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| | * [[Directory:Vietnam/Vietnam Society|Vietnam Society]] | | * [[Directory:Vietnam/Vietnam Society|Vietnam Society]] |
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| − | == Economy ==
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| | * [[Directory:Vietnam/Vietnam Economy|Vietnam Economy]] | | * [[Directory:Vietnam/Vietnam Economy|Vietnam Economy]] |
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| − | '''Overview:''' Beginning in the 1980s, dire economic conditions forced the government to relax
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| − | restrictions on private enterprise and sharply cut back on labor camp prisoners, many of them
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| − | entrepreneurs. In 1986 Vietnam launched a political and economic renewal campaign (Doi Moi)
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| − | that introduced reforms intended to facilitate the transition from a centralized economy to a
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| − | “socialist-oriented market economy.” Doi Moi combined government planning with free-market
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| − | incentives. The program abolished agricultural collectives, removed price controls on
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| − | agricultural goods, and enabled farmers to sell their goods in the marketplace. It encouraged the
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| − | establishment of private businesses and foreign investment, including foreign-owned enterprises.
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| − |
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| − | By the late 1990s, the success of the business and agricultural reforms ushered in under Doi Moi
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| − | was evident. More than 30,000 private businesses had been created, and the economy was
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| − | growing at an annual rate of more than 7 percent. From the early 1990s to 2005, poverty declined
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| − | from about 50 percent to 29 percent of the population. However, progress varied geographically,
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| − | with most prosperity concentrated in urban areas, particularly in and around Ho Chi Minh City.
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| − | In general, rural areas also made progress, as rural households living in poverty declined from 66
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| − | percent of the total in 1993 to 36 percent in 2002. By contrast, concentrations of poverty
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| − | remained in certain rural areas, particularly the northwest, north-central coast, and central
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| − | highlands.
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| − |
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| − | In 2001 the Vietnamese Communist Party (VCP) approved a 10-year economic plan that
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| − | enhanced the role of the private sector while reaffirming the primacy of the state. In 2003 the
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| − | private sector accounted for more than one-quarter of all industrial output, and the private
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| − | sector’s contribution was expanding more rapidly than the public sector’s (18.7 percent versus
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| − | 12.4 percent growth from 2002 to 2003).
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| − |
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| − | Despite these signs of progress, the World Economic Forum’s 2005 Global Competitiveness
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| − | Report, which reflects the subjective judgments of the business community, ranked Vietnam
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| − | eighty-first in growth competitiveness in the world (down from sixtieth place in 2003) and
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| − | eightieth in business competitiveness (down from fiftieth place in 2003), well behind its model
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| − | China, which ranked forty-ninth and fifty-seventh in these respective categories. Vietnam’s sharp
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| − | deterioration in the rankings from 2003 to 2005 was attributable in part to negative perceptions
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| − | of the effectiveness of government institutions. Official corruption is endemic despite efforts to
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| − | curb it. Vietnam also lags behind China in terms of property rights, the efficient regulation of
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| − | markets, and labor and financial market reforms. State-owned banks that are poorly managed and
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| − | suffer from non-performing loans still dominate the financial sector.
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| − |
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| − | Although Vietnam’s economy, which continues to expand at an annual rate in excess of 7
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| − | percent, is one of the fastest growing in the world, the economy is growing from an extremely
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| − | low base, reflecting the crippling effect of the Second Indochina War (1954–75) and repressive
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| − | economic measures introduced in its aftermath. Whether rapid economic growth is sustainable is
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| − | open to debate. The government may not be able to follow through with plans to scale back trade
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| − | restrictions and reform state-owned enterprises. Reducing trade restrictions and improving
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| − | transparency are keys to gaining full membership in the World Trade Organization (WTO), as
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| − | hoped by mid-2006. The government plans to reform the state-owned sector by partially
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| − | privatizing thousands of state-owned enterprises, including all five state-owned commercial
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| − | banks.
