Canada Can be a Strong Partner in Vietnam’s Economic Development

Eric Miller

07:56 05/07/2018

In recent decades, Vietnam has steadily integrated into the global economy, established a world-class manufacturing base and pursued increasingly market-oriented policies at home.

Canada Can be a Strong Partner in Vietnam’s Economic Development

Prime Minister Justin Trudeau and Prime Minister Nguyen Xuan Phuc

Eric Miller is President of Rideau Potomac Strategy Group and a Fellow at the Canadian Global Affairs Institute.
In the fullness of time, the Quebec G7 Summit will likely be seen as the end point for the U.S.-led world order.
While President Trump’s tweets dominated the news coverage, the Trudeau government was already looking ahead, using the summit to put Canada’s trade diversification agenda into high gear.
As part of this process, it invited Prime Minister Nguyen Xuan Phuc of Vietnam to participate in an “Expanded G7.” Mr. Phuc’s visit came at a time of substantially deepening trade and political relations between our countries and built on Prime Minister Trudeau’s visit to Vietnam last November.
When many Canadians think of Vietnam, images of its war come to mind. While the legacies of these events live on, today’s Vietnam, with a median age of 30.4 years, has a significant share of its population of 96 million that has known only peace.
And now the country is getting increasingly prosperous.
In recent decades, Vietnam has steadily integrated into the global economy, established a world-class manufacturing base and pursued increasingly market-oriented policies at home.
In 2018, Vietnam signed the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), which liberalized trade with Canada, Japan and a host of other countries.
CPTPP will accelerate Vietnam’s journey toward middle-income status while speeding up the outflow of global manufacturing from China to Vietnam. Output in sectors from furniture to footwear is already surging.
The transformation of Vietnam’s economy is in evidence on the streets of its cities and in its statistics. Since 2008, economic growth has never fallen below 5 per cent. It has been above 6 per cent for the last three years, and the Asian Development Bank is projecting that it will top 7 per cent in 2018.
In 2017, PricewaterhouseCoopers LLP reported that Vietnam is positioned to be the world’s fastest-growing economy between now and 2050, averaging 5.1 per cent annual growth. This trajectory would make Vietnam the world’s 20th largest economy.
Yet success is not guaranteed. The Vietnamese government is pursuing perhaps an even more important agenda for future prosperity: domestic economic reform. Key priorities include improving the ease of doing business, making the regulatory process more efficient and transparent, and streamlining the delivery of public services.
While the policy-making process is deliberative and often slow, real change is happening on the ground.
Usefully, the government benchmarks progress through tools such as the “Provincial Competitiveness Index,” which ranks the quality of economic governance for each of Vietnam’s 63 provinces and municipalities. Increasingly, promotion of leaders is based on whether they deliver results around this agenda.
Vietnam’s transformation offers tremendous opportunities. It is already Canada’s largest trading partner in Southeast Asia; exports to the country doubled in 2017.
With forthcoming preferential access under CPTPP, Canada is ideally positioned to provide Vietnam’s government with the tools of transformation while supplying the needs and wants of a growing middle class.
On a recent visit to Hanoi, my hotel offered a special promotion where one could sample “Canadian World-Class (Seafood) Specialities.” With abundant supplies and a reputation for quality, Canada has the required ingredients to effectively take on the United States and Australia as a preferred supplier of imported food.
Education is another area of opportunity. Vietnam is the fastest growing source of foreign students in Canada. The number of Vietnamese studying at Canadian universities and colleges has tripled to 15,000 over the past three years – and there is substantial room to grow.
One key advantage that Canada has in growing its trade linkages is a sizable Vietnamese diaspora, numbering 240,000. Many Vietnamese-Canadians are doing business with their country of origin. At a recent meeting in Hanoi, I met the head of an important Vietnamese investment fund, who, as it turns out, grew up in Toronto.
Canada-Vietnam relations are pragmatic but also strategic. Both are middle powers striving to preserve stability and a rules-based order in an increasingly uncertain world. In an age of trade conflict, it is fundamental that the like-minded work together.
Wayne Gretzky famously said that the path to success is to “skate where the puck is going, not where it has been.” With NAFTA in doubt and CPTPP coming online, a key place where the puck is going is to Vietnam. Let’s now lace up our skates, chase the puck and put it in the net. Canadians and Vietnamese alike will benefit.

Theo Globe and Mail