Headline Oct 10, 2015/ ''' VIETNAM : BLACK AND WHITE '''


ON THE edge of Hanoi's brick walled factories lie abandoned, weeds sprouting in their ruins. Surprisingly, this is a sign of progress.

The land is slated for new housing; the state-owned textile firm that operated there is moving to an industrial park, where it can better meet booming demand for Vietnamese garments.

Exports of textiles and garments rose by 17% in the first seven months, to over $5.8 billion, suggesting that investors still favour Vietnamese as a base for cheap manufacturing.

Its advantage has been amplified by recent labour unrest and rising costs in southern China's factories. In Hanoi there is a renewed talk of  ''China Plus One'' as as strategy for multinationals keep to spread their bets.

Vietnam would gain handsomely, thanks to its labour which is cheaper than China's and its neighbours. 

Even after a pay rise, the monthly wage for a textile worker starts at $84, says Nguyen Tung Van, head of the Communist Party-run textile workers union.

The industry employs around  1.7 million people. Makers of footwear, furniture and more also gain from supplies of cheap labour.

Vietnam has prospered as a result GDP per head was below $100 in 1990 but is now well over  $1,000  says the World Bank. 

But with workers getting richer, more will need to move into higher-skilled work, becoming better educated and using capital and technology more efficiently.

Even that is not enough. Vietnam's creaky infrastructure  [power cuts are very common]  and inefficient bureaucrats make it hard for exporters to compete. A wish to develop poorer provinces has led to some questionable choices:

Vietnam's only oil refinery, for example is in central Quang Ngai, far from either oil wells or industrial cities.

The government, too, needs to give up on short-term fixes. The currency, the dong, has been devalued three times since November 2009. Fiscal weaknesses and  policy flip-flops led Fitch, a credit-rating agency, to cut Vietnam's rating.

Foreign reserves have been run down. Many Vietnamese opt to hoard dollars, not bank them. Inflation at 8.2% plus is a big worry.

More could be done to develop a domestic market,to, in a population of 86 million. One problem is dominant state-owned enterprises. Some competition has appeared in sectors like banking, but too often big, state firms are-

Morphing into conglomerates, helped by cheap credit and political ties. Party leaders speak warmly of South Korea's Chaebol, but Vietnam's versions are unlikely to develop a competitive edge..

Just recently, for example, note, Vinashin, a deeply indebted shipbuilding company, where the powerful ex-boss, who had been appointed by the Prime Minister, was arrested for mismanagement.

The sensible decision may be to close or sell such a company. Officials, however,went on to decide that it was just too big to fail.

So, for Vietnam, and even the developing world, cheap labour will not yield gains for ever. But what comes next is unclear.

With respectful dedication to the Students, Professors and Teachers of Vietnam. See Ya all on !WOW!  -the World Students Society Computers-Internet-Wireless:

''' Rocks And Hopes '''

Good Night and God Bless

SAM Daily Times - the Voice of the Voiceless


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