The sinking of a tourist boat in the stunningly beautiful waters of Halong Baythis year, which killed 12 people, has illustrated how Vietnam's rush to catch up to the other Asian tigers has run into troubled waters.
The vessel in the Halong tragedy in February was, according to reports, a rickety affair, under the guidance of a 22-year-old captain. While the young man survived the sinking, one of his crewmen and 11 of his passengers, mostly young backpackers, did not.
Undoubtedly Halong Bay has earned its sixth place among National Geographic's top 10 cruise spots in the world. But in its rush to capitalise on this, Vietnam's safety standards and regulation have fallen behind, if they exist at all.
Unlike neighbouring Thailand, which has decades of tourism behind it, Vietnam is a relative newcomer to holiday travel. Tourists spend about US$500 (Dh1,835) in Thailand for every $100 in Vietnam, according to government figures. This is something the authorities would dearly like to change.
And it is not just its tourism industry that is now under pressure to play catchup. Vietnam has lofty ambitions. Ever since the long and bloody war with the US ended in 1975, the country has struggled to rebuild its economy and emulate the examples of other Asian tigers, such as South Korea, and especially China, its northern neighbour.
There is no reason it should not. The US ended sanctions in 1994, which effectively welcomed Vietnam back into the global economic fold. Since then, it has become a manufacturer of everything from computer parts to footwear.
So successful has it been that Vietnam is now becoming a serious alternative to China for companies looking for offshore manufacturing. Recently, Nokia said it would build a $275 million (Dh1.01 billion) manufacturing plant for cheap handsets outside the capital Hanoi. And Intel, the world's largest chip maker, has opened a $1bn assembly and test plant in Ho Chi Minh City.
Not long ago, this kind of investment would have almost certainly gone to China. Analysts say Vietnam's labour costs are up to a third less than China's.
To illustrate the point, Wintek, based in Taiwan, which makes panels for iPhones, said it would invest $150m in a new factory in Vietnam.
"The major factor in us choosing Vietnam is to reduce labour costs as compared to China," said Jay Huang, a spokesman for the company. "We have relatively high capacity in China, which we'll continue to use for R&D [research and development] and high-end manufacturing."
The result is Vietnam's confidence in taking on its old rival is growing; it is pouring billions of dollars into its ports to accommodate the world's largest container ships, to draw exports away from China.
"Vietnam is so heavily dependent on external demand that getting the entire system to work, not just ports, but roads and railways too, and making customs work faster, is a big part of the story," said Jonathan Pincus, the dean of the Harvard Kennedy School's Fulbright economics teaching programme in Ho Chi Minh City.
As much as 440 trillion dong (Dh77.56bn) will be spent this decade to increase deepwater port capacity for larger vessels.
This could not come soon enough. Vietnam runs a trade deficit that is approaching $1bn a month, which is putting pressure on the ruling Communist Party to tame rampant inflation and fight to keep the country competitive amid a global economic slowdown.
Consumer prices are rising by more than 12 per cent a year, which has triggered labour unrest. At least 20 strikes have taken place so far this year.
But the fight against inflation has been undermined by the sporadic devaluation of the dong, which has been reduced by about 17 per cent since 2009. Analysts say this muddled approach is complicating the fight against inflation and undermining confidence in the currency.
The sorry condition of the state-owned Vinashin has not helped either. Notionally a shipbuilding company, Vinashin borrowed $1bn in 2007 and began to function as a sort of government investment fund. It diversified into everything from tourism to steel to property.
But last December it failed to make a $600m loan repayment instalment and indicated more defaults were to follow. The company has about $4bn in liabilities.
The impact of Vinashin's collapsing fortunes has had a knock-on effect on the economy. Investors and analysts see its troubles as a symptom of wider problems in state-owned firms, which are a key part of Vietnam's economic planning.
Although international investors will be keenly watching how the state handles the continuing fallout from Vinashin, it is unlikely to stem the influx of foreign capital. Vietnam's growth, which exceeds 6 per cent, and its low labour costs, together with its enthusiasm for market capitalism, means it will continue to race ahead.
