Accessibility links

Breaking News

North Korea Studies Vietnam for Development Ideas

North Korean Foreign Minister Ri Yong Ho, left, poses with Vietnamese Prime Minister Nguyen Xuan Phuc for a photo during a meeting at the Government Office in Hanoi, Vietnam, Saturday, Dec. 1, 2018.

Vietnam, a fast-growing country that’s liberal on trade and has friends in multiple countries, is offering to help advance North Korea, a fellow communist state that’s impoverished as well as distrusted by the West.

Vietnamese deputy Prime Minister Pham Binh Minh said his country was "ready to share" with North Korea its socio-economic development and nation-building experience, Viet Nam News reported Friday.

North Korean Foreign Minister Ri Yong Ho visited the Southeast Asian country from Thursday to Sunday.

The host's offer probably means teaching North Korea to prosper economically under existing authoritarian rule, experts believe.

"The Kim regime expresses interest in Vietnam’s development experience because the country managed to realize reform and rapid economic growth while maintaining one-party rule," said Leif-Eric Easley, international studies professor at Ewha University in Seoul.

Lessons to teach

Vietnam’s government and Communist Party are "willing to work with (North Korea) to promote exchanges and cooperation in all fields," Minh said, as quoted by the party’s official website Nhan Dan.

Vietnamese media outlets did not elaborate on how the two sides would cooperate but hinted at future exchanges.

The Southeast Asian state would have its economic expansion to share. Growth in Vietnam is one of the fastest in Asia with GDP in the first half of this year expanding about 7 percent after several years of near 6 percent growth. The Asian Development Bank estimates 7.1 percent growth for the full year.

Vietnam, like China, began opening to foreign investment in the late 1980s. Today, low labor costs bring investors from all over East Asia to set up factories producing exports. Low-value production is starting to give way to higher-value items such as electronics.

"They've recognized that China made huge economic progress after it made reforms, and I think probably the most important transformation that happened in Vietnam was about a decade ago when the government realized they needed to really accelerate the development of value added manufacturing," said Rajiv Biswas, Asia Pacific chief economist at IHS Markit.

Sanctions and poverty in North Korea

Vietnam pursues a neutral foreign policy that allows trade with China, the West and within Southeast Asia. Vietnam was one of 11 countries in the defunct Trans Pacific Partnership trade pact and expects to finalize a free trade deal with the European Union.

North Korea, by contrast, trades mostly with China. It has faced 12 years of economic sanctions imposed by the United Nations Security Council, which is alarmed by its tests of missiles and possibly nuclear weapons. Those have stunted exports of minerals and factory goods. The U.S. government imposes its own list of sanctions.

"The overall Vietnamese economy, as you can see it joined the (Trans Pacific Partnership), it’s still steering an economic course that favors the United States a bit," said Tai Wan-ping, international business professor at Cheng Shiu University in Taiwan.

North Korea’s GDP contracted by 3.5 percent last year, its weakest showing in two decades, the South Korean central bank says. An estimated 40 percent of North Koreans live in poverty.

Venturing outward

This year has seen a surge in diplomatic activity aimed at ending North Korea’s isolation. A first-ever meeting in June between North Korean leader Kim Jong Un and U.S. President Donald Trump capped that momentum.

"Foreign Minister Ri Yong Ho's visit (to Vietnam) is likely meant to signal Kim Jong Un's focus on economic development ahead of the North Korean leader’s New Year’s speech that will call for removal of international sanctions," Easley said.

Regional connections

North Korea will want to learn from Vietnam how South Korean investors have come to be responsible for about 20 percent of Vietnamese exports, in case it can find an inter-Korean connection, said Song Seng Wun, economist with the private banking unit of CIMB in Singapore. The two Koreas have aimed this year to strengthen their own economic ties.

North Korean leaders may also want to learn how Vietnam recovers from hitches in its development, Song said. In 2011, inflation, currency rates and labor unrest were threatening foreign investment in Vietnam, but those issues no longer weigh on economic growth.

“Kim is more interested in terms of what to learn from Vietnam, so why it failed initially but seems to be moving back to traction this time around," he said, referring to "high" inflation before the global financial crisis of 10 years ago.

Southeast Asia beyond Vietnam is on North Korea's radar, too.

Although China accounts for about 85 to 90 percent of trade with North Korea, seven Southeast Asian countries did business worth $181 million with Pyongyang in 2015, the Brookings Institution research group said in a report last year.

Some North Korea-Southeast Asia trade may violate U.N. resolutions and involve arms shipments, the Brookings Institution says.