International Finance |
This report shall explore the landscape of Vietnam in terms of its Competitiveness, Industry, Social Landscape, and Financial Market in order to provide the reader with a logical understanding of the forces driving Vietnam’s economy. |
Team Vietnam |
Vietnam is located in the southeasternextremity of the Indochinese peninsula and occupies about 331,688 square kilometers, of which about 25 percent was under cultivation in 1987. The S-shaped country has a north-to-south distance of 1,650 kilometers and is about 50 kilometers wide at the narrowest point, with a coastline of 3,260 kilometers.
The country is divided into the highlands and the Red River Delta in the north; and theGiai Truong Son (Central mountains, or the Chaîne Annamitique,) the coastal lowlands, and the Mekong River Delta in the south.
The climate is basically tropical in south; monsoonal in north with hot, rainy season (mid-May to mid-September) and warm, dry season (mid-October to mid-March)
Vietnam achieved around 8% annual GDP growth from 1990 to 1997 and continued at around 7% from 2000 to 2005,making it one of the world's fastest growing economies. Growth by 8.5 percent, 6.3, 5.3 and 6.8 for the year of 2007, 2008, 2009 and 2010 respectively, but inflation rate hit 11.8 percent in December 2010.
Up 16 positions from the 2009-2010 rankings, Vietnam (59th) has improved in 10 of the 12 GCI pillars since and is now standing at 59th position out of 139 countries in theGlobal Competitiveness Report compiled by the World Economic Forum. Among the country’s competitive strengths are its efficient labour market currently ranked at 30th and its impressive innovation potential given its stage of development which is factor driven (49th), including its relatively large market size (35th) with a particularly large export market. As per the General Statistics Office (GSO)of Vietnam, the 2009 export turnovers were estimated to be US$56.6 billion, reflecting a drop of 9.7% from 2008.
Currently, Vietnam's major trading partners include Japan, Singapore, Hong Kong, Taiwan, Korea and the European Union. Its trade with the Asian economies constitutes approximately 80 percent of its total trade. However, trade remains hindered by very high import tariffs of 8.2%,placed 90th in rankings , other trade barriers (112th), and burdensome custom procedures (106th).
Following a hectic period marked by high inflation, a dramatic fall in the dong, and large swings in interest rates, the macroeconomic situation improved sharply (85th, up 27). Yet the government budget deficit remains one of the highest in the world, contributing to rising public debt and pointing to aneed to continue efforts toward macroeconomic stability.
In addition, infrastructure, strained by rapid economic growth, remains a major challenge for the country despite some improvement in recent years, with particular concerns about the quality of roads (117th) and ports (97th). And while there is a sense that the quality of education is improving, enrolment rates at all levels remain low(ranked 71st, 103nd, and 109th for primary, secondary and tertiary enrolments, respectively).
In order to further improve its competitiveness, Vietnam must also continue to strengthen its institutional environment. Regulation is perceived as burdensome (120th), with the number of procedures (11,110th) and time (50 days,118th) required to start a business making this a daunting process. Vietnamcould follow in the footsteps of Japan which is currently ranked 1st in business sophistication and 4th in innovation, making it more viable to doing business as compared to Vietnam.
Moreover, there are concerns regarding the level of intellectual property protection (109th) and to a lesser extent the respect of property rights (81st). Corruption is considered frequent and pervasive (107th). On...