Economy of Vietnam

Economy of Vietnam

Currency	Vietnamese dong
Fiscal year	Calendar year
Trade organisations	AFTA, WTO, APEC, ASEAN, FAO
Statistics
GDP	$198.8 billion (nominal, 2015 est.)[1] $551.3 billion (PPP, 2015 est.)[1]
GDP growth	6.68% (2015 est.) [2]
GDP per capita	$2,073 (nominal, 2014 est.)[3] $6,100 (PPP, 2015 est.)[1]
GDP by sector	Agriculture: 17.00%, industry: 33.25%, services: 49.75% (2015 est.)[4]
Inflation (CPI)	2.05% (2015 est.)[4]
Population below poverty line	7%-7.2% (2015 est.)[4]
Gini coefficient	38.2 (2014)
Labour force	54.61 million (2015 est.)[4]
Labour force by occupation	Agriculture: 44.3%, industry: 22.9%, services: 32.8% (2015 est.)[4]
Unemployment	2.31 % (2015)[4]
Main industries	paddy rice, coffee, rubber, cotton, tea, pepper, soybeans, cashews, sugar cane, peanuts, bananas, poultry, fish, seafood
External
Exports	$162.11 billion (2015)
Export goods	clothes, shoes, marine products, crude oil, electronics, wooden products, rice, coffee, machinery
Main export partners	United States 20.9%  China 11.7%  Japan 10.6%  South Korea 7.1%  Hong Kong 5.8%  India 4.9% (2013 est.)[5]
Imports	$165.65 billion (2015)
Import goods	machinery and equipment, petroleum products, steel products, raw materials for the clothing and shoe industries, electronics, plastics, automobiles
Main import partners	China 30.2%  South Korea 16.0%  Japan 9.5%  Taiwan 7.3%  Thailand 6.3%  Singapore 5.8% (2013 est.)[6]
FDI stock	US100.5 billion (2015)[7]
Gross external debt	US$69.76 billion (Dec 2014 est.)
Public finances
Public debt	52.7% of GDP (2014)[1]
Revenues	US$39.61 billion (2015 est.)[1]
Expenses	US$47.39 billion (2015 est.)[1]
Economic aid	US$4.115 billion pledged (2012)
Credit rating	Standard & Poor's:[8] BB- (Domestic) BB- (Foreign) BB- (T&C Assessment) Outlook: Stable[9] Moody's:[9] B1 Outlook: Stable Fitch:[9] BB- Outlook: Stable
Main data source: CIA World Fact Book All values, unless otherwise stated, are in US dollars.

Vietnam's socialist-oriented market economy is a developing planned economy and market economy. Since the mid-1980s, through the Đổi Mới reform period, Vietnam has made a shift from a highly centralized planned economy to a mixed economy that uses both directive and indicative planning through five-year plans. Over that period, the economy has experienced rapid growth. In the twenty-first century, Vietnam is in a period of being integrated into the global economy. Almost all Vietnamese enterprises are small and medium enterprises (SMEs). Vietnam has become a leading agricultural exporter and served as an attractive destination for foreign investment in Southeast Asia. In a similar fashion to other Communist countries after the end of the Cold War the planned economy of Vietnam lost the momentum for productivity and sustainable growth. In the current period the economy of Vietnam relies largely on foreign direct investment to attract the capital from overseas to support its continual economic rigorousness.^[10]

In 2013, the nominal GDP reached US$170.565 billion,^[3] with nominal GDP per capita of US$1,902. According to a forecast in December 2005 by Goldman Sachs, the Vietnamese economy was expected to become the 35th largest economy in the world with nominal GDP of US$436 billion and nominal GDP per capita of US$4,357 by 2020.^[11] According to a forecast by the PricewaterhouseCoopers in 2008, Vietnam may be the fastest-growing of the world's emerging economies by 2020, with a potential annual growth rate of about 10% in real terms, which would increase the size of the economy to 70% of the size of the UK economy by 2040.^[12]

Vietnam has been named among the Next Eleven and CIVETS countries. Despite economic achievement following Doi Moi, there exist issues that cause many analysts and researchers to remain worried about the economic slowdown in the country in recent years.^[13][14]

