It is no coincidence that Hanoi was chosen to host the second summit between U.S. President Donald Trump and North Korean Leader Kim Jong-un.
The fact that both sides selected Hanoi for their historic meeting shows the high level of faith that they have placed in Vietnam as a trusted and reliable partner. This is a huge diplomatic achievement for the Vietnamese government, and one which solidifies Vietnam’s position on the global stage and as a leader in ASEAN.
However, unlike Singapore, where the first meeting between the two leaders was held, Vietnam is more than just an impartial host. It holds considerable relevance for North Korea at this point.
While there are differences, Vietnam and North Korea have shared some common historical and political challenges. However, over the last few decades, the two countries have taken two quite different directions. While North Korea remains relatively isolated, Vietnam has reunified and established itself as a modern nation, and an influential and integral part of ASEAN. It is now a leader in the region and at home on the global stage.
Indeed, it is noteworthy that Vietnam has developed strong and positive relationships with the United States, normalising relations in 1995, China and both nations in the Korean peninsula (South Korea remains one of the largest investors in Vietnam).
Meanwhile, it has become an integral actor in international organizations including the World Trade Organization – which Vietnam joined in 2007 – and the World Economic Forum – which was held in Hanoi in 2018.
Therefore, Vietnam can be held up as a model example of successful economic development and international integration for North Korea.
Three short decades ago, Vietnam began a journey of reform, starting with the Doi moi policy in 1986, which would take it from being one of the poorest countries to one with a middle-income status. Over this period, Vietnam became one of the fastest-growing economies in the world, with annual GDP per capita growth of over 5 per cent, the second highest growth rate, just behind China.
This strong and positive growth has transformed the lives and living standards of millions of people. To put it in perspective: In 1993, over 50 percent of people lived on less than $2 a day. Today, that figure is less than 3 percent. Meanwhile, GDP per capita – which was just 360 dollars in the late 1990s – has now reached over two thousand dollars.
This economic growth, alongside significant improvements in infrastructure, has led to an impressive increase in living conditions. Compared to 1993, when less than 50 per cent of households in Vietnam had electricity, access is almost universal today. Meanwhile, three-quarters of people now have clean water and sanitation; up from less than half decades ago.
I first came to Vietnam in the 1990s, and have lived and run a business here ever since. I have, therefore, seen these changes unfold first-hand. Vietnam has become an attractive trade and investment destination for European business, and one which is becoming ever more attractive to new enterprises.
These positive changes were not an accident. Indeed, the lesson of the last three decades in Vietnam is that countries who open their doors to foreign investment and pursue free, fair and rules-based trade are more productive, more competitive and more successful. That’s because open markets boost trade and investment across borders. Free trade creates a true ‘win-win’ situation for both sides, with businesses benefitting from lower costs and consumers benefitting from greater access to goods and services.
From the Doi moi policy in 1986 to the Law on Foreign Investment in 1987, the Vietnamese government has pursued gradual policies of economic liberalization, legislative modernization, and international integration. Foreign direct Investment (FDI) has seen strong growth over this time, and has become the engine of Vietnam’s reform and development.
Meanwhile, the Government has continued to make positive administrative reforms to create a more business-friendly trade and investment environment.
Today, Vietnam is part of a long list of bilateral and multilateral free trade agreements with 56 economies around the world. In order to sign these international agreements, the government has continued to reform its administrative procedures, improve the legal framework, equitize state-owned enterprises and ensure greater transparency. Now, new-generation free trade agreements (FTAs), such as the upcoming EU-Vietnam Free Trade Agreement (EVFTA), will help Vietnam to go further.
The EVFTA is one of the most comprehensive and ambitious FTAs ever concluded between the EU and a developing nation. Once it is ratified in the next session of the European Parliament, Vietnam will join a select group of countries with privileged, tariff-free access to Europe’s 500-million-strong consumer market and world-leading goods and services in all sectors and industries. Once it enters into force, the EVFTA will set in train a gradual reduction of 99 percent of tariffs across a range of products and eliminate technical barriers to trade. This will boost trade and investment between Europe and Vietnam, while facilitating further reform of Vietnam’s legal framework.
In short, the EVFTA, along with other new generation agreements like the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), marks the next step in Vietnam’s economic development. The EVFTA in particular will increase trade and make Vietnam a more attractive investment destination for European companies in the region. Vietnam will become a trade and investment hub, able to attract more FDI in the future.
Therefore, the future certainly looks bright for Vietnam. If the government continues on its path of reform, liberalization and international integration, it will be able to unlock the benefits of the EVFTA and fulfill its potential as a leading trade and investment destination.
I believe these are the lessons that the world can learn from Vietnam’s socioeconomic development. Today, these lessons are more important than ever. Global trade is now at a crossroads, and barriers and tariffs are becoming more widespread. But protectionism is bad for business and bad for citizens. It increases the costs of trade, making international goods and services more expensive for consumers; damaging economic growth and losing jobs in the process.
Vietnam provides clear and undisputed evidence that free, fair and rules-based trade policies, alongside economic reforms that open up domestic markets and attract foreign investment, is the best route for countries to join the global economy and the international community.
I hope the model of Vietnam’s growth and development over the last three decades, marked by liberalization, upgraded legislative frameworks and international integration – will be high on the agenda this week.
At EuroCham, more than one thousand members will continue to share our insights and recommendations to help further improve the business environment in Vietnam, for the benefit of business, consumers and citizens.
We hope the government will continue to share these ideas with other international actors around the world.
To sum up, the choice of Hanoi as the location for this historic summit is a huge positive for Vietnam as it will cement the country’s position on the global stage and accelerate its integration into the international community.
For sure, North Korea can take heart from Vietnam’s achievements.
*Nicolas Audier is co-chairman of EuroCham Vietnam. The opinions expressed are his own.
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