The government has made great efforts to be more enabling and responsive to businesses. This has received a thumbs-up from international organisations, which believe it is a sign that brighter prospects lie ahead. 

On the eve of the solar New Year, when Hanoians are eager to welcome 2017 with big aspirations and bright wishes, the city’s Ta Hien street looks more beautiful than on other days. Here and there, the street, decorated with colourful light bulbs and boards, is packed with foreigners who are sitting on the pavement enjoying draught beer, known as bia hoi, and chatting with one another.

British Ambassador to Vietnam Giles Lever is a lover of bia hoi – a speciality of Hanoi. He is also there on Ta Hien street, welcoming the new year with the locals and travellers.

“I love Vietnam in general and Hanoi in particular. I have witnessed the city’s growth over the past two decades,” he said, while waiting for the countdown to 2017.

Lever came to Vietnam in early 2014 to work as the British Ambassador to the country. Earlier, during the 1993-1997 period, he worked as the second secretary at the embassy in Hanoi.

Lever said he can feel “every beat of life in Vietnam”, especially the economic development in big cities like Hanoi, Ho Chi Minh City, and Danang.

During his time in Vietnam, people and enterprises have improved their lives significantly. Per capita income has soared from an average $250 per year in the 1990s to an average of about $2,200 presently.

“Vietnamese people can easily own expensive items such as iPhones and iPads now,” he said. “I can see their smiles everywhere. They always have great confidence in their future.”

US Ambassador to Vietnam Ted Osius has also witnessed the growth of Vietnam’s economy for years.

“I first came to Vietnam as a young foreign service officer in 1996, when I was fortunate to work for the first US Ambassador to Vietnam Pete Peterson. I later served in Ho Chi Minh City, where I helped establish the first US Consulate General,” Osius told VIR.

Beginning his work as the US Ambassador to Vietnam in 2014, he has visited almost all the cities and provinces in Vietnam to see how the country is developing, and how the government’s efforts to reform the economy have translated into action benefiting enterprises and people.

“For example, we’ve seen Vietnam rise quickly in the ‘ease of doing business’ rankings, in large part because of significant efforts to reform its system of state-owned enterprises (SOEs) and allowing foreign investors greater access to protected sectors,” Osius said. “Vietnam has also improved its protections for intellectual property and the environment.”

In the eyes of Lever and Osius, Vietnam is witnessing “a sustainable growth trend”. GDP growth climbed from 5.25 per cent on-year in 2012 to 5.42 per cent in 2013, 5.98 per cent in 2014, and 6.68 per cent in 2015. In 2016, the rate was 6.21 per cent.

Building a more responsive government

In talks with foreign companies, state ambassadors, and leaders of international organisations, Prime Minister Nguyen Xuan Phuc has always maintained that the government is strongly committed to reforms which will create a level playing field for enterprises from all economic sectors. In the past, the business community has expressed grave concerns over discrimination between the state and private sectors.

Phuc reiterated the state’s protection of the legitimate rights of the corporate sector, emphasising that investors can do everything not prohibited by law. Businesses can also have equal access to capital, land, markets, natural resources, and business opportunities.

The government will also refrain from ad hoc policy changes to increase predictability and transparency. Additionally, business conditions will be quantified so that investors can control costs and avoid business and investment risks.

“The government always stands ready for open and straightforward dialogue to seek the most appropriate and effective solutions for the country to achieve fast, sustainable, and harmonious development,” the prime minister pledged.

He also noted that since Vietnam embarked upon its Doi moi economic reform in 1986, the private sector has served as a very important driving force of the economy.

Vietnam currently has nearly 600,000 enterprises, of which about 95 per cent are private enterprises. 2016 is the first year that more than 100,000 new businesses were established. The record number of over 110,100 newly-established enterprises means an average of 300 enterprises founded per day.

Applause

At a recent meeting with the prime minister in Hanoi, Jonathan Dunn, resident representative of the International Monetary Fund (IMF) for Vietnam, said that Vietnam’s government “is sending a positive message to the international community about its commitment and determination to improve Vietnam’s business climate,” and that “the IMF highly commends Vietnam for its reform programmes such as SOE reform, and increasing the role of the private sector.”

