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Doing Business In Viet Nam Economic Environment 3.1 Gross Domestic Product Growth Though a global economic recession, Vietnam registered quite a high growth in the recent years, with 2008 at 6.18%, 2009 at 5.32%, 2010 at 6.78%, 2011 at 5.89%, and expected 5.7% in 2012. The growth rates acquired in the recent years, made Vietnamese economy have the third highest growth rate in the Asia - Pacific Area after China and India.
3.2 Sectorial Growth The structure of the Vietnam's economy, which is basically made up of three sectors: agriculture, industry and construction, and services, has been undergoing a considerable transformation over the last few years, with the agriculture sector declining its contribution while the industrial and service sectors increasing their shares.
3.3 Foreign Direct Investment Flow Up to June 20, 2012, as many as 13,893 foreign invested projects with a total registered capital of over US$204.331 billion, had been licensed in Vietnam (except investment by overseas Vietnamese). The implemented capital in the first six months of this year 2012 has reached over US$6.3 billion, which accounts for around 3.08% of total registered capital. By sectors, the Processing and Manufacturing absorbs the largest quantity of foreign capital into Vietnam, with registered capital of over US$97.921 billion and 7,853 projects. The Property & Construction sector stands behind with the registered capital of over US$59.742 billion and 1,269 projects; the Accommodation & Food services with the registered capital of over US$10.539 billion and 326 projects; the Electricity, Gas & Water Production and Distribution with the registered capital of over US$7.403 billion and 80 projects; and the Information Technology & Communications sector with the registered capital of over US$5.721 billion and 759 projects. By localities, all 65 cities and provinces of Vietnam have been fully covered by foreign investment. Nation-wide, foreign investment most focuses on the South, especially Ho Chi Minh City, Ba Ria-Vung Tau, Hanoi, Dong Nai and Binh Duong. Among the principal cities and provinces, HCMC and Ba Ria-Vung Tau are the most attractive ones, which accounted for 15.8% and 12.7% of the total registered capital in Vietnam. Hanoi, Dong Nai and Binh Duong stand behind, with the registered capital accounted for 11.7%, 9.3% and 8.3% of the total registered capital. By nationality, 95 different countries and territories have so far invested in Vietnam. Japan now is the biggest foreign investor with 1,681 projects and registered capital of US$28.035 billion, followed by the Republic of Korea, Taiwan, Singapore, British Virgin Islands, etc. These top five economies have invested in 8.536 projects (61.44% of the total licensed projects) with total registered capital of over US$114.512 billion (56.05% of the total registered capital). Other countries and territories like Hong Kong, Malaysia, the United-States, Cayman Islands and the Netherlands, which have given impetus to get a steady foothold in Vietnam, and are now among the top ten. The "top ten" investors account over 75.35% of the total licensed projects and over 78.95% of the total registered capital in Vietnam. 3.4 ODA Commitments Total ODAs reserved for Vietnam has been from 1993 more than US$71 billion. Thanks to the positive economic development and the political stability, the ODA commitments by the international donor community to Vietnam follow the trend of increasing from year to year. Particularly, US$6.144 was agreed for 2009, US$8.063 for 2010, US$7.88 for 2011, and almost US$7.4 for 2012 despite the on-going global economic recession. Moreover, capital from this source was being disbursed progressively better from US$3 billion in 2009, US$3.5 billion in 2010, US$3.65 billion in 2011, and approximately US$1.75 in the first six months of 2012, out of the total ODAs, which have been disbursed so far about US$33.4 billion. 3.5 Global Integration Thanks to the excellent preparations, Vietnam officially became the 150th member of the WTO from November 2007, and at the same time, achieved the Permanent Normal Trade Relations (PNTR) with the US in the same year. In addition to an ASEAN-China Free Trade Agreement as of 2004 and a Framework Agreement on Comprehensive Economic Co-operation among the ASEAN countries and the Republic of Korea as of 2005, in 2008 the coming into full effect of a Comprehensive Economic Partnership Agreement between ASEAN countries and Japan as well as the signing of another separated one between Vietnam and Japan, added by the initial negotiations for a future FTA between Vietnam and the EU in June 2012, all pave the way for the easier entry of Vietnamese goods to these three of the biggest economies of the world with much lower tax rates. @1999-2012 Vision & Associates. All Rights Reserved.
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