A Tale of Two Economic Policies: Why Vietnam's Doi Moi BEATS the Filipino First Policy

Updated on: July 18, 2026

Last July 7, 2026, I read an article from ABS-CBN called "A tale of two economies: Why the Philippines now lags Vietnam". I found the art above on Facebook; perhaps it's AI art that shows the Philippines lagging behind Vietnam. The Philippines used ot be ahead, but what happened? Speaking of ABS-CBN, I'm still reminded of how the network has the tendency to be hostile to constitutional reform. Now, putting that aside, I'd like to share an excerpt from the article, for a start:

The Philippine Department of Economy, Planning, and Development (DEPDev) admitted that the Philippines has been on a slow growth pace for the past decades. Secretary Arsenio Balisacan said many ASEAN neighbors have outgrown the country, including Vietnam.

“If you’re asking why we are poor, the big part of the story is the country has not grown as fast as our neighbors,” Balisacan said.

Comparing the Philippines to other ASEAN neighbors, Singapore’s GNI per capita is $81,760, Malaysia $12,380, Thailand $7,690, and Indonesia $5,120. Singapore is a high income country, while the rest have been upper-middle income in recent years. The Philippines and Vietnam both graduated together to upper-middle income this year, but the latter has a higher GNI per capita.

But why is the Philippines achieving slower growth?

“When Vietnam opened up its economy to foreign investors, it made it clear that it signals to the world its major driver for growth would be exports and foreign investments,” Balisacan said. 

He said the Philippines did not follow that path and instead started exporting labor and was dependent on domestic consumption for growth. He added that Vietnam chose to beef up its industries, opened up the economy, and improve its exports sector.

“We neglected developing our exports sector, our competitiveness. We didn’t invest in competitiveness, productivity, and we were so constrained, foreign investors are constrained from coming into the country,” he said.

Balisacan said the Philippines has been playing ‘catch-up’ in recent years. Several reforms have been made to make it easier for foreign investors to invest in the Philippines. He said there is also now an emphasis on manufacturing, semiconductors and other higher quality industries.

He also said that other industries must also be strengthened like tourism, agriculture.

“We have realized that for us to continue growing and to continue making our economy resilient, we need to get the other drivers of growth coming in, to complement consumption,” he said.

Balicasan's statement made me think about blame gaming. In fact, I even wrote an article about how the Philippines can never get richer, blaming its richer Asian neighbors. Sure, Filipinos can start pointing fingers, like saying, "It's the fault of Singapore!" Come on, the late Lee Kuan Yew already told Filipinos some time ago to remove unnecessary restrictions. It was during the Philippine Business Conference in 1992, when LKY said this:

First : Restore law and order. Make Manila safe from organised kidnapping and major crimes.

Second : Concentrate on economics not politics or more accurately, politicking . Lift restrictions on trade and investment. Dismantle the web of measures which keep out foreign companies and make Philippine companies compete to survive, not thrive at the expense of ordinary Filipinos.

Third : Build up your infrastructure, like power stations, roads and communications, either in partnership with or completely by the private sector.

Comparing the Filipino First Policy vs. Doi Moi

However, the Philippines remained stubborn. After reading From Third World to First, I thought about how Communist Vietnam listened to LKY's advice and the Philippines didn't. In fact, the difference was night and day. The book showed LKY's encounter with Vietnam, where his description of the Vietnamese back then would probably be a grim reminder of what if the late Jose Maria Sison won the revolution. However, Vietnam changed course in late 1986, two years and some months after the first EDSA Revolution. This was when Doi Moi, or restoration, became the new policy. 

Sure, some people are still blaming Ferdinand E. Marcos Sr., who has been dead for more than 20 years. Comments like, "If only Marcos had never sat in power, the Philippines would still be richer." Well, newsflash, that kind of mentality is crying over spilled milk. Hypothetically, even if the Marcos Wealth was returned to the Philippines, that would just be a short-term wealth increase. It might be easy to say that Balicasan isn't mentioning the Marcos wealth because President Ferdinand "Bongbong" R. Marcos Jr. is Marcos Sr.'s son. However, that's just another red herring and for some, it's intergenerational hatred.

