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Introduction toIntroduction toECONOMIC PROSPECTIVEECONOMIC PROSPECTIVE

of of

VIETNAMVIETNAM

Presented by Cao Hao Thi.Presented by Cao Hao Thi.

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OutlineOutline

Vietnam overviewVietnam overview Political situationPolitical situation Economic situationEconomic situation Summary and conclusionsSummary and conclusions Q&AQ&A

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Viet Nam overviewViet Nam overview Abundant endowmentAbundant endowment

– Rich agricultural landRich agricultural land– Minerals and petroleumMinerals and petroleum

GDP: $44 billion, growth rate: 8.4 % GDP: $44 billion, growth rate: 8.4 % (2005)(2005)– Agriculture:Agriculture: 20.9%20.9%– Industry:Industry: 41.0%41.0%– Service: Service: 38.1%38.1%

GDP per capita $2800 GDP per capita $2800 (2005)(2005) Population: Population:

– Almost 84 millionAlmost 84 million– Half under 25Half under 25– Growth rate: 1.02%Growth rate: 1.02%

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Viet Nam overviewViet Nam overview

Labor Labor – Labor force: 44.39 million (2005)Labor force: 44.39 million (2005)

» Agriculture:Agriculture: 20.9%20.9%» Industry:Industry: 41.0%41.0%» Service: Service: 38.1%38.1%

– Unemployment rate: 5.5%Unemployment rate: 5.5%– Large and well educatedLarge and well educated– InexpensiveInexpensive– ProblemsProblems

» Managerial and English skillsManagerial and English skills» TaxTax

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Viet Nam overviewViet Nam overview

Geography Geography – North (Ha Noi)North (Ha Noi)– Central (Da Nang)Central (Da Nang)– South (Ho Chi Minh)South (Ho Chi Minh)

Area: 329,247 sq kmArea: 329,247 sq km Administrative divisions:Administrative divisions:

– 59 provinces59 provinces– 5 municipalities (Ha Noi, Hai Phong, Da Nang, 5 municipalities (Ha Noi, Hai Phong, Da Nang,

Ho Chi Minh and Can Tho)Ho Chi Minh and Can Tho)

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Political situationPolitical situation

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Political structurePolitical structure

Official nameOfficial name– Socialist Republic of Vietnam (SRV)Socialist Republic of Vietnam (SRV)Form of stateForm of state– One party ruleOne party ruleThe executiveThe executive– The cabinetThe cabinetHead of stateHead of state– The presidentThe president

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Political structurePolitical structure (cont’d) (cont’d)

National legislatureNational legislature– National AssemblyNational Assembly

Local governmentLocal government– 59 Provinces/ 5 municipalities59 Provinces/ 5 municipalities

National governmentNational government

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Political structurePolitical structure (cont’d)(cont’d)

Main political organizationsMain political organizations– The Communist PartyThe Communist Party– The Fatherland FrontThe Fatherland Front

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Political structurePolitical structure (cont’d)(cont’d)

Main members of the cabinetMain members of the cabinet– Prime minister (1)Prime minister (1)– Deputy prime ministers (3)Deputy prime ministers (3)– Key ministers (18)Key ministers (18)

Execute policies and directions set by Execute policies and directions set by the Partythe Party

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Political issuesPolitical issues

BalanceBalance– Economic growth Economic growth – EqualityEquality– Political stability Political stability

Role of private sectorRole of private sector– Engage in private business (2002)Engage in private business (2002)

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Vietnam’s economyVietnam’s economy

Economic structureEconomic structure

Vietnam’s economyVietnam’s economy

Investment climateInvestment climate

Economic issuesEconomic issues

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Economic structureEconomic structure

Multi-component economyMulti-component economy– Entire people (state owned)Entire people (state owned)– Collectives (cooperatives)Collectives (cooperatives)– Private individualsPrivate individuals

Market mechanisms Market mechanisms Under the management of the State Under the management of the State A socialist orientationA socialist orientation

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Economic structureEconomic structure

AgricultureAgriculture

IndustryIndustry

ServicesServices

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Economic structureEconomic structure

Agriculture and forestry Agriculture and forestry (2005)(2005)

– 70% labor force70% labor force– 21% GDP robust growth (4.4%)21% GDP robust growth (4.4%)– Industrial cropsIndustrial crops

» CoffeeCoffee» RubberRubber» SugarcaneSugarcane» Rice Rice

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Economic structureEconomic structure

Industrial sectorIndustrial sector– Growth 14.4% annuallyGrowth 14.4% annually

– 41% GDP41% GDP

– Private sector grew fastestPrivate sector grew fastest

Service and investment sectorService and investment sector– 38% GDP38% GDP

– Fast growthFast growth

Develop financial serviceDevelop financial service

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Vietnam economyVietnam economy

““ Market-based economy with socialist Market-based economy with socialist orientation under state management”orientation under state management”

Macroeconomic indicators improvedMacroeconomic indicators improved

More to doMore to do– Benchmark the country’s progressBenchmark the country’s progress– WTO WTO member in 2006 ? member in 2006 ?

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Vietnam economyVietnam economy

Challenges Challenges – Increase investmentIncrease investment– Foreign investment (capital, skills, Foreign investment (capital, skills,

technology and market)technology and market)– Prepare for the integration (region and Prepare for the integration (region and

world)world)– Legal and administrative reformLegal and administrative reform

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InvestmentInvestment

Domestic InvestmentDomestic Investment

Large stock of domestic savingsLarge stock of domestic savings New enterprise law (Jan 2000)New enterprise law (Jan 2000) ChallengesChallenges

– LandLand– Credit Credit

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Investment ClimateInvestment Climate

Openness to foreign investmentOpenness to foreign investment– Targets: FDI and ODATargets: FDI and ODA

Some issuesSome issues– Investment environmentInvestment environment– ““State-supervised” market economyState-supervised” market economy– ShortcomingsShortcomings

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Investment ClimateInvestment Climate

ShortcomingsShortcomings– Infrastructure Infrastructure – Legal and financial systemsLegal and financial systems– Shortage of trained personnel.Shortage of trained personnel.– Issuance of investment licenses and Issuance of investment licenses and

implementation of projectsimplementation of projects

Changes in 1996 Foreign Changes in 1996 Foreign Investment Law (effect July 2000)Investment Law (effect July 2000)

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Economic issuesEconomic issues

Uneven improvement in business Uneven improvement in business environmentenvironment– Discrimination between Private and State Discrimination between Private and State

sectorssectors

Monopoly sectors (Telecom, etc.)Monopoly sectors (Telecom, etc.)

Transparency and consistencyTransparency and consistency

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Summary and conclusionSummary and conclusion

Young and growing countryYoung and growing country– Potential marketPotential market– Cheap laborCheap labor

Government effortsGovernment efforts Improved economic indicatorsImproved economic indicators Challenges and more to doChallenges and more to do

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THANK YOU THANK YOU

FOR YOUR FOR YOUR ATTENTION!ATTENTION!