Book Review: The Economy and Business Environment of Vietnam. Edited by Roderick Macdonald

© 2021 Published by VŠB-TU Ostrava. All rights reserved. ER-CEREI, Volume 24: 80–83 (2021). ISSN 1212-3951 (Print), 1805-9481 (Online) Book Review: The Economy and Business Environment of Vietnam. Edited by Roderick Macdonald Cham: Palgrave Macmillan, 2020. xv + 137 pp. ISBN: 978-3-030-49973-0. Ngyuen Thi My DIEU ab, Michal SCHWARZ ab a Department of Vietnamese Studies – Faculty of Arts, Masaryk University, Jaselská 201/18, Brno, Czech Republic. b Department of Public Economics – Faculty of Economics and Administration, Masaryk University, Lipová 507/41a, Brno, Czech Republic. Contemporary growth is the main positive outcome of the modern Vietnamese economy thanks to recent reforms, technological advances and the potential of the young population open to international contact. In 1986, Vietnam began its early steps towards a market economy with a continuing set of social policies. The reform process, known as Doi Moi, started 35 years ago with decentralization, openness to foreign investment and the establishment of membership of regional (ASEAN) as well as world organizations (WTO). Innovations of corresponding laws and acceptance of gradual changes contributed to many remarkable improvements in socio-economic life in Vietnam during this time. The evaluation of the renovation process, whether personal or limited in time, has a certain scope that still suggests and clarifies a few points concerning Vietnamese government’s reform policy. Through the collaboration of scholars, economists and managers, this book is able to present both insider and outsider perspectives on the Vietnamese economy. Indeed, one of the book’s primary strengths is the breadth of expertise shown by the nine contributors. Each of them has worked in a prestigious higher educational institution in Vietnam (RMIT, Vietnam National University, University of Economics – HCM) or abroad (University of Quebec and Montreal, Yncréa Hauts-de-France). The majority of the authors have experience from more academic institutions and businesses, and six of them are of Vietnamese ancestry. While the depth of presentation varies at times between chapters, this combination of specialists from diverse fields ensures wide perspectives on the current problems confronting the Vietnamese economy, resulting in detailed suggestions for possible solutions. The six chapters of this book address Vietnam’s economic main topics and are organized as follows: an introduction to the modern economic environment of Vietnam (chapter 1), the Doi Moi process in Vietnam (chapter 2), the restructuring of state-owned enterprises (chapter 3), the participation of Vietnamese small and medium-sized enterprises (SMEs) in the global value chain (chapter 4) and the sectors of marketing (chapter 5) and finance (chapter 6). The authors’ viewpoint, in general, is that, while the economic gains have been spectacular, they have not yet created the possibility of thinking and sustainable economic growth and development. The Doi Moi policies have produced results but only had initial significance for the start of the process of economic development of a country that had just emerged from the war. The purpose of the Introduction is to introduce the topic in a general way and introduce a particular problem to be analysed in the current paper, including relevant sources of literature that should stress the importance of the problem; the procedure should be also apparent. The first chapter provides an overview of Vietnam’s history and geography as well as its resilience N. T. M. Dieu, M. Schwarz – Book Review: The Economy and Business Environment of Vietnam. Edited by Roderick Macdonald 81 in the face of internal and external challenges throughout the twentieth century and its ability to create an extremely inviting business environment, as evidenced by both the GDP per capita growth and the foreign direct investment in the twenty-first century. However, weaknesses of the Vietnamese economy are also presented when compared with countries in the same region, such as Singapore, the Philippines and Thailand. Roderick Macdonald (University of Quebec and Montreal) points out that corruption is still a burning problem in Vietnam. Indeed, it strongly affects foreign investors, the process of privatization and ownership of real estate in Vietnam (see more in Khoi, 2021). Foreign investors are restricted in using land rights; only state-owned enterprises are permitted to do so (Tran, 2014). Meanwhile, Singapore appears to be the safest option for investors seeking entry into Asia, according to the author. This also means that the Vietnamese government needs to make more efforts to improve the business environment, including increasing the quality of the workforce, removing procedural barriers in the administrative apparatus and enhancing transparency in policies, to enhance its competitiveness with other countries in the region. Development in natural resource management is also important, and it would be desirable to write more about it (see Ortmann, 2020 and the whole book of Anderle, 2021), even though it is not the author’s main focus. The first chapter’s conclusion summarizes the primary good prospects and unique characteristics of the Vietnamese environment, such as difficult logistics and bureaucracy. The author discusses five distinct routes to business in Vietnam, and this discussion serves