GENERAL INFORMATION ABOUT VIETNAM1 Vietnam info

 

INTRODUCTION

Vietnam, a member of ASEAN – one of the most dynamic regions in the world, is featured as the 3rd fastest growing country in Asia after China and Indonesia over the last 20 years3. This is a rising star among the emerging countries with a total GDP reaching 170Bn USD in 2013, making it the world’s 51st largest economy4. Having transformed from a poor agricultural country more or less devastated by seemingly never-ending wars, Vietnam is now a middle-income country with a population of 94 million habitants, 70% of which is the working age group5. The renovation policy in 1986 removed Vietnam from the international isolation and created a business-welcoming environment to attract investors from all over the world. Interest in the Vietnamese market was reflected in the increased FDI inflows to Vietnam from 15,6Bn USD6 in 2011 to 22.35Bn USD7 in 2013 after the 2008 global economic recession. According to a report by PricewaterhouseCoopers in 2008, Vietnam has the potentials to grow up to 10% per annum in terms of dollars to become the fastest growing of emerging economies in 2025 and its economy could expand to 70% of the size of the UK economy in 20508. With such impressive figures showing the steady progress made in recent years and the open market policy step by step adopted by the government, the Vietnamese economy is likely to skyrocket in the near future with the involvement of many sectors.

 

GEOGRAPHY

Located on the Indochinese peninsula in the heart of Southeast Asia, with a total land area of 331.210 square km, Vietnam shares borders with China in the North, Laos and Cambodia in the West while in the South it faces the Gulf of Thailand and the East the South China Sea. The long coastline of 3.444 km plus the densely disposed networks of rivers and lakes in the Mekong delta and the Red River delta – 2 largest deltas in Vietnam – are an asset for the fishing industry and the seafood production. In addition, the Central Highlands is home to many agricultural export products such as coffee, pepper, cashew nuts, and rubber. Vietnam’s geographic position holds an extremely strategic meaning to the international trade. On one hand, it is the gateway to the in-land economies of Laos and Cambodia. One the other hand, it opens out to the strong economies of the region on the South China Sea namely the Philippines, Indonesia, and Malaysia.

 

GOVERNMENT COMPOSITION AND ADMINISTRATIVE DIVISIONS

Vietnam is one of the remaining one-party countries administered by the Communist party. The Prime Minister is the Head of Government and the President is the Head of State. Every five years the National Assembly is re-elected, including the Prime Minister, the President, 5 Deputy Prime Ministers and 18 Ministers of whom one is also a Deputy Prime Minister.

On administrative level, in total there are 58 provinces and 5 municipalities (Ha Noi, Hai Phong, Da Nang, Ho Chi Minh – also known as Saigon, and Can Tho). The capital of Vietnam is Hanoi and the biggest city, also the financial and economic centre of the country, is Ho Chi Minh City.

 

POPULATION AND LANGUAGES9

Ranked as the world’s 15th most populous country, Vietnam is considered to have a young population as 94.3% of the total of 94 million people is under 65 years old. The birth rate is 1.6% per year, 121st place in comparison to the world, which contributes to the population growth rate of 1% per year. Hanoi and Ho Chi Minh City are the 2 most crowded cities in Vietnam with more than 1 million people living in these urban areas. Unsurprisingly, the financial and economic centre of Ho Chi Minh City is densely populated by 6.5 million people, followed by Hanoi, the capital, with 3 million.

Like other Southeast Asian countries, the Vietnamese population comprises of many different ethnic groups that are united but also unique in their own cultures. The largest group is the Kinh (also called Viet) 85.7% scattered all over the country. Other smaller groups of Tay (1.9%), Thai (1.8%), Muong (1.5%), Khmer (1.5%), Mong (1.2%), Nung (1.1%) plus other ethnics (5.3%) can be found in the Central Highlands and the Northern part of the country.

As for languages, the official language is Vietnamese although English is also widely spoken particularly among younger generations as it is taught as a second language at early school ages. The spoken language of many Chinese-Vietnamese living in Vietnam, especially the Cho Lon quarter in Ho Chi Minh City, remains Chinese as a proportion of the population originates from Southern China. The French language is also frequently conversed for professional and educational purposes among the French expats and francophone Vietnamese people as a legacy of the colonial era. Some Khmer and minor languages such as Mon-Khmer and Malayo-Polynesian can be heard in the mountain areas.

 

ECONOMY

Before 1986, Vietnam was a heavily centralized economy isolated from the international arena. Seeing the vital need of improvement and development, in 1986 the Vietnamese government launched a renovation policy called ‘Open Door’ (Doi Moi) to help stimulate and boost the stagnant economy across all sectors. The implementation of this policy transited Vietnam into a socialist-oriented market economy and ever since has made steady progress towards a sustainable development goal.

At present, 7 years after joining the World Trade Centre, Vietnam is one of the most open economies in Asia with an increase in per capita income to 1.130USD by the end of 2010 and a drop in ratio of population in poverty from 58% to 14.5% in 200810. The emergence of the middle class also accounts for Vietnam’s successful economic and administrative reforms. This growing proportion of the population is pushing the domestic consumption, the industrial production and the import-export rates every year as well.

