The story of Vietnam’s economy has been one of resilience and steady growth despite the pandemic that has stymied activities across the world. The country’s growth rate was the highest in Asia in 2020, according to IMF figures, owing to their ability to swiftly pivot and effectively capture opportunities that lay open in the US and China trade tussle. Additionally, Vietnam’s quick response to the COVID-19 pandemic in the early stages showcased best practices in disease tracking and management.

None of this would have been possible if its economic structure was not based on strong fundamentals and policies developed over the past three decades.

The result is that rapid technological and socioeconomic development, increasing foreign direct investment, and an emerging start-up ecosystem have all helped to ease the impact of COVID-19 on the private sector. The Asian Development Bank (ADB) forecasts strong economic growth in Vietnam into next year with 6.7% growth expected this year and 7% expected in 2022.

Christopher Jeffery, British University Vietnam (BUV) chief academic officer and Vietnam Business Forum vice chairman. Photo: LinkedIn

It is not difficult to understand how this successful outcome is possible, even in the midst of a pandemic, after talking to Christopher Jeffery, chief academic officer at the British University Vietnam (BUV) and vice chairman of the Vietnam Business Forum.

Having lived and worked in Vietnam over the last decade, he has witnessed not only the pace of development in the country, but also the enthusiasm of the population to learn key skills to help them acquire better jobs in a globalised workforce.

In his view, activities such as the initial journey from the airport into Hanoi and going shopping, illustrate how much things like infrastructure and supply chains have changed in a relatively short period.

“I’ve really seen a massive change,” Jeffery said.

He notes that modern airports with the latest tech systems are now the norm and that even the landscape throughout the journey into Hanoi tells the story of the country’s rapid modernisation.

“It shows the journey of Vietnam in 10 years, and it’s one that has, from a political – but also business level – really taken on board technology, the 4IR (Fourth Industrial Revolution), and decided that is the future.”

Jeffery noted how the manufacturing and industrial sectors have shifted from, “basic outsourcing to value package outsourcing” by moving up the value chain from its well-established specialties within the IT sector as well as in non-IT skills, such as furniture manufacturing and design. This has enabled Vietnam to be open to opportunities to contribute at every part of the value chain supplying budget retailers as well as more expensive brands.

This coincides with various major global trends coming together, such as the push to diversify manufacturing operations to improve supply chain resilience and rapid technological advancement, to create this opportunity for Association of Southeast Asian Nation (ASEAN) members. As Boston Consulting Group (BCG) points out, Vietnam was selected as the destination for a new Samsung manufacturing hub due to, “the quality of its young and educated workforce, widespread internet access, a domestic venture capital ecosystem, and government incentives and support”. The country has also prioritised advanced manufacturing systems and continues to receive significant foreign-direct investment (FDI).

“That illustrates what Vietnam is good at,” said Jeffery. “When it’s good at something. It’s everything.”

The Mindsets Behind Economic Development

Beyond the political and business level, another powerful driver of the country’s economic performance has been the Vietnamese people themselves. As Jeffery explains, self-motivation and a commitment to learning (especially practical skills that open the door to international career opportunities) have been crucial to the country’s rapid growth.

This can be seen from the construction workers who make small talk in English to practice their skills, to parents who line up outside language centres with their children on weekends and students who develop impressive portfolios of accomplishments at a young age to earn spots in higher education institutions. In his view, this makes the generation that are finishing school ideally suited to the Fourth Industrial Revolution (IR4).

“Vietnamese (people) understand the power of language… if you look at the investment that’s coming in and where it’s coming from, they speak English because it’s the global language but then they will speak another language or another two languages. That gives them that powerful differentiator; they can communicate across every nationality virtually, and that is an amazing thing.”

Building a Business in Vietnam

As foreign investment increases and more businesses expand into the market, a motivated and skilled workforce is incredibly valuable. However, for business leaders, finding this type of workforce doesn’t necessarily guarantee success in the Vietnam market.

“Motivation is key, but the other one is commitment,” said Jeffery.

