Despite human rights abuses, Vietnam’s economy ploughs ahead
Share this on

Despite human rights abuses, Vietnam’s economy ploughs ahead

HANOI elites probably rejoiced reading the World Economic Forum’s latest Global Competitiveness Report. The Geneva-based group has been constantly praising Vietnam’s economic reforms, and now sees the country as the 55th most competitive place in the world, 20 spots higher than in 2012.

The government was congratulated for its improvements in labour market reforms and its technological readiness, which are some of the key drivers of foreign direct investment. Similar gains were identified across Asean, confirming previous assessments conducted by the World Bank, which expects the economies of South and East Asia to be the world’s fastest-growing; both are eyeing GDP growth rates above six percent this year.

To hit these impressive growth rates, though, Asia’s developing economies need substantial foreign investments to build infrastructure. Surprisingly enough, Communist Vietnam, which once barred foreign investment entirely, seems to be on the right track in terms of sparking investors’ interest.

Ever since Tom Malinowski, the State Department’s former Assistant Secretary for Democracy, Human Rights and Labour wrote that a “completed Trans-Pacific Partnership (TPP)… offers the best hope of giving the Vietnamese people the space to pursue their rights” back in 2015, the regime has been pursuing incremental reforms.

The TPP-driven reforms come a decade after Vietnam’s 2005 Law on Investment and Law on Enterprise, a shift which ushered in a sustained period of high economic growth and cemented Vietnam’s reputation as a rising Asian tiger.

2017-09-25T111526Z_1568697401_RC1C930E22B0_RTRMADP_3_VIETNAM-HUNGARY

Vietnam’s President Tran Dai Quang. Source: Reuters/Kham

In the years since, Hanoi has pursued a number of liberalisation and arbitration reforms in tandem with increasingly transparent and democratic governance, modernising its commercial legal framework beyond recognition to attract outside investment.

Despite 2016 being a sluggish year for the global economy (thanks to Brexit and Donald Trump), Vietnam’s economy grew and exceeded the averages reported by its neighbours.

SEE ALSO: Germany expels Vietnamese diplomat following kidnapping of asylum seeker

At the same time, the Vietnamese government understands that competing for investment on the basis of low wages for workers is only a short-term option, and a bad one at that. Instead, Vietnam needs to plough funds into critical infrastructure needs such as airports, ports and roads to facilitate expanding manufacturing across the country.

Another critical component of that wider infrastructural push is telecommunications; four of Vietnam’s mobile telecoms providers are set to roll out 4G throughout the year.

While Vietnam is very much still an undemocratic one-party state, Hanoi seems to have found the winning recipe. A key component underpinning that success is a respect for property rights and the rule of law… at least as far as foreign companies are concerned.

Foreign companies and business interests entering the Vietnamese market have a reasonable expectation that they will be treated fairly. Unfortunately, other emerging economies in both Asean and South Asia are having a much harder time applying these lessons.

2017-10-10T120014Z_732399877_RC18DC0D6E80_RTRMADP_3_MYANMAR-ROHINGYA-BANGLADESH

Myanmar’s Rohingya crisis is linked to business. Source: Reuters/Mohammad Ponir Hossain

Myanmar had earned good press over the past few years for its attempted reforms, but the recent violence perpetrated against the Rohingya minority has exposed the dark reality of government land grabs. Much of the deprivation currently being inflicted on the Rohingya benefits military-connected business interests in the mining sector but also oil and gas.

SEE ALSO: Rohingya persecution is driven by economics, not just religious hatred

Similarly, efforts by the Philippines to attract foreign investment are undermined by President Rodrigo Duterte’s violent, mercurial style. Duterte, incredibly, says he wants to spend US$167 billion on infrastructure through 2022. Having stuck a finger in the eye of his allies in Washington, Duterte is counting on Chinese FDI to generate the needed cash – leaving his critics to wonder whether he is mortgaging the country’s future.

Other South Asian countries are also struggling to convince foreign providers that they can be reliable partners. Much like Vietnam, Bangladesh is trying to upgrade communications infrastructure for 4G mobile connectivity, but arbitrary rules are throttling the rollout.

The Bangladesh Telecommunication Regulatory Commission (BTRC) is trying to force mobile phone operators to sell their cell towers to a narrow list of officially “approved” firms. With the stroke of a pen, the operators could also be barred from sharing infrastructure (like towers or spectrum) with each other, a move that would increase the infrastructural costs by as much as 50-70 percent.

Unfortunately, the Bangladeshi telecoms revolution doesn’t seem to be the most well-coordinated affair: the telecoms and information communications ministries are currently embroiled in a turf war over the maintenance of a US$360 million national fibre network, and the two sides are building competing infrastructure with apparently zero internal coordination.

While all four of these countries – Vietnam, Myanmar, the Philippines, and Bangladesh – share a painful disdain for human rights and are democracies in name only, Hanoi seems to have found the winning recipe.

Leaders in Hanoi have decided that ease and clarity of doing business are not just good for business, they can strengthen an otherwise teetering social contract. The ruling CPV’s cynical calculus is simple: as long as the West perceives the country as a dynamic market, Hanoi can go freely about the business of imprisoning bloggers, cracking down on dissent and persecuting opposition figures.