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| − |
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| − |
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| − | '''Gross Domestic Product (GDP):''' In 2004 Vietnam’s GDP was US$45.2 billion. Per capita
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| − | gross national income was US$550. However, based on purchasing power parity (buying power
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| − | for a basket of goods without regard for market exchange rates), Vietnam’s per capita GDP was
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| − | approximately US$2,700. In 2004 the contributions to GDP by sector were as follows:
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| − | agriculture, 21.8 percent; industry, 40.1 percent; and services, 38.2 percent. Reflecting Vietnam’s
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| − | hybrid economy, industry ownership was mixed, as indicated by percentage of output, as
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| − | follows: state-owned, 40 percent and declining; privately owned, 25 percent, but employing four
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| − | times as many workers as the state-owned sector; and foreign-owned, 35 percent.
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| − |
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| − |
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| − | '''Government Budget:''' In November 2003, Vietnam’s National Assembly approved a total state
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| − | budget of about US$12 billion for 2004, corresponding to about 26.5 percent of estimated gross
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| − | domestic product (GDP). The government’s budget deficit, currently targeted not to exceed 5
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| − | percent, is rising but remains under control in the view of independent observers.
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| − |
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| − |
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| − | '''Inflation:''' In 2004 inflation was 9.5 percent, higher than the 3.4 percent rate measured in 2000
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| − | but down significantly from 160 percent in 1988. The long-term decline reflects the beneficial
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| − | effect of fiscal and monetary reforms aimed at stabilizing the economy.
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| − |
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| − |
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| − | '''Agriculture, Forestry, and Fishing:''' In 2004 agriculture and forestry accounted for 21.8 percent
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| − | of gross domestic product (GDP), and during 1994–2004 the sector grew at an annual rate of 4.1
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| − | percent. However, agricultural employment was much higher than agriculture’s share of GDP; in
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| − | 2005 some 60 percent of the employed labor force was engaged in agriculture, forestry, and
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| − | fishing. Agricultural products accounted for 30 percent of exports in 2005. The relaxation of the
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| − | state monopoly on rice exports transformed the country into the world’s second or third largest
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| − | rice exporter. Other cash crops are coffee, cotton, peanuts, rubber, sugarcane, and tea.
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| − |
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| − | In 2003 Vietnam produced an estimated 30.7 million cubic meters of roundwood. Production of
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| − | sawnwood was a more modest 2,950 cubic meters. In 1992, in response to dwindling forests,
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| − | Vietnam imposed a ban on the export of logs and raw timber. In 1997 the ban was extended to all
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| − | timber products except wooden artifacts. During the 1990s, Vietnam began to reclaim land for
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| − | forests with a tree-planting program.
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| − |
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| − | Vietnam’s fishing industry, which has abundant resources given the country’s long coastline and
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| − | extensive network of rivers and lakes, has experienced moderate growth overall. In 2003 the total
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| − | catch was about 2.6 million tons. However, seafood exports expanded fourfold from 1990 to
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| − | 2002 to more than US$2 billion, driven in part by shrimp farms in the South and “catfish,” which
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| − | are a different species from their American counterpart but are marketed in the United States
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| − | under the same name. By concentrating on the U.S. market for the sale of vast quantities of
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| − | shrimp and catfish, Vietnam triggered antidumping complaints by the United States, which
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| − | imposed tariffs in the case of catfish and is considering doing the same for shrimp. In 2005 the
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| − | seafood industry began to focus on domestic demand to compensate for declining exports.
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| − |
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| − |
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| − | '''Mining and Minerals:''' In 2003 mining and quarrying accounted for a 9.4 percent share of gross
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| − | domestic product (GDP); the sector employed 0.7 percent of the workforce. Petroleum and coal
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| − | are the main mineral exports. Also mined are antimony, bauxite, chromium, gold, iron, natural
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| − | phosphates, tin, and zinc.