History

Civilization in Vietnam had been built on agriculture. The feudal dynasties always considered agriculture as the main economic base, and their economic thoughts have been predicated on physiocracy. Land ownership was regulated, and such large-scale works as dykes were constructed in the Red River Delta to facilitate wet rice cultivation. In peaceful times, soldiers were sent home to do farm work. Furthermore, the court prohibited slaughtering water buffalo and cattle and held many agriculture-related ceremonies. Handicrafts and art were valued, but commerce was deprecated, and businessmen were called by the derogatory term con buôn. The national economy was self-sufficient.

From the 16th century, Confucianism was losing its influence on Vietnamese society and a monetary economy began to develop. Early commercial ports, such as Hội An, were constrained, and foreign countries with their different cultures and their invasion ambitions were seen as a threat. This policy of closure led to a degree of stagnation in the Vietnamese economy, and contributed to Vietnam becoming a French colony.

Until the French colonization in the mid-19th century, Vietnam's economy had been mostly agrarian, subsistence-based and village-oriented. French colonizers, however, deliberately developed the regions differently as the French needed raw materials and a market for French manufactured goods, designating the South for agricultural production as it was better suited for agriculture, and the North for manufacturing as it was naturally wealthy in mineral resources. Though the plan exaggerated regional divisions, the development of exports — coal from the North, rice from the South — and the importation of French manufactured goods stimulated domestic commerce.^[15] The separation distorted the basic Vietnamese economy by overly stressing regional economic differences. In the South, while irrigated rice remained the principal subsistence crop, the French introduced plantation agriculture with products such as tea, cotton, and tobacco. The colonial government also developed some extractive industries, such as the mining of coal, iron, and nonferrous metals. A shipbuilding industry was begun in Hanoi; railroads, roads, power stations, and hydraulics works were constructed. In the South, agricultural development concentrated on rice cultivation, and, nationally, rice and rubber were the main items of export. Domestic and foreign trade were centered around the Saigon-Cholon area. Industry in the South consisted mostly of food-processing plants and factories producing consumer goods.^[16]

When the North and South were divided politically in 1954, they also adopted different economic ideologies: communism in the North and capitalism in the South. Destruction caused by the Second Indochina War from 1954 to 1975 seriously strained the economy. The situation was worsened by the country's 1.5 million military and civilian deaths, and the subsequent exodus of 1 million refugees, including tens of thousands of professionals, intellectuals, technicians and skilled workers.^[15]

The government's Second Five-Year Plan (1976–1981) aimed for extraordinarily high annual growth rates in industrial and agricultural sectors and national income and sought to integrate the North and the South, but the goals were not attained. The economy remained dominated by small-scale production, low labor productivity, unemployment, material and technological shortfalls, and insufficient food and consumer goods.^[15] The more modest goals of the Third Five-Year Plan (1981–85) were a compromise between ideological and pragmatic factions; they emphasized the development of agriculture and industry. Efforts were also made to decentralize planning and improve the managerial skills of government officials.^[15]

Since reunification in 1975, the economy of Vietnam has been plagued by enormous difficulties in production, imbalances in supply and demand, inefficiencies in distribution and circulation, soaring inflation rates, and rising debt problems. Vietnam is one of the few countries in modern history to experience a sharp economic deterioration in a postwar reconstruction period. Its peacetime economy is one of the poorest in the world and has shown a negative to very slow growth in total national output as well as in agricultural and industrial production. Vietnam's gross domestic product ( GDP) in 1984 was valued at US$18.1 billion with a per capita income estimated to be between US$200 and US$300 per year. Reasons for this mediocre economic performance have included severe climatic conditions that afflicted agricultural crops, bureaucratic mismanagement, elimination of private ownership, extinction of entrepreneurial classes in the South, and military occupation of Cambodia (which resulted in a cutoff of much-needed international aid for reconstruction).^[17]

From the late 1970s until the early 1990s, Vietnam was a member of the Comecon, and therefore was heavily dependent on trade with the Soviet Union and its allies. Following the dissolution of the Comecon and the loss of its traditional trading partners, Vietnam was forced to liberalize trade, devalue its exchange rate to increase exports, and embark on a policy of economic development.^[18]

