About Vietnam
	Introduction
	Viet culture
	Doing business

 

ABOUT VIETNAM

At the turn of the Century, Vietnam has emerged from the shadow of the War and transformed its war torn economy into a "growth engine". Since the last decade of the 20^th Century, far reaching economic and legal reforms have enabled the economy to grow on average at an annual rate above 7%, and turned the shortage economy into one of the world's biggest commodity exporters (Rice, Coffee, Pepper, Cashew nuts...).

Although the local economy is still small (GDP per capita is only $US 600 in 2005), healthy economic performance means the local market is also growing quickly. In the 2005 report, AT Kearney, an international consulting company ranks Vietnam as the 8^th fastest growing emerging retail market in the world, attracting the attention of big international retailers such as Metro, Big C, Tesco, Wal-Mart, and others. The automobile market also entered a rapidly growing phase since 2000, with average annual growth of 30% despite very high local prices. The development of retail banking service (15-30% growth rate) also facilitates stronger domestic consumption, and it is projected that Vietnam will be an important market for Personal Computers, Cell phones and other products as a new generation of consumer is emerging.

Culturally, Vietnam is making its name as a new tourist destination. While other important regional tourist centers suffer from political instability, threat of terrorism and natural disasters, Vietnam is attracting growing numbers of visitors (in 2005, 3.4 million international arrivals is expected, a 17.2% annual increase). Pacific Asia Travel Association (PATA) has ranked Vietnam 5th among the ASEAN countries in term of attracting foreign visitors within the next 3 years given its beautiful scenery, fast developing services, and a safe and stable political environment. And with the projected real growth rate of 7.7%, The World Travel & Tourism Council (WTTC) identifies Vietnam to be among the top 10 fastest growing tourist destinations in the world in the period 2006-2015. Unlike many other transition economies, the fruit of economic success has been distributed across society. The UNDP reported the poverty rate in Vietnam has fallen from 58% in 1992 to 24% in 2004. The Human Development Index has also improved from 0.582 in 1985 to 0.704 in 2003 (higher than the developing countries' average of 0.694), making Vietnam the 6^th fastest improving nation in the world.

Economic prosperity, social and political stability have created a favorable environment for business and investment. The number of private enterprises registered shot up since the introduction of the Enterprise Law in 2000 and new opportunities have also attracted multinational companies and foreign investors to this emerging market. FDI inflow recovers strongly from set backs caused by the Asian crisis; inflow in 2004 is US$ 4.2 billion, 10% of GDP. The Economists' Intelligence Unit upgraded Vietnam four positions (from 54^th to 50^th) in terms of reliable, attractive investment locations for the period 2005-2010, while the Minister of Economics, Trade and Industry of Japan (METI) ranks Vietnam the 4^th highest potential location for Japanese investment (after China, India, and Thailand) based on the assessments of labor cost, capacity to export to third countries and the growth potential of the local market. In 2005, there is a wave of Japanese investment into Vietnam, reflecting the Japanese business needs to diversify their investment portfolio away from China.

Commitment to deeper integration into the world economy and the prospect of WTO accession make Vietnam's market even more attractive as important sectors are opening up for foreign investors such as telecommunication, banking, insurance, distribution, etc. Currently the equalization process (privatization of SOEs) is taking center stage in the government's reform initiative, presenting attractive opportunities for both domestic and foreign investors.  The Prime Minister's visit to the United States has ignited hope for a new wave of FDI inflow especially in the area of high tech and financial services.

The economic reform is also matched by the government's commitment to push for legal reform to be in line with international standards and WTO's sprit... providing a level playing field for business and to be open to international competition. The new Investment and Enterprise law will relax most current restrictions on foreign investors, allowing them to enjoy the same privileges as domestic players. The World Bank and the International Finance Corporation has acknowledged Vietnam's effort in improving its business environment by raking Vietnam in the top 3 most rapidly reforming countries in the Doing Business 2006 report.

Although Vietnam is still a developing country, in transition toward a market economy, healthy economic growth is expected to continue in the foreseeable future. According to the ADB 2004 report, Vietnam has "made solid progress in its macroeconomic performance and in improving its business climate". The economy is projected to enjoy "continued robust growth" "projected at around 7.5% annually over the next 3 years". Such strong fundamental growth and development is the foundation for increased  business and investment activities, making Vietnam the "Destination of the 21^st Century".