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The next growth Story

General Information


Economic Overview
Key Developments 

Why Vietnam?

 

Vietnam - the next growth story in Asia.

 

We have been monitoring Vietnam's economy and business opportunities since the middle 90s, when Vietnam was considered the poorest nation in the world.

Things do change.

The investment opportunities are tremendous. Vietnam needs almost everything:

 

      Fundamental renovation of the infrastructure.

 

      Establishment of a comprehensive range of light industries.

 

      Rapid development of the power industry.

 

      Modernization of all its airports.

 

      Development of its tremendous tourist potential.

 

      Bridges, ports, railways.

 

      Irrigation systems.

 

      Waste disposal and effluent control.

 

      City transport.

 

      Telecommunications.

 

      Services of all descriptions. 

 

The list is endless.

 

The country has become one of Asias best economic performers, with GDP growth averaging an impressive 7.4% since 2000. Supported by a nearly 20% growth in domestic consumption, the GDP growth rate of over 8.85% in 2005 and the average of 7.9% in 2006 make this the second fastest in the world. This is an increasingly progressive government with a number of important recent trade agreements.

 

After 11 years of negotiations, Vietnam concluded an in-principle bilateral WTO accession agreement with the United States on May 16, 2006, with WTO entry expected at the end of 2006. The case for investment in Vietnam has never been stronger.Vietnam is undergoing exciting and unprecedented changes.

These changes present both opportunities and challenges for doing business in
Vietnam. Vietnamese companies must become more competitive, efficient, productive and profitable. To achieve these goals, they may be interested in forming strategic partnerships with foreign companies and investors, or in selling their equity stake to foreign companies. Furthermore, numerous SOEs (state-owned enterprises) are undergoing, or will soon begin, the privatization process.  And hundreds of other companies will consider going public in the next few years. These challenges are new and unique in Vietnam.This rapidly changing environment in the Vietnamese market is calling out to investors.

Israel Vietnam Cooperation (IVC) is focused on Vietnam.  We help Israeli companies penetrate the market by forming marketing and strategic alliances. 

General Information

Official Name

Socialist Republic of Vietnam

Capital

Hanoi

Population

84,402,966 (July 2006 est.)

Age structure

Young population 0-14 years27% (male ~ 12 Million/female 11 Million)

15-64 years 67.1% (male 28 Million /female 28 Million)

65 years and over 5.8% (male 2 Million /female 3 Million) (2006 est.)

Currency

Dong (VND) 1 US$= 15990 Dongs

Language

Vietnamese (official), English, French, Chinese, Russian.

Literacy

93%

Unemployment

>6%

 

Economic Overview and Indicators Forecast

 

Vietnams growth rate is among the highest in the world, expanding annually GDP 7-8% (8.4% 2005).

      Vietnams growth rate is the second only to China.

    ­Export, tourism and FDI (Foreign Direct Investment) - based.

­  Cheap labor and the flexible exchange rate are key to the countrys competitive edge.

     Industrial production is growing at around 14-15 % pa.

    FDI averages more than 8% of GDP a year, a higher percentage than for China (more than $6 billion committed in 2005).


 

GDP growth

8.85% (2005)

GDP Per capita

US$640 in 2006 ($2000 in HCM City)

CPI

6.5%

Industrial production growth

16%

Export growth

$31bn, +19%

Import growth

22%

FDI

$5 bn

Gross investment growth

16%

Retail sales

$27.8 bn, +17%

 

In 1988, the Vietnamese Communist Party (VCP) moved away from Soviet-style central planning and toward a more market-oriented strategy, including a commitment to reform, called Doi Moi. 

 

                  In the last 30 years, Vietnam has recovered from the ravages of war, the loss of

                 financial support from the old Soviet Bloc, and the rigidities of a centrally planned

                 economy. The country achieved substantial progress from 1986 to 1997.

                    In 1988 the Vietnamese Communist Party (VCP) moved away from Soviet-style

                 central planning and towards a more market-oriented strategy and commitment to

                 reform, which is called Doi Moi. 
                 Since 2001, Vietnamese authorities have reaffirmed their commitment to

                 economic liberalization and international integration. They have moved to implement

                 the structural reforms needed to modernize the economy and to produce more

                 competitive, export-driven industries.

                     Vietnam has moved forward from an extremely low level of development,

                 significantly reducing poverty. Growth averaged around 9% per year from 1993

                 to 1997.

                    GDP growth averaged 6.8% per year from 1997 to 2004, even against the background

                 of the Asian financial crisis and a global recession, and growth hit 8% in 2005.

                  Vietnam's membership in the ASEAN Free Trade Area (AFTA) and entry into force of

                 the US-Vietnam Bilateral Trade Agreement in December 2001 have led to even more

                 rapid changes in Vietnam's trade and economic regime. Vietnam's exports to the US

                 doubled in 2002, and again in 2003. 

      

 

       

Key Developments

 

    

      Expected entry to WTO by mid 2006

      Continued opening up of key industries for foreign involvement such as financial services, telecoms and power

      Increase to a 49% cap (from 30%) on foreign ownership of local companies

      Continued structural changes in the economy with the privatization of major State Owned Enterprises (SOEs)

 

 

 

 

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