In 1986, Vietnam launched a political and economic renewal campaign (Đổi Mới) that introduced reforms to facilitate the transition from a centralized economy to a "socialist-oriented market economy". Đổi Mới combined government planning with free-market incentives and encouraged the establishment of private businesses and foreign investment, including foreign-owned enterprises. Furthermore, the Vietnam government stressed the necessity to lower birth rates when developing the economic and social rights of the population by implementing a policy that restricted the number of children per household to two, called the two-child policy.^[19] By the late 1990s, the success of the business and agricultural reforms ushered in under Đổi Mới was evident. More than 30,000 private businesses had been created, the economy was growing at an annual rate of more than 7%, and poverty was nearly halved.^[18]

Throughout the 1990s, exports increased significantly, growing by as much as 20% to 30% in some years. In 1999, exports accounted for 40% of GDP, an impressive performance in the midst of the economic crisis that hit other countries in Asia. Vietnam became a member of the World Trade Organization (WTO) in 2007, which freed Vietnam from textile quotas enacted worldwide as part of the Multi Fibre Arrangement (MFA) in 1974.^[20] The MFA placed restrictions on the import by industrialized countries of textiles from developing countries. For China and other WTO members, however, textile quotas under the MFA expired at the end of 2004 as agreed in the Uruguay Round of trade negotiations in 1994.^[18]

Development since 1997

Vietnam's economic policy following the 1997 Asian Financial Crisis has been a cautious one, emphasizing macroeconomic stability rather than growth. While the country shifted toward a more market-oriented economy, the Vietnamese government still continues to hold a tight rein over major state sectors, such as the banking system, state-owned enterprises and foreign trade.^[21] GDP growth fell to 6% in 1998 and 5% in 1999.

The signing of the Bilateral Trade Agreement (BTA) between the United States and Vietnam on July 13, 2000, was a significant milestone. The BTA provided for "normal trade relations" (NTR) status of Vietnamese goods in the U.S. market. It was expected that access to the U.S. market would allow Vietnam to hasten its transformation into a manufacturing-based, export-oriented economy. Furthermore, it would attract foreign investment, not only from the U.S., but also from Europe, Asia and other regions.

In 2001, the ruling Communist Party of Vietnam approved a 10-year economic plan that enhanced the role of the private sector, while reaffirming the primacy of the state.^[18] Growth then rose to 6% to 7% between 2000 and 2002 even in the midst of the global recession, making it the world's second fastest-growing economy. At the same time, investment grew threefold and domestic savings quintupled.

In 2003, the private sector accounted for more than one-quarter of all industrial output.^[18] However, between 2003 and 2005, Vietnam fell dramatically in the World Economic Forum's global competitiveness report rankings, largely due to negative perceptions of the effectiveness of government institutions.^[18] Official corruption is endemic, and Vietnam lags in property rights, efficient regulation of markets, and labor and financial market reforms.^[18]

Vietnam had an average GDP growth of 7.1% a year from 2000 to 2004. The GDP growth was 8.4% in 2005, the second-largest in Asia, trailing only China's. The government estimated that GDP grew in 2006 by 8.17%. According to the Minister of Planning and Investment, the government targeted a GDP growth of around 8.5% in 2007.^[22]

On November 7, 2006, the General Council at the World Trade Organization (WTO) approved Vietnam's accession package. On January 11, 2007, Vietnam officially became the WTO's 149th member, after 11 years of preparation, including eight years of negotiation.^[20] The country's access to the WTO was intended to provide an important boost to the economy, as it ensured that the liberalizing reforms continue and created options for trade expansion. However, the WTO accession also brought serious challenges, requiring the economy to open up to increasing foreign competition.

