How Vietnam Could Become A Developed Country Besides GDP? | Warrick Cleine MBE | EP 393

Key Concepts

• Developed Country Status: A state of economic and social maturity defined by quality of life, longevity, and governance rather than just GDP or physical infrastructure.
• Resolution 68: A Vietnamese government policy aimed at facilitating and empowering the private sector to drive economic growth.
• Corporate Governance: The system of rules, practices, and processes by which a firm is directed and controlled, essential for attracting institutional investment.
• Adjacency Strategy: A business growth methodology where companies expand into sectors related to their existing competitive advantages (e.g., moving from raw commodity export to branded food production).
• Human Capital: The economic value of a worker's experience and skills, which Vietnam must continue to develop to support higher-value industries.

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1. Defining a Developed Country

Warrick Klein, Chairman and CEO of KPMG Vietnam, argues that "developed" status is often misunderstood. While shiny infrastructure (like in Singapore) is a common association, it is not the defining metric, as evidenced by the United States, which possesses world-leading wealth despite aging infrastructure.

• Core Metric: The true measure is the quality of life of the population. This includes the ability to move beyond basic survival (food/security) toward cultural pursuits, retirement planning, and leisure.
• Longevity: A key differentiator is life expectancy; developed nations like Japan and Switzerland significantly outperform developing ones in this area.

2. Vietnam’s 2045 Roadmap

Vietnam aims to transition from its current GDP per capita of approximately $5,000 to $15,000 over the next 20 years.

• Holistic Goals: Beyond GDP, the government’s vision—as articulated by the General Secretary—includes advancements in governance, digital economy integration, industrialization, and improved public health.
• Cultural Evolution: As the economy prospers, the cultural sector (art, media, sports) is expected to grow. Klein notes that art currently serves as both a tool for social messaging (propaganda murals) and a burgeoning market for collectors, signaling a shift toward a more expressive, affluent society.

3. Economic Strategy and Lessons from Asia

Klein cautions against "copy-paste" development models but highlights lessons from North Asia:

• The "Whole-of-Country" Approach: Japan and Korea succeeded through strong government direction combined with an inclusive strategy that pulled the entire population toward industrialization.
• Pitfalls to Avoid: Vietnam must prepare for the demographic challenges (aging populations) and environmental degradation that plagued earlier industrializing nations.
• Real Estate as a Springboard: While real estate accounts for 20–25% of Vietnam’s GDP, Klein emphasizes that it must be an enabler rather than an end goal. It should facilitate industrial zones and service-sector growth rather than remaining the primary focus of national wealth.

4. Empowering the Private Sector (Resolution 68)

The private sector is identified as the primary engine for future growth.

• The Goal: To move beyond small-scale shops and F&B businesses toward creating "national champions"—hundreds of world-class companies with global footprints in fintech, insurance, and consumer goods.
• Capital Markets: Vietnam needs deeper capital markets to support these firms. Currently, the country lacks the regional/global corporate giants seen in neighbors like Thailand or Malaysia.
• Corporate Governance: As Vietnam seeks inclusion in global emerging market indices, it must improve corporate governance. Poor governance (e.g., lack of transparency, weak boards) risks exclusion from institutional investment, as seen in recent challenges in Indonesia.

5. Actionable Insights and Future Outlook

• Adjacency Growth: To build global brands, Vietnamese companies should leverage existing strengths. For example, transitioning from raw commodity export (rice/coffee) to branded, value-added agritech products.
• Holistic Development: The government and private sector must balance rapid growth with environmental protection. Klein references Joni Mitchell’s "Big Yellow Taxi" to warn against the irreversible loss of culture and biodiversity during the "paving" of rapid development.
• Human Capital Catch-up: There is a current mismatch between university output (engineers) and market needs (creative/management roles). This "catch-up" phase is natural but requires rapid adaptation.

Synthesis

Vietnam’s path to developed status by 2045 is a transition from a commodity-based, property-heavy economy to a sophisticated, service-oriented, and industrialized nation. The success of this transition depends on the government’s ability to empower the private sector through Resolution 68, the adoption of rigorous corporate governance standards to attract global capital, and a commitment to holistic quality of life—ensuring that economic prosperity translates into better health, culture, and environmental sustainability for its citizens.