It has planned for this day for years but, nonetheless, when Vietnam becomes the 150th member of the World Trade Organisation today, it will be bracing itself.

Clothing manufacturers, seafood producers and other big exporters are hoping to cash in. Others, from livestock farmers to insurance companies, are getting ready for a wave of new, tough foreign competition. Politicians will face calls for further, far-reaching reforms.

That the country will reap a rich dividend from WTO membership is not widely doubted. Economists predict that Vietnam will continue to enjoy roaring growth of about 8 per cent for the foreseeable future.

Indeed, Martin Rama, the World Bank’s lead economist in Vietnam, said that the country had been reaping the benefits of WTO membership even before it joined formally. “If you look at the amount of foreign direct investment arriving in the last year, when it was clear that Vietnam was going to make it, you see the surge already happening,” he said.

This week the world’s largest electronics subcontractor, Hon Hai, a Taiwanese company that makes components for iPods and some Nokia phones, announced plans for a $1 billion plant near Hanoi. It followed an announcement by Intel, the computer chip maker, late last year that it would build another big factory in the south.

American, Japanese, Taiwanese and South Korean investors have been rushing into Vietnam, hoping to take advantage of a literate labour force that is cheaper than India or China. With the guarantee of stability that WTO membership provides, others are following suit.

Mr Rama said: “It is difficult not to be optimistic about economic growth in Vietnam and we think that, in the medium term, the kind of growth rates we are seeing now will remain sustainable. Seven, eight per cent, maybe slightly above that, over the next five years is perfectly reasonable.”

It is hardly surprising that there are few dissenting voices on the question of WTO membership. Vietnam is not a country where the ruling Communist Party’s decisions are openly questioned. No one has publicly criticised the decision to join, even though there are likely to be tough consequences for pig farmers, for example, once American imports start to arrive.

Vu Ngoc Ky, the head of the Vietnamese farmers’ union and a senior party member, admitted that there were going to be hard times ahead for many of his members. “I think one third of our members are under- employed and will have to leave farming — around ten million labourers. We are working to provide training for them so they will satisfy the needs of other industries, particularly service industries.”

WTO membership is likely to have political effects as well, according to Jonathan Pincus, chief economist for the United Nations Development Programme in Vietnam. He said: “It will give those within the party who want to further liberalise the economy support to overcome special interest groups in the state-owned sector.”

Although Vietnam is booming, it is starting from a very low base, with a GDP per head just 20 per cent of nearby Thailand. The Communist Party has high ambitions for its “socialist-oriented market economy”, but in truth, there is little that is socialist about Vietnam’s economy. It has a huge and bloated state sector, which enjoys cosy relationships with banks and government at all levels, but state firms act as national capitalists. In some senses, Vietnam’s economic policy is more Gaullist than communist as it seeks to build national champions in sectors such as shipping and energy.

The party knows that this will not be enough to satisfy Vietnam’s huge young population. With a million new entrants into the labour force annually, the country desperately needs foreign investment to employ those leaving school or being cast out by agriculture.

At a glance

84.4m
Population of Vietnam

70.8
Life expectancy

8%
Growth rate of gross domestic product

$2,800
GDP per capita

2.4%
Rate of unemployment

19.5%
Who live below the poverty line

25.9
Median age

90.3%
Literacy rate

8.3%
Inflation rate

Source: CIA World Factbook

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