Vietnam’s economy continues to expand at an annual rate in excess of 7%, one of the fastest-growing in the world, but it grew from an extremely low base, as it suffered the crippling effect of the Vietnam War from the 1950s to the 1970s, as well as the austerity measures introduced in its aftermath.^[18] In 2012, the communist party was forced to apologise about the mismanagement of the economy after large numbers of SOEs went bankrupt and inflation rose. The main danger has been over the bad debt in the banks totalling to 15% and forecast growth is 5.2% for 2012 but this is also due to the global economic crisis.^[23] The government has launched schemes to reform the economy, however, such as lifting foreign ownership cap from 49% and partially privatizing the country's state-owned companies that have been responsible for the recent economic downturn. By the end of 2013, the government is expected to privatize 25–50% of SOEs, only maintaining control on public services and military. The recent reforms have created a major boom in the Vietnamese stock market as confidence in the Vietnamese economy is returning.

Over the last 2 decades, Vietnam has experienced a rapid construction booming that contributed to economic growth but also caused "bubble" to the economy. Skyscrapers ballooned in big cities. According to Skyscrapercity, in 2013, the top three tallest buildings in Vietnam were the Hanoi Landmark 72 (336m), the Hanoi Lotte Center (267m), and the Saigon Bitexco Financial Tower (263m).

Vietnam's current economic turmoil has given rise to question of a new period of changing political economy, however.^[24]

Economic sectors

Agriculture, fishery and forestry

In 2003, Vietnam produced an estimated 30.7 million cubic meters of wood. Production of sawn wood was a more modest 2,950 cubic meters. In 1992, in response to dwindling forests, Vietnam imposed a ban on the export of logs and raw timber. In 1997, the ban was extended to all timber products except wooden artifacts. During the 1990s, Vietnam began to reclaim land for forests with a tree-planting program.^[18]

Vietnam’s fishing industry, which has abundant resources given the country’s long coastline and extensive network of rivers and lakes, has generally experienced moderate growth. In 2003, the total catch was about 2.6 million tons. However, seafood exports increased fourfold between 1990 and 2002 to more than US$2 billion, driven in part by shrimp farms in the South and "catfish", which are a different species from their American counterparts, but are marketed in the United States under the same name. By selling vast quantities of shrimp and catfish to the U.S., Vietnam triggered antidumping complaints by the U.S., which imposed tariffs in the case of catfish and was considering doing the same for shrimp. In 2005, the seafood industry began to focus on domestic demand to compensate for declining exports.^[18]

Vietnam is one of the top rice exporting countries in the world, but the limited sophistication of small-scale Vietnamese farmers causes quality to suffer.^[25]

Vietnam is the world's second largest exporter of coffee.^[26]

Energy, mining and minerals

Petroleum is the main source of energy, followed by coal, which contributes about 25% of the country’s energy (excluding biomass). Vietnam’s oil reserves are in the range of 270–500 million tons. Oil production rose rapidly to 403,300 barrels per day (64,120 m³/d) in 2004, but output is believed to have peaked and is expected to decline gradually.

In 2003, mining and quarrying accounted for 9.4% of GDP, and the sector employed 0.7% of the workforce. Petroleum and coal are the main mineral exports. Also mined are antimony, bauxite, chromium, gold, iron, natural phosphates, tin, and zinc.^[18]

Crude oil was Vietnam’s leading export until the late 2000s, when high-tech electrical manufactures emerged to become the biggest export market (by 2014, crude oil comprised only 5% of Vietnamese exports, compared to 20% of all exports in 1996). This is in part because Vietnam crude oil peaked in 2004, when crude oil represented 22% of all export earnings.^[27] Petroleum exports are in the form of crude petroleum because Vietnam has a very limited refining capacity. Vietnam’s only operational refinery, a facility at Cat Hai near Ho Chi Minh City, has a capacity of only 800 barrels per day (130 m³/d). Refined petroleum accounted for 10.2% of total imports in 2002. As of 2012, Vietnam had only one refinery, the Dung Quat refinery, but a second one, the Nghi Son Refinery was planned and was scheduled for construction in May 2013.^[18][28]

Vietnam’s anthracite coal reserves are estimated at 3.7 billion tons. Coal production was almost 19 million tons in 2003, compared with 9.6 million tons in 1999. Vietnam’s potential natural gas reserves are 1.3 trillion cubic meters. In 2002, Vietnam brought ashore 2.26 billion cubic meters of natural gas. Hydroelectric power is another source of energy. In 2004, Vietnam confirmed plans to build a nuclear power plant with Russian assistance,^[18] and a second by a Japanese group.

