With Fidel Castro’s death, the world spotlight is on Cuba.
In many ways, Cuba is curiously similar to Vietnam. It is a single party state that was shut off from the global spotlight for many years. Vietnam has soared since it opened its doors under doi moi in 1986 and we believe Cuba has the potential to do the same. We outline four similarities between Vietnam and Cuba below.
Note: Our friends at Viet Capital securities also did an in-depth, heavily researched piece on similarities between Vietnam and India as investment destinations. A crucial read for any emerging market investor.
1) Tourist Destination
Vietnam has been slowly flexing its tourism muscles this decade. In fact, just this month, 926,642 tourists visited Vietnam. Sites like Halong Bay and My Son are becoming staples in luxury travel tours, and figments of Vietnamese culture like the gorgeous Ao Dai are being recognized in mainstream fashion.
Cuba may be just spreading its wings. Travel guru Kevin Ferguson provided an excellent travel diary on Cuba that we shared above. The country saw a record breaking 3.1 million tourists enter its borders in 2015. That was a 17.5 percent increase year over year. A large part of Cuba’s tourism draw comes from its perception as a country lost in time. Americans have been barred from it for almost half a century. Tourists are almost walking into another era, as classic cars like Chrysler DeSotos and Ford Fairlanes glide through the streets.
2) Single Party State
Both Vietnam and Cuba are ruled by single party states. However, Vietnam has proven that with enough privatization and global trade, single-party states can prosper. Vietnam’s economic evolution began when it launched the Doi Moi in 1986, a set of policies aimed at creating a “socialist-oriented market economy.” Trade moves the world and the past decade has seen Vietnam capitalize on and prosper from that trend. The government is now aiming to privatize 400 large corporations, and gates have been opened to foreign investors, who have flooded local businesses with capital.
The same could happen for Cuba. The seeds for this economic evolution were planted when President Obama and President Raul Castro appeared on national television and announced the end to half a century of animosity. As with Obama’s Vienam visit, economic implications abound. Furthermore, Netflix and Air BnB are now operational in Cuba, Hollywood films are being filmed there, renowned socialites like Paris Hilton and Rihanna have stopped by to party. Flights and ferries for American tourists are just starting, and an American embassy was recently opened in Havana. While there is still much to do, like lifting the trade embargo for instance, Cuba is moving towards integration.
3) Literacy Rate
Vietnam boasts an astounding literacy rate of 97.3 percent among its population aged between 15 and 30. Cuba displays an even more incredible 99.7 percent. Cuba has 36,doctors, which is twice the number of doctors per 1000 people than the US. “An educated population provides countries with the labor force it needs to compete higher up on the global value chain,” opined Louie Nguyen, long time Vietnam investor.
In fact, that educated population is one of Vietnam’s biggest draws to foreign companies looking to set up factories in its borders. While Cuba may not be launching revolutionary learning apps like Vietnam’s KidsOnline anytime soon, it still harbors tons of potential. If Cuba can extend to educate its population beyond literacy, it could harbor similar appeal.
4) Large US Immigrant Population
Vietnamese immigrants have a long history in the U.S. The prevalence of Vietnamese restaurants and the nation-wide love for Pho are evidence of that. A large immigrant population represents meaningful intellectual capital and potential technology transfer. Immigrants are also responsible for a high level of remittance which can be a source of needed foreign capital.
Like Vietnam, we are optimistic that Cuba has the necessary factors and will be soon be on its way to prosperity.