Why Vietnam ?

With its rising costs, China is no longer the go to destination for many businesses, and Vietnam has arisen as a serious competitor. Recent trends show that the number of orders shifting from China to Vietnam has seen a significant increase. For example, China’s Pearl River Delta, long known as one of the key factory centers for the world’s manufacturers (particularly those from Hong Kong) has now become too costly for many companies to stay in the region.

In the past three years alone, a growing number of businesses have relocated their operations from China to Vietnam in an attempt to escape rising costs and an increasingly complex regulatory environment. Located in a strategic position for foreign companies with operations throughout Southeast Asia, Vietnam is an ideal export hub to reach other ASEAN markets.

Compared with other developing markets in the region, Vietnam is emerging as the clear leader in low-cost manufacturing and sourcing, with the country’s manufacturing sector now accounting for 25 percent of Vietnam’s total GDP. Currently, labor costs in Vietnam are 50 percent of those in China and around 40 percent of those reported in Thailand and the Philippines. With the country’s workforce growing annually by around 1.5 million, Vietnamese workers are inexpensive, young, and, increasingly, highly skilled.

Another driving force behind Vietnam’s growing popularity is the country’s collection of free trade agreements (FTAs)—most notably, the soon-to-be-signed Trans-Pacific Partnership (TPP) and EU-Vietnam FTA. Additional FTAs currently under negotiation include the Regional Comprehensive Economic Partnership (RCEP) and the ASEAN Economic Community (AEC). When these trade agreements come into force, Vietnamese exports will be freely accessible to many of the world’s largest markets with few tariffs or restrictions.

In terms of regulatory and financial incentives, Vietnam has become increasingly investor-friendly in recent years –the government has taken such actions as reforming its financial sector, streamlining business regulations, and improving the quality of its workforce. Since the mid-2000s, the Vietnamese government has offered extremely competitive financial incentives to businesses seeking to set up operations in the country, in addition to a zero percent withholding tax on dividends remitted overseas and a low corporate income tax (CIT) rate of only 22 percent (set to drop to 20 percent in 2016). These advantages have enabled Vietnam to become a premier “sourcing economy” in the eyes of many companies.


The Socialist Republic of Vietnam remains a Communist dictatorship characterized by political repression and an absence of civil liberties. Economic liberalization began in 1986 with the doi moi reforms, and Vietnam joined the World Trade Organization in 2007. In 2012, Prime Minister Nguyen Tan Dung acknowledged mismanagement of the economy and affirmed his commitment to reforming the state sector, but the Vietnamese are still waiting for dynamic action. Vietnam’s economy is driven primarily by tourism and exports. Persistent inflation and the absence of a transparent legal and regulatory system are disincentives to long-term investment. Vietnam is a party to the recently concluded Trans-Pacific Partnership, which, if implemented, will require further economic liberalization.

GDP Growth Rate in Vietnam is expected to be 6.30 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate GDP Growth Rate in Vietnam to stand at 6.20 in 12 months time. In the long-term, the Vietnam GDP Growth Rate is projected to trend around 6.20 percent in 2020, according to our econometric models.