Industry and manufacturing

Although the industrial sector contributed 40.1% of GDP in 2004, it employed only 12.9% of the workforce. In 2000, 22.4% of industrial production was attributable to non-state activities. From 1994 to 2004, the industrial sector grew at an average annual rate of 10.3%. Manufacturing contributed 20.3% of GDP in 2004, while employing 10.2% of the workforce. From 1994 to 2004, manufacturing GDP grew at an average annual rate of 11.2%. The top manufacturing sectors — food processing, cigarettes and tobacco, textiles, chemicals, and electrical goods — experienced rapid growth. Almost a third of manufacturing and retail activity is concentrated in Ho Chi Minh City.^[18]

Services and tourism

In 2004, services accounted for 38.2% of gross domestic product (GDP). From 1994 to 2004, GDP attributable to the service sector grew at an average annual rate of 6.0%.^[18]

In 2012, Vietnam welcomed 6.8 millions international visitors and the number is expected to be more than 7 millions in 2013. Vietnam keeps emerging as an attractive destination. In Tripadvisor's list of top 25 destinations Asia 2013 by travellers' choice, there are four cities of Vietnam, namely Hanoi, Ho Chi Minh City, Hoi An and Ha Long

Banking and finance

Banking

Most efficient and reliable banks are the largest (also state-owned) ones: VietinBank, BIDV, and Vietcombank. The banking sector is dominated by the three institutions. There is also a trend of foreign investment into profitable banks. For example, VietinBank is currently owned by Bank of Tokyo Mitsubishi UFJ (20%) and International Finance Corporation (10%) while Vietcombank is owned by Mizuho (15%).

VietinBank – Vietnam's largest listed bank

Vietnam's top five banks by registered capital (as of May 2013, USD/VND exchange rate = 21,000 VND)

1. VietinBank $1.56 billion (32,661 billion VND)
2. Agribank $1.39 billion (29,154 billion VND)
3. Vietcombank $1.10 billion (23,174 billion VND)
4. BIDV $1.10 billion (23,011 billion VND)
5. Eximbank $0.59 billion (12,355 billion VND)

Finance

Vietnam currently has two stock trading centers, the Ho Chi Minh City Securities Trading Center and the Hanoi Securities Trading Center, which run the Ho Chi Minh Stock Exchange (HOSE) and the Hanoi Stock Exchange (HNX), respectively.

Currency, exchange rate and inflation

Currency

Vietnam's currency is the Vietnamese dong.

Exchange rate

The exchange rate between the U.S. dollar and the Vietnamese dong is important because the dong, although not freely convertible, is loosely pegged to the dollar through an arrangement known as a "crawling peg". This mechanism allows the dollar–dong exchange rate to adjust gradually to changing market conditions.^[18] As of June 28, 2013, 1 U.S. dollar was equivalent to about 21,036 Vietnamese dong.

Gold still maintains its position as a physical currency to a certain extent, although it has seen its economic role declining in recent years.^[29]

Latest foreign exchange rates can be found here.

Inflation

Vietnam's inflation rate, 1980 - 2010

Year	Inflation rate (%)
1980	25.2
1981	69.6
1982	95.4
1983	49.5
1984	64.9
1985	91.6
1986	453.5
1987	360.4
1988	374.4
1989	95.8
1990	36.0
1991	81.8
1992	37.7
1993	8.4
1994	9.5
1995	16.9
1996	5.6
1997	3.1
1998	8.1
1999	4.1
2000	-1.8
2001	-0.3
2002	4.1
2003	3.3
2004	7.9
2005	8.4
2006	7.5
2007	8.3
2008	23.1
2009	6.9
2010	11.8

(Source: IMF)

Vietnam's economy experienced a hyperinflation period in its early years of the extensive reform program, especially from 1987 to 1992.^[30]

In 2008, inflation was tracking at 20.3% for the first half of the year,^[31] higher than the 3.4% in 2000, but down significantly from 160% in 1988.^[18]

