for Western publications and something that readers accept as the truth because they consider the source to be authoritative and don’t know any better.

With no opposition, autocrats can force very rapid growth, but often their unchecked policy whims and obsessions generate erratic boom-and-bust cycles, which stall development. These hurdles make what Vietnam’s unusually competent autocracy has achieved so far all the more impressive — but also much more difficult to sustain.

This analysis is an oversimplification of a situation that is more complex than Mr. Sharma lets on or perhaps knows. Yes, there is one party but it is hardly a monolith. Viet Nam’s leaders do not walk in lockstep but rather engage in a vigorous debate and discussion about a variety of issues. There is considerable diversity of opinion under the tent of this one party.

There is also a concerted effort at the highest level (think General Secretary of the Communist Party of Vietnam and president) to root out and put an end to massive corruption, something Sharma didn’t touch on. He also doesn’t answer his question about why these impressive achievements are “difficult to sustain,” encouraging the reader to accept this dubious assumption at face value.

One possible problem: After multiple rounds of privatization, the government owns many fewer companies, but those it still owns are huge and account for nearly a third of economic output — same as a decade ago. If trouble comes, these bloated state companies, which account for many of the bad loans in the banking system, are one place it could start.

Here we go again, the old canard that the public sector is inefficient and unproductive and the private sector is efficient and productive. Many people still hold this dichotomous view, in spite of all of the US and other private sector companies that have performed poorly and, at times, engaged in unethical and illegal behavior. It’s cultural mythology. (Think The Big Short about the 2008 financial meltdown and all the banks and mortgage companies people love to hate, and Dirty Money about Wells Fargo.)

It’s not all gloom and doom. Some state-owned companies in Viet Nam have been wildly successful. Take, for example, Viettel, a telecommunications company owned by the Ministry of Defense. Its 2019 revenue was nearly $11 billion USD. (I’m a satisfied customer!) Then there’s Petrovietnam, which is 100%-owned by the Vietnamese government. Its 2019 revenue was $31.7 billion. Finally, there’s Vinamilk, which has attracted considerable foreign interest and investment. Viet Nam’s State Capital Investment Corporation (SCIC), i.e., the government, held 36% of the shares, as of late 2017. Its 2018 revenue was $2.2 billion. Not too shabby for state-owned companies, not all of which are “bloated.” It’s all about competent leadership not structures. (The same logic applies to Viet Nam’s successful containment of the COVID-19 pandemic.)

Environmental Pollution as an Impediment to Sustainable Economic Growth

This existential point is conspicuously absent from Sharma’s analysis. If Viet Nam doesn’t come to terms with this nationwide crisis, which is of great concern to most Vietnamese and expats, based on survey evidence, the economic growth party will be over. More importantly, air and water pollution are a grave threat to the health of Viet Nam’s people, flora, and fauna, and negatively impact quality of life. It’s worth mentioning that sustainable development is a high priority of the Vietnamese government.

Shalom (שלום), MAA

2 thoughts on “Is Vietnam the Next ‘Asian Miracle’?

    • I’m sure Viet Nam is an integral part of his $20 billion (?) fund. I don’t know whether he actually believes everything he wrote; the point is the NYT probably wouldn’t publish his essay without the items that I mentioned.


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