In Bac Giang, along the Red River Delta, in Southeast Asia, Foxconn plans to invest $300M in a new 50.5-hectare industrial estate. Luxshare Precision and Foxconn, two of Apple’s principal suppliers, are negotiating an agreement to commence the manufacture of Apple Watches and MacBooks in Bac Giang, Vietnam. Sixty-five per cent of Air Pods, Apple’s signature wireless earphones, will be made in Vietnam by 2025. South Korea’s, Samsung Electronic Mobile Division intends to invest $3.3bn by July 2023, at its sprawling Thai Nguyen factory in Vietnam, to produce semiconductor components by August 2023.
Vietnam is positioning itself to be the “next powerhouse” in Southeast Asia for manufacturing and exporting precision next-generation technologies. The World Bank projects that the Southeast Asian economy will grow by about 7.2 per cent in 2022 – up from 2.6 per cent growth in 2021 – compared with 2.8 per cent growth for neighbouring China. This growth is tied to exports, which in the first half of 2022 reached $186bn. This amounts to more than a seventeen per cent increase year on year.
Synopsys, the US giant chip design software firm, plans to shift engineer training and investment to Vietnam. In 2021, Intel invested $475m in its largest chip assembly and testing installation in Ho Chi Minh. Google is set to begin the manufacture of its Pixel Smartphones in Vietnam by 2023. Apple, Samsung, Microsoft, and LG Electronics are all taking advantage of the purposeful advances in the ease of doing business in Vietnam.
From around 1975, the economy of Vietnam was overwhelmed by difficulties in production, imbalances in supply and demand, inefficiencies in distribution and circulation, climbing inflation, and rising debt. Vietnam’s gross domestic product (GDP) in 1984 was valued at US$18.1 billion with a per capita income estimated at about US$200 and US$300 per year. Vietnam transitioned from being one of the poorest countries in the world to becoming a tech manufacturing hub under a package of economic reforms known as the Doi Moi or Open Door. The effects of this economic shift will trickle down to connected classrooms and the connected child whose future will pivot to the screen as the new “page” in paperless schools.
While developer density is low in Vietnam, the nurturing of citizen developer talent and digital skills is a fresh opportunity for stackable micro-credentials. “The digitalization process will create seven times more jobs than jobs it destroys,” says Jacques Morisset, at the World Bank. The global shifting balance between skills demand and its supply has increased skill premia and wage differentials. This has exacerbated labour income inequality and diminished prospects for less-skilled workers. Micro-credentials delivered at the workplace now replace the University lecture halls with MOOCs that deliver bespoke skills training linked to compensation, as part of a talent management strategy.
A new global alternative is “Section 4”. Section 4 distills MBA-quality courses into two and three week sprints using an agile methodology. Eighty per cent of the educational value of a business school lecture is delivered at ten per cent of the cost and at one per cent of the friction. The sprints are taught by Professors from schools like NYU Stern, UC Berkley Haas, and Cornell Johnson alongside practitioners from companies like Etsy, and Allbirds.
Digital technologies have undoubtedly produced increased market concentration as it promotes a winner-takes-all form of competition. These advances buttress first-mover advantages, strong economies of scale, network effects, and advantages of Open Data. Policy has a critical role to play to improve the enabling environment for foreign direct investment and workers – to broaden access to novel opportunities and to enhance capabilities by removing unfreedoms that hinder the release of the imagination. Lifelong learning and accredited stackable microcredentials that interlock like LEGO Bricks is a fresh frontier.
Policies and institutions have been tardy to rise to the challenges of technological advances as technology shifts the dynamics across product and labour markets. Slowing productivity growth and rising inequality are interrelated and are intimately coupled to the way that technologies interact with prevailing policy, and the institutional environment. The rise of the intangible economy has altered product and labour dynamics with data lakes, software, and knowledge embodied in patents and NFTs. Digital technologies have birthed connected cars. Digital-only banks that have ditched branches and FinTech platforms like Marcus by Goldman Sachs now offer lending, investment, and savings products.
Technology-driven forces are also creating greater market concentrations that are reinforced by failures in competition policy. Competition policy has not adapted to the shifts in market structures and the challenges to keep markets competitive, especially those movements related to the digital economy. Antitrust enforcement has not been robust in the face of rising monopoly power and takeover activity. Regulatory policies have not supported competition consistently, sometimes overregulating and restricting competition and sometimes deregulating without safeguards.
What is significant for the Vietnamese economy is the increase in value-added and the technology emphasis in the futures that Vietnam will export. The more intricate and stickier those revenue streams become from the assembly and export process, the stickier foreign direct investments become. The evolution of export channels up the value chain augurs well for the future of the Vietnamese people.