In 2010, inflation stood at 11.5%, and 18.58% in 2011.^[32]

At the end of 2012, inflation stood at 7.5%, a substantial decrease from 2011.^[33]

In 2013, inflation stood at 6%,^[34] and 4.09% in 2014.^[35]

Mergers and acquisitions

There is a tremendous interest by foreign companies to get exit to the market or continue the expansion using Mergers and Acquisitions. From 1999 to November 2016, Vietnamese companies have been involved as either an acquiror or an acquired company in 3,649 mergers and acquisitions with a total value of US$30 billion. The mergers and acquisitions activities faced many obstacles, lowering the rate of success of the transaction. Common obstacles come from culture, transparency and legal aspects.^[36] The Institute for Mergers, Acquisitions and Alliances that has been active in Vietnam since 2006 and its M&A expert Christopher Kummer think that there is a likelihood to reach a new record for the year 2016,^[37][38] with more than 600 valued US$6 billion.^[39] Among the largest and most prominent transactions since 2015 are:

• acquisition of the Big C supermarkets by the Central Group of Cos from Thailand for USD 1'135 mil. USD
• acqisition of a 25% stake in Massan Consumer Corporation by Singha Asia Holding from Singapore for USD 1'100 mil.,
• the sale of the Vietnam activities of German Metro Group to TCC Land International from Singapur for USD 705 mil., and
• the acquisition of a 8.8% stake in Vietnam Airlines by ANA Holdings from Japan for USD 109 mil.

Trade

A proportional representation of Vietnamese exports.

Economic relations with the United States are improving, but are not without challenges. Although the United States and Vietnam reached a landmark bilateral agreement in December 2001, which helped increase Vietnam’s exports to the United States, disagreements over textile and catfish exports are hindering full implementation of the agreement. Further disrupting the economic relations between the two countries were efforts in Congress to link non-humanitarian aid to Vietnam's human rights record. Barriers to trade and intellectual property are also within the purview of bilateral discussions.^[18]

Given neighboring China's rapid economic ascendancy, Vietnam highly values its economic relationship with China. Following the resolution of most territorial disputes, trade with China is growing rapidly, and in 2004, Vietnam imported more products from China than from any other country. In November 2004, the Association of Southeast Asian Nations (ASEAN), of which Vietnam is a member, and China announced plans to establish the world’s largest free-trade area by 2010.^[18]

Vietnam became a member of the World Trade Organization (WTO) on January 11, 2007.^[18]

In December 2015, Vietnam joined the ASEAN Economic Community along with the 9 other ASEAN members. The community's goal is to integrate the 10 members of ASEAN and bring a freer flow of labor, investment and trade to the region.^[40]

Foreign trade

Trades and balance of trade

After Đổi Mới in 1986, Vietnam has increased trading exponentially, growing both exports and imports in double digits ever since. More recently, alarms on trade account deficits have been raised domestically, especially after joining the WTO in 2007. Throughout the next 5 years after 2007, Vietnam ran trade deficit with the rest of the world in the tens of billions of dollars, with the record trade deficit in 2008 of US$18.0 billion.^[31]

Account deficit has since decreased. In 2012, Vietnam recorded a trade surplus of US$780 million, the first trade surplus since 1993. Total trade reached US$228.13 billion, an increase of 12.1% from 2011.^[41] In 2013, Vietnam recorded the second year of trade surplus of US$863 million. In 2014, Vietnam recorded the third year of trade surplus of US$2.14 billion, the largest trade surplus ever in history.^[42]

