The choice of Hanoi for Kim Jong Un's second summit with U.S. President Donald Trump holds
particular significance for the North Korean leader.
Vietnam and the U.S., once military enemies, are now partners in trade.
That history could offer Kim a road map for making peace with the world’s mightiest superpower.
And Kim is reported to have already discussed Vietnam-style reforms to transform his country's
dilapidated economy.
This is your Bloomberg QuickTake on why North Korea is looking for lessons from Vietnam.
Vietnam has much in common with North Korea.
Both fought wars with the U.S. and both are among the few nations that retain communist elements.
In the ‘80s, both had poor-performing state-led economies and experienced the shock of aid
and trade loss when the Soviet Union fell.
But how they responded set them on different paths.
The Vietnamese government introduced market-led economic reforms, downsized its military,
improved relations with the U.S., and opened itself to the world for aid, investment and trade.
Since then, Vietnam has completed more than a dozen free trade agreements as it embraced
a “socialist-oriented market economy” and welcomed international companies — like
South Korean tech giant Samsung, which has brought more than 100,000 jobs to Vietnam.
And it’s paying off.
Average annual incomes in Vietnam rose to almost $2,600 in 2018, from about $400 in 2000.
Vietnam now has one of the highest GDP growth rates in the world.
North Korea on the other hand, has one of the lowest.
That’s because the North Korean government headed in a much different direction.
It adopted isolationist, self-reliant economic policies, increased military tensions by pursuing
a nuclear weapons program and took a confrontational approach toward the U.S.
Although its economy was stronger than South Korea’s in many areas through the ‘70s,
North Korea has fallen rapidly behind and suffered devastating famines since then.
Now, the average annual North Korean income is estimated to be just under $1,300 — less
than a 20th of South Korea’s.
But there is a glimmer of hope for the crumbling North Korean economy.
Kim has declared a “new strategic line” which prioritizes economic development.
This includes improving relations with the international community and opening special
economic zones.
Since Kim took power in 2011, the number of these zones — designated to promote manufacturing
and trade — has increased fivefold to 27.
In 2018 he started visiting country leaders, starting with Xi Jinping in China, followed
by many other diplomatic trips.
Kim's regime seems intent on an economic turnaround and Vietnam offers a route to follow.
The country even sent its foreign minister to North Korea with the message that it stands
ready to share its experience.