Dr. Nguyen Si Dung: If there are no successful corporations, where can Vietnam look to 'become a dragon'?
Tùng Anh•04/04/2023
Why, after the remarkable developments that created 'Asian dragons' like Singapore and South Korea, has no third world country successfully risen to the first world?
After many years of researching the development path of countries, Dr. Nguyen Si Dung, former Deputy Head of the National Assembly Office, realized that the British-American regulatory state model, or the social welfare model in Northern Europe, although very successful in some countries, also caused many countries to become stuck and unable to rise to become developed countries.
He believes that the developmental state model has been successful in Northeast Asia, and has also been successfully applied by a Southeast Asian country, Singapore, and could be a suitable model for Vietnam to choose. 'It seems that the institutional model for development of each country depends not only on the will of the leader, but also greatly on tradition and culture. Political culture, governance culture, culture of interaction between people and the government, and norms, what Vietnamese people value, what we are willing to sacrifice, all are important foundations for choosing an institutional model' - Mr. Dung shared.
An important event taking place is the first visit to Singapore by Prime Minister Pham Minh Chinh in his new position, opening the events to celebrate the 50th anniversary of diplomatic relations and the 10th anniversary of the Strategic Partnership between the two countries. On this occasion, I would like to interview him about the experiences that Vietnam can learn from Singapore - the only developed country in Southeast Asia, and which has a very large economic gap with the other countries. If we talk about learning from Singapore's experiences, first of all, the lesson in choosing an institutional model for economic development that is suitable for culture, tradition and historical conditions is worth learning. Because it seems that the institutional model for development of each country depends not only on the will of the leaders, but also largely on tradition and culture. Political culture, governance culture, culture of interaction between people and government, and norms, what Vietnamese people value, what we are willing to sacrifice, all are important foundations for choosing an institutional model.
For development, there are many successful models in the world. With the model of a regulated state, valuing the market in the Western style, many countries follow that model, but some countries are successful, others are not. This model is very successful in the UK, the US, Australia, Canada, New Zealand... but why are only these countries successful, while many countries in the third world following this model cannot rise to the first world? The UK-US model is good, but perhaps it is only good for the UK, the US... Or the social welfare state model is successful in the Nordic countries: Denmark, Sweden, Finland... but it is not more successful. Southern European countries have not been successful when following this model, because the Nordic culture of 'knowing enough' is the foundation for this model to succeed. Returning to Singapore's experience, they chose the developmental state model. This model is a state-led economic development model, not a free market model like the Western model. Singapore has been successful with this model, and in fact they have risen to the first world. This model, in my opinion, seems to be suitable for Singaporean culture. So what are the similarities between Singaporean and Vietnamese culture?
Indeed, Vietnam and Singapore are both located in Southeast Asia, but their cultural foundations are closer to Northeast Asia. The economies with Northeast Asian cultural foundations include Japan, South Korea, North Korea, mainland China, Taiwan (China), Singapore, and Vietnam. Of these 7 economies, 5 have followed the developmental state model and have been successful. Vietnam has indeed made quite strong reforms following this model, although we have not formed a theoretical framework, we have developed the market but the State's management role is highly valued. The second thing that contributes to Singapore's development, which we need to note, is the elite civil service administration team. This team is perhaps the very important foundation for the State to be able to orient and lead development. Countries with Northeast Asian culture often have elite civil service administration teams, because of their tradition of academic excellence. Here, we need to refer to Singapore's experience in selecting and evaluating the team, so that Vietnam can quickly have such a professional team of civil servants. Any economy, especially when following the model of a developmental state, if you want a powerful country, you must have a powerful apparatus. World history has proven this. Francis Fukuyama's book Political Order and Political Decline has clearly demonstrated that throughout the history of human development, any powerful country must have a professional and talented apparatus. Singapore, Japan, South Korea, and China all have very professional civil service administrations, and talented people are selected through academic qualifications, not by relatives or clans.
Besides choosing the institutional model, what else can we learn from Singapore? Singapore is also a country with a world-class education system, valuing education and investing heavily in education. They consider education as the foundation for development, not only economically but in all aspects. Education is also the foundation for selecting talented people for the civil service system. Next, we must mention their very special point, which is that almost all of Singapore's wealth is outside of Singapore. In recent years, who is the largest investor in Vietnam? Singapore! Seeing and taking advantage of opportunities abroad is something worth considering.
Singapore is a very easy place to do business. Many Vietnamese startups have opened companies there. Why? Because the procedures are quick, the costs are negligible, and everything is transparent. This point is similar to the state-regulated model - the state attaches importance to creating a favorable environment. On the one hand, it invests abroad, on the other hand, it attracts foreigners to do business in Singapore, in high-value segments that require a lot of intelligence and technology. That is also the reason why a small country has a great ability to attract talent.