as a springboard for the remainder of the book’s chapters. Chapter 2 affirms Doi Moi as a “comprehensive reform program”, according to author and historian Pham Van Thuy from Vietnam National University. The reforms have touched on all facets of life, with a particular emphasis on economics. The author traces the evolution of the Vietnamese government’s policies from 1945 to the 1986 economic reforms and extends them to recent years. In clearly written consecutive parts, he outlines the reforms in the “pre-Doi Moi period”; he then summarizes the main programme points of the Doi Moi reforms and the following changes since the beginning of the 1990s. Pham mainly focuses on internal factors, while some changes occurred as a result of the international market opening. The rest of the chapter focuses exclusively on the outcomes of these policies. With experience in teaching and researching Southeast Asian history, particularly the economic and political history of Vietnam, the author presents an overview of Vietnam’s Doi Moi path so far while providing readers with a historical view of this country’s economy. He concludes his chapter in compliance with the official standpoint of the government. Knowledge of official arguments is essential for anyone who wants to enter the business environment in Vietnam. The chapter thus occupies an important place in the book. In chapter 3, Nguyen, Schrage and Kane (RMIT University and Portland) point out specific barriers that make investors hesitant to participate in the equitization process of state-owned enterprises in Vietnam: an incompatible strategy, a lack of incentives and political will, corporate governance issues, supervision and accountability. Of these reasons, the lack of incentives and political will is arguably the most difficult barrier to overcome. In fact, local and personal interests are a major obstacle to the equitization process, which has not yet created real motivation to accelerate equitization and divestment (Linh, 2016). At first glance, it seems that the opportunities for investors are more specific in the policy. Many stateowned enterprises still use the excuse that it is difficult to find strategic investors to divest capital to justify their slow equitization progress (Linh, 2016). Meanwhile, investors feel discouraged because of the lack of transparency in equitization and the slow progress of implementation in state-owned enterprises (Minh, 2020). Indeed, delays in project development and approval, a lack of coordination among ministries, departments and sectors in equitization and some policies that are not tight, not in harmony and not timely (Son, 2020) are problematic. The authors discuss the importance of substantive reforms, which include more desirable and effective collaboration between the public and the private sector. Privatization, in particular, is a difficult task for the government as state-owned enterprises account for a sizable portion of Vietnam’s GDP. Nguyen, Pham and McLelland, from RMIT University, define Vietnamese small and medium-sized enterprises and global value chains in chapter 4. The performance of SMEs in Vietnam is compared with that in other Southeast Asian countries and is contextualized. According to the General Statistics Office in 2018, Vietnam’s SMEs are underdeveloped, accounting for less than 25% of all enterprises. In fact, their share should be increased since they represent the most promising developmental potential and contribution to the economic stability of the country. The key factors for SMEs to participate in global value chains include lead firms, competitive advantages and institutional factors (see further the whole monograph by Tran, 2014). They cover corporate governance, innovation capability, the macroeconomic environment, formal credit access and logistics infrastructure. All of these constitutive factors should be strengthened in Vietnam, and the only way to achieve this is through the provision of corresponding specialization or education. Some recommendations are also given to 82 Ekonomická revue – Central European Review of Economic Issues 24, 2021 develop the absorptive capacity, assimilation and exploitation of lead firm knowledge and future sustainable development. The authors recommend concentrating efforts on Vietnamese SMEs engaged in higher-value-added activities while also enhancing the collaboration between lead firms, SMEs and the government to foster a more favourable business environment. These recommendations are all the more critical in light of the promising combination of an adequate supply of natural resources and a young educated labour force. N. H. Phuoc of the University of Economics in HCM contributes Chapter 5, presenting a new perspective on marketing in Vietnam. The chapter begins with an overview of the Vietnamese consumer market and then delves into the retail channel, which is concentrated in two major business and investment hubs: Ho Chi Minh City (which accounts for 70% of all transactions in Vietnam) and Hanoi. Although electronic commerce is less developed in Vietnam, it is growing faster in the advertising sector than in other ASEAN countries. Obviously, this is a remarkable element of domestic and foreign enterprises’ strategy when conducting business in Vietnam. However, businesses must also be more responsible to society and especially to sustainable development. These are not merely official policy issues; they are regarded as