Vietnamese economy

Vietnamese economy, traditionally, is based on the agriculture, especially rice culture, which plays a leading role even until now.

With the arrival of the French colonialism in 1858, the country began to come into contact with European technology. Other economic areas were created: railways, mining, construction, metallurgy … new modern farms were founded by the French: Rubber, coffee…

Vietnamese economy

But since World War II until 1986, the country was plunged into terrible wars without stops. The country was completely destroyed, isolated from the world… to open the border with China in 1991. For the historic reasons, Vietnam has adopted the style of the planned economy from Russia since the 60th until 80th century.

In addition, the economic embargo imposed by the United – States since 1975 until 1995 plunged the country into the total poverty.

Since 1986, the economic reforms carried out by the Vietnam Communist Party, the country has followed a free market economy, but with the orientation of the State. For example: The state plays the role of land owner, but farmers themselves decide their work, production…

Private companies have the right to develop by playing the leading role in the Vietnamese economy, beside the state enterprises.

The government spreads red carpet to foreign investors to develop industries: electronics…The firsts are: South Korea, Taiwan, Japan, and Singapore…

So, the agriculture is now ranked as first role in the country’s income, but we begin to see: crude oil, industry, tourism…

Today, Vietnam is in a period of integration into the global economy. The country is one of the leading exporters of agricultural products in the world and an attractive destination for foreign investment in Southeast of Asia.

Here are some results of the Vietnamese economy:

The Vietnamese economy is a market economy, highly dependent on gross exports and foreign direct investment. This economy is ranked in 6th position among the largest economies of 11 nations in Southeast Asia, in 48th position among the world's largest economies in terms of gross domestic product in 2013 but in 128th position in nominal GDP per capita. The total domestic GDP in 2015 was $ 198.8 billion.

The Vietnamese Communist Party is planning the construction of a market economy system in Vietnam. In November 2007, China, Russia, Venezuela, South Africa, ASEAN (11 countries of the Association of Nations in Southeast Asia) and Ukraine declared that Vietnam has an economy market. In 2013, 37 countries recognized Vietnam's economy as a market economy, including Japan, Germany, South Korea... Deputy Prime Minister Pham Binh Minh announced in 2017 that 64 countries recognized Vietnam economy as a market economy at a government meeting.

On the economic front, Vietnam is a member of the United Nations, the World Trade Organization, the International Monetary Fund, the World Bank, the Asian Development Bank, the Asia-Pacific Economic Cooperation Forum, ASEAN.... Vietnam joins multilateral free trade agreements with ASEAN, South Korea, Japan, China and other countries. Vietnam has also signed a bilateral economic partnership agreement with Japan...

Characteristics of the Vietnamese economy:

While Vietnam's economy is increasingly commercialized, government intervention in the economy is still important. At present, the government still uses administrative measures of price management. For example, the government can ask companies, businesses to adjust investment levels, determine gas prices, control the price of steel, cement, coal...

The Vietnamese government recognizes that the Vietnamese economy is a market-oriented economy; many countries, economic sectors, including advanced market economies, also recognize the market economy of Vietnam. However, until now, the United States and the EU and Japan have not recognized Vietnam's economy as a market economy. The World Trade Organization recognizes that Vietnam has a developing economy in transition.

Vietnam has many economic sectors. According to the current government's determination, Vietnam has the following economic sectors: state economy, collective economy, private economy (individuals, smallholders and private capitalists) and private economy having foreign elements. The option of Vietnam is that the state sector plays the essential role in the economy of the country with the creation of state-owned economic groups and state-owned enterprises. However, since the early 1990s, Viet Nam has systematically privatized state-owned enterprises. Although the country gives priority to the development of the economic sectors of the state and the collective economy, the growth rate of these two sectors is lower than that of the private economy and the economy with foreign investment.

Structure of this economy:

Vietnamese economy is divided into three sectors:

1. Agriculture, Forestry and Fisheries

2. Industry (including mining and mineral industry, processing industry, construction and production of building materials, production and distribution of gas, electricity, water)

3. Trade, services, finance, tourism, culture, education and health.

Main products:

1. Agriculture: rice, coffee, rubber, tea, pepper, soy, white sugar, banana, peanut, seafood...

2. Industry: food processing, textiles, footwear, construction machinery - agriculture; Extraction: coal, apatite, bauxite, crude oil, gas; Cement, nitrogen fertilizer, steel, glass, tire; Cell phone; Construction industry; Electricity production.

3. Services: Tourism, restaurants, hotels, private education, health, healthcare, entertainment...

Percentage of savings contributions to total GDP (estimated in 2015):

Agriculture: 17.4%

Industry: 38.8%

Services: 43.7%

Current and major problems of the Vietnamese economy:

. The real estate market: It develops too quickly in relation to the purchasing power of the populations.

. The budget deficit is still high. In order to offset the deficit, foreign investment and foreign debt must be relied upon. So the national debt and external debt are rising rapidly in recent years, but still at the security level according to experts.

. The trade deficit, imports of luxury goods, inflation are the main causes of the depreciation of the Vietnamese currency, the decline in national currency reserves and the loss of confidence in VND (Vietnamese currency) by creating opportunities for speculation, fraud...

. Infrastructure is one of the biggest obstacles to the development of the Vietnamese economy. Vietnam's infrastructure is considered weak and infrastructure improvements in Vietnam are still slow.

. The paperwork makes foreign investment difficult, complicated...

. The economic structure of Vietnam is unreasonable in the ownership structure: public enterprises have too many priorities...

. Labor: One of the obstacles in the Vietnamese economy is the lack of qualified human resources. Vietnam's labor force is abundant, young, educated but lacking in skills. The number of skilled workers is low, unable to respond to the labor market. Vocational training and universities are not close to recruitment needs.

. Many policies in Vietnam's economy are backward compared to other countries in Southeast Asia. Vietnam's macroeconomic instability weakens its competitiveness and efficiency.

In addition, the trade protectionism of the most advanced economies in the world, global warming... are also the challenges of the Vietnamese economy.