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| − |
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| − |
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| − | '''Industry and Manufacturing:''' Although industry contributed 40.1 percent of gross domestic
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| − | product (GDP) in 2004, it employed only 12.9 percent of the workforce. In 2000, 22.4 percent of
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| − | industrial production was attributable to non-state activities. During 1994–2004, industrial GDP
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| − | grew at an average annual rate of 10.3 percent. Manufacturing contributed 20.3 percent of GDP
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| − | in 2004, while employing 10.2 percent of the workforce. During 1994–2004, manufacturing
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| − | GDP grew at an average annual rate of 11.2 percent. The top manufacturing sectors—food
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| − | processing, cigarettes and tobacco, textiles, chemicals, and electrical goods—experienced rapid
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| − | growth. Almost a third of manufacturing and retail activity is concentrated in Ho Chi Minh City.
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| − |
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| − |
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| − | '''Energy:''' Petroleum is the main source of commercial energy, followed by coal, which
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| − | contributes about 25 percent of the country’s energy (excluding biomass). Vietnam’s oil reserves
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| − | are in the range of 270–500 million tons. The World Bank cites the lower bound of the range. Oil
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| − | production rose rapidly to 403,300 barrels per day in 2004, but output is believed to have peaked
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| − | and is expected to decline gradually. Vietnam’s anthracite coal reserves are estimated at 3.7
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| − | billion tons. Coal production was almost 19 million tons in 2003, compared with 9.6 million tons
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| − | in 1999. Vietnam’s potential natural gas reserves are 1.3 trillion cubic meters. In 2002 Vietnam
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| − | brought ashore 2.26 billion cubic meters of natural gas. Hydroelectric power is another source of
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| − | energy. In 2004 Vietnam began to build a nuclear power plant with Russian assistance.
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| − | Crude oil is Vietnam’s leading export, totaling 17 million tons in 2002; in 2004 crude oil
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| − | represented 22 percent of all export earnings. Petroleum exports are in the form of crude
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| − | petroleum because Vietnam has a very limited refining capacity. Vietnam’s only operational
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| − | refinery, a facility at Cat Hai near Ho Chi Minh City, has a capacity of only 800 barrels per day.
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| − | Several consortia have abandoned commitments to finance a 130,000-barrel-per-day facility at
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| − | Dung Quat in central Vietnam. Refined petroleum accounted for 10.2 percent of total imports in
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| − | 2002.
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| − |
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| − |
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| − | '''Services:''' In 2004 services accounted for 38.2 percent of gross domestic product (GDP). During
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| − | 1994–2004, GDP attributable to the services sector grew at an average annual rate of 6.0 percent.
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| − | '''Banking and Finance:''' Vietnam’s first stock exchange, known as the Ho Chi Minh City
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| − | Securities Trading Center, was established in July 2000. By the spring of 2005, the number of
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| − | companies listed on the exchange had reached 28, representing a total market capitalization of
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| − | only US$270 million. In March 2005, Vietnam opened an over-the-counter exchange, known as
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| − | the Hanoi Securities Trading Center. The purpose of the second exchange is to expedite the
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| − | process of equitization (partial privatization) of state-owned enterprises. Although these
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| − | exchanges are still very small, officials have set the goal of expanding their combined market
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| − | capitalization to 10 percent of gross domestic product by 2010 and gradually phasing out
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| − | restrictions on foreign ownership of shares. In September 2005, Vietnam’s prime minister
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| − | announced that the limit on foreign share ownership would rise from 30 percent to 49 percent.
