Simon Roughneen in Hanoi – Like much of Asia, Vietnam’s economy is vaulting clear of the global slowdown, with growth for 2010 projected to beat the 5% recorded last year, and the opening of what is computer chip maker Intel’s largest plant highlights the country’s emergence as an investment target for multinationals.
Intel president and chief executive Paul Otellini joined Vietnam’s Deputy Prime Minister Hoang Trung Hai at the opening, with Hai saying the new facility “supports our goal of accelerating economic transformation led by technology-intensive industries”.
While the new Vietnam operation will not directly affect Intel’s Irish base in Leixlip, it highlights the longer-term challenges posed to smaller, inward-investment oriented western economies, by lower-cost emerging economies in rapidly-growing Asia, particularly as education and income levels increase. Intel recently announced record global quarterly revenues of €7.95billion, driven partly by growth in emerging markets, the company said.
The new Intel plant showcases that for western businesses seeking to invest in Asia, there are alternatives to China. A legal and commercial set-up favouring Chinese companies has prompted complaints from the European Chamber of Commerce in Beijing, as well as companies as different as Google and General Electric.
Vietnam’s Politburo approved a China-esque market liberalisation system called doi moi in the late 1980s, and since the US lifted a trade embargo in 1994, the country’s economy has “taken off”, according to a recent research paper by consultancy McKinsey. A rapidly-growing and young population means that Vietnam, along with southeast Asian neighbours such as Indonesia and Thailand, are increasingly viewed as viable locations for multinationals seeking to expand or relocate.
According to Kim N.B. Ninh, the head of The Asia Foundation’s Vietnam office, “crucial legal reforms embodied in such laws as the Enterprise Law, the Land Law, and the Investment Law have further spurred economic development, encouraging the emergence and growth of market activities, the private sector, and foreign investment in a country long governed by central planning.”
However, like a relic from a long-gone era, the statue of Lenin in central Hanoi’s old quarter reminds the visitor that Vietnam remains a one-party socialist republic. Facebook is blocked, and more seriously, dissent is quashed, as seen in the jailing on Thursday of six Catholics who were among a group of villagers that clashed with police at a funeral in central Vietnam last May, amid claims that the state is expropriating church land. Speaking in Hanoi yesterday, Clinton said that Vietnam’s longer-term prosperity would be better served by a political liberalisation to match the economic version.
Friday’s Intel opening marks a busy week for Vietnam, as the country ends its year as chair of the Association of Southeast Asian Nations (ASEAN) with a high-profile summit meeting that brought Chinese Premier Wen Jiabao and US Secretary of State Hillary Clinton to Hanoi, amid growing tensions between Washington and Beijing over a raft of economic, security and geopolitical issues. Vietnam and southeast Asian neighbours are trying to hedge a way between the two giants, seeking to latch on to China’s economic boom, but cutting defence and security deals with the US as a balance against possible Chinese regional dominance in the future.Show