1 Introduction to ECONOMIC PROSPECTIVE of VIETNAM Presented by Cao Hao Thi.

2 Outline Vietnam overview Vietnam overview Political situation Political situation Economic situation Economic situation Summary and conclusions Summary and conclusions Q&A Q&A

3 Viet Nam overview Abundant endowment Abundant endowment –Rich agricultural land –Minerals and petroleum GDP: $44 billion, growth rate: 8.4 % (2005) GDP: $44 billion, growth rate: 8.4 % (2005) –Agriculture:20.9% –Industry:41.0% –Service: 38.1% GDP per capita $2800 (2005) GDP per capita $2800 (2005) Population: Population: –Almost 84 million –Half under 25 –Growth rate: 1.02%

4 Viet Nam overview Labor Labor –Labor force: million (2005) »Agriculture:20.9% »Industry:41.0% »Service: 38.1% –Unemployment rate: 5.5% –Large and well educated –Inexpensive –Problems »Managerial and English skills »Tax

5 Viet Nam overview Geography Geography –North (Ha Noi) –Central (Da Nang) –South (Ho Chi Minh) Area: 329,247 sq km Area: 329,247 sq km Administrative divisions: Administrative divisions: –59 provinces –5 municipalities (Ha Noi, Hai Phong, Da Nang, Ho Chi Minh and Can Tho)

6 Political situation

7 Political structure Official name Official name –Socialist Republic of Vietnam (SRV) Form of state Form of state –One party rule The executive The executive –The cabinet Head of state Head of state –The president

8 Political structure (cont’d) National legislature National legislature –National Assembly Local government Local government –59 Provinces/ 5 municipalities National government National government

9 Political structure (cont’d) Main political organizations Main political organizations –The Communist Party –The Fatherland Front

10 Political structure (cont’d) Main members of the cabinet Main members of the cabinet –Prime minister (1) –Deputy prime ministers (3) –Key ministers (18) Execute policies and directions set by the Party Execute policies and directions set by the Party

11 Political issues Balance Balance –Economic growth –Equality –Political stability Role of private sector Role of private sector –Engage in private business (2002)

12 Vietnam’s economy Economic structure Vietnam’s economy Investment climate Economic issues

13 Economic structure Multi-component economy Multi-component economy –Entire people (state owned) –Collectives (cooperatives) –Private individuals Market mechanisms Market mechanisms Under the management of the State Under the management of the State A socialist orientation A socialist orientation

14 Economic structure Agriculture Agriculture Industry Industry Services Services

15 Economic structure Agriculture and forestry (2005) Agriculture and forestry (2005) –70% labor force –21% GDP robust growth (4.4%) –Industrial crops »Coffee »Rubber »Sugarcane »Rice

16 Economic structure Industrial sector Industrial sector –Growth 14.4% annually –41% GDP –Private sector grew fastest Service and investment sector Service and investment sector –38% GDP –Fast growth  Develop financial service

17 Vietnam economy “Market-based economy with socialist orientation under state management” “Market-based economy with socialist orientation under state management” Macroeconomic indicators improved Macroeconomic indicators improved More to do More to do –Benchmark the country’s progress –WTO  member in 2006 ?

18 Vietnam economy Challenges Challenges –Increase investment –Foreign investment (capital, skills, technology and market) –Prepare for the integration (region and world) –Legal and administrative reform

19 Investment Domestic Investment Large stock of domestic savings Large stock of domestic savings New enterprise law (Jan 2000) New enterprise law (Jan 2000) Challenges Challenges –Land –Credit

20 Investment Climate Openness to foreign investment Openness to foreign investment –Targets: FDI and ODA Some issues Some issues –Investment environment –“State-supervised” market economy –Shortcomings

21 Investment Climate Shortcomings Shortcomings –Infrastructure –Legal and financial systems –Shortage of trained personnel. –Issuance of investment licenses and implementation of projects Changes in 1996 Foreign Investment Law (effect July 2000) Changes in 1996 Foreign Investment Law (effect July 2000)

22 Economic issues Uneven improvement in business environment Uneven improvement in business environment –Discrimination between Private and State sectors Monopoly sectors (Telecom, etc.) Monopoly sectors (Telecom, etc.) Transparency and consistency Transparency and consistency

23 Summary and conclusion Young and growing country Young and growing country –Potential market –Cheap labor Government efforts Government efforts Improved economic indicators Improved economic indicators Challenges and more to do Challenges and more to do

24 THANK YOU FOR YOUR ATTENTION!