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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