02/27/2015 01:09 EST | Updated 04/29/2015 05:59 EDT

How Vietnam Is Putting Other ASEAN Countries on the Map

In the past 20 years, Vietnam has come out from the ravages of war to become as some prominent observers have called the "New Asian Tiger". It is emerging as a key economic and geo-strategic pillar of Southeast Asian stability.

Vietnam's Prime Minister, Nguyen Tan Dung, is the chief architect behind Vietnam's profound and ongoing transformation. Because of that, he is increasingly acknowledged as the senior statesman -- or "First Among Equals" -- within the Association of Southeast Asian Nations (ASEAN).

Writing in The Diplomat this week, Julio S. Amador III and Jeremie P. Credo observed that in dealing with regional flashpoints, Vietnam has used both hard and soft power approaches. It has strengthened its military and non-military presence in disputed waters of the South China Sea. It has chosen to be diplomatically proactive, internationalizing the issue to gain the support of other countries. And it has elevated and strengthened bilateral relations to strategic partnerships.

The prognosis for Vietnam continues to be very positive. Foreign investment is up, inflation is well under control, the economy is opening up, bureaucratic inertia is being beat down, corruption is being tackled, and hundreds of state owned enterprises are being restructured or put up for sale. All of this is inevitably a boost to investor confidence.

Vietnam's leadership and trade liberalization is having a positive effect on the rest of ASEAN countries. The ASEAN region is on the radar for investors in the hunt for more diversified growth opportunities, particularly against the backdrop of weak commodity markets and political instability in eastern Europe, the Middle East, and parts of Africa.

Standard Chartered Bank of London recently reported that foreign investment in Vietnam is growing at one of the highest rates among ASEAN countries. GDP expanded 5.98 percent in 2014, and inflation has stabilized at around 3 percent, a dramatic improvement from more than 18 percent that threatened Vietnam's prosoects in 2011.

Vietnam joined the World Trade Organization in 2007. This opened up the country to trade, investment and commerce that the country had never before experienced. Dung was instrumental in negotiating Vietnam's entry into the WTO, and his government is today negotiating six free trade agreements, including with the European Union, the Trans-Pacific Partnership and the Customs Union.

There's no putting the liberalization genie back in the bottle. In Hanoi last week, Dung said, "Trade agreements require us to be more open so our market must become more dynamic and efficient. We must build a more transparent legal platform to ensure flexibility and alignment with international practices in the local market."

Analysts seem to agree. In a comprehensive analysis published this month, PricewaterhouseCoopers forecast how the world's economies could look like in 2050. According to PWC, the world economy is projected to grow at an average rate of just over 3 per cent per year from now to 2050, doubling in size by 2032 and nearly doubling again by 2050. Vietnam is projected to be the 19th largest economy in the world. For some perspective, meanwhile, Canada, a G8 country, is projected to be in 17th place, only two ahead.

This is twenty-first century "communism" for you -- a paradigm-shifting, mind-bending blend of unfettered capitalism and loosening state control.

Impatience is sometimes a virtue. It drives change. But even the remarkable shift in Vietnam isn't fast enough for some. Dung's challenge remains to finesse a fine balance between the pace of economic liberalization and institutional reform and political stability. That careful balancing act is certain to displease critics who are convinced Dung is going either too fast, or too slow.

The smart money has been steadily and increasingly betting on the soundness of the Dung government's direction and leadership. It has lead to economic growth, new prosperity, and political stability in Vietnam and the entire region. Dung is no longer someone to watch. He's being recognized as the indispensable senior statesman in a vital corner of the world.


Photo galleryWhat's In Canada-China Trade Deal? See Gallery