Vietnam Economy Facts
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.
- 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.
- 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. Check findjobdescriptions to learn more about 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)
US $ 244,948 million (2018)
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)
3.6 percent (2019)
Government debt’s share of GDP
55.6 percent (2018)
US $ 104,079 million (2017)
US $ 243,697 M (2018)
US $ 227 157 million (2018)
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)
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.
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.
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.
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.
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).
Joins the WTO
Vietnam becomes a member of the World Trade Organization (WTO).