Viet Nam advocates the policy of building an independent and self-reliant economy, bringing into full play its internal strengths and international integration and cooperation, in close association with cultural development, social progress and justice, environmental protection, and national industrialization and modernization.
Overview of Viet Nam’s economy:Viet Nam embarked on Doi Moi policy in 1986 with three main pillars: (i) to transform the centrally planned economy into a market - oriented one; (ii) to develop a multi - sector economy in which the private sector plays an increasingly important role; and (iii) to actively and effectively integrate into regional and global economy in accordance with Viet Nam’s situation.
The Law on Foreign Investment in 1987 was the first legal document that helped form the legal framework for the market economy in Viet Nam (the law was amended in 1990, 1992, 1996 and 2000). In 1990, the Law on Private Enterprises and Companies Law were introduced. The amended 1992 Constitution affirmed the existence and development of a multi - sector economy under a market mechanism, including the foreign - invested sector. This was followed by the promulgation of a series of laws crucial for the development of the market economy, including the Law on Land, the Law on Tax, the Law on Bankruptcy, the Law on Environment and the Labor Code etc. After that, hundreds of ordinances and decrees were enacted to guide the implementation of the law. The introduction of the Law on Enterprises and the Law on Investment in 2005 represented a significant progress in creating an atttrative investment climate in Viet Nam. On amendments to the Law on Enterprises - 1999 and the Law on State Owned Enterprises - 2003…, the Law on Enterprises - 2005 is applicable to both domestic and foreign invested enterprises. This law provides more encouragement through equal rights and obligations of enterprises regardless of ownership forms. On amendments to the Law on Promotion of Domestic Investment - 1998 and the Law on Foreign Investment - 2000…, the Law on Investment - 2005 provides for investment activities for business purposes, rights and obligations of investors, assurance of legitimate rights and interests of investors, encouragement of investment and investment incentives, state management of investment activities in Viet Nam and offshore investment from Viet Nam; applicable to both domestic and foreign investors. The 2013 Constitution (amended) reaffirms: the Vietnamese economy is a socialist - oriented market economy with varied forms of ownership and economic sectors; the state economy plays the leading role. All economic sectors are important components of the national economy. Entities in different economic sectors are equal, cooperating and competing with one another in accordance with the law.
Along with the law - making process, market economy institutions have also been established. It is the policy of the government to eliminate the central planning mechanism, emphasize monetary - market relations, focus on economic management measures and establish an array of financial institutions, banks and basic markets for money, labor, goods and land, etc. The administrative reform was promoted so as to improve economic competitiveness and to help create a more favorable business environment and mobilize all resources for economic growth. Viet Nam accomplished the 2001-2010 administrative reform program which emphasized the simplification of administrative procedures, amendment of law and improvement of economic management, contributing to the establishment of a dynamic mechanism. Currently, Viet Nam has been carrying out the administrative reform program for 2011-2020 which will help to realize the country’s socio - economic development strategies to the year 2020, meeting the development requirements of Viet Nam in the new context.
Tremendous economic reforms in the past nearly three decades of Doi Moi have yielded encouraging results. Viet Nam has created an ever more competitive and dynamic economic environment. The multi - sector economy has been encouraged to develop, thus mobilizing effectively all social resources for economic growth. External economic relations have been expanded, attracting greater foreign direct investment and broadening export market. Labor export, tourism industry and remittances from overseas Vietnamese have been strongly promoted to generate increasing foreign earnings for Viet Nam. In particular, WTO membership enables Viet Nam’s economy to integrate further into the global economy and to utilize external resources to boost industrialization and modernization.
Viet Nam has sustained economic growth at a relatively high level in many consecutive years. Viet Nam’s GDP growth had increased from 3.9% between 1986 and 1990 to 8.2% in the following 5 years of 1991-1995. Between 1996 and 2000, GDP grew about 7.5%, lower than that of the previous five years amidst the Asian financial crisis. During the implementation of the 2001-2010 socio-economic development Strategy, Viet Nam’s GDP averaged at 7.26% per year. From 2011 to 2013, the average GDP growth rate was around 5.5-6% per year. Between 2008 and 2013, GDP per capita of Viet Nam rose from US$1.024 to US$1.960. Viet Nam is among countries with highest income growth rate over the last 40 years. Along with economic growth, Viet Nam’s economic structure has witnessed significant changes. Economic structure shifting moves toward ascending shares of industries and services and lowering shares of agriculture. Currently, industries and services make up around 80% of the total GDP share. Agriculture - forestry - fishery, industry and construction, services part - takings in 2013 were, respectively 18.4%, 38.3%, 43.3%. The country’s exports have grown at an average rate of 20% per annum in recent years. The total export and import turnover has exceeded US$200 billion per year. In 2013, export turnover and import turnover were US$132.2 billion and US$131.3 billion respectively.
FDI inflows to Viet Nam rapidly increase can be seen as a bright color in the picture of Viet Nam’s economic development. From a negligible figure of 1986, FDI registered capital in 2008 reached US$ 64 billion. As of 31 December 2012, there were 14,522 valid FDI projects with total registered capital of US$210.5 billion. From the beginning of 2013 to 15 December 2013, attraction of FDI capital was approximately US$21.6 billion, including US$14.3 billion of registered capital of 1,275 newly licensed projects and US$7.3 billion of capital increase from 472 existing projects.
With a view to raising the productivity of the state - owned sector, priority has been given to concrete policies and measures to adjust and reorganize SOEs, particularly in finance management of SOEs, management of state investment in SOEs, or the equitization of SOEs. As of 1st January 2013, the total number of SOEs was only 54.4% that of 2000, a reduction of 2,624 enterprises. The country’s revenue in 2012, profit before tax and contribution to state budget were, respectively 6.9-fold increase; 9.4-fold increase and 8.1-fold increase compared to that of 2000.
Over the past years, Viet Nam has succeeded in translating economic achievements into social progress: economic growth is combined with the improvement of life quality and development of healthcare and education; the Human Development Index rank of Viet Nam has increased by 41% over the last two decades; the average life expectancy was raised from around 50 in the 1960s to 73 in 2012; the poor household ratio dropped from over 70% in early 1980s to 9.6% in 2012. Viet Nam has met well ahead of schedule many UN Millennium Development Goals (MDGs) including targets in poverty reduction and human development.
As Viet Nam is actively integrating into global economy, Viet Nam’s economic ties with other countries and international organizations have been expanded. Viet Nam has entertained economic and trade relations with over 160 countries and 70 territories. The country has joined various economic arrangements at bilateral, regional and global levels. It is member of the United Nations, the World Trade Orgazation, the Association of Southeast Asian Nations, the Asia - Europe Meeting, the Asia-Pacific Economic Cooperation, the World Bank, the International Monetary Fund, the Asia Development Bank and other regional and international organizations. Economic cooperation with major economies like the United States, the EU, Japan, Russia, China and India has been broadened. Viet Nam signed bilateral trade agreements with the US, the EU, Japan and a number of countries. Currently, Viet Nam is involved in the negotiation of FTAs with the EU, Republic of Korea and the Russia - Belarus - Kazakhstan Customs Union; and is in the negotiation process of the Trans Pacific Partnership Agreement (TPP).
Pursuing 11th National Congress of the Communist Party’s guidelines, Viet Nam has been integrating into the world in a comprehensive manner. In the process, economic integration remains the crucial task, serving as the foundation for Viet Nam’s successful international integration.
Source: Vietnamese Ministry of Foreign Affairs