VIETNAM, a war-ravaged country under a one-party state, has become richer than us, overtaking us in 2018 when its GDP per capita (in current US$) of $3,267 exceeded our $3,195 (see Figure 1). It is quickly pulling away from us. The gap between Vietnam’s GDP per capita in 2022 of $4,164 and our $3,499 has even been widened, from just $73 million in 2018 to last year’s $665 million.
From being the third-richest country in Southeast Asia in 1973, after Singapore and Malaysia, we’re now at nearly rock bottom, richer only than Cambodia and Myanmar.
That may not be news to professional economists. But for me, it was. I was just about to write in a column: “Unlike us, Vietnam, a country poorer than us, could spend hundreds of millions of dollars to fortify their claimed islands in the South China Sea.” I decided to check that claim. I was shocked. Vietnam, devastated in a 25-year war with the US, is now better off than us? How on earth could that happen?
Vietnam again shocked me. When researching our terrible rice situation, I found that for the past several years, it has supplied over half of our sugar, and so far this year, 90 percent of our rice is imported from that country. And to think it was the Philippines that started the Green Revolution in the 1970s that vastly increased crop yields. How could it produce so much rice when Vietnam has 800,000 unexploded US bombs lying around there?
Already called by some as Asia’s newest economic miracle, Vietnam’s poverty rate (measured as the percentage of the population earning $3.65 per day or less) went steeply down from 65.6 percent in 2006 to 5.3 percent by 2018, less than our 18.3 percent. (See Figure 2)
Despite our high English proficiency (ranked 22nd among 111 countries) compared to Vietnam (rank 60), one major factor that should make us a more attractive site for foreign investors, overseas capital inflow to Vietnam has boomed, its level overtaking us in 2003. Total direct investment inflows to Vietnam from 1998 to 2021 totaled $182 billion, nearly double the $97 billion we received in the same period. (See Figure 3)
Most commentators attribute Vietnam’s spectacular growth to its so-called Doi Moi (open door) reform program started in 1986 that involved shifting the country from a centrally planned economy to a market-oriented one. The policy also involved the privatization of state-owned firms that dominated the economy and opening it up to foreign investments.
Unfortunately, literature on exactly how Vietnam’s “Doi Moi” reform program propelled the economy to one that overtook us is limited, most probably due to the fact that closely studying the country requires proficiency in Vietnamese, as all government documents, newspapers, and studies are in that language.
I would think, though, that one of Vietnam’s strengths is precisely that which is criticized by most Western observers with a liberal-democratic ideology: a dedicated party — the Communist Party of Vietnam — that is totally in charge of the nation, sparing it from the chaotic aspects of a representative democracy.
In our case, policies and top officials, as well as ruling factions of the elite, change every six years so that even very successful programs of one administration are slowed down or even junked every time a new government takes power.
Witness the independent foreign policy ushered in by President Arroyo, which was junked by her successor, Aquino 3rd, who adopted an anti-China, US-subservient stance, which was in turn reversed by President Duterte, which was then reversed by President Marcos, Jr.
The advantage of a one-party government is that it results in one political will — a unified, consistent command to undertake good governance. Such is especially required by businesses, whose horizons are much longer than electoral cycles.
Indeed, the data indicate that Vietnam is superior to us in terms of several measures of good governance, based on the World Bank’s Aggregate Governance Indicators for 1996–2021, accessed at www.govindicators.org. (See accompanying Figures 4 to 7)
– The degree to which corruption has been contained in Vietnam and the Philippines has roughly been the same since 1996, although Vietnam started to do better in this measure in 2017.
– Vietnam has a high level of “political stability and the absence of violence as well as terrorism,” compared to the Philippines.
– Vietnam has a rule of law better than ours, with that of the Philippines going down steeply starting in 2014.
– The Philippines had better government effectiveness from 1998 to 2014, but this has deteriorated so much that Vietnam overtook us in this measure in 2016.
Vietnam shames us, or more precisely, our political-economic elite that rules us under the guise of representative democracy. An organization of Marxist-Leninists, the Communist Party of Vietnam, has led their nation better than our proudly cosmopolitan ruling class. We boast of a robust democratic system, unlike Vietnam, where the media is tightly controlled and a single party rules over the country. Out of 165 countries graded along the so-called Human Rights Index, Vietnam ranks 134, way below our 101.
But really, if we ask any of the 20 million poor Filipinos (with a daily income of P81 or less), would they really prefer having an uncensored press, voting every six years on who would lead them, going to the streets to demonstrate, rather than having satisfying meals every day, a roof over their heads, totally free health care and education?
Democracy is overrated. But in the first place, what we have is not really democracy but a regular game of the elites, whose faction becomes dominant in one six-year period by backing one presidential candidate. Our people do not rationally choose the president and other elected officials; it is factions of the elite by sheer force of finances they mobilize for their candidate or their clever maneuvers in manipulating the masses’ minds.
Vietnam does not have tycoons with 100 malls spread throughout the archipelago and abroad competing with those in the US, the richest country in the world; magnates who are among the biggest port operators in the world; ultra-billionaires with posh properties and condominiums now owning a substantial portion of Singapore’s biggest sovereign fund, Temasek; a magnate whose $1 billion annual profits from power and telecom firms are remitted to an Indonesian tycoon based in Hong Kong; or a nabob who has become so rich he has even bought the biggest vineyards in Europe; and world-renowned brandy and whisky brands.
Instead, Vietnam has faceless businessmen and a government serving its people, growing its economy, and reducing poverty among its people fast.
A heavily edited version of that biblical line could portray our sad situation: What does it profit our ruling class if it is among the richest in the world, yet has its countrymen so poor that its country’s economy is stuck in the mud?
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