The Philippines had the Filipino First Policy, which was first introduced by Carlos P. Garcia. However, it mutated overtime and it still persists today. Article XII of the 1987 Constitution of the Philippines further enforced Garcia's policies as if they were the best thing on Earth. It should be ironic that Doi Moi was implemented in December 1986. The 1987 Constitution of the Philippines was ratified on February 2, 1987, after it was drafted in October 1986. 1986 was the year of the interim government. Honestly, the late Maria Corazon Cojuangco-Aquino should've remained in a ceremonial role, like she did during EDSA. Vietnam was probably even poorer than the Philippines, especially since it was still under Vietnam's isolationist policies. However, things changed when the two countries implemented different policies. The Philippines continued with the Filipino First Policy, while Vietnam didn't.

Sure, one can brag that the growth rate "miraculously grew" under former president, the late Benigno Simeon "Noynoy" C. Aquino III. The Philippines' growth rate was naturally going to be higher because the Philippines was still catching up. Growth rate is the percentage of the total. However, Vietnam was still doing economically better overall because it had sustained growth from 1987 (since Doi Moi was first implemented in December 1986) up to that time. However, the Philippines was still stuck with a certain degree of jobless growth. In fact, the CNBC article by Felipe Salvosa, also has this truth sadly written as a flaw under Noynoy:

Under President Benigno Aquino, in office since 2010, unemployment has fallen. The latest figures show the rate at 6.4 per cent in the second quarter of this year, down from 7 per cent a year earlier. But progress has been uneven and the Philippines still has one of the highest rates of unemployment in the Asean region.

Basically, the Philippines had some improvement under Noynoy, but was it long-term sustainable? Sure, the growth rate may be above that of Vietnam at that time. The big issue was that Vietnam, despite being a Communist state, actually reversed the policies that make North Korea an undesirable destination. Doi Moi happened when Nguyen Duy Cong aka Do Muoi, who was then the economics secretary under Nguyen Van Linh, saw the need for practicality. Vietnam puts all forms of economic restrictions into legislation. Protectionist policies should be placed as legislative moves. That means every protectionist act should be repealed by legislation. That's what even makes Vietnam's FDI ownership restrictions far better than the Philippines. In the Philippines, the protectionist measures are embedded, which makes it cumbersome to amend them when the time needs. Sure, Article XVIII exists, but it requires a 2/3 vote, and the Philippines is known for being slow, because the system encourages it. 

For people who think that Vietnam is an example of, "See, if the Philippines follows the self-industrialization path with national industrialization and agrarian reform, not accepting open FDI, it will be like Vietnam." However, that's a poor analysis of history. It was a fallacy presented by the now-defunct Philippine Anti-Fascist League (a new page exists, but barely gets attention, thankfully) Facebook page. Vietnam swallowed its pride, and while it remains a Communist country, it certainly has understood better economics. Vietnam didn't "enrich itself first" before accepting FDI. Instead, Vietnam accepted FDI while it was still a downtrodden country. Vladimir Lenin had the "one step backward for two steps forward" for the New Economic Policy. Doi Moi got institutionalized in Vietnam.  

On the other hand, the reality is far from what some fantaserye mentality (such as from the now-defunct Philippine Anti-Fascist League page) would suggest. Diwa C. Guinigundo of the Business World provides this insight on this one:

DISCIPLINE OF PURSUING LONG-TERM NATIONAL VISION

Perhaps the most enduring lesson from Vietnam is therefore not any single policy but the discipline of pursuing a long-term national vision. As Khalidi noted, Vietnam has consistently planned not only for the next five or 10 years but for the next half century. Such strategic continuity has provided investors, businesses, and citizens with confidence that priorities will outlast political cycles.

Đổi Mới gradually dismantled restrictions on trade and investment, encouraged private enterprise, strengthened property rights in agriculture, and integrated Vietnam into the global economy. At the same time, the government deliberately nurtured industries capable of competing internationally through export-oriented manufacturing and carefully planned industrial zones.

STRIKING RESULTS

The results have been striking. Global companies such as Apple, Intel, and Microsoft, together with manufacturers serving the aerospace, electronics, apparel, and automotive industries, have established significant operations in Vietnam. More importantly, these investments have become vehicles for technology transfer, workforce development and integration into global value chains rather than isolated investment projects. 

