VIETNAM – ECONOMIC OVERVIEW & TRADE ANALYSIS EIP/MTR/002/02/2016 (MARKET REPORT) Export Initiatives & Partnerships Division, Phone: +9714-4455333; Fax: +9714-4455355 E-mail: [email protected]; Web: www.dedc.gov.ae PO Box 123336, Dubai – UAE Primary Information Sources: Prepared – February, 2016 Disclaimer: While all attempts have been made to collect & present accurate information, DE makes no warranty, express or implied, as to the fitness, appropriateness of the above information for a particular purpose, or assumes any legal liability for the accuracy or usefulness of any contained information.
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Primary Information Sources: Prepared – February, 2016
Disclaimer: While all attempts have been made to collect & present accurate information, DE makes no warranty, express or implied, as to the fitness,
appropriateness of the above information for a particular purpose, or assumes any legal liability for the accuracy or usefulness of any contained information.
BASIC INDICATORS Population (thousands, 2014) 90 730 Rank in world trade, 2014 Exports ImportsGDP (million current US$, 2014) 186 205 Merchandise 32 32GDP (million current PPP US$, 2014) 510 715 excluding intra-EU trade 22 22Current account balance (million US$, 2013) 9 471 Commercial services 56 53Trade per capita (US$, 2012-2014) 3 130 excluding intra-EU trade 36 36Trade to GDP ratio (2012-2014) 164.2
2014 125
Exports of goods and services (volume, 2010=100) 168Imports of goods and services (volume, 2010=100) 150
TRADE POLICY WTO accession 11 January 2007 Contribution to WTO budget (%, 2015) 0.479Trade Policy Review 17, 19 September 2013 Import duties collected GPA accession Observer in total tax revenue ...Tariffs and duty free imports to total imports ...
Tariff binding coverage (%) 100 Number of notifications to WTO and measures in force MFN tariffs Applied 2014 30
Simple average of import duties Goods RTAs - services EIAs notified to WTO 9 - 5All goods 11.5 9.5 Anti-dumping (30 June 2015) ...
Agricultural products 17.6 Agricultural products 11.5Fuels and mining products 8.0 Fuels and mining products 11.4Manufactures 73.9 Manufactures 76.5
1. European Union (28) 18.4 1. China 27.92. United States 18.1 2. Korea, Republic of 15.73. Japan 10.3 3. Japan 8.84. China 10.0 4. European Union (28) 7.15. Korea, Republic of 5.1 5. Chinese Taipei 7.1
COMMERCIAL SERVICES TRADE Value2014 2013
10 833 14 305
2014 0.22 0.30
Breakdown in economy's total exports By principal services item
... ... 21.4 54.1 67.7 15.0 10.9 30.9
INDUSTRIAL PROPERTY
Madrid Total 5 130 24 360
September 2015
Viet Nam
Annual percentage change2010-2014 2013 2014
Real GDP (2010=100) 6 5 614 17 1211 17 13
Final bound
Non ad-valorem duties (% total tariff lines) Number of disputes (complainant - defendant) Requests for consultation
in agricultural goods (AOA) in non-agricultural goods
Viet Nam: EconomyFaster Gross Domestic Product growth in Viet Nam, at 6.3% in the first halfover the same period in 2014, was driven by strong expansion inmanufacturing, construction, and mining.
Selected economic indicators (%) 2015 2016
ADO 2015 Update ADO 2015 Update
GDP Growth 6.1 6.5 6.2 6.6
Inflation 2.5 0.9 4.0 4.0
Current Account Balance (share of GDP) 3.1 0.5 1.5 1.0
Source: Asian Development Outlook 2015; Asian Development Outlook 2015 Update
Economic performanceSustained inflows of foreign direct investment into manufacturing have propelled Viet Nam’sexports in recent years. Private consumption is growing robustly, supported by low inflation,higher offfarm employment, and improved consumer confidence.
