There are numerous global and domestic trends that may be setting Vietnam up as the region’s economic leader, according to a recent report in Bloomberg.
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Following years of relative economic stagnation stemming from the bad debt of state-owned companies, things are starting to turn around in a big way, according to the finance company’s news outlet. It cited a report from PricewaterhouseCoopers LLP that predicted the country “has the potential to become one of the world’s fastest-growing economies over the period to 2050.”
Beyond shedding some of its bad debt, rising labor costs in China have resulted in an exodus of manufacturing jobs to Vietnam with Intel, Microsoft and Samsung investing billions of dollars in new factories.
Japanese investment is also up due to the country’s relative stability and chilly Sino-Japanese relations.
“It is quite possible that Vietnam could become the fastest-growing economy in Asia,” said Vikram Nehru, a senior associate in the Asia Program and Bakrie Chair in Southeast Asian Studies at the Carnegie Endowment for International Peace in Washington. “It has all the ingredients for rapid growth if it can address the challenges in the state sector.”
There are, however, more than a few obstacles that must be overcome for Vietnam to reach its full economic potential, such as bad loans, inefficient state-owned firms, inadequate infrastructure, skills gaps and corruption.
“It’s not guaranteed that Vietnam will fulfill its potential,” said Hawksworth, an author of the PwC report.
For a more in-depth look at the country’s economic situation, be sure to read the full article from Bloomberg.
[Photo via Lê Phúc]