To him, that means differentiating between achieving success fast and maintaining a sustainable operation for the long term. Building a network is also essential, because it creates a solid foundation and opportunities for growth.

“That’s a great necessity here, because it is a laborious process sometimes, but once you’ve achieved it, it is fantastic,” he said.

Business leaders looking to expand into the Vietnam market or set up operations there face many opportunities for growth. However, success will be dependent on how committed you are to the market.

Christopher Jeffery’s tips for expanding into the Vietnam market:

• Don’t imagine it’s easy. It’s tough and it takes time.
• Trust is key. Building trust, and showing your commitment to Vietnam, is important.
• Find a friend. Whether it’s a commercial friend, or a chamber friend, for example, who knows Vietnam, knows the market, and knows the people.
• Leave your operating system at home. Vietnam operates as Vietnam and trying to impose your mindset of how to do things never works.

QUICK INSIGHTS

➤   Healthcare: Parallel to Vietnam’s economic dynamism is its healthcare system. The World Bank states that between 1990 and 2016, life expectancy rose from 70.5 to 76.3 years – “the highest in the region for countries at a similar income level.” However, the World Health Organisation notes Vietnam as among the countries with the fastest aging population in the world, owing to sharply declining fertility rates.

➤   Media Access &  Freedom: Despite these upward trends, Internet freedom remains low for the approximately 98 million people living in the one-party communist state. Vietnam scored 22/100 (not free) in Freedom House’s Freedom on the Net 2020 report, as government-imposed restrictions on alternative voices continue to raise concerns internationally.

➤   Connectivity: Evidence of Vietnam’s systematic planning to enable economic growth can also be found in the surge of Internet usage over the past decade. Statista figures reveal that nearly 70 million people are now connected – predominantly via mobile device – for activities including studies, ecommerce and entertainment.

➤   Ease Of Business: Vietnam’s sound foundations have also resulted in a strong focus on improving the business environment for foreign companies. The World Bank’s 2020 Doing Business report placed Vietnam 70th amongst 190 economies that were measured on various indicators of ease of doing business.  Of these, the country scored highest in access to credit and payment of taxes, pointing towards improved access to credit information, and upgraded technological infrastructure for tax payments.

The post Investing in Vietnam — Asia’s Bright Spot appeared first on Bizruption Asia.

Yet, as we learned from a recent conversation with Benjamin Ang, a senior fellow at Nanyang Technological University, cybersecurity remains underfunded or overlooked in the grand scheme of what is required to protect an enterprise and generate growth. Ang spends his time  looking at cyber issues from a 10,000 ft view. He digs into the policy aspects of international and national cybersecurity to increase understanding of how disinformation online, international cyber or nation state attacks, and the security of advanced technologies disrupt the real world. From this perspective, the reasons for nations, enterprises and individual consumers securing their data and systems within networks become clear.

However, if you read the business news regularly, you may come away with a picture of a high stakes war with invisible threats and a global talent shortage to address it. Enterprises continue to underspend on areas that may protect them most. Although 47% of Asia-Pacific executives reported in a survey that they plan to increase data security spending in the next 12 months, it comprises less than 15% of typical IT security budgets. The primary focus remains on network security for 37% of enterprises followed by data and application security. Additionally, the consequences of not notifying the public quickly about incidents are escalating – at least in Europe. Yet, Benjamin’s response to that is to offer good news; protecting your business is not as complicated as it seems.

In his view, not enough businesses are implementing practices to be aware of the risks, ensure proper access to IT networks and keep employees trained to reduce the success of breach attempts. The current environment has also led some company leaders to cut corners when it comes to what they perceive as non-core expenses. Their timing could not be worse. Cyber threats and incidents have intensified with attackers adapting to people’s fears around COVID-19 and exploiting vulnerabilities brought to light by digitalisation.

Managing Cyber Disruption

Ang cautioned that leaders holding their business together in this manner need to enter a new phase. That includes getting back to some basic tenets of security by making sure that all employees working at home are provided with the right devices and are thoroughly educated about cyber risks on a continual basis.

