Economical overview
In just over three decades, Vietnam has been
transformed from a poor agricultural nation into a lower
middle-income country where industry and service account
for most of the economy. This has happened in parallel
with the transformation from planning economy to market
economy. The rapid growth has been accompanied by a
large reduction in poverty. Today, the government faces
the challenge of pushing the reforms of state-owned
enterprises to keep pace with growth.
The transformation accelerated with the reforms, doi
moi, decided by the party congress in 1986 (see
Modern History). Exports of food and goods from the
manufacturing industry became a major source of income,
as did tourism. Poverty decreased, from well over half
of all Vietnamese in the 1990s to one in ten today.
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Countryaah.com:
Major imports by Vietnam, covering a full list of top products imported by the country and trade value for each product category.
The first phase of economic liberalization had a huge
impact on the economy, not least on rice production.
When collective agriculture was dissolved in the late
1980s and farmers were allowed to return to selling rice
to the highest bidder, production increased sharply.
Vietnam went from importing large quantities of rice to
becoming the world's third largest rise exporter in just
a year.
Large parts of the state industrial sector were
deregulated and are now operated according to commercial
principles. More than a third of state-owned companies
disappeared during the first years of reform and several
million employees lost their jobs. At the same time,
tens of thousands of new private companies have been
started and a business class has emerged.
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Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including VNM which represents the country of Vietnam.
Attract foreign investors
There is now a process in which many remaining
state-owned companies are incorporated and sold out, and
public ownership is concentrated on service and the
military. Many state-owned companies are heavily
indebted and in recent years several have gone bankrupt,
or have been close to doing so.
A glaring example is the large shipbuilder Vinashin,
who went bankrupt in principle in 2010 after being
forced to settle payments on a $ 4.5 billion debt.
Several executives within the company were sentenced to
prison for moping deals and failed projects. Vinashin
has since been reconstructed.
Vietnam has attracted foreign investment since the
early 2000s, not least from Singapore, Japan and South
Korea. Political stability and good transport
opportunities are contributing factors. Cheap labor also
attracts. In order to maintain investment inflows, the
country must overcome corruption, heavy bureaucracy,
unclear laws and an inadequate banking system.
Partly secret budget
Vietnam has long received development assistance only
from the Eastern Bloc and some neutral countries, such
as Sweden. It was not until 1993 that the World Bank
granted loans to Vietnam, which paved the way for
assistance from other countries, not least Japan.
Foreign debt's share of GDP fell sharply during the
1990s.
Money that foreign-working Vietnamese send home to
their relatives is also an important source of foreign
currency and has since 1993 totaled about twice as much
as foreign loans.
Control of the state budget is inadequate. Parts of
the budget are secret, which increases the risk of
corruption and financial neglect.
The country's growing exports have led to high
growth, but the country is nevertheless faced with major
so-called structural problems, such as unprofitable
state-owned large companies and other state involvement
in the economy.
To address these problems, in June 2015, the
government issued a decree that would eliminate certain
restrictions on foreign ownership in state-owned
companies in about 150 sectors of society. The decision
was seen by analysts as an important step towards
adapting the Vietnamese economy to international
conditions.
Free trade agreements
Vietnam joined when twelve countries around the
Pacific signed the Free Trade Agreement TPP
(Trans-Pacific Partnership) in 2016. One purpose of the
agreement was to counterbalance China's dominance in
Asia. In its original form, the TPP would have covered
40 percent of the world economy, but the deal failed
before it came into force as the US withdrew after
President Donald Trump took office in January 2017.
The remaining eleven countries, which together
account for about 14 percent of the world economy,
decided to stick to the agreement. After some
adjustments, they signed in March 2018 under the TPP-11,
or CPTPP (Comprehensive and Progressive Agreement for
Trans-Pacific Parthership). The agreement means that
tariffs will be lowered between the countries and,
according to the hopes, will contribute to increased
growth. The TPP-11 includes economic heavyweights such
as Japan, Canada and Australia. Other Southeast Asian
countries in the TPP-11 are Brunei, Singapore and
Malaysia.
In 2019, Vietnam and the EU signed a free trade
agreement, which means that customs duties on almost all
import goods will be sharply lowered. The agreement also
contains rules for labor law, the environment and
copyright for intellectual property. The FTA enters into
force when both parties' legislators approve it.
FACTS - FINANCE
GDP per person
US $ 2,564 (2018)
Total GDP
US $ 244,948 million (2018)
GDP growth
7.1 percent (2018)
Agriculture's share of GDP
14.6 percent (2018)
Manufacturing industry's share of GDP
16.0 percent (2018)
The service sector's share of GDP
41.2 percent (2018)
Inflation
3.6 percent (2019)
Government debt's share of GDP
55.6 percent (2018)
External debt
US $ 104,079 million (2017)
Currency
dong
Merchandise exports
US $ 243,697 M (2018)
Imports
US $ 227 157 million (2018)
Current account
US $ 5,899 million (2018)
Commodity trade's share of GDP
200 percent (2018)
Main export goods
crude oil, textiles, seafood, rice, electronics,
rubber (2017)
Largest trading partner
China, USA, Japan, South Korea (2017)
2007
August
New government is presented
A younger and somewhat smaller government is presented; as usual, combating
corruption and continuing economic reform is at the top of the agenda.
July
Two top leaders are re-elected
The National Assembly elects Prime Minister Nguyen Tan Dung and President
Nguyen Minh Triet. Both were first elected a year earlier, after being elected
by the party at the congress in April 2006.
June
First US visit after the war
President Nguyen Minh Triet becomes the first head of state to visit the
United States after the end of the war in 1975.
May
Elections to the National Assembly
Elections are held for the National Assembly. 493 members are appointed, of
whom 450 are members of the Communist Party and 43 independent candidates
approved by the authorities.
February
The United States finances remediation
The United States is for the first time agreeing to help finance the
decontamination of the toxic agent Orange Agent, from a former US air base in Da
Nang (see Natural Resources and Energy).
January
Joins the WTO
Vietnam becomes a member of the World Trade Organization (WTO).
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