The Vietnam Economy

The Council

rasmus – lester – brian – shawn – darren – rastus

Road mapVietnam’s economy:

In the Past (Before 1999)

Transition of Economic Activity

Present Economy

Current concerns

1954-1975

• French developed the area by segments

• South involved in irrigation and agriculture

• North is reserved for manufacturing

• Resulted in ideological differences and the civil war

• Unemployment & Lack of food

History in short

1976-1986

• A series of plans were created to centralizing the economy

• Growth figures for industrial and agricultural sectors and national income

• Plans were extremely unrealistic

• Not enough resources : Technological shortfalls,too much small-scaled business

History in short

1986-1990s

• Free-market reforms

known as Đổi Mới (renovation)

• Transition from a command economy

to

a Socialist-oriented market economy.

• Deregulation of laws

• Foreign investment grew

History in short

Đổi Mới

1. Payment of wage and salaries on a straight cash basis 2. Pricing of inputs to state enterprises on the basis of costs 3. Permission for private employers to employ up to ten workers 4. Abolition of internal customs check points 5. A revised Foreign Investment Law 6. Virtual decollectivization of agriculture 7. Elimination of virtually all direct subsidies and price controls 8. Increased autonomy for enterprise managers 9. Devaluation of the currency (dong) to market rates 10. Elimination of the State's monopoly in foreign trade 11. Provision for foreign participation in banking 12. Reduced restrictions on private enterprise 13. Creation of export processing zones for 100% foreign-owned enterprises 14. Legislation on shareholding corporations 15. Dismantling of major elements of central planning and bureaucracy 16. A 15% reduction in the government workforce 17. A return to former owners or their heirs of businesses in the South that were nationalized in 1975.

Under Đổi Mới

Industries Sector

• Private businesses and foreign investments thrived

• More liberal operations

• 30,000 private businesses created,

• Economy grew at an annual rateof more than 8%

• Poverty was nearly halved.

Agricultural Sector

• Scrapped agricultural collectives

• Removed price controls

• Enabled farmers to sell their goods in the marketplace

• Rapid growth in agricultural and industrial production

Under Đổi Mới

The Past

Average growth 8%

Level of exports and imports

The Past

Per capita income $220 (1994)

Poverty reduction :

Vietnam East Asia and Pacific

4.1% 2.0%

Transition of

Economy activity

State

Bank of

Vietnam

Does this mean that

Vietnam is a agriculture

heavy country?

Where is the country

shifting its’ focus to?

Transition of

Economy activity

Employed population as of annual 1

July by kind of economic activity

Transition of

Economy activity

49%

4%

1%

46%

Primary industry Vs Other industries in 2008

Agriculture and forestry Fishing Mining and quarrying Others

Agriculture and Forestry: A

decrease of 13%

Others: An increase of 12%

Transition of

Economy activity

Manufacturing

Electricity. gas and water supply

Construction

Wholesale and retail trade; repair of motor vehicles. motor cycles and personal and

household goods

Hotels. restaurant

Transport. storage and communications

Financial intermediation

Scientific activities and technology

Real estate. renting and business activities

Public administration and defence; compulsory social security

Education and training

Health and social work

Recreational. cultural and sporting activities

Activities of Party and of membership organisations

Community. social and personal service activities and private household with employed

persons

Present Economy.

GDP

Total

Of which

Agriculture, forestry

and fishing

Industry and

constructionService

Bill. dongs

1990 41955 16252 9513 16190

1991 76707 31058 18252 27397

1992 110532 37513 30135 42884

1993 140258 41895 40535 57828

1994 178534 48968 51540 78026

1995 228892 62219 65820 100853

1996 272036 75514 80876 115646

1997 313623 80826 100595 132202

1998 361017 93073 117299 150645

1999 399942 101723 137959 160260

2000 441646 108356 162220 171070

2001 481295 111858 183515 185922

2002 535762 123383 206197 206182

2003 613443 138285 242126 233032

2004 715307 155992 287616 271699

2005 839211 175984 344224 319003

2006 974266 198798 404697 370771

2007 1143715 232586 474423 436706

Prel. 2008 1477717 326505 587157 564055

GDP Growth

http://www.indexmundi.com/vietnam/gdp_real_growth_rate.html

GDP Growth

Year GDP - real growth

rate

Rank Percent Change

Date of Informatio

n

2003 6.00 % 22 2002 est.

2004 7.20 % 23 20.00 % 2003 est.

2005 7.70 % 27 6.94 % 2004 est.

2006 8.50 % 23 10.39 % 2005 est.

2007 8.20 % 29 -3.53 % 2006 est.

2008 8.50 % 28 3.66 % 2007 est.

Export and Import Figures 2003

Export and Import Figures2005Export and Import Figures 2005

Export and Import Figures2006Export and Import Figures 2006

Export and Import Figures2007Export and Import Figures 2007

Currency

Monthly Average income

Prospering economy

Current Concerns

• Inflation

• Poor Infrastructure

• Power Shortage

• Corruption

Current Concerns

Current Concerns - Inflation

• High inflation of 25%

• Increased cost of production

• Affects Investors

Current Concerns – Poor Infrastructure

Current Concerns – Poor Infrastructure

World Bank

agreed to loan

US$190 million

to Vietnam

For

infrastructure

development

(for public and

private sectors)

Current Concerns – Poor Infrastructure

Current Concerns – Power

ShortageIn May

Vietnam faces

power shortage

(because of

drought)

Power obtained

from hydroelectric

power plants.

NO WATER, NO

POWER!

Current Concerns – Power

ShortageIn August

Electricity of Viet Nam

(EVN) reports that

country is facing a

severe power

shortage of 1,400

MW.

EVN imported approx.

2.2 billion kWh of

electricity from china.

(In first 7mths)

Plans to increase

supply sources and

retain water.

Current Concerns - Corruption

Corruption Perception Index

(CPI)

Current Concerns - Corruption

Current Concerns - Corruption

Risks of Corruption

Sources indicates land management to be most corrupt

sector in Vietnam. Policies and laws on land have many

loopholes

Encourage corruption

Investors should take care during contracting

procedures

Positive Developments – related to Corruption

Corruption is now a priority on the political agenda

Vietnam has abolish almost 200 ‘unnecessary’ permits (for

operating a business)

Companies special relationship with authorities have declined

Current Concerns - Corruption

Conclusion

Citation

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