“Giving your employees devices and proper access actually makes them more productive, and can also help the bottom line. If your employees are often on calls, but they are in a noisy home environment like most of us are with kids or other family members working from home, can you provide them with a headset and a mic so that they can make a sales call properly? Maybe that helps them to close the deal. Can you provide them with a computer that is going to allow them to pull up the information faster because it’s not creaking at the seams or doesn’t keep crashing out of Zoom calls? These things will in the end, add up.”

It also means helping your employees access the corporate network safely. Ang noted that companies can guide employees in setting up a safe Wifi network at home, but should also consider other places employees may set up their laptop to work.

We can’t take it for granted that everybody’s got the access to be able to do things from home.

If your employees are escaping noisy homes to get some work done at a cafe or to get a reliable internet connection, they could be putting your company at greater risk. Benjamin said business owners should consider what documents their employees are accessing from public places.

“Should your employees be working on confidential documents where everybody can just walk by and see it?”

Despite the potential threats, Ang said business leaders who think about these factors when protecting their company’s data are in the minority. Even large enterprises are still guilty of setting basic passwords to servers in spite of the amount of information available explaining why setting strong passwords is important.

“You can avoid certain more basic things like having unsafe passwords, or employees sharing passwords around, or having passwords in a visible place. These kinds of things still matter, because it is terrifying how many breaches happen because of these basics.”

Benjamin recommends that business owners devise a security backup plan and invest in more IT hardware with the guidance of security experts, especially if there is no dedicated expert on staff. These steps pay off in the long run because your business is not helpless if a breach occurs.

“You either pay upfront, or you pay later when customer data is stolen, there is a ransomware attack, or you get fined from the Personal Data Protection Commission for a data leak. Then your business grinds to a halt for a day, two days, a week, which could actually wipe out some businesses.”

We know that cyber threats will continue to loom over enterprises, especially with the accelerated pace of digitalisation. Establishing or reinforcing basic security processes can mean the difference between focusing on growing your business or facing the consequences of a successful attack.

Recommended reads: Benjamin recommends reading the Singapore Cyber Landscape, which is published annually, and the Safer Cyberspace Masterplan from the Cyber Security Agency of Singapore (CSA) to know the risks and gain insight on how to reduce it.
https://www.csa.gov.sg/news/publications

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In the early days of the pandemic, the industry responded by transitioning passenger fleets to cargo planes. More recently, marketing inventions like “Flights to Nowhere” laid on by Qantas, Royal Brunei, Taiwan’s EVA Air, and All-Nippon Airways have proven to be wildly popular among passengers who simply miss the ‘in-flight’ experience. Singapore Airlines chose a different approach. The national carrier launched Restaurant A380@Changi, offering the public the chance to enjoy the SIA dining experienceonboard one of its aircraft, just sitting on the tarmac. Tickets sold out in less than 30 minutes. Also, Finnair is selling their branded business class meals at a Helsinki supermarket. These efforts to stay afloat, with or without government aid, do not hide the fact that the shape of the economic recovery can make or break airline businesses across the region. The question must be asked – how long can this situation go on? However inventive these schemes are, they barely make a dent in the loss of revenue from the suspension of actual flights.

Looking into 2021, a rebound in the industry is dependent on countries getting the virus unders control and people believing that it safe to fly internationally

In India, Fiji Airways India General Manager Sajid Khan believes a V-shaped recovery seems possible for the industry, but only once the borders are reopened for international travel. “The sale is already done,” Sajid noted about travel agents in the country who have retained bookings for annual holidays. “Now all the travel companies are thinking, what do I do with this? Where do I take these people?” He surmises that this opens up opportunities for destinations in Asia that have controlled COVID-19 infections, like Fiji, when the borders reopen for tourists. Brave words, but realistically, which destination will be willing to accept visitors from India, second only to the U.S. in the grim COVID-19 league table?

