In 1986, Vietnam decided to launch economic and political reforms that would enable the country to transform from a centralized economy into a socialist-oriented market economy.
Trade liberalization was vigorously pursued while domestic reforms that include deregulation as well as lowered cost of doing business were implemented. More importantly however, the Vietnamese government decided to open up its economy to foreign investors, creating the Law on Foreign Investment that paved the way for foreign companies to enter Vietnam. The PhilStar reports.
The succeeding years saw Vietnam revising its foreign investment law several times to become more investor friendly. At the same time, more market friendly policies were also instituted. From being one of the poorest countries over three decades ago – in the aftermath of the Vietnam War that lasted for 20 years from 1955 to 1975 – Vietnam has emerged as one of the fastest growing economies in Asia, registering a 6.8 percent GDP growth in 2017 and 7.1 percent in 2018, its highest in over a decade.
According to PhilStar, Vietnam is a single-party Socialist republic with no separation of powers, with the Communist Party playing a central role. Thus, its government can make decisions quickly without long drawn-out debates over legislation, which is one of the reasons why its economy has surged in an impressive manner – with growth projected at 6.6-6.8 percent.
Vietnam’s government has adopted outward looking economic policies and is committed to private-sector led growth that has made the business climate very attractive to investors. The irony of it all is that the economy of a Socialist country like Vietnam is even more open and more progressive than a democratic country like the Philippines, where almost every decision requires lengthy debates, back-and-forth arguments and compromises, even if the legislation is so important that it will have a great impact on the economy.
The trade war between China and the United States is one opportunity where the Philippines could very well attract more American businesses that are pulling out of China due to the tariff wars. But Philippines is already missing the boat as it is. Many American companies are already rethinking their business expansion plans and are coming to Philippines at the Embassy looking for Asian countries to relocate their operations. But sadly, the outdated economic provisions in the 1987 Constitution and many other investment requirements that in Philippines need legislation which Vietnam seems to be able to immediately act upon – is making them look at Philippines‘ neighbor, whose open and investor-friendly business climate is so encouraging.
Read full story by Babe Romualdez on PhilStar