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| − |
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| − |
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| − | Vietnam’s banks suffer from low public confidence, regulatory and managerial weakness, high
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| − | levels of non-performing loans (NPL), non-compliance with the Basel capital standards, and the
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| − | absence of international auditing. Since 1992 Vietnam’s banking system has consisted of a
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| − | combination of state-owned, joint-stock, joint-venture, and foreign banks, but the state-owned
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| − | commercial banks predominate, and they suffer from high levels of NPL, most of them to state-
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| − | owned enterprises. Consequently, in September 2005 Vietnam decided to equitize all five state-
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| − | owned banks—a change from previous plans to equitize only two of them. In addition, Vietnam
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| − | plans to boost the transparency of its financial system by establishing a credit-rating agency and
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| − | performance standards for joint-stock banks. Large foreign banks are balancing their strong
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| − | interest in serving multinationals in Vietnam and frustration with continuing restrictions on their
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| − | activities. Although Vietnam is a cash-based society, 300 to 400 automated teller machines
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| − | (ATMs) have been installed, and about 350,000 debit cards are in circulation.
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| − |
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| − |
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| − | '''Tourism:''' In 2004 Vietnam received 2.9 million international arrivals, up from 2.4 million the
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| − | previous year. The annual increase represented a strong rebound from a slight decline in 2003
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| − | attributable to the severe acute respiratory syndrome (SARS) epidemic in Asia. From 1999 to
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| − | 2004, tourism rose by 63 percent. Most of the visitors in 2004—27 percent—came from China,
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| − | with 8–9 percent each coming from the United States, Japan, and South Korea. The Vietnam
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| − | National Administration of Tourism is following a long-term plan to diversify the tourism
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| − | industry, which brings needed foreign exchange into the country.
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| − |
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| − |
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| − | '''Labor:''' In 2004 the unemployment rate in urban areas was 5.6 percent, down from 5.8 percent in
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| − | 2003 and 6.0 percent in 2002.
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| − |
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| − |
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| − | '''Foreign Economic Relations:''' Vietnam is an observer to the World Trade Organization (WTO),
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| − | but it aspires to full membership as early as mid-2006. Joining the WTO is vitally important
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| − | because membership will free Vietnam from textile quotas enacted worldwide as part of the
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| − | Multifiber Arrangement (MFA) of 1974. The MFA placed restrictions on the import by
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| − | industrialized countries of textiles from developing countries. For China and other WTO
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| − | members, however, textile quotas under the MFA expired at the end of 2004, as agreed in the
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| − | Uruguay Round of trade negotiations in 1994. Partially as a result, Vietnam’s textile exports
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| − | stagnated in 2005.
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| − | Economic relations with the United States are improving but are not without challenges, even
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| − | beyond Vietnam’s aspirations to join the WTO. Although the United States and Vietnam reached
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| − | a landmark bilateral agreement in December 2001 that boosted Vietnam’s exports to the United
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| − | States, disagreements over textile and catfish exports are hindering full implementation of the
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| − | agreement. Further disrupting U.S.-Vietnamese economic relations are efforts in Congress to link
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| − | non-humanitarian aid to Vietnam’s human rights record. Barriers to trade and intellectual
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| − | property are also within the purview of bilateral discussions.
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| − |
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| − | Given neighboring China’s rapid economic ascendancy, Vietnam’s economic relationship with
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| − | China is of utmost importance. Following the resolution of most territorial disputes, trade with
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| − | China is growing rapidly, and in 2004 Vietnam imported more products from China than from
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| − | any other nation. In November 2004, the Association of Southeast Asian Nations (ASEAN), of
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| − | which Vietnam is a member, and China announced plans to establish the world’s largest free-
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| − | trade area by 2010.
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| − |
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| − |
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| − | '''Imports:''' In 2004 Vietnam’s merchandise imports were valued at US$31.5 billion, and growing
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| − | rapidly. Vietnam’s principal imports were machinery (17.5 percent), refined petroleum (11.5
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| − | percent), steel (8.3 percent), material for the textile industry (7.2 percent), and cloth (6.0
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| − | percent). The main origins of Vietnam’s imports were China (13.9 percent), Taiwan (11.6
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| − | percent), Singapore (11.3 percent), Japan (11.1 percent), South Korea (10.4 percent), Thailand
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| − | (5.8 percent), and Malaysia (3.8 percent).
