Vietnam: Growth, Optimists… Not a MINT

Vietnam made Jim O’Neill’s “Next 11” in 2005 and Robert Ward’s “CIVETS” list in late 2009, yet it was not included in O’Neil’s most recent set of “MINT” predictions.

Vietnam made Jim O’Neill’s “Next 11” in 2005 and Robert Ward’s “CIVETS” list in late 2009, yet it was not included in O’Neil’s most recent set of “MINT” predictions.

“I find these neologisms always quite random, perhaps they are selected based on O'Neill's preferred holiday destinations,” one individual who is based in Vietnam told us straight off the bat. Maybe this highlights part of the problem when attempting to identify the next growth region? There are so many different perspectives and so many different ways to analyse the information, on top of which, things change so quickly and there is so much emphasis on creating a nice phrase like “MINT”… that it all seems to undermine the process.

One thing is certain though: things do seem to be changing in Vietnam. In fact a study by the Boston Consulting Group (BCG) last summer showed more than 90% of all consumers in Vietnam “believe that their children will have a better life than they themselves.” This volume is 20% higher than in China, India, or Indonesia. And BCG even concluded in the press release that “consumers in [Vietnam and Cambodia] are among the most optimistic in the world.”

There have also been numerous developments in technology over the last 12 months. IBM initiated its first Vietnamese Smarter Cities program in Da Nang in August. The aim of this is to utilise data in order to transform water management and transport for residents of the country’s fourth largest city. The startup scene is also growing and the Ministry of Science and Technology gained $110 million (mostly from the World Bank), in a program called FIRST over the summer. Whilst Vietnam is even gradually moving away from its textile past and seeing electronics become its top export.

[image_library_tag ffe7c307-fdde-4eff-a34c-53cb5d53e6a5 418x328 alt="vietnam-map" title="vietnam-map" width="418" height="328"class="center "]

However, Vu-Thanh NGUYEN, Research Fellow at the National University of Singapore believes in order to “understand why Vietnam is not in the MINT countries, it’s useful to look back at some research and predictions that Tim O’Neill and Goldman Sachs teams published over the years.”

“In 2001, they predicted that BRIC countries (Brazil, Russia, India, and China) would contribute more than 10% of the world GDP within a decade,” explains Vu-Thanh NGUYEN. “In 2005, they identified the Next Eleven (N-11) countries that could potentially become important economies, mostly based on their large population. These include Bangladesh, Egypt, Indonesia, Iran, Korea, Mexico, Nigeria, Pakistan, Philippines, Turkey, and Vietnam.”

"The MINT countries (Mexico, Indonesia, Nigeria, and Turkey) that we’re talking about are from this N-11 group. Globally, MINT countries may grow to join the world’s top 15 economies (in terms of GDP at PPP), while Vietnam may only reach to the top 20 in 2050."

"These predictions are based on each country's growth potential and growth conditions, which is measured by Goldman Sachs's Growth Environment Score (GES). Currently, Vietnam has a better than average GES (5.43 out of 10), better than all N-11 countries except Korea (7.8 out of 10). However, its growth has been slower during the last five years due to various problems, from weak external demand, deteriorating macroeconomic stability and conditions, to constrained skilled workforce. Whether Vietnam can realize its growth potential will largely depend on its ability to solve these immediate problems and improve its growth conditions,” concludes Vu-Thanh NGUYEN.

In its ICT predictions last December, IDC estimated a year-on-year increase in growth rate of 7.1%, making the total growth rate in 2014, 15.5%. It even suggests that “Vietnam will be among the top ICT spenders in Asia/Pacific in 2014.”

According to Business Monitor the real GDP growth forecast of 6.0% for 2014 also appears to be on the up. The press release states: “Strong data on foreign direct investment inflows, remittances, passenger car sales, and property market launches, suggests to us that domestic demand is on a nascent recovery, setting the stage for stronger 2014 growth.”

Maybe there is cause to regard Jim O'Neill's predictions with some scepticism? As Ywert Visser, a Renewable Energy Project Developer in Vietnam points out: “Many other countries share the same characteristics as the MINT countries. For example, Indonesia was selected, because of its demographics and geographical location (near China). But Cambodia, Myanmar, Vietnam and Thailand share the same characteristics. I think Cambodia and Myanmar will grow faster than Indonesia in the coming years.”

“Indonesia has already seen substantial growth in recent years and it has much investment prestigious and highly leveraged project in real estate and industries,” he continues. “When the economy is well, money is borrowed and invested using scenarios that are too optimistic. With a slight change in the investment climate, these projects are in trouble, just like what happened in Vietnam.”

There is clearly a lot of potential for development in Vietnam. Only time will tell how things will actually progress in practice. Although maybe it is all a moot point?  Because as Visser concludes: “From my perspective these terms also do not affect business in a country much. Vietnam was included in CIVETS but here in Vietnam nobody ever mentions that.”


Kathryn Cave is Editor at IDG Connect


IDG Connect has produced a full series on the MINTs:

Local Perspectives: What about the ‘MINTs’?

Reformed Mexico Has Strength to Be a Knowledge Economy Leader

Swings and Roundabouts in Resurgent Indonesia

Country Spotlight: Nigeria

Turkey: The Double-Edged Sword of Production


Q&As with local marketers:

Turkey: Aysenur Guven

Indonesia: Dev Mehta

Nigeria: Tim Beighton