As a member of the World Trade Centre and the Berne Convention, Vietnam’s important role in the protection of intellectual property and civil violations was emphasized by its updates on a new law on intellectual property rights which took effect in 200611.

 

VIETNAM’S GDP COMPOSITION12

vVietnam is moving towards industrialization and modernization; as a result, the proportions of GDP have transferred from Agriculture to Industry and Services.

GDP BREAKDOWN

 

GDP GROWTHSource: 13

 

VIETNAM’S EXPORTS AND IMPORTS IN THE FIRST 2 MONTHS OF 201414

Since 2011, Vietnam has shifted its focus to exports and imports as one of the national development strategies in order to increase the competitiveness of products, benefit from economic advantages and meet domestic demands. In general, the total value of exports and imports of Vietnam increased every year with an impressive turnover of more than one billion US dollars found in 4 industries. These are telephone/mobile phone (1.7Bn) and textile and garment (1.05Bn) for export and machine, equipment, tool (1.5Bn) and computer and electrical products (1.3Bn) for import. Total value of Vietnam’s exports and imports was equal at 132.13Bn USD in 2013.

EXPORTS

 Top 10 major exported commodities of Vietnam in February, 2014 as compared to the same period of 2013

 IMPORTS

Top 10 major imported commodities of Vietnam in February, 2014 as compared to the same period of 2013

FDISource: 15

 

INFLATION RATE16

Vietnam’s long-running struggle to control the inflation rate saw an impressive success in 2012 compared to that of 2011 when the rate dropped half way down from 18.58 to 9.21%. However, the Vietnamese government still need to remain cautious as this rate is likely to shoot back up without vigilant measures.

INFLATION

 

BILATERAL RELATIONS BETWEEN EUROPE AND VIETNAM17

EU Vietnam

Vietnam’s accession to ASEAN in 1995 widened its foreign relations and opened up new cooperation opportunities with other regions in the world, including Europe – the longstanding dialogue partner of ASEAN. Recognizing the expansion in the number of ASEAN members, the EU with its New Partnership with South East Asia proposal announced a new period of cooperation with this strategic vibrant region. Being an ASEAN member, the relations between Vietnam and the EU are set out in accordance with the 1980 EC-ASEAN Cooperation Agreement to which Vietnam acceded in 1999. These relations are rejuvenated on a wide range of areas from security, human rights, democracy, good governance to trade, investment and development cooperation. Vietnam’s participation in promoting the EU-ASEAN partnership through its components of the Trans-Regional EU-ASEAN Trade Initiative (TREATI) and the Regional EU-ASEAN Dialogue Instrument (READI), as well as its coordination for the negotiations of an EU-ASEAN FTA in 2007 is considered a significant contribution to the bilateral relations on a trans-regional level.

Vietnam’s active and flexible foreign policy is also demonstrated by its founding membership of the Asia-Europe Meeting process, which engages not only 27 EU member states and the European Commission with all ASEAN members but also China, Japan, South Korea, India, Mongolia and Pakistan, in dialogue and cooperation.

The successful organization of the 5th ASEM Summit by Vietnam in 2004 was regarded a crucial contribution to shortening cooperation gaps between the two regions.

 

CURRENT TRENDS IN VIETNAM18

According to Dr. Richard Dixon on Globalchange.com, the economy of Vietnam is likely to witness these changes in the future:

  • Vietnam’s domestic market is predicted to grow to 20% a year.
  • Investment in processing and manufacturing industrial products is believed to be enormous in the future.
  • Green products and services will be in favour of many companies as the concern about sustainable development is constantly raised.
  • Digital services, Banking, Social Media and Health Care will be among the most promising sectors for Vietnam’s future perspectives.

 

SOURCES

  1. The World Fact Book – CIA 
  2. Geography, climate, natural resources – Vietnam-US Trade
  3. Indonesia – The Europe-Indonesia Business Network
  4. The World Fact Book – CIA
  5. The World Fact Book – CIA
  6. Vietnam FDI – Vietnam Report
  7. Vietnam’s FDI soars to USD22.35Bn last year – Asia First
  8. China to overtake US by 2025, but Vietnam may be fastest growing of emerging economies – PwC
  9. The World Fact Book – CIA
  10. Vietnam Overview – The World Bank
  11. Intellectual Property Rights – Vietnam-US Trade
  12. The World Fact Book – CIA
  13. GDP Growth (annual %) – The World Bank
  14. Preliminary assessment of Vietnam international merchandise trade performance in the second half of February, 2014 – Vietnam Customs
  15. Indicators for Vietnam’s economy in 2013 – The Business
  16. Indicators for Vietnam’s economy in 2013 – The Business
  17. Bilateral Relations – European Union External Action
  18. Future of Vietnam – Economy, Banking, Manufacturing, Digital, Green Tech – Global Change

 

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