Here’s the problem; COVID has not shown any signs of retreating, so what airlines choose to focus on now is important. Door to door safety during travel will be a great concern for passengers, so plans to sanitise aircraft fleets, airport terminals, and their transit to and from airports can’t be temporary actions. Measures such as touchless travel, free masks and hiring wellness officers to cover airport terminals and flights add costs to an already stressed industry. Sajid believes that passengers will ultimately win in this scenario.

Moves to enhance the “no-touch” travel experience are underway. Daniel Baron, who operates LIFT Aero Design, an aircraft cabin design studio, acknowledges that touchless travel “promises peace of mind,” adding that the industry needs to get to a state of, “not having to even think about ‘clean’.” Other proposed measures include plexiglass dividers between passengers, staggered row layouts, zig-zag seating, and even space-age transparent bubbles around travellers’ heads. Will such innovations really get passengers back on board? Not on its own.. These are only secondary features for airlines to boast about once destinations are fully open and flight schedules are back to something like normal.

Safety on board the aircraft is not the only issue. Onerous testing procedures and lengthy quarantine periods imposed by authorities have proved a major disincentive to travel, even as borders reopen in some places. The new head of British Airways Sean Doyle said that the UK risks being “left behind” if quarantine measures remain in place.

In remarks to Airlines 2050 conference virtual attendees, he pointed to IATA data suggesting that, since the start of 2020, 1.2 billion people have travelled but only 44 coronavirus cases have been linked to flights. He told the conference, “the best way to reassure people is to introduce a reliable and affordable test before flying.”

Governments are doing all they can to restore regular flights, once control over the virus is deemed good enough to warrant the risk. Air corridors are being established between countries and cities considered safe for visitors, including Australia to New Zealand and Singapore to Hong Kong. Singapore Airlines also plans to restore non-stop flights between the island state and New York. Thailand is negotiating with China to set up a quarantine-free corridor by the end of this year, and the UK and U.S. are in similar talks. The UK established an air bridge with Portugal in late August – and closed it again a few weeks later as COVID-19 cases rose. The conclusion is obvious; the overwhelming need is to conquer the virus, and no one can confidently predict when this happy state of affairs will be achieved.

Consumers wield considerable power in determining the fate of the industry. If they aren’t comfortable flying, airlines will continue to suffer. A survey by Wego.com of Asia Pacific travellers conducted between May and June of this year found that 39 percent plan to book a trip once international flights resume. More than half of would-be travellers would only consider getting on a plane again when they personally feel it is safe to travel, according to GlobalWebIndex.

Airlines must do more than implement cosmetic measures and cross their fingers that they can survive until a vaccine is available. Colin Neubrunner, vice president of marketing at Oman Air, says airlines need to move beyond merely surviving. He believes the crisis has exposed serious structural issues around the industry’s decades-old practices, adding that a major digital overhaul is long overdue. To him, this means fewer, smaller carriers and transforming the business model to focus on selling travel experiences, rather than just seats.

If you are an optimist like Sajid, you may believe that once travel restrictions are lifted, consumers will simply be eager to return to air travel with a vengeance, after having taken family holidays for granted. Outdated business models and shaky consumer confidence may facilitate a radical restructuring of the aviation industry, that delivers flights the way Uber serves up taxis, or Netflix keeps us hooked on watching videos.

Airlines must do more than implement consmetic measures and cross their fingers that they can survive until a vaccine is available

Low-cost, domestic-focused carriers may be the first to recover as leisure travellers focus on value. China’s budget carrier Spring Airlines is seeing this exact trend as the country’s domestic aviation market rebounds. In September, Spring’s passenger traffic was up 47 percent and the airline’s load factor was close to 90 percent as it redirected planes from closed international markets. In the face of global industry gloom, Spring has added more than 60 domestic routes since May and will put on another 20 in the coming months.

Full-service carriers, like Japan Airlines, have indicated they may follow Spring’s example and expand low-cost offerings. But Spring’s positive outlook is only possible because China – for now at least – has the pandemic under control. Whether airlines switch to a digital business model or follow traditional cost-cutting tactics, the 1,000pound gorilla is still sitting in the corner. Until the pandemic is over, the future of aviation can only be described as turbulent.

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