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Vietnam is An emerging economy

World Affairs Talk | Jan 28, 2007

Vietnam is an emerging nation in the Asian trade map that has recently expanded its GDP to 8%, the second fastest in the region just after China. Vietnam’s foreign investments and exports will get a further boost soon after it starts to receive benefits of joining the World Trade Organization and for acceptance of the market economy principles.

Vietnam has set targets of 8.5 percent GDP and per capita income of US $820 for 2007 along with the focus of generating 1.6 million jobs. It also plans to provide clean water to 80 percent of urban dwellers and 67.2 percent of rural population before the yearend. The National assembly announced that it will soon pass 11 laws and one resolution, including those on tax management, vocational training, gender equality, organ and tissue donation and transplantation, and technology transference, personal income tax, quality of product and commodity, and legal assistance in a bid to combine its economic growth with the social advancement.

In the recent years, manufacturing and service sectors increased in the values and in contribution to Vietnam's economy as agricultural sector decreased. In 2006, manufacturing sector accounted for 41 percent of the economy, services 38 percent while agriculture was 21 percent.

Over the years, Vietnam's one-party regime successfully attracted foreign investment from the major economic powers and this has worked out in the favor of the country in many ways. For instance, foreign investment enabled the local professionals to access advanced technology and to learn the dynamics of Western management methods. Country’s export volume is expected to reach US$40 billion while the country is expected to magnetize record assurance of over US$10 billion in foreign direct investment in 2007. This target is possible to achieve by ensuring equal treatment for both local and foreign investors as well as transparency, consistency and no retroactive policies. The government in the process ordered local authorities and state agencies, especially in the licensing, customs, taxation and market monitor sectors to find ways to clear difficulties that the foreign businesses are still facing. Vietnam continues to promote and broaden friendly relationship and mutually beneficial cooperation with other countries and regions.

The government however admitted that its fight against corruption was not carried out in all parts of the country so far and punishments were not ruthless enough to deter others from illegal activities.

The year 2006 witnessed the flourishing of Vietnam’s stock market. The market capitalization rate rose from 1% of GDP in 2001 to 17% of GDP this year. In the 1980’s and 90s’, in the process of shifting from a command economy to a market-driven one, Vietnam government had to consider the socio-economic situation along. Between 1986 and 1990, Vietnam had to deal with major consequences left by the old mechanism and at the same time, find suitable ways to make the switch from a planned to a market-oriented economy. The growth rate then was low, but laid a foundation for faster development in ensuing years. Vietnam’s close and fluent relationship with regional and international nations enabled it to attract investments and transfer of technological know-how.

Trade barriers and quota limits nevertheless still exist in the business scenario. Shortage of skilled labor due to an archaic educational system hampers the growth but the government is working for a credible solution. Vietnam government also took several countermeasure steps to prevent the industrial pollution which is a bi-product of the mass industrialization.

Despite having some problems such as; sluggish public spending and implementation of projects and shortage of skilled human resources; the ambitious & smart future plan of Vietnam government will take the nation on a high in the near future. Vietnam can further sharpen its competitiveness in the international economy if the government encourages the growth of small and medium-sized businesses to stabilise the domestic market and increase production capacity.

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