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Barun Roy: Vignettes of change in Vietnam

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Barun Roy New Delhi
A high-speed railway which costs $33 bn and a new $1bn Intel chip plant are not the only things that reflect the huge change "" 10,000 copies of The World is Flat, translated in Vietnamese, sold within two months.
 
A group of Japanese consultants will soon arrive in Vietnam for a high-speed railway project between Ho Chi Minh City and Hanoi, which could cost up to $33 billion and reduce travel time from 30-40 hours now to ten. Intel is building a $1 billion chip assembly and testing plant at a hi-tech park outside Ho Chi Minh City. After tying up with foreign partners for four subway projects, Ho Chi Minh City has just lined up a Chinese partner for a fifth. Some 4.4 million foreign tourists are expected to visit the country this year, 800,000 more than in 2006, when 17.5 million non-resident Vietnamese also came.
 
String these facts together and you begin to get an idea of the dynamism sweeping through what US-based MasterCard has described as the most optimistic market in Asia-Pacific and Japanese investors say is the third most attractive investment market, after China and India. With an 8.17 per cent GDP growth in 2006 and membership of the World Trade Organisation just obtained, Vietnam is experiencing a spectacular spurt of economic activity, and vignettes like these give one a better feel of its economic mood.
 
For example, Vietnam ranks third in a ten-nation A T Kearney survey of most attractive retail markets in Asia. Leasing fees for premises at retail centres have reached an average of $80 per square metre a month. With regulatory cobwebs removed, the real estate market is beginning to boom. In December 2006, property projects worth $4 billion were announced for Hanoi alone.
 
Last year, $10 billion worth of foreign direct investment (FDI) commitments were registered, 50 per cent more than in 2006. Disbursements reached $4.1 billion, almost 18 per cent higher. The government is confident it can attract $11 billion a year in FDI commitments between now and 2010. Foreign-invested companies have already absorbed 20 per cent of the national workforce and created 1.6 million new jobs in 2006. The role of state-owned enterprises is fast dwindling and these now constitute only 3.6 per cent of all enterprises in the country (113,350, mostly small-scale). Here are some more vignettes:
 
Only 56.8 per cent of the national workforce is now in agriculture, against 80 per cent at one time. Of the rest, 25.3 per cent is in the services sector and 17.9 per cent in industry.
 
Export earnings totalled $39.6 billion in 2006, 22.1 per cent higher than a year ago. Of this amount, garments and textiles alone accounted for $5.8 billion, up 19.9 per cent, with over half of it going to the US. Customs authorities are set to introduce a nationwide electronic clearance system next year, following a successful pilot project that helped clear goods in two to three minutes instead of seven to eight hours at present.
 
The stock index has grown 206.4 per cent since end-2005 to over 1,000. The market is only six and a half years old but its 106 companies have a combined capital value of $11.53 billion already. A $20 billion level by the end of this year is quite possible.
 
Ten million new telephones, fixed and mobile, were added to the network in 2006 and the number was 188 per cent more than the year before. In a country of 84 million people, there are 25.5 million phone subscribers in all, including over 10 million for mobiles. Over 4 million Vietnamese subscribe to the Internet. The target is 38 million phone subscribers by end-2007, or 43 phones for every 100 people. The way the mobile market is going, there could be 25 million mobile subscribers by 2010. Commercial 3G mobile services are to be available from later this year. Digital TV via mobiles has been available since last November.
 
Managers are in great demand for the banking and finance, telecommunications, transport, and hotel and restaurant sectors, as are Ph D holders for colleges and universities. Between now and 2010, industrial and export processing zones alone would need some 500,000 workers. Training is therefore a big government priority alongside urban and rural infrastructure and education. Most of the funds needed for these activities are to come from international donor agencies, which disbursed $2.66 billion in 2006 and have promised $4.45 billion for 2007. The government expects it will need between $20 billion and $24 billion in official development assistance by 2010 to improve infrastructure.
 
The government is budgeting some $437 million to upgrade existing vocational schools and establish new ones. The aim is to have at least 7.5 million trained workers by 2010.
 
But the economy isn't the only thing that reflects Vietnam's changing persona. Over 10,000 copies of The World is Flat by Thomas L Friedman "" translated into Vietnamese "" were sold within two months of publication. Vietnam occupies the 134th place in the latest FIFA world ranking, up 38 rungs. Two Vietnamese figure among the 250 young global leaders named by the World Economic Forum for 2007.
 
That should tell us something.

 

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First Published: Feb 01 2007 | 12:00 AM IST

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