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WHY am I
passionate about
Vietnam?
Because Vietnam has proven to the world that it is
possible to simultaneously achieve robust and sustained
economic growth with equitable income distribution. Real
GDP has been growing at an average of +7.5 percent for the
past eight years, even accelerating to 8.5 percent in
2007, while poverty incidence has been dramatically
reduced from 60 percent in 1990 to less than 10 percent as
of year-to-date 2007. This has earned them the rare
global distinction of achieving the UN Millennium
Development Goal to reduce poverty incidence a full 10
years ahead of schedule. Their GINI coefficient of 0.37 is
lower (more favorable) than the Philippines or the US,
indicating that income inequality and undue wealth
concentration is worse in RP and even the US despite (or
precisely because of) being run by democracies supposedly
“by, for and of the people.”
How did they do it and what can we learn
from the Vietnamese economic miracle?
1.
Humility. First, they humbled themselves and turned a new
leaf. For 10 years after driving out the Americans in
April 1975,
Vietnam
followed a centrally planned economic system patterned
after East European communist regimes. They failed. By
1986, the country faced a crisis marked by severe food
shortages, soaring inflation, fiscal deficits and chronic
trade imbalances. But they learned from this tragic
mistake. At the 6th National Congress of the Communist
Party, Vietnam instituted an Economic Renovation Policy
called “Doi Moi” (New Life). In our case, we continue to
boast about being one of the oldest democratic republics
in Asia, and yet, we have failed to uplift the welfare of
the majority of our countrymen who live on less than P90 a
day (not even enough for a fast-food meal), now numbering
a record 40 million, more than many African countries.
2.
Economic reforms implemented consistently. They not only
introduced a comprehensive economic reform agenda
comprising three major pillars but they implemented these
consistently across the country from 1986 up to this day:
* Shifting to a market-oriented economy
with proactive state management.
* Developing a multisectoral economy
consisting of SMSEs, public-private partnerships, foreign
investments, while reducing the role of SOEs. The
Enterprise Law in 2000 spurred private sector growth,
leading to the birth of 200,000 enterprises in the last
seven years that now contribute 60 percent to GDP.
* Opening up the economy and pursuing
international economic integration which resulted in
robust export growth of 20 percent per year, a total
foreign trade value of $84 billion in 2006, capped by its
WTO accession in 2007.
In contrast, we engage in short-term
economic planning by not building upon the plans and
accomplishments of previous administrations. Most
developing Asian countries are already executing their
10th 5-Year Development Plans while we seem to start from
scratch everytime there is a change in the administration.
3. Propoor.
They prioritized, not marginalized, their poor, adopting
broad-based development policies that spurred food
production via emphasis on agriculture and fisheries.
This has not only led to poverty alleviation, but it has
produced a healthier, better-educated, more empowered and
more productive workforce. This propoor policy enabled
them to achieve self-sufficiency in food production which
they have effectively leveraged to transform Vietnam into
an agricultural powerhouse, becoming the world’s No. 2
producer of rice (after Thailand whom they expect to
dislodge in 2008) and coffee (after Brazil, when they
absolutely had no clue about coffee beans as recently as
15 years ago); and becoming the world’s No.1 producer of
high-value agricultural products like black pepper, cashew
nuts, black tiger prawns, and the world-famous miracle
fish—the Vietnamese pangasius endemic to the Mekong
River. They now even export tea to India and Sri Lanka
and raise 4 million heads of cattle so they have been
insulated from the drought ravaging Australia’s dairy
industry. The abundance of fresh and healthy produce has
also been vital in containing the rise in cost-of-living,
thus keeping manufacturing wages competitive vs.
industrial behemoths like China. The Philippines cannot
graduate to the status of a Newly Industrializing Country,
much less First World, if we do not return to basics and
achieve self-sufficiency in food production that will make
our poor productive members of society who can make
positive contributions to the economy as producers and
consumers.
4.
Socialism for prosperity. Communist governments
traditionally employed poverty to exercise influence and
control over the people. But after Doi Moi, the
Vietnamese are now employing prosperity, not poverty, to
empower its people. Some local and traditional government
officials think the same way. They intend to keep their
constituencies in poverty so the poor continues to rely on
them and therefore vote for them in elections. If our
system of government in a capitalistic economy has failed
to uplift our people from poverty for the past 109 years,
perhaps we should consider to adopt the principles and
spirit of socialism, i.e., sharing with the less fortunate
in order to unleash their potential as productive members
of society and increase their purchasing power as
consumers, e.g., by sharing our land and sharing our
profits; by sharing our time and sharing our talents. As
His Excellency Vietnamese Ambassador to the
Philippines said
during the 2nd Mission, “As the poor prospered, demand
rose, production increased, and all companies benefited.”