Inflation subsided to 0.8% year on year in the first 8 months, continuing a steep decline since2011, and the forecast for 2015 is revised down from March.
In contrast with most other subregional economies, Viet Nam recorded solid growth inmerchandise exports in the first half. Still, imports rose at a much faster pace than exports,reflecting strong domestic demand for capital and consumer goods. A lower trade surplus cut thecurrent account surplus. Forecasts for current account surpluses are lowered from March,
particular for 2015. The central bank devalued the Viet Nam dong against the US dollar threetimes in the first 8 months, by 1% each time, to support the competitiveness of exports.
Economic prospectsAs these economic trends are projected to continue, growth forecasts are raised from the AsianDevelopment Outlook 2015 report.
Growth in credit has picked up and looks likely to exceed the government’s target. Fiscal policysupports economic growth, though concerns over rising public debt could prompt a tightening nextyear. The outlook for trade and investment is bolstered by an easing of restrictions on foreigninvestment in shares and property and by the conclusion in August of a Viet Nam–EuropeanUnion freetrade agreement.
By the end of 2015, inflation is seen rising to 2.0%. The forecast for 4.0% yearaverage inflation in2016 is retained.
Excerpted from the Asian Development Outlook 2015 Update.
Related Fact SheetKey Indicators 2015: Viet NamBasic Statistics
How Do We Measure Economic Freedom? See page 467 for an explanation of the methodology
or visit the Index Web site at heritage.org/index.2014 data unless otherwise noted.Data compiled as of September 2015.
Quick Facts
BACKGROUND: The Socialist Republic of Vietnam remains a Communist dictatorship characterized by political repres-sion and an absence of civil liberties. Economic liberaliza-tion 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 reform-ing 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.
Population: 90.6 millionGDP (PPP): $510.7 billion6.0% growth in 20145-year compound annual growth 5.9%$5,635 per capitaUnemployment: 2.3%Inflation (CPI): 4.1%FDI Inflow: $9.2 billionPublic Debt: 58.7% of GDP
Economic Freedom Score
0 20 40 60 80 100
Country Comparisons
Freedom Trend
Country
WorldAverage
RegionalAverage
FreeEconomies
2012 2013 2014 20162015
5025 75
0 100Leastfree
Mostfree
49
50
51
52
53
54
55
54.0
60.7
59.0
83.9
54.0
V ietnam 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 inte-gration 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
The rule of law remains an issue, a remnant of decades of Communism. The court system is inefficient, and the pro-tection of intellectual property has been a major area of contention in international trade negotiations. The lack of democratic governance and accountability contributes to a permissive environment for corruption.
World Rank: 131 Regional Rank: 27
VIETNAM
452 2016 Index of Economic Freedom
Property RightsFreedom from
Corruption
Fiscal FreedomGovernment
Spending
Business FreedomLabor FreedomMonetary Freedom
Trade FreedomInvestment FreedomFinancial Freedom
Business FreedomLabor Freedom
Monetary Freedom
REGULATORY EFFICIENCY
OPENMARKETS
Trade FreedomInvestment Freedom
Financial Freedom
GOVERNMENT SIZE
Fiscal FreedomGovernment Spending
RULE OF LAW
Property RightsFreedom from Corruption
0 20 40 60 80 100
0 20 40 60 80 100
0 20 40 60 80 100
0 20 40 60 80 100
Country World Average Rank Change1–Year
Score
RULE OF LAW GOVERNMENTSIZE
REGULATORY EFFICIENCY OPEN MARKETS
+5.0+21.0
+10.5–12.0
+18.3–1.5
+15.4
+38.4–5.0
+10.0
158th122nd
85th71st
124th78th
145th
63rd159th105th
15.031.0
79.375.1
58.362.670.6
83.025.040.0
00
+0.2–2.0
–3.2–0.3+3.8
+4.4+10.0+10.0
Long-Term Score Change (since 1995)
THE TEN ECONOMIC FREEDOMS
Corruption and graft blight all levels of Vietnam’s government and judiciary. Internal dis-sent and factionalism, bureaucratic rivalries, nepotism, vast corruption within the Commu-nist Party, and a general lack of accountability ensure that many agencies are run as fiefdoms. Many state companies operate with little transparency. Private property rights are not strongly respected, and resolution of disputes can take years.