Year	Total trade (US$ Billions)	Export (US$ Billions)	Export change (%)	Import (US$ Billions)	Import change (%)	Account Balance (US$ Billions)
2001	31.20	15.00		16.20		-1.2
2002	36.40	16.70	11.3	19.70	21.6	-3.0
2003	45.20	20.2	21.0	25.2	27.9	-5.1
2004	58.50	26.5	31.2	32.0	27.0	-5.4
2005	69.40	32.4	22.3	37.0	5.7	-4.5
2006	84.70	39.8	22.8	44.9	21.4	-5.1
2007	111.30	48.6	22.1	62.7	39.6	-14.1
2008	143.40	62.7	29.0	80.7	28.7	-18.0
2009	127.00	57.1	-8.9	69.9	-13.4	-12.9
2010	157.00	72.2	26.4	84.8	21.3	-12.6
2011	203.41	96.91	34.2	106.75	25.8	-9.84[43]
2012	228.57	114.57	18.2	113.79	6.6	0.780[44]
2013	263.47	132.17	15.4	131.30	15.4	0.863
2014	298.23	150.19	13.7	148.04	12.1	2.14
2015	327.76	162.11	7.9	165.65	12	-3,54[45]

Exports

A map of Vietnamese export destinations, 2004.

In 2004, Vietnam’s exports of merchandise were valued at US$26.5 billion, and, were growing rapidly along with imports. Vietnam’s principal exports were crude oil (22.1%), textiles and garments (17.1%), footwear (10.5%), fisheries products (9.4%) and electronics (4.1%). The main destinations of Vietnam's exports were the United States (18.8%), Japan (13.2%), China (10.3%), Australia (6.9%), Singapore (5.2%), Germany (4.0%), and the United Kingdom (3.8%).^[18]

In 2012, export rose 18.2%, valued at US$114.57 billion.^[41] Vietnam's main export market included the EU with US$20 billion, United States with US$19 billion, ASEAN with $US 17.8 billion, Japan with US$13.9 billion, China with US$14.2 billion, and South Korea with US$7 billion.^[46]

In 2013, export rose 15.4%, valued at US$132.17 billion, of which export of electronics now comprised 24.5% of total export, compared with a 4.4% in 2008. Textiles and garments are still an important part in Vietnam's export, valued about US$17.9 billion in 2013.

In 2014, exports rose 13.6%, reaching US$150.1 billion. Electronics and electronics parts, textiles and garments, computers and computer parts are the three main export groups of Vietnam. The United States continued to be Vietnam's largest export market, with US$28.5 billion. The EU is second with US$27.9 billion, ASEAN is third, China is fourth and Japan is the fifth largest export market of Vietnam.

Imports

In 2004 Vietnam’s merchandise imports were valued at US$31.5 billion, and growing rapidly. Vietnam’s principal imports were machinery (17.5%), refined petroleum (11.5%), steel (8.3%), material for the textile industry (7.2%), and cloth (6.0%). The main origins of Vietnam’s imports were China (13.9%), Taiwan (11.6%), Singapore (11.3%), Japan (11.1%), South Korea (10.4%), Thailand (5.8%), and Malaysia (3.8%).^[18]

Vietnam import rose 6.6% in 2012, valued at US$113.79 billion.^[41] Major import countries were China US$29.2 billion, ASEAN with US$22.3 billion, South Korea with US$16.2 billion, Japan with US$13.7 billion, EU with US$10 billion, and United States with US$6.3 billion.^[46]

In 2014, imports rose 12.1%, reaching US$148 billion, most of which are materials and machinery needed for export. China continued to be Vietnam's largest import partner, with US$43.7 billion. The ASEAN is second with US$23.1 billion, South Korea is third, Japan is fourth and the EU is the fifth largest import partner of Vietnam.

External debt, foreign aid, and foreign investment

In 2004, external debt amounted to US$16.6 billion, or 37%, of GDP.^[18]

From 1988 to December 2004, cumulative foreign direct investment (FDI) commitments totaled US$46 billion. By December 2004, about 58% had been dispersed. About half of FDI has been directed at the two major cities (and environs) of Ho Chi Minh City and Hanoi. In 2003 new foreign direct investment commitments were US$1.5 billion. The largest sector by far for licensed FDI is industry and construction. Other sectors attracting FDI are oil and gas, fisheries, construction, agriculture and forestry, transportation and communications, and hotels and tourism. From 2006 to 2010, Vietnam hoped to receive US$18 billion of FDI to support a targeted growth rate in excess of 7%. Despite rising investments, foreign investors still regard Vietnam as a risky destination, as confirmed by recent survey by the Japan External Trade Organization of Japanese companies operating in Vietnam. Many of the respondents complained about high costs of utilities, office rentals and skilled labor. Corruption, bureaucracy, lack of transparent regulations and the failure to enforce investor rights are additional obstacles to investment, according to the U.S. State Department. Vietnam tied with several nations for the 102nd place in Transparencies International's Corruption Perceptions Index in 2004.^[18]