Indeed, wasn’t socialism the essence of early Christianity
when everyone contributed their incomes for the community
so that no one was left in need? Their socialist
government upheld the rights of the individual while
eliminating feudalism in land ownership so that there is
no unproductive land, while private ownership gave way to
private stewardship of the “land that belongs to the
people of Vietnam.” They curtail greedy profiteering
arising from unbridled laissez-faire capitalism which many
democracies still suffer from. We visited two food
processors which are both trebling their capacity to meet
robust global demand for Vietnamese food exports—and both
companies allocate 25 percent to 40 percent of their share
ownership to their own employees—including rank-and-file,
thus minimizing turnover and encouraging loyalty and
lifetime employment.
5.
Patriotism. The Vietnamese invoked love for country and
rallied behind a shared purpose and a common vision or dom
chay. Patriotic fervor united north and south, rich and
poor, young and old, employers and employees, public and
private sector who all resolved to stop fighting after
centuries of war and having defeated four
superpowers—China, France, Japan and the US, and instead
apply their collective talent and energies on the vigorous
pursuit of socioeconomic activity to improve the welfare
of Vietnamese society—not just those of a privileged
few. We need to rediscover our love of country—we need
to revive the spirit of 1896 when Andres Bonifacio
launched the revolution against Spanish colonial rule and
founded the Katipunan anchored on the values of honor,
integrity and patriotism.
6. Law and
order. Ironically, in a communist state, it appears that
the peace-and-order situation is far better, criminality
and the threat of terrorism far lower than in democratic
states like the US and RP. One would wonder which is
closer to a police state—is it China or the US, is it
Vietnam or the Philippines? During our past two visits to
HCM, Manila witnessed the Batasan bombing and the Trillana
revolt. Furthermore, when people follow laws, you don’t
need many lawyers. They only have 2,000 lawyers vs. our
50,000 members of the Integrated Bar of the Philippines.
As Jesus Christ admonished in Luke 11: 42-46, “A curse is
on you also, teachers of the law, for you prepare
unbearable burdens and load them on the people while you
yourselves don’t move a finger to help them.”
7. Investment haven. They attracted foreign investments
with their relatively low cost of labor, a young and
educated workforce, openness to market-oriented reforms
and most of all, as Citibank country treasurer Bong
Arjonillo emphasized, “political stability and peace and
order,” two prerequisites for foreign investments that the
Philippines struggles to attain despite (or because of)
being a 109-year-old democratic republic. Their
cumulative foreign investments have topped $80 billion;
their foreign direct investment (FDI) committed for 2007
alone is $15 billion (vs RP’s $3 billion) and most of all,
the new FDI pending approval by the Prime Minister is a
staggering $50 billion.
Vietnam is an attractive low-cost production and market base
of 85 million and they are upbeat—not terrified like
us—about growing to 100 million well-nourished and
productive people within the next few years. They have
been very aggressive in accelerating the integration of
Vietnam with the regional Asean, Asian and global economic
communities, while the Philippines seems to be resisting
foreign participation, e.g., the Chinese on the NBN,
Cyber-Ed, Northrail and 1-million-hectare lease of
agricultural land; the Japanese on Jpepa, leaving us the
only Asean state without a Japan treaty.
8. Fiscal
prudence. They managed their fiscal position well,
incurring a foreign debt stock of only $15 billion, less
than one third the value of our country’s outstanding
foreign debt of $50 billion, half of which was incurred
during the Marcos regime, now practically nonperforming or
bad debts for which Cory Aquino’s erstwhile advisers
should have requested our creditor-countries and
multilateral lending agencies to condone (since they were
party to granting the loans to a corrupt Marcos
dictatorship) to enable our fledgling democracy to start
anew and enable the government to provide for much-needed
social services (infrastructure, education, health, social
welfare), instead of sacrificing our exporters, OFWs, BPOs
and tourism industry with an appreciating peso to reduce
our dollar-denominated debt repayments—reliving Aesop’s
fable of the greedy giant who killed his goose that lay
the golden egg. The Vietnamese are able to exercise
fiscal prudence because people comply with their tax
obligations and they live the oriental values of frugality
and spending within one’s means. Their daily minimum wage
rate is lower than Filipino workers ($3 vs. $8), but their
savings rate is higher (30 percent vs. 15 percent),
allowing them to finance domestic investments with minimal
debt. People buy new condominium units with cold cash and
cars with solid gold.
9.
