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Capitalism's Rising Star?
The red-hot Chinese economy may remain the darling of global investors, but neighboring Vietnam has been increasingly creeping into the spotlight. Its smaller economy and population may not rival the giant neighbor to its north, but Vietnam's rate of growth and openness to Western standards of doing business are making it an attractive destination for foreign direct investment.
These came to light when Vietnam hosted the annual Asia-Pacific Economic Cooperation (APEC) summit in November. Vietnam staged the event like it was its own coming out party. Long considered one of the less relevant economies in the Southeast Asian block, the late-bloomer country welcomed dignitaries to Hanoi with freshly built or repaved roads, and even some porcelain-tiled streets, all leading to the spanking new US$250 million National Convention Center.1
Never mind the costs; the two-year-in-the-making facelift project achieved the desired effect as the analysts and media organizations covering the event churned out cover stories or special features hailing Vietnam as the new hot investment destination. Since then, Vietnam has been increasingly in the global news, a fact not lost in the country. Vietnam Chamber of Commerce and Industry president Dr. Vu Tien Loc noted in December that Vietnam has had the most number of mentions on the world media in 2006, the same year that 10 percent of the Fortune Top 500 companies arrived in Vietnam. "Never has Vietnam been the destination of as many great groups, business communities and international investors as this year," he said.2
Vietnam's attraction to foreign investors is its incredible economic growth. Since 2000, gross domestic product (GDP) growth averaged seven percent. Its 2005 increase of 8.4 percent positioned it as Asia's second fastest growing economy, eclipsed only by China's 10 percent. Thanks to the booming economy, the reported poverty rate in the past decade has shrunk from 61 percent to only 19 percent, a feat not even China can match. 3 And investors have flocked to the bourse, boosting the Ho Chi Minh Stock Index by a whopping 109 percent in 2006, making Vietnam's equity market one of the ten top performing exchanges in the world. 4 Credit Suisse vice chairman for Asia, Jose Isidro Camacho, summed it up when he told Fortune Magazine, "Vietnam has arrived."5
Where exactly Vietnam has arrived at, and where it's going, is the focus of much of this quarters' world review. In 2006 the country came to be regarded as capitalisms newest Rising Star, and as such it symbolizes the changes and challenges that will paint the backdrop to the future sagas of corporate citizenship. We explore why the country's economy has boomed, some of the positive social as well as economic implications of its opening up to foreign influence, the dangers of unequal forms of privatisation and sky rocketing stock markets, before placing this economic and social change in the context of the country's natural environment, and the future sustainability of its development trajectory.
1 Karl D John, The new Vietnam welcomes the world, Asia Times Online, Nov 16, 2006 http://www.atimes.com/atimes/Southeast_Asia/HK16Ae02.html
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