|Võ Trí Thành|
This year marks the 20th anniversary of Việt Nam’s joining Asia-Pacific Economic Cooperation Forum. Economist Võ Trí Thành* reviews the 20 year long journey of Việt Nam, highlighting the country’s benefits brought by the integration as well as imprints it has left as a responsible, active member.
In 1989, the Asia-Pacific Economic Cooperation Forum (APEC) was launched to meet the dynamic development of the Asia-Pacific region, based on three pillars: trade and investment liberalisation; business facilitation; and economic and technical cooperation (ECOTECH).
APEC sets Bogor Goal: liberalisation and openness to trade and investment will be fully implemented by developed member economies by 2010 and developing ones by 2020.
With deep and rapid changes in the region and in the world, from the early 2000s until now, APEC has expanded its scope of concern such as issues of inclusive and green growth; energy security; environment and climate change; diseases; labour migration; and human trafficking.
APEC has contributed significantly to the conclusion of the Uruguay Round with the advent of the WTO in 1994, setting out initiatives to integrate and promote trade and investment in Asia and the Pacific - a foundation for growth and prosperity in the region.
Although the effectiveness of the implementation of APEC commitments is constrained by a lack of resources and a "soft" regulations such as basic principles of voluntary/non-binding consensus, APEC still has many support mechanisms for member economies.
Becoming an APEC member has had a positive impact on the process of reform, integration and development of Việt Nam. Of the 16 FTAs in Việt Nam, whether they have been implemented or in the process of negotiation, 13 are FTAs with economies in the Asia Pacific region. Currently, 13 APEC members are either strategic or comprehensive partners of Việt Nam, while this figure was only two in 2006.
In 2005, 66 per cent of foreign direct investment (FDI) to Việt Nam came from APEC member economies. The figure in 2016 is 80 per cent. The country’s trade value with the region also increased from 65 per cent to over 80 per cent of total trade value.
Participation in APEC marked an important milestone in the country’s open diplomatic policy, multilateralisation, diversification and international integration.
APEC 2017 - a success of Việt Nam
Since joining the APEC in 1998, Việt Nam has also had specific contributions to the Asia-Pacific’s regional connection process. The country is one of the active members proposing and participating in more than 70 initiatives in almost every field (trade, investment, emergency response, health, anti-terrorism ...), and has held several key positions in APEC.
In 2017, Việt Nam hosted the APEC forum for the second time. This is the country’s biggest diplomatic event of the year and the most remarkable as it hosted the summit amidst complicated developments of the world and regional situation.
While the protectionism and a trend of anti-trade liberalisation are emerging, APEC really needs a new momentum for growth and sustainable development. It is time for APEC to prepare for the APEC Vision post-2020.
At the same time, APEC must adequately address a wide range of socio-economic issues such as poverty, underemployment and inequality. Therefore, the summit this time was expected to solve new problems for the process of globalisation. That is how trade and investment liberalisation would be able to not only bring benefits, but also distribute them equitably between economies, between social groups in an economy while still be capable to adapt to new trends, such as the Fourth Industrial Revolution.
Success in APEC Việt Nam 2017 is a result of tremendous efforts and many remarkable achievements were highly appreciated by the international community. The APEC 2017’s theme “Creating new dynamism, fostering a shared future" together with four priorities (Promoting sustainable, creative and inclusive growth; Strengthening regional economic links; Improving the competitiveness and creativity of micro, small and medium enterprises in the digital age; Enhancing food security and sustainable agriculture adapt to climate change) received high consensus from all APEC member economies. This is the first premise for Việt Nam to successfully organise the forum.
One of the event’s unforgettable success was that despite a number of obstacles, the remaining 11 Trans-Pacific Partnership members (after the United States withdrew from the TPP) were unanimous to fast adopt the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). The consensus helped revive a trade pact of which the demise was forecast to be likely after the US’ withdrawal and confirmed the commitments of APEC member economies to trade liberalisation.
APEC 2017 showed the country’s efforts to continuously innovate, reform and deepen its integration. This event affirmed the prestige and position of the country in the international community.
Reform mandate and APEC role
With more than 30 years of Đổi mới (Renewal), Việt Nam has achieved remarkable achievements. From a low-income country where most people was living below the poverty line, Việt Nam has become a low-middle income country since 2010, and the poverty rate in 2017 was only 4-5 per cent.
From a major agricultural-based economy with the agriculture sector accounting for more than 40 per cent of GDP in the early 1990s, Việt Nam has shifted sharply towards manufacturing and services industries, while still maintaining its position as one of the largest agricultural producers and exporters (although agricultural production in 2017 only accounted for less than 15 per cent of GDP).
In particular, from a planned, closed economy, Việt Nam has gradually shifted to a market economy, integrating strongly with a very high level of openness in terms of trade in goods relative to GDP (about 190 per cent in 2017) and in term of the role of the FDI sector in the economy.
However, Việt Nam is facing many challenges of development. Growth quality and productivity remain a big question. The private sector is basically rising but weak. Vietnamese enterprises are in the low position in the global value chains while spillover effects of the foreign direct investment sector on technology and skills are limited. Income gap is widening, especially in some remote areas, the percentage of poor people among population is still high. The environment is polluted and degraded in many areas.
Việt Nam’s aspiration is to become a modern, prosperous, creative, equitable, and democratic middle-income country in 2035. The Vietnam 2035 report by the World Bank and the Ministry of Planning and Investment (2016) identifies six areas for Việt Nam to make a breakthrough, including: institutional reform; enhancing the competitiveness of the private sector; innovation; social inclusion; "green" growth and sustainable development; and urbanisation.
Integration and domestic reform are the two most important pillars for Việt Nam’s development. Joining APEC is a strategic choice in the country’s integration process. The engagement is to understand, to know how to "play" and to "actively play" with the world and especially in a playing field with many regional and global powers.
Although there are times when confidence in APEC’s value declines and despite concerns about the practicality of some APEC activities and even the debate on the suitability of the APEC institution itself, values of APEC is still acknowledged and increasingly proven by time.
In the new context, APEC can also provide added value to Việt Nam. Basically, APEC’s idea of sustainable, creative and inclusive development and a vision of new trends for APEC post-2020 is very compatible with Việt Nam’s policies.
As long as Việt Nam is striving to catch up and go together with developed countries in the new era, the country needs to integrate more deeply, widely and effectively. APEC is a strategic choice and will certainly support the process.
* Võ Trí Thành is a senior economist at the Central Institute for Economic Management (CIEM) and a member of the National Financial and Monetary Policy Advisory Council. The holder of a doctorate in economics from the Australian National University, Thành mainly undertakes research and provides consultation on issues related to macroeconomic policies, trade liberalisation and international economic integration. Other areas of interest include institutional reforms and financial systems.