Self-reliance via hard work and patience. They are
self-reliant and demonstrate a strong work ethic—toiling
hard and fast—a trait best demonstrated in their
successful struggle for independence with virtually no
help from the outside world. This, against the Chinese,
the French, the Japanese and the Americans. They
patiently and industriously built the Cu-Chi tunnels
stretching 250 kilometers over a period of 25 years. They
solved their problems in prawn farming to emerge as the
world’s largest exporter, while Filipino prawn farmers
abandoned their farms when their prawns got afflicted by
disease resulting from overstocking. They solved their
lack of fish from the sea (because the tuna and sardines
were caught nearer the Philippines), by coming up with a
creative and indigenous solution—farming and exploiting
the Vietnamese catfish, or pangasius, which is native to
the fresh waters of the mighty Mekong. By so doing they
reduced reliance on ocean fish whose size and migratory
patterns have been affected by global warming. They keep
their promises for meetings while they ask why Filipinos
are seldom punctual for appointments. We cannot expect
other countries to help us if we do not help ourselves—by
fighting and overcoming temptations of pride, power and
greed—for the good not only of our own families, but for
our entire country.
10.
Positive media. Their media accentuates the positive and
devotes most of the airtime and newspaper space to
promoting business and investment opportunities,
improvement of social welfare and living standards. Even
if the media is controlled, local and foreign readers
alike are “encouraged” to focus on the bright side,
keeping the overall business sentiment positive and
upbeat, and it becomes a self-fulfilling prophecy. In
contrast, most of our newspapers are cluttered with
commercial advertising and punctuated by political
scandals and intrigues, spiced up by titillating gossip
and celebrity worship, adorned with fashion and lifestyle
pages that glorify the wrong values of materialism and
encourages a consumptive mentality to spend beyond one’s
means—which tends to become a source of temptation for
criminality, dishonesty among civilians and a culture of
graft and corruption in the government. There is a joke
going around that
Vietnam
is a rich country pretending to be poor, while the
Philippines
is a poor nation pretending to be rich. Media must
realize press responsibility is the other side of the coin
of press freedom. Their continued exposés on scandals and
bad news will risk driving off foreign investors and
tourists—itself tantamount to economic sabotage given the
billions of foreign trade, investment and tourism dollars
forgone. Our Lord Himself ordered His disciples thus, “Go
out to the ends of the earth and proclaim the ‘GOOD NEWS’”
(not the bad news like the passion and death of Christ but
His resurrection; not Judas’ betrayal of Jesus but the
loyalty of the 11). No one pretends there is no
corruption in Vietnam, but what the press reports on are
the punitive measures taken by the government against
errant officials—which serves as a stern warning to others
and, more important, an assurance to investors.
11.
Natural affinity. We share many similarities with the
Vietnamese. We are member-states of the Asean, in fact,
they are the closest Asean neighbor to the Philippines
“linked—not separated—by the South China Sea” as Vice
Minister Vu Dzung stated in his keynote speech in Manila.
We lie on the same latitude with southern Vietnam, live in
a similar tropical climate and topography. We have
identical geographical areas and population sizes composed
of young and literate people. We share a colonial past and
identical physical features borne out of the fact that the
third migration to our archipelago (after the Negritos
from Polynesia and the Malays from Indonesia) came from
the Indochinese Peninsula. One may be surprised we even
share the same delicacy—balut. HR practitioners say
Vietnamese and Filipinos complement each other well
because the serious and stern disposition of Vietnamese
and their high levels of stress and anxiety are balanced
by the cheerful and jovial optimism of Filipinos who have
a better sense of work-life balance. To date, there are
2,000 Filipino expatriates working in all levels of
management across different sectors of the economy in
Ho Chi Minh City
and Hanoi. As Dr. Tom Aquino remarked, “We are natural
partners.”
12. Strong
historical ties. As Vice Minister Vu Dzung recounted, San
Miguel Corp. was the first-ever foreign investor in
Vietnam, while Philippine Airlines was the first-ever
foreign airline to land in Ho Chi Minh when Vietnam opened
up. Many Vietnamese also recall buying and owning their
first car from Columbian Motors. Many of
Vietnam’s
business leaders and government officials studied in
Philippine schools, and they got their first exposure to a
market-oriented economy in the Philippines after the
Communist Party instituted the Doi Moi in 1986. Many
Vietnamese to this day also treasure the act of humanity
and generosity we extended to their citizens in the ’70s
and ’80s when the Philippines was the only country in the
world that did not close its doors to the Vietnamese boat
people.
Despite their accomplishments, the
Vietnamese remain humble and are quick to dismiss praises,
insisting they still have much to learn from the world,
including the Philippines, and up to this day, many study
at UP Los Baños, Asian Institute of Management, University
of Asia and the Pacific and the International Rice
Research Institute.
Indeed, while the erstwhile student
appears to have outperformed and outdone its own teacher,
it’s never too late for the teacher to learn anew for, as
my own father imbibed in us, education is a lifelong
endeavor and a never-ending journey. We 88 million
Filipinos need to learn from the Vietnamese economic
miracle and enact our own Doi Moi—a New Life for a New
Nation. Bagong Buhay para sa Bagong Bayan.
The writer helped organize the First and Second RP-Vietnam
Business Missions involving more than 100
businessmen—executives and entrepreneurs—as well as a
Business Conference on the Vietnam Economic Miracle in
Manila with 150 participants. |