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| − |
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| − |
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| − | '''Exports:''' In 2004 Vietnam’s merchandise exports were valued at US$26.5 billion, and, much
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| − | like imports, were growing rapidly. Vietnam’s principal exports were crude oil (22.1 percent),
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| − | textiles and garments (17.1 percent), footwear (10.5 percent), fisheries products (9.4 percent),
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| − | and electronics (4.1 percent). The main destinations of Vietnam’s exports were the United States
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| − | (18.8 percent), Japan (13.2 percent), China (10.3 percent), Australia (6.9 percent), Singapore (5.2
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| − | percent), Germany (4.0 percent), and the United Kingdom (3.8 percent).
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| − |
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| − |
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| − | '''Trade Balance:''' In 2004 Vietnam ran a merchandise trade deficit of US$5 billion, or 16 percent
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| − | of imports.
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| − |
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| − |
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| − | '''Balance of Payments:''' The current account balance was negative US$1.4 billion in 2004.
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| − | Vietnam last registered a slightly positive current account balance in 2001.
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| − |
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| − |
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| − | '''External Debt:''' In 2004 external debt amounted to US$16.6 billion, or 37 percent of gross
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| − | domestic product (GDP).
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| − |
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| − |
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| − | '''Foreign Investment:''' From 1988 to December 2004, cumulative foreign direct investment (FDI)
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| − | commitments totaled US$46 billion. By December 2004, about 58 percent had been dispersed.
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| − | About half of FDI has been directed at the two major cities (and environs) of Ho Chi Minh City
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| − | and Hanoi. In 2003 new foreign direct investment commitments were US$1.5 billion. The largest
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| − | sector by far for licensed FDI is industry and construction. Other sectors attracting FDI are oil
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| − | and gas, fisheries, construction, agriculture and forestry, transportation/communications, and
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| − | hotels and tourism. During the period 2006–10, Vietnam hopes to receive US$18 billion of FDI
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| − | to support a targeted growth rate in excess of 7 percent. Despite rising investments, foreign
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| − | investors still regard Vietnam as a risky destination, as confirmed by a recent survey by the
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| − | Japan External Trade Organization of Japanese companies operating in Vietnam. Many of these
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| − | companies complained about high costs for utilities, office rentals, and skilled labor. Official
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| − | corruption and bureaucracy, the lack of transparent regulations, and the failure to enforce
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| − | investor rights are additional issues impairing investment, according to the U.S. State
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| − | Department. Vietnam tied with several nations for 102nd place in Transparency International’s
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| − | 2004 Corruption Perceptions Index.
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| − |
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| − |
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| − | '''Foreign Aid:''' The World Bank’s assistance program for Vietnam has three objectives: to support
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| − | Vietnam’s transition to a market economy, to enhance equitable and sustainable development,
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| − | and to promote good governance. From 1993 through 2004, Vietnam received pledges of US$29
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| − | billion of official development assistance (ODA), of which about US$14 billion, or 49 percent,
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| − | actually has been disbursed. In 2004 international donors pledged ODA of US$2.25 billion, of
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| − | which US$1.65 billion actually was disbursed. Three donors accounted for 80 percent of
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| − | disbursements in 2004: Japan, the World Bank, and the Asian Development Bank. During the
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| − | period 2006–10, Vietnam hopes to receive US$14 billion–US$15 billion of ODA.
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| − |
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| − |
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| − | '''Currency and Exchange Rate:''' As of December 2005, one U.S. dollar was equivalent to about
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| − | 15,913 Vietnamese dong (D). The relationship between the U.S. dollar and Vietnamese dong is
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| − | important because the dong, although not freely convertible, is loosely pegged to the dollar
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| − | through an arrangement known as a “crawling peg.” This mechanism allows the dollar-dong
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| − | exchange rate to adjust gradually to changing market conditions.
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| − |
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| − |
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| − | '''Fiscal Year:''' Calendar year.
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| | == Transportation And Telecommunications == | | == Transportation And Telecommunications == |
