“Doi Moi” reforms opened doors to success

Published in EIC Outlook Q2/2017 Click here for more detail

Starting three decades ago, Vietnam’s “Doi Moi” policy dramatically transformed the nation, spurring fast economic and social development. Since 1986, Vietnam has transitioned toward becoming a market-based economy by reducing government monopolies and allowing freedom of commerce and investment by the private sector. As a result, the Vietnamese economy took off, booming at an average annual rate of 9.6% during 1985-1995, and continuing steadily at rates of 6-7% until today (Figure 27). The key part of this reform was freeing up domestic trade and investment. It began with the elimination of agricultural price controls, food coupons, and agricultural production and distribution quotas. This move allowed prices of agricultural products to be determined by the market and farmers to be able to increase production, providing adequately for domestic consumption and eventually export. This in turn allowed Vietnam to become the world’s second largest exporter of rice and coffee beans. Later, as the government turned its focus to the industrial sector, it introduced regulatory reforms, infrastructure development projects and socialist-style human resource development. As a result, foreign investment began to pour into Vietnam, transforming the country into a complete industrial economy. Foreign investment brought in new technology, which help raise employment and technological knowhow among Vietnamese workers.