Latest EM label: the chopsticks

Emerging market fund managers like to deploy snappy buzzwords to help attract the attention of increasingly risk-averse investors.

So far we have the Brics, the Civets and the Next 11, to name the most popular.

And now, courtesy of Truong Gia Binh, one of Vietnam’s richest businessmen, we have the “chopstick economies”.

Binh, who founded FPT, Vietnam’s biggest software company, believes the countries where chopsticks predominate – China, Japan, Singapore, South Korea, Taiwan and Vietnam – all share key cultural values including saving, respect for knowledge and hard work.

He argued at an investment summit organised by The Economist in Hanoi on Wednesday that these values were key factors for economic success and that Vietnam, as the laggard among the group, would soon follow in the footsteps of its richer East Asian neighbours.

“Vietnam will become like China, South Korea, Japan and Singapore,” he told investors.

“I strongly believe in the will of the nation to [acquire] knowledge.

I see a future boom for IT and telecommunications inVietnam.”

There is an ongoing academic debate about the cultural drivers of Chinese and East Asian economic success within the region and beyond.

The more prosaic concern for investors looking at Vietnam, much in evidence at The Economist summit, is that the Communist government, beset by conflicts of interest and corruption, is failing to prescribe the tough macro-economic medicine needed to ensure the country’s future success.

In 2008, a major UN report argued that Vietnam needed to urgently increase the quality of education and infrastructure, cut inefficient public spending and create a level playing field for the private sector if it was to become an east Asian tiger like South Korea or Taiwan rather than a flagging southeast Asian crony capitalist state.

Many analysts and investors believe that Vietnam has made little progress on these key issues since then, as inflation has soared, state finances have been squeezed and struggling state-owned companies have absorbed ever more capital – all against the backdrop of an ongoing global financial crisis.

In short, there is much work to be done if Vietnam is to live up to Binh’s “chopstick economy” vision rather than being handed the wooden spoon by investors casting their eye over an increasingly competitive world.


Source: FT


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