Vietnam Economy Grows at Fastest Pace in Seven Years

Vietnam’s economy grew 6.28 percent from January to June, the fastest since 2008, according to government figures. The government is easing regulations and privatizing parts of the economy for further economic progress.

Vietnam’s economy grew 6.28 percent from January to June, the fastest since 2008, according to government figures. The government is easing regulations and privatizing parts of the economy for further economic progress.

Vietnam has been a formidable competitor with China over manufacturing jobs and investment. The Southeast Asian country has transitioned from an agriculture-based economy to a system based on services and manufacturing. Some companies have moved operations from China to Vietnam because of lower labor costs, and many investors see Vietnam as a vital emerging market. Vietnam has grown at a steady rate of 5.3 percent since 1986, faster than any other Asian market aside from China, and the nation has ranked consistently as a top spot for foreign investment. Vietnam’s efforts have lifted many people out of poverty while adding high-quality jobs to the nation. The latest luxury items are a common sight around the country, which is a culture shock to more conservative Vietnamese who believe such flaunting of wealth conflicts with the nation’s Buddhist values.

Much of Vietnam’s rise has to do with a youthful population that contributes to the work force, but Vietnam’s launching point started when the country joined the World Trade Organization, boosting certain sectors of the economy, along with becoming an important trading partner of the United States. Vietnam-U.S. trade expanded from $500 million in 1995 to $35 billion in 2014 notes the Herald-Standard. Vietnamese trade also surpassed Thailand and Malaysia, becoming Southeast Asia’s primary exporter of goods to the United States. Communist Party head Nguyen Phu Trong will visit the United States this week to conduct talks with President Obama about strengthening political and economic ties between the two nations.

Vietnam may be soaring economically, but there are certain challenges to overcome. First, the export sector needs a boost from the impact of the global recession, but the country’s central bank has lowered the dong, Vietnam’s national currency, to improve exports. Officials must also do more in increasing the competitiveness of the government’s state-owned companies. This means recruiting top executives from around the world to boost productivity and make public companies more competitive with the likes of Chinese state-owned companies. Experts believe Vietnam has time to tackle these challenges, but authorities need to implement such reforms in the coming years.

In addition, human rights have become an issue in Vietnam, with over 100 political dissidents behind bars, causing the U.S. Congress to oppose measures that would further enhance Vietnam’s economy. Obama has been pressuring Vietnamese on their human rights record, and experts note that Vietnam is improving its democratic institutions and human rights by releasing some prisoners in order to become more palatable to future trade deals. However, critics remain unconvinced, and Vietnam will have to do more about these blemishes to further integrate into the world community.