During the 2011-2016 period, about 640 SOEs were equitised. In late December the prime minister released a list of SOEs selected to be equitised in the period between 2016 and 2020. The government will keep a 100 per cent stake in only 103 SOEs.

Ambassador Giles Lever also commended the government’s efforts. “The new government has shown real commitment to building its pro-business credentials, and this has been widely recognised by the business community, including foreign investors,” he said.

 “Sustainable growth in an economy at Vietnam’s level of development largely depends on the creation of favourable conditions for businesses to grow and to improve productivity.” 

In 2016, Vietnam moved up another nine places on the World Bank’s “Doing Business” report, from 91st to 82nd. “This is very good for a lower middle-income country,” Lever stressed.

Ousmane Dione, who began his position as World Bank country director in Vietnam in 2016, told VIR that when he began working in Vietnam, the country’s rapid growth surprised him greatly.

Dione highly commended the role of the government in driving the economy forward.

“As we enter 2017, Vietnam has witnessed its fifth straight year of macro-economic stability, marked by low single-digit inflation, a stable exchange rate, and strengthening external position,” he said.

“Amid global headwinds, the economy continues to show resilience, supported by robust domestic demand and export-oriented manufacturing. Although growth has decelerated to 6.21 per cent, it is still one of the fastest rates both regionally and globally.”

At the Vietnam Business Forum (VBF) 2016, the new government’s commitments were lauded by the business community in Vietnam.

Kyle Kelhofer, country manager for Vietnam, Cambodia, and Laos of the International Financial Corporation (IFC), praised the government’s efforts in maintaining macro-economic stability and keeping public debt within permissible bounds. He said that the role of the private economic sector has received greater government attention.

AmCham Vietnam’s chair Virginia Foote made comments on the same line. She said, “Vietnam’s continued economic growth and the strengthening of the private sector creates opportunities for job creation, wealth creation, and a better standard of living.

“Even in the face of global headwinds and economic challenges, our members remain optimistic about business prospects in Vietnam. In fact, over 70 per cent of AmCham members think the business environment is improving here.”

International confidence

Like many leaders of international organisations, Asian Development Bank’s country director for Vietnam Eric Sidgwick told VIR, “Inspired by Prime Minister Phuc’s commitments and determination to build a responsive and enabling government, and speed up all reforms to construct an economy whose growth will depend on high labour productivity and management efficiency, we can be quite optimistic about Vietnam’s economic prospects for 2017 and beyond.”

EuroCham chairman Michael Behrens said European firms in Vietnam are optimistic about Vietnam’s economic prospects under the new government’s leadership.

“Perhaps more than ever, as proven in EuroCham in Vietnam’s recent ‘Business Climate Survey’ – a quarterly EuroCham survey about Vietnam’s business environment responded to by EuroCham’s members – the Europe-Vietnam business community is optimistic regarding Vietnam’s future economic prospects. The index mark of 86 in 2016’s third quarter rose 10 points from the 77 mark of last quarter,” he told VIR.

Some 71.5 per cent of the respondents described their current business situation as “excellent” or “good”.

It is clear that diplomats and leaders of international organisations in Vietnam have their own way of perceiving Vietnam’s development. However, the common thing they seem to be feeling is trust in Vietnam’s brighter outlook.

Among them, British Ambassador to Vietnam Giles Lever may be the most happy. In 2016, he said, Vietnam was one of the most-visited destinations for British people.

“Vietnam’s fast growth and beauty have attracted them. The number of British visitors to Vietnam in 2016 rose 19 per cent year-on-year. One of the key reasons is that Vietnam’s government has raised the visa exemption duration for citizens from Britain from 15 to 30 days – that’s also a noteworthy reform,” he said. “I do believe that in 2017, more British tourists will come to Vietnam.”

Lever joins the river of people in Ta Hien street to welcome the new year. Nearby, the gigantic clock at Hanoi’s Hoan Kiem Lake has struck 12, amid locals and foreigners loudly singing “Happy New Year!”

VIR