Vietnam's prospects on upward turn
Nike employs 130,000, its second biggest outfit outside of China.
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HANOI, Vietnam (CNN) -- The morning ritual in Ba Dinh Square in Vietnam's capital involves raising the flag and singing the national anthem, communist overtones that are one of the few signs of the country's roots.
But around the corner from the square in Hanoi, this Southeast Asian nation is veering in another direction and is giving way to capitalism at breakneck speed.
"We are trying to abandon the old way of socialism in Vietnam, which did not work. We are therefore trying a market economy," Vietnam's Deputy Minister for Foreign Affairs, Le Van Bang told CNN.
"We are looking for a way that suits our society and allows the economy to develop in a way that does not create a big gap between rich and poor."
The minister is keen on stepwise development following the Chinese model and other Asian economies, with a focus on a strong manufacturing sector.
As the rest of the Asia-Pacific region develops, the country is trying hard to improve its competitiveness. Vietnam is already seeking membership of the World Trade Organization by the end of this year.
Part of this plan has been to off-load loss-making, state-owned enterprises (SOEs).
In a fresh move to embrace the market economy, the government has signed a decree allowing foreign investors to buy a stake of up to 100 percent in some SOEs.
Nike is one overseas firm that is active in Vietnam. It employs 130,000 workers in its second biggest production center outside of China.
Vietnam is a throughput country for the American sporting goods firm, with raw products coming in and manufactured goods going out.
"[Our presence here] has a lot to do with the quality of the workforce. There are a lot of people in Vietnam that have a wonderful work ethic. They are also bright and interested in learning," says Amanda Tucker, general manager of Nike Vietnam.
The American firm is also looking at doing more research, design and development work on its sporting goods in the country.
"This will require a more skilled labor force, which is a tall order for Vietnam, given the fact that more than 60 percent of its workers are employed in agriculture," says Tucker.
"But the country has a literacy rate of 94 percent, which is high for a developing country and more than half of its 81 million people are below the age of 25."
Despite the challenges of poverty, infrastructure and development, the Vietnamese market represents a growing opportunity for would-be entrepreneurs.
"There is such an intense consumer culture here that is just beginning to grow. But only 25 percent of the roads are sealed and Vietnam suffers from a lack of deepwater ports," says Henry Nguyen of IDG Ventures.
This has not stopped large-scale construction around the southern metropolis of Ho Chi Minh City, formerly Saigon, and Hanoi -- both bustle with new buildings and business parks.
Vietnam has already joined economic groups such as APEC and ASEAN and has its sights set on joining the WTO. The World Bank is also involved in Vietnam with 35 projects.
"I see the transition to the market economy as stable, sure-footed and certainly it will be continuing without much cause for concern," says Rakesh Nangia, acting-country director for the World Bank in Vietnam
"On the political side, I do not see a multi-party democracy emerging anytime in the near future. It will happen over time -- we hope, but again there are no guarantees how this will emerge."
Nangia highlights the fact that rapid change has occurred elsewhere in Asia both economically and to a certain extent politically, and that is bound to reach Vietnam.
"If we look at this as the model -- we are talking [about Vietnams rising as a] Asian Tiger, Vietnam will probably be a South Korea or a Singapore," he explains.
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