extraordinarily significant by Vietnamese citizens due to the Indochinese Peninsula’s vulnerable environment. Related corporate social responsibility (CSR) practices (Nguyen et al., 2018) that are desirable for Vietnamese authorities to adopt have been introduced by foreign companies and are gradually being implemented by Vietnamese enterprises. Nonetheless, the process is lengthy, and results will not materialize until CSR standards are universally accepted. The final chapter, by Van Hong Vu (Dept of Business Management, Yncréa Hauts-de-France, Lille) presents an outline of Vietnam’s financial sector. Vu provides an inventory of Vietnamese financial services, securities, fintech and payment, and insurance markets. The overview focuses on their legal framework, fundamental statistics and contemporary positive trends influenced by technological advancement. New technologies have enabled digital innovations, and the launch of digital banking is critical in the current COVID-19 pandemic, when any lockdown results in stock market losses (Phuong, 2021), although the Vietnamese response was initially quite positive (see Willoughby, 2021). Despite a new global outbreak of COVID-19 (July/August 2021), it is expected that the Vietnamese financial sector will remain relatively unaffected in the post-COVID era as structural regulation of non-performing loans followed the 2008 financial crisis. Financial institutions in Ho Chi Minh City will eventually adopt at least some of the responsible financial models associated with green banking (see Ho et al., 2021: 17). The reviewed chapter is thus a useful introduction for financial firms seeking to establish a presence in the Asian market as well as for any firm considering commencing activities in Vietnam that would necessitate the use of local providers of financial services. In general, the book performs well in giving the reader an initial look at the business environment in Vietnam as well as the context of its economic and historical development. The number of chapters in the book is limited, but it is enough to give the reader an overview of important aspects of Vietnam’s economy, including current technologies and the process of digitalization in this Southeast Asian country. Vietnam is recognized as a country that has achieved remarkable success during nearly half a century of internal post-war recovery and about thirty years of growth (see Booth, 2019). However, at the same time, with the current setting and remnants of the centralized economy, the reform and renovation process in Vietnam still faces many difficulties. Corruption, local interests and a lack of transparency in policies and regulations are considered as the main factors that make international investors hesitant, despite this being a densely populated market that is friendly and full of growth potential. This research work is particularly meaningful for scholars, researchers and students who are interested in the study of Southeast Asia in general and Vietnam in particular. Given that the region’s economy has shown impressive growth in recent years, more research on the region and the country is urgently needed. Acknowledgement The article was funded within the project OP VVV „Interní grantová agentura Masarykovy univerzity“, Reg. No. CZ.02.2.69/0.0/0.0/19_073/0016943, as a subproject Water and Energy in Public Economics: Case Studies and Good Governance in Central and Southeast Asian Countries in Transition (MUNI/IGA/1082/2021). References ANDERLE, M. (ed.). 2021. Innovations in Land, Water and Energy for Vietnam’s Sustainable Developemnt. UNIPA Springer Series. Cham: Università degli studi di Palermo – Springer. BOOTH, A. 2019. Living Standards in Southeast Asia: Changes over the Long Twentieth Century, 1900-2015. Amsterdam: Amsterdam University Press. N. T. M. Dieu, M. Schwarz – Book Review: The Economy and Business Environment of Vietnam. Edited by Roderick Macdonald 83 HANSEN, A. et al. (eds). 2020. The Socialist Market Economy in Asia. Development in China, Vietnam and Laos. Singapore: Palgrave Macmillan – Springer Nature. HO, M. T. et al. 2021. A Systematic and Critical Review on the Research Landscape of Finance in Vietnam from 2008 to 2020. Journal of Risk and Financial Management 14: 219. https://doi.org/10.3390/jrfm14050219 KHOI, M. 2021(June 24). Phòng chống tham nhũng khu vực tư – Hạn chế và giải pháp (Preventing corruption in the private sector – Limitations and solutions. Tạp Chí Pháp Lý. https://phaply.net.vn/phongchong-tham-nhung-khu-vuc-tu-han-che-va-giai-phapa237498.html LINH, N. 2016 (December 27). Vì sao cổ phần hóa doanh nghiệp nhà nước vẫn chậm? (Why is the equitization of state-owned enterprises still slow?). Nhân Dân. https://nhandan.vn/kinh-te/vi-sao-co-phan-hoadoanh-nghiep-nha-nuoc-van-cham-281659 MINH, P. 2020 (May 27). Vì sao cổ phần hoá các doanh nghiệp nhà nước vẫn chậm? Why is the equitization of state-owned enterprises still slow? VnBusiness. https://vnbusiness.vn/quan-tri/vi-sao-co-phanhoa-cac-doanh-nghiep-nha-nuoc-van-cham1068813.html NGUYEN, M. et al. 2018. Corporate social responsibility (CSR) in Vietnam: a conceptual framework. International Journal of Corporate Social Responsibility 3: 9. ORTMANN, S. 2020. Evolving Environmental Governance Structures in a Market Socialist State: The Case of Vietnam. In: The Socialist Market Economy in Asia. Development in China, Vietnam and Laos. Ed. A. Hansen et al. 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