Vietnam Economic Overview

The collectivized North was thus contrasting a South with a very low agricultural collectivization, in the an area in which the development of small free enterprises and mixed companies (private-municipalities) had been granted, that is an area that enjoyed a significant influx of remittances from abroad and capable of attracting up to 80% of the foreign capital employed in entire Viet Nam (in 1992 equal to a total of 45% of net material product): it was a dualism which, despite the extensive privatization of public enterprises (announced in 1992) and the various resistances opposed by the political-administrative apparatuses, was further consolidating. At the beginning of the nineties, this evolution of the Vietnamese economy found reason for reaffirmation in the upheaval of international trade relations caused by the dissolution of the COMECON and the USSR, Viet Nam’s main commercial partners until then: the significant reduction in aid from Moscow and preferential tariffs, particularly relevant in the energy field, led to the search for stronger commercial ties with countries with economies of Southeast Asian market, as well as the normalization of relations with China.

According to Businesscarriers, a profound reorganization has been initiated in the economic structure of Viet Nam since 1994, the year in which the United States decided to end an embargo commercial that lasted (with not particularly severe effects) from the times of the war. In addition to a series of organizational measures, such as the modification of the administrative structure of the country, the main change concerned the growing liberalization in the economic field, carried out essentially by the southern regions and much less by the northern ones (organized for a longer time in collectivistic production systems). Therefore, the regional differentiation of Viet Nam still persists, caused by the long division of the country and which is undoubtedly one of the causes of its precarious development. The opening moment to a more intense transformation took place between 1993 and 1994, when Viet Nam obtained from international organizations, private banks and individual countries a set of credits which in turn brought direct investments by foreign companies (including US and Japanese, which were added to the European and Asian ones already present).

In the same period, political and diplomatic activity also intensified, tending to include the country in the regional context, with the entry, in 1995, into the ASEAN (Association of South East Asian Nations), with admission to APEC (Asia-Pacific Economic Cooperation) in 1998 and with a series of bilateral and multilateral agreements with many Asian and non-Asian countries, starting with China and the United States. However, it was the emerging countries of the Far East that represented the main investors and the best customers for Viet Nam: Taiwan, Hong Kong and South Korea together (1995) made up just under half of foreign investments in the country, followed by the ASEAN countries (but Japan quickly recovered positions). Following these developments, economic growth continued, albeit at the cost of a new temporary increase in inflation and a further imbalance in imports / exports. Consistent support in the direction of containing the trade deficit also came from the entry into production of offshore hydrocarbon fields. The presence of oil and gas was, at the same time, the cause of the worsening of the dispute regarding the sovereignty over the islands of the South China Sea (Xisha Qundao and Nansha Qundao in particular), which contrasts Viet Nam with China, Malaysia, Brunei, Indonesia and the Philippines.

Affected by the crisis in the Asian markets, in 1998 the Vietnamese economy suffered a significant, albeit not drastic, decline in annual growth following the devaluation measures adopted by the government at the cost of a significant decrease in foreign investment. The trade agreement with the USA (July 2000), providing for the reduction of customs tariffs and new investments, helped to relaunch the Vietnamese economy affected in the last months of 1999 by a series of devastating floods with hundreds of victims and homelessness. Another element in support of the economy was the approval of a law that removes foreign investments from the control of local political power. Furthermore, the authorities have begun to tackle the problem of corruption. Since the early 2000s, the Vietnamese production system has shown characteristics of stability, with an ever greater openness to the private sector, which has a greater impact on GDP than that of state-owned enterprises, and continues to have the potential for expansion. The public sector has also been subject to restructuring as in many cases the state held monopolies, priorities and preferential options over private individuals. To push the accelerator further on the reform button in this direction was then the will to access The public sector has also been subject to restructuring as in many cases the state held monopolies, priorities and preferential options over private individuals. To push the accelerator further on the reform button in this direction was then the will to access The public sector has also been subject to restructuring as in many cases the state held monopolies, priorities and preferential options over private individuals. To push the accelerator further on the reform button in this direction was then the will to access WTO, which actually took place in 2007. The indicators are favorable: agricultural and industrial production has been strengthened, tourist revenues have progressively grown as the State has worked to incentivize the sector and remittances have been significant (often in the form of productive investments) by Vietnamese abroad. Exports are on the rise, even though the trade balance remains in deficit, and the local currency has reached a certain stability. In 2006, growth was high (8.2%), with inflation, however, still high and a deficit of the state budget, which make the results of the restructuring still unsatisfactory. In 2008, GDP per capita was US $ 1,040, while the national GDP was US $ 89,829 million.