With an estimated 90.5 million inhabitants as of 2011, Vietnam is the world’s 13th-most-populous country, and the eighth-most-populous Asian country. It is bordered by China to the north, Laos to the northwest, Cambodia to the southwest, and the South China Sea to the east. In 1986, the government instituted economic and political reforms and began a path towards international reintegration.By 2000, it had established diplomatic relations with most nations. Its economic growth has been among the highest in the world since 2000, with such high growth set to continue, as reported by BBC News. Does this mean that Vietnam is a good country to do business in? Vietnam has the highest Global Growth Generators Index among 11 major economies,and its successful economic reforms resulted in it joining the World Trade Organization in 2007. Let’s take a look at the other factors that influence business in Vietnam.
The Vietnamese economy is a developing planned economy and market economy. Manufacturing, information technology and high-tech industries now form a large and fast-growing part of the national economy. Though Vietnam is a relative newcomer to the oil industry, it is currently the third-largest oil producer in Southeast Asia, with an output of 400,000 barrels per day. Deep poverty, defined as the percentage of the population living on less than $1 per day, has declined significantly in Vietnam, and the relative poverty rate is now less than that of China, India, and the Philippines, giving rise to a middle class, according to the CIA World Factbook. In 2011, Vietnam’s nominal GDP reached $121.6 billion with a nominal GDP per capita of $1,361, according to the IMF. According to a December 2005 forecast by Goldman Sachs, the Vietnamese economy will become the world’s 17th-largest by 2025, with an estimated nominal GDP of $436 billion and a nominal GDP per capita of $4,357. According to a 2008 forecast by PWC, Vietnam may be the fastest-growing of the world’s emerging economies by 2025, with a potential growth rate of almost 10% annually in real dollar terms.
Global Trade in Vietnam
Since the early 2000s, Vietnam has applied sequenced trade liberalisation, a two-track approach opening some sectors of the economy to international markets while protecting others, according to the Overseas Development Institute. In July 2006, Vietnam updated its intellectual property legislation to comply with TRIPS, and it became a member of the WTO on 11 January 2007. Vietnam is now one of Asia’s most open economies: two-way trade was valued at around 160% of GDP in 2006. Vietnam’s chief trading partners include China, Japan, Australia, the ASEAN countries, the United States and Western Europe. As a result of several land reform measures, Vietnam has become a major exporter of agricultural products. It is now the world’s largest producer of cashew nuts, with a one-third global share; the largest producer of black pepper, accounting for one-third of the world’s market; and the second-largest rice exporter in the world, after Thailand. Other primary exports include coffee, tea, rubber, and fishery products. However, agriculture’s share of Vietnam’s GDP has fallen in recent decades, declining from 42% in 1989 to 20% in 2006, as production in other sectors of the economy has risen.
Business in Vietnam has been climbing and overall Vietnam is a great market to do business in. If you read my previous article on Frontier Markets, in which I talk about the next hottest markets, you will read that Vietnam is one of those markets. Since, Vietnam is starting from a very small base, it is likely it will continue to grow at very high rates for the foreseeable future. In fact, Vietnam actually grew at approximately 6% in 2011, which was a very challenging year for the global economy. With its large population and great geographic location, Vietnam is likely to be one of the biggest markets of the future. Vietnam was ranked at 98th place for Ease of Doing Business, in the World Bank’s annual ranking. In the same survey, Vietnam ranked at 166th for Protecting Investors, 68th for Trading Across Borders, and 30th for Enforcing Contracts. To find out more about various countries around the world, please join us on Globial.com.