Reforms result in remarkable economic growth in Vietnam

3 March 2017

Minister for Trade, Tourism and Investment The Hon Steven Ciobo MP

Few countries around the world better exemplify the benefits of trade and investment liberalisation than Vietnam. It is now three decades since Vietnam launched the doi moi reforms to facilitate the country's shift to a market economy. The results have been stunning. Since 1990, Vietnam's average annual economic growth per person has been 5.5 per cent, among the highest in Asia.

Vietnam is now a middle income country with a population of 90 million. It has invested heavily in education and skills, reinforcing its favourable demographics, including a median age of 30. With the help of partners such as Australia, it is investing in transport infrastructure that will consolidate its favourable geography, notably its proximity to the growth engines of southern China and the world's busiest maritime trading routes.

Commentators judge Vietnam to be among the best placed of the emerging economies to escape the so-called "middle income trap" and follow a similar trajectory to the first Asian tigers such as Singapore, Korea and Taiwan. By mid-century, Vietnam is expected to be on the cusp of joining the world's top 20 economies.

Trade and investment liberalisation has been at the very centre of Vietnam's growth story. Two-way trade is equivalent to 185 per cent of Vietnam's GDP. In a short period of time, clothing manufacturing has grown into a $40 billion export industry, with Vietnam now the second largest supplier of apparel to the United States, Japan and Korea. Samsung makes nearly a third of its smart phones in Vietnam. Foreign direct investment in Vietnam rose to record highs in both 2015 and 2016.

Importantly, Vietnam has made a strategic choice to embark on further trade liberalisation as a core element of its ambitious domestic reform agenda. As they face hard choices in 2017 and beyond, other countries around the world might look for inspiration in Vietnam's success story.

Australia is well placed to benefit from Vietnam's continuing rise. Vietnam is now our 15th largest trading partner, with two-way trade exceeding $10 billion and Australian investment in Vietnam growing strongly. We see tremendous potential for Australian business to gain market share in sectors such as agriculture, energy, financial services, education, tourism and health.

Australia is pursuing a strong innovation and education agenda with Vietnam, which is showcased in this edition of business envoy. The Australian-Vietnamese community – representing the sixth highest foreign-born population in Australia – brings energy and know-how to the business relationship.

As Vietnam prepares to host Asia-Pacific Economic Cooperation leaders in the flourishing coastal city of Danang in November, Australia is working closely with Vietnam to drive economic connectivity and reduce trade barriers among APEC's 21 Pacific Rim member economies.

Vietnam is one of the largest users of ASEAN-Australia-New Zealand Free Trade Area tariff preferences for Australia, and the two countries are involved in negotiations for a Regional Comprehensive Economic Partnership, a trade agreement that would cover over 30 per cent of global GDP. Australia and Vietnam are also signatories to the Trans-Pacific Partnership. While the United States has withdrawn from the TPP, Australia, Vietnam and other TPP members are working to ensure the benefits of the agreement are not lost.

The time has come for Australia to take our relationship with one of Asia's most dynamic countries to a new level. Prime Minister Turnbull and I are looking forward to visiting Vietnam during its APEC host year in 2017 and building a closer economic partnership between our two countries. I would strongly encourage Australian businesses to explore how they too can be part of Vietnam's remarkable growth story.

Last Updated: 3 March 2017
Steven Ciobo
Minister for Trade, Tourism and Investment, The Hon Steven Ciobo MP