The World Bank's assistance program for Vietnam has three objectives: to support Vietnam’s transition to a market economy, to enhance equitable and sustainable development and to promote good governance. From 1993 through 2004, Vietnam received pledges of US$29 billion of official development assistance (ODA), of which about US$14 billion, or 49%, has been disbursed. In 2004, international donors pledged ODA of US$2.25 billion, of which US$1.65 billion actually was disbursed. Three donors accounted for 80% of disbursements in 2004: Japan, the World Bank, and the Asian Development Bank. From 2006 to 2010, Vietnam hopes to receive US$14 billion to US$15 billion of ODA.^[18]

Pledged foreign direct investment US$21.3 billion for 2007 and a record US$31.6 billion for the first half of 2008.^[31] Mergers and acquisitions have gradually become an important channel of investments in the economy, especially after 2005.

Free trade agreement

• ASEAN Free Trade Area (AFTA)
• ASEAN–Australia–New Zealand Free Trade Area (AANZFTA) is a free trade area between ASEAN and ANZCERTA, signed on 27 February 2009^[47] and coming into effect on 1 January 2010.^[48] Details of the AANZFTA agreement are available online.^[49]
• ASEAN–China Free Trade Area (ACFTA), in effect as of 1 January 2010^[50]
• ASEAN–India Free Trade Area (AIFTA), in effect as of 1 January 2010^[50]
• ASEAN–Japan Comprehensive Economic Partnership (AJCEP)
• ASEAN–Korea Free Trade Area (AKFTA), in effect as of 1 January 2010^[50]
• Comprehensive Economic Partnership for East Asia
• Vietnam is negotiating to join the Trans-Pacific Strategic Economic Partnership Agreement.
• On May 29, 2015, Vietnam signed a Free Trade Agreement (FTA) with Eurasian Economic Union.^[51]
• On 2 December 2015, the EU and Vietnam announced the conclusion of the negotiations for an EU-Vietnam Free Trade Agreement (FTA).^[52]
• Vietnam-Chile Free Trade Agreement (VCFTA) came into effect on 1 January 2014.^[53]
• Vietnam-Korea Free Trade Agreement (VKFTA) came into effect on 20 December 2015.^[54]
• Japan-Vietnam Economic Partnership Agreement came into effect on 1 October 2009.^[55]

Major economic areas

Vietnam's major economic regions include Ho Chi Minh city and Hanoi.

Economic indicators and international rankings

Organization	Title	Year	Ranking
Economist Intelligence Unit	Resilience amid turmoil Bechmarking IT industry competitiveness 2009	2009	56 out of 66[56]
International Monetary Fund	Gross Domestic Product (PPP)	2016	35 out of 188
World Economic Forum	Global Competitiveness	???	70 out of 148[57]
World Bank	Ease of Doing Business	2017	82 out of 190
Heritage Foundation/The Wall Street Journal	Index of Economic Freedom	2014	147 out of 177 - mostly unfree (2013)[58]
Transparency International	Corruption Perceptions Index	2015	116 out of 177

Literature

• Jandl, Thomas (2013). Vietnam in the Global Economy. Lexington Books.

References

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23. vietnam will struggle to meet 2012 growth target southeast asia, Bloomberg. Retrieved November 4, 2012
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47. atinder. "Welcome To The World Of Smokeless Cigarettes!". Retrieved 23 July 2016.
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External links

• Vietnam economy
• National Securities Center
• Securities
• FPTS.com.vn, live price of stock
• World Bank Trade Summary Statistics Vietnam 2012
• Vietnam : “Doi moi” and the World Crisis (article)
• Mergers and Acquisitions in Vietnam's Emerging Market Economy: 1990-2009
• Tariffs applied by Vietnam as provided by ITC's Market Access Map, an online database of customs tariffs and market requirements.