We already know that Canadian businesses have mostly missed the boarding onto the “China bandwagon.” As it turns out, we are quite good at missing all kinds of bandwagons, including the one potentially destined for Vietnam.
Vietnam is booming. The country’s population is 85 million and most of it is working like crazy, creating economic growth of 8.2% this year and expecting a total 2007 growth rate of 8.5%. Not surprisingly, foreign capital has swarmed Vietnam’s economy, pouring in over $13.0 billion this year.
In Canada’s usual foreign investment “style,” our take-home piece of this particular pie is traditionally modest (and that’s an understatement) at only one-hundred and forty-two million dollars. Moreover, although it is true that our trade with Vietnam has tripled over the past five years, the grand total is still under $1.0 billion, which puts us behind countries such as Panama and Romania (?). Taking into account that Vietnam has become foreign investment “destination” number four in the world, Canada’s trade and investment score do appear rather pathetic to the naked eye.
>From the macroeconomic point of view, Canada’s low score on Vietnam could be summarized as surprising. We have a number of goods and services that Vietnam would pay top dollar for, such as wood, oil and gas, and even skilled labor and other training.
Furthermore, Vietnam also has a competitive advantage in a number of areas that could benefit the Canadian economy, such as much cheaper labor than even in China. Outsourcing and “offshoring” seem like good ideas that most of the developed economies have been enjoying for years, a concept that only Canada has had a problem grasping fully.
On the other hand, perhaps Canada has its own reasons to stay away that could be just as valid as jumping on the bandwagon. For starters, why bother going halfway across the world when the “best of Vietnam” is not that far away at all — just south of the border?
Also, like many emerging Asian economies, Vietnam is also a red tape maze and a bottomless pit of corruption. This is bad enough without jam-packed highways, which should be treated as parking lots on the best of days, and inefficient ports that just cannot move enough stuff either in or out of the country.
Finally, although things may be improving in Vietnam, many Canadian businesses still remember and “feel” the holes drilled after unsuccessful ventures into China. Let’s just say that Canada has learned to wait for emerging economies’ businesses to come knocking on our own door than the other way around.