None of this occurred overnight. Vietnam confronted enormous obstacles after decades of conflict. Its transformation was gradual, requiring institutional reforms, macroeconomic discipline, expanding international part-nerships, and continuous investment in productive capacity. Yet throughout this period, the country’s strategic direction remained remarkably steadfast and consistent.

International organizations have repeatedly noted the results. Millions of Vietnamese have risen out of poverty. Literacy and educational attainment have improved substantially. Human development indicators have strengthened alongside economic growth. Infrastructure has expanded rapidly, while policy continuity has reinforced business confidence and encouraged sustained, enormous foreign direct investment.

The comparison with the Philippines is instructive, not because the two countries are quite identical, but because they started from broadly comparable levels of development several decades ago.

THE PHILIPPINES AND VIETNAM

The Philippines enjoys many strengths: relatively stable macroeconomic fundamentals, a young population, a resilient financial system, and a globally competitive labor force. Overseas Filipino workers have made invaluable contributions to national development through remittances that have supported domestic consumption and macroeconomic stability for decades.

Yet Vietnam pursued a somewhat different development trajectory. Its reforms consistently focused on building domestic productive capacity through manufacturing, exports, and technology-intensive industries. The emphasis was not simply on producing more goods but on steadily increasing productivity through investment in people, infrastructure, and industrial capability.

Today, Vietnam has become one of the ASEAN’s fastest-growing manufacturing centers and an increasingly important participant in global supply chains. Continued investment in ports, logistics, industrial parks, and transport infrastructure has strengthened its attractiveness as businesses diversify production across Asia.

ESCAPING THE MIDDLE-INCOME TRAP

Significantly, Vietnam’s ambitions no longer stop at manufacturing. Having substantially expanded industrial capacity, the country is now pursuing a more demanding objective: escaping the middle-income trap through innovation.

This represents the next chapter of Đổi Mới rather than a departure from it. Economics

Vietnam’s development  strategy increasingly emphasizes innovation, digital technologies, artificial intelligence, green growth and higher productivity. The objective is not merely to produce more with additional labor and capital, but to generate sustained improvements in total factor productivity through knowledge, technology, and creativity. Increasing total factor productivity enables  economies to produce more value from the same resources through better technology, improved organization, and stronger institutions.

This  strategic shift reflects an important economic reality. Early development can often rely on mobilizing labor, expanding infrastructure, and attracting investment. As economies mature, however, future growth depends increasingly on innovation and technological upgrading.

Vietnam appears to understand this transition well.

More than a decade ago, the OECD observed that while Vietnam had successfully diversified exports, it would eventually need stronger science, technology, and innovation capabilities to sustain growth in a less favorable global environment. That assessment remains highly relevant today. Rather than waiting for productivity gains to slow, Vietnam has increasingly positioned innovation as the principal engine of its next phase of development.

The real reason behind the lag

The reality is that the Philippines' decades of Filipino First Policy, aka Pinoy Pride Economics, is what caused the Philippines to lag behind Vietnam. Filipinos may have spent "too much time" listening to the local "experts" like Atty. Hilario G. Davide Jr. instead of practical advice from people like Mahatir Mohammad. The Philippines may brag that it's a democracy and point out that Vietnam is a Communist state. The irony? A Communist country understood economics better than a democratic one. Vietnam became more aggressive in courting FDIs over the Philippines.

Both Vietnam and the Philippines are rich in natural resources. Some may say Singapore only opened to FDI because it lacks natural resources. The Philippines has that advantage over Singapore but why was it left behind? Vietnam decided to learn from Singapore, and the results were different. Under Doi Moi, Vietnam stopped depending on its natural resources alone. Sure, there's fear that FDI can ruin the natural resources. That's why there are environmental laws to control the business environment in general. No one needs a PhD from the Greenbelt area to understand that basic concept! 

What now, Philippines? Would we rather have Pinoy Pride all the time and yet fail to meet basic needs, such as employment? Vietnam is already defeating us economically. It's time to think about swallowing your Filipino pride or choking on it.