The top personal income tax rate is 35 percent, and the top corporate tax rate is 22 percent. Other taxes include a value-added tax and a property tax. The overall tax burden equals 18.9 percent of total domestic income. Government spending amounts to 28.8 percent of GDP. Defi-cits have been persistently high in recent years, and public debt now equals nearly 60 percent of total domestic product.
Despite ongoing reform efforts, the overall business regulatory framework lacks efficiency. Although no minimum capital is required, starting a business remains time-consuming. The labor market remains dominated by the public sector, but informal labor activity is consider-able. The government has reduced pharmaceutical subsidies but maintains price controls and high subsidies for rice and other agricultural commodities.
Vietnam’s average tariff rate is 3.5 percent. Export taxes are imposed on several goods. The government screens foreign investment, and investment in some sectors of the economy is restricted. State-owned enterprises distort the economy. The financial sector continues to expand, and capital markets are evolving. Directed lending by state-owned commercial banks has been scaled back in recent years.
VIETNAM (continued)
Sources: ITC calculations based on UN COMTRADE statistics.2015 values estimated based on 2013-14 growth
Imported
value 2015
(USD '000)
Est.
Imported
value 2014
(USD '000)
Trade balance
2014 (USD
'000)
Annual value
growth 2010-
14 (%, p.a.)
TOTAL All products 165,579,734 147,839,048 2,378,091 14China Korea Japan
'8542 Electronic integrated circuits and microassemblies 10,398,175 10,295,223 (8,076,042) 65 Korea Singapore China
'8517 Electric app for line telephony,incl curr line system 10,313,964 9,376,331 15,016,485 45 China Korea Thailand
'2710 Petroleum oils, not crude 8,751,545 8,028,940 (6,927,065) 1 Singapore China Taipei
'7208
Flat-rolld products of iron/non-al/s wdth>/=600mm,hr,not
clad 1,795,368 2,163,094 (2,147,303) -2Japan Korea Taipei
'3901 Polymers of ethylene, in primary forms 2,243,941 1,934,432 (1,896,125) 14 KSA Korea Thailand
'6006 Other knitted or crocheted fabrics 2,212,560 1,923,965 (1,769,668) 22 China Korea Taipei
'7225
Flat-rolled products of other alloy steel, of a width of 600mm
or more 4,367,795 1,907,334 (1,869,319) 63China Japan Taipei
'3004 Medicament mixtures 2,019,729 1,870,119 (1,782,018) 12 India France Germany
'2304 Soya-bean oil-cake and other solid residues 1,989,974 1,859,789 (1,815,023) 12 Argentina Brazil China
'8534 Printed circuits 1,455,255 1,455,255 (1,011,911) 40 Korea China Taipei
'5201 Cotton, not carded or combed 1,749,949 1,422,723 (1,421,006) 18 USA India Australia
'3902 Polymers of propylene/other olefins, in primary forms 1,527,806 1,401,657 (1,251,006) 13 KSA Korea Singapore
'8536 Electrical app for switchg (ex fuse,switche,etc) 1,425,167 1,344,497 (874,011) 27 China Japan Korea
'8471 Automatic data processing machines;optical reader 1,631,927 1,316,070 2,495,791 12 China Malaysia Taipei
'8529 Part suitable for use solely/princ with televisions, 2,260,766 1,262,998 (961,989) 43 China Japan Malaysia
'7204 Ferrous waste and scrap; remelting scrap ingots .. 1,241,566 1,241,566 (1,215,571) 8 Japan Australia HongKong