Economic Prospective of Vietnam: Challenges and Opportunities

Introduction toECONOMIC PROSPECTIVEof VIETNAM Presented by Cao Hao Thi.

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

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

Viet Nam overview • Labor • Labor force: 44.39 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

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

Political situation

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

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

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

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

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

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

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

Economic structure • Agriculture • Industry • Services

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

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

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

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

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

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

Investment Climate • 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)

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

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

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Economic Prospective of Vietnam: Challenges and Opportunities