Like most Southeast Asian countries, Vietnam is a country destined to be affected by the whims of its powerful neighbors. In addition to having access to the entirety of Southeast Asia, the developing nation is located directly beneath China. In times of global conflict—militaristic or otherwise—this proximity to powerful nations can be a double-edged sword. The current US-China trade war serves as a good example of this.
Tensions between the superpowers may lead to favorable business opportunities for Vietnam, as well as other nearby nations. On August 23rd, President Trump ordered American businesses to begin searching for alternatives to China, citing the International Emergency Economic Powers Act (https://www.cnbc.com/2019/09/01/trump-ordered-us-firms-to-ditch-china-but-many-already-have.html). While most companies have no intention of relocating completely, Trump’s aggressive tactics have unsettled investors, and many have begun looking at other options. Nearby regions, such as Vietnam, Malaysia, and Indonesia, are becoming increasingly attractive possibilities. The CEO of Home Depot, Ted Decker, has said “On the margin, I’m not aware of a single supplier who is not moving some form of manufacturing outside of China”. Google has plans to move most of its hardware production to Vietnam ((https://www.cnbc.com/2019/09/01/trump-ordered-us-firms-to-ditch-china-but-many-already-have.html).
Having struggled for many years after the Vietnam War, this boost in foreign commerce has caused unprecedented economic growth in Vietnam. Previously, growth in the country has been limited by a lack of guarantees for investors. Recently, however, Vietnam passed a draft law on public-private partnership (PPP) investment which will give investors a government guarantee on PPP investments. (www.hanoitimes.vn/investment/2019/08/81E0DB40/investors-expect-positive-changes-in-vietnam-s-ppp-investment-law/). This law follows a recent trend of economic reforms intended to promote foreign business and industry in Vietnam. The Vietnam International Bank just made upgrades to its international debit card, which will include ATM protection, e-commerce purchase protection, and unlimited cash back for up to 2% of all transactions (https://vietnaminsider.vn/enjoy-unlimited-cash-back-and-transaction-security-with-vib-international-card/). According to Chairman of the Hanoi People’s Committee Nguyen Duc Chung, “Hanoi is committed to creating an enabling environment for startups to operate”. This dedication to economic growth has caused Vietnam’s annual GDP to increase rapidly.
A large part of the recent boom has been creative statistical revision. Due to said revision, from 2011-2017, Vietnam’s GDP boomed by a staggering 25.4%. Provided that this figure is accurate, it would mean that Vietnam has surpassed Egypt, Finland, and Chile in terms of GDP (https://asia.nikkei.com/Opinion/Vietnam-s-surprise-GDP-revision-risks-damaging-economic-credibility). While the numbers are positive, this tactic can become an issue because it makes it difficult for investors to trust in the country’s integrity, especially because other Asian nations have recently been suspected of exaggerating their figures to indicate a higher GDP. China and India have both been accused of misrepresenting their GDP to indicate greater financial success than they have attained. Additionally, Vietnam’s boost has come at a very convenient time for the country. Hanoi’s public debt was recently approaching 65% of GDP, a cap that it is not supposed to pass. With these new revisions, the debt constraint is no longer an emergent issue, and Vietnam is able to exercise greater borrowing power than ever before. It also allows the government to increase internal spending, furthering the agenda of economic expansion.
Unfortunately, this recent economic success may have come at the cost of Vietnam’s financial credibility (https://asia.nikkei.com/Opinion/Vietnam-s-surprise-GDP-revision-risks-damaging-economic-credibility). By playing with the numbers in order to increase GDP, Vietnam risks alienating investors and organizations like the World Bank and Asian Development Bank. These organizations can offer critical aid and are instrumental in raising per capita income. Payments to these organizations may now increase along with the GDP (https://asia.nikkei.com/Opinion/Vietnam-s-surprise-GDP-revision-risks-damaging-economic-credibility).
Globalization: Asia 