TT Thời Trang Vietnam20copy mport & Export

Vietnam | Economic Forecasts | 2016-2020 Outlook

GDP Growth Rate6.406.[+]
Unemployment Rate2.0622.[+]
Inflation Rate4.[+]
Interest Rate6.506.56.5665percent[+]
Balance of Trade-200.00-20010-400-200-1300USD Million[+]
Government Debt to GDP50.5054.5854.855.0255.563.08percent[+]
Currency22334.002252722750229732319626765 [+]
Stock Market675.17678671665658548points[+]
Government Bond 10y5.976.286.346.416.477.46percent[+]
GDP Growth Rate6.406.[+]
GDP Annual Growth Rate6.406.[+]
GDP193.60205217217217260USD Billion[+]
GDP Constant Prices2070880.003050000600000138000021980003880000VND Billion[+]
Gross National Product3433515.0039313674041990415261242632355823583VND Billion[+]
Gross Fixed Capital Formation1033780.0012734081489888148988814898882284610VND Billion[+]
GDP per capita1684.8717731795181618382130USD[+]
GDP per capita PPP5668.0059175979604161047014USD[+]
GDP From Agriculture471971.0071000099000297000466000755000VND Billion[+]
GDP From Construction156435.0023600045400101000158000269000VND Billion[+]
GDP From Manufacturing453524.0061200013600308000470000800000VND Billion[+]
GDP From Mining235921.0039300073500143000240000431000VND Billion[+]
GDP From Public Administration106138.00120000125000125000128000145000VND Billion[+]
GDP From Services1269694.00185000040000096000014000002220000VND Billion[+]
GDP From Transport85280.00118568263695235589437143000VND Billion[+]
GDP From Utilities173533.00250000295000295000295000482000VND Billion[+]
Unemployment Rate2.0622.[+]
Employed Persons53.2453.9353.8853.8655.255.63Million[+]
Unemployed Persons1.[+]
Minimum Wages3500.0035003900390039005000VND Thousand/Month[+]
Living Wage Family9424600.0096000001000000100000010000001800000VND/Month[+]
Living Wage Individual9159300.00968000097400009820000994000011192433VND/Month[+]
Retirement Age Men60.006060606062 [+]
Retirement Age Women55.005555555558 [+]
Wages4845.0048975356509750656100VND Thousand/Month[+]
Wages High Skilled12031200.001240000012500000127000001300000015500000VND/Month[+]
Wages In Manufacturing4769.0049005310511052006410VND Thousand/Month[+]
Youth Unemployment Rate7.107.36.777.27.4percent[+]
Inflation Rate4.[+]
Consumer Price Index CPI104.17105106107108123Index Points[+]
Core Inflation Rate1.862.[+]
GDP Deflator145.80152158158158176Index Points[+]
Export Prices96.20999999100104Index Points[+]
Import Prices94.20101101101103103Index Points[+]
Cpi Transportation83.9382.78383.583.792Index Points[+]
Food Inflation2.903.[+]
Inflation Rate Mom0.830.[+]
Producer Prices99.5099.75100101101106Index Points[+]
Interest Rate6.506.56.5665percent[+]
Interbank Rate3.733.[+]
Money Supply M0624832.00711259721968732677743386998022VND Billion[+]
Money Supply M14613262.00626000074100007410000741000010000000VND Billion[+]
Money Supply M25179216.00673000067300006730000482715911100000VND Billion[+]
Foreign Exchange Reserves34124.623883241343414364143648901USD Million[+]
Deposit Interest Rate4.7054.[+]
Balance of Trade-200.00-20010-400-200-1300USD Million[+]
Exports15500.001541415700155001600018300USD Million[+]
Imports15700.001560015700159001620019700USD Million[+]
Current Account2632.001110136074513202730USD Million[+]
Current Account to GDP0.301.[+]
External Debt45243.005290059900599005990070200USD Million[+]
Terms of Trade102.16101101101101101Index Points[+]
Foreign Direct Investment3530.0059126843506451008500USD Million[+]
Capital Flows2944.001354151217451500700USD Million[+]
Crude Oil Production312.00337338340314360BBL/D/1K[+]
Tourist Arrivals812.00189208008401220Thousand[+]
Terrorism Index0.0000000.03 [+]
Government Debt to GDP50.5054.5854.855.0255.563.08percent[+]
Government Budget-5.40-5.7-5.9-5.9-5.9-5.3percent of GDP[+]
Government Budget Value-171932.00-181000-185000-185000-168664-197000VND Billion[+]
Government Spending265545.00282445285706288968292229312671VND Billion[+]
Government Revenues863520.009000379173219346049518871107325VND Billion[+]
Fiscal Expenditure1035452.0011089171126631114434511620581438898VND Billion[+]
Military Expenditure4580.5045194480444046235513USD Million[+]
Manufacturing PMI51.705251.451.852.253 [+]
Industrial Production7.[+]
Manufacturing Production11.708.[+]
Changes in Inventories126667.00137000144000145200145300170133VND Billion[+]
Car Registrations24130.002910033047345203420171461Cars[+]
Competitiveness Index4.314.[+]
Competitiveness Rank60.006265656570 [+]
Ease of Doing Business82.0087878785.6178 [+]
Electricity Production15500.001563516384176861723025683Gigawatt-hour[+]
Corruption Index31.003132323237Points[+]
Corruption Rank112.00113113111111109 [+]
Mining Production-7.10-2-9.47-3-2.83.3percent[+]
Retail Sales Yoy1.3010.2118.59.17.9percent[+]
Consumer Spending2849540.0030946553154029321340432727784001281VND Billion[+]
Consumer Confidence144.80143140141138142 [+]
Gasoline Prices0.730.730.720.70.70.62USD/Liter[+]
Retail Sales Mom-2.408.39-32.5-2.96.9percent[+]
Corporate Tax Rate22.002222222222percent[+]
Personal Income Tax Rate35.003535353535percent[+]
Sales Tax Rate10.001010101010percent[+]
Social Security Rate26.002626262626percent[+]
Social Security Rate For Companies18.001818181818percent[+]
Social Security Rate For Employees8.0088888percent[+]

Vietnam has gradually been transforming itself into a more open, more market-oriented economy and is beginning to enjoy the benefits of its steady but slow integration into the global commercial system. Reforms have included partial privatization of state-owned enterprises, liberalization of the trade and investment regimes, and modernization of the financial sector.

Economic Freedom Snapshot

  • 2016 Economic Freedom Score: 54.0 (up 2.3 points)
  • Economic Freedom Status: Mostly Unfree
  • Global Ranking: 131st
  • Regional Ranking: 27th in the Asia–Pacific Region
  • Notable Successes: Trade Freedom
  • Concerns: Rule of Law and Regulatory Efficiency
  • Overall Score Change Since 2012: +2.7

For more infomation: Source

Vietnam: Trade freedom index (0-100)

For that indicator, The Heritage Foundation provides data for Vietnam from 1995 to 2016. The average value for Vietnam during that period was 59.89 points with a minumum of 44.6 points in 1995and a maximum of 83 points in 2016.

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Vietnam’s fast changing society

Every time when I visit Vietnam, I notice that the country is developing in very high speed. It is
inevitable that such development brings changes with it. Some changes are for the benefit of the people; Vietnam’s mid-class society is growing fast. But it also brings social disintegration and exclusion, where the poorest of society, often the ethnic minorities do not benefit at all.
This phenomenon interests me most; first of all the question why the economically deprived are left behind, even when a country is developing the way Vietnam is developing. And moreover, what need to be undertaken to strengthen the position of the oppressed and economically deprived groups in Vietnam society. My Master’s thesis, which I wrote in 2013, also deals with these themes.

By Pim Verweij – Anthropologist / Vietnam specialist

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