Some people say that the developmental state model has only been successful in Korea, Japan, etc. because in the past, they had many advantages to implement this model, but it will be very difficult for Vietnam to implement it when we integrate deeply into the world economy? With an open economy and many free trade agreements like today, it is true that promoting the developmental state model is more difficult than before. China is a successful country although it has only recently followed the developmental state model. The Chinese government has strongly supported businesses developing digital technology, artificial intelligence, clean energy, etc. In fact, other countries have also complained about China's protection of domestic businesses, but they have not done much more than that, because they still need the Chinese market and goods. Vietnam, of course, will find it difficult to achieve such a position, but it is not impossible to promote industrialization according to its own direction. First, you must know that all outstanding achievements and breakthroughs have the state behind them. Don't be naive about what the West says, such as "small state, big society", or "the best state is the one that manages the least". In her book "The Initiating State", Professor Mariana Mazzucato convincingly demonstrated that in fact, breakthroughs for economic development in the West all have the participation of the state. She pointed out that all technological achievements that created the iPhone were the result of investment by the US government, from the Internet, GPS, to touch screens, or virtual assistants...
Second, there are many ways to support breakthrough research. For example, investing in national defense and security, then when there are results, transferring them to civilians, because there is no agreement that can limit investment in security and defense. Many countries are doing this. Third, a good civil service administration team will still have a way to create advantages for the country's development. There are still ways, but the important thing is to be good (laughs), then sooner or later it will come back to having a good civil service administration. You also mentioned the factors that Vietnam still lacks to become a dragon, besides the elite civil service administration team as presented above, there are not many breakthrough inventions. What can we learn from Singapore to promote innovation? In Singapore, many breakthrough ideas come from abroad, because doing business there is very easy. Second, because Singapore is a developmental state, its elite civil servants know what to invest in to create breakthroughs. As for Vietnam, it is clear that Vietnam has many strengths that Singapore may not have. One of them is that talented Vietnamese people are all over the world. War and chaos have caused Vietnamese people to disperse all over the world. In good fortune there is misfortune, in misfortune there is blessing, this dispersion has expanded the vast space of existence of the Vietnamese people. According to many data sources, there are about 5 million Vietnamese people living in 130 countries and territories around the world. For comparison, Singapore's population is only over 5 million people. Vietnamese people living and working abroad send billions of dollars in remittances each year (in 2022, remittances to Vietnam will be 19 billion USD - PV). But we can only measure money, not ideas. Many Vietnamese people work in very large companies, some of which are world leaders in technology, and need to create conditions for ideas to be sent back as much as remittances.
On the other hand, it is also necessary to create conditions for Vietnamese startups. Starting a business in Vietnam is still more difficult, so many people go to Singapore to open companies (laughs). Therefore, it is necessary to create conditions. Perhaps in the startup field, there should be a pilot mechanism, like the sandbox mechanism that Ho Chi Minh City is proposing. That is, within the sandbox framework, the city can pilot it, if the pilot is successful, it will be expanded nationwide, if it is not successful, it will not have a large-scale impact. If it is piloted, there will be no inspection, audit, or investigation according to the current legal framework. Many things that a startup aims for are too new, if it is not allowed to pilot, but must comply with this law or that law, then it is almost impossible to do anything.
One of the characteristics of the developmental state model is that the state builds an industrialization program and intervenes strongly to realize it. Reality from other countries also shows that there must be large corporations, especially in the industrial sector, to be successful with this model. You once mentioned that Mr. Pham Nhat Vuong's car production could be a right direction. Can we expect such businesses? In fact, if we want VinFast to succeed, we probably need state support. Compared to the 'giants' that have existed for hundreds of years, even fully depreciated, how can a company whose core technology also requires investment and a lot of money compete? To put it simply: forcing a newborn baby to compete with a strong man is not fair, but unfair. Or how can a lightweight boxer compete fairly with a heavyweight boxer? So now, if we want to bring VinFast to the world to compete, without the State creating conditions and support, it will obviously be very difficult. And without large industrial companies, when will the economy "turn into a dragon, turn into a tiger"?
The revenue of a Japanese car company like Toyota was at one point equal to Vietnam's GDP, reaching hundreds of billions of dollars. Without such companies, how could we become a high-income country? The difficulty is that supporting VinFast without relying on the institutional framework of a developmental state will be very easy to be biased or crony. Obviously, determining the choice of a developmental state model is very important here. Otherwise, businesses will have a lot of difficulties. That is half the problem. And the other half is that it would be better for businesses if many Vietnamese people could support and share their success. If we are not careful, we can easily share the sweet and bitter in war, hardship, but it is difficult to share the outstanding success of our compatriots. Just think, if there are no powerful corporations, where can Vietnam look to "turn into a dragon"? Compared to other developing countries, how do you evaluate the opportunity for Vietnam to become a developed country? Vietnam has a great advantage. If the institutional model is chosen correctly and clearly, we can develop quickly. Among the countries that are hoping to become a dragon and rise to the first world, Vietnam is one of the countries with great opportunities. In the 20th century, Japan rose, Singapore, South Korea and Taiwan, European and American countries rose before, but since then, have there been any more countries? No, it is not easy. Malaysia, or many other countries may have also developed, but to rise to the first world, like Singapore or South Korea, there has not been any.
The country with the culture, resources, and people to grow like that seems to be Vietnam. Of course, this is not a matter of living long enough to become a veteran (laughs), but Vietnam has a great opportunity. Thank you!
Comment (0)