Vietnam itself represents a significant market
opportunity as the country’s robust pace of economic growth and development
shows. The significant Doi Moi economic reforms introduced in 1986 enabled Vietnam to shift from
a highly-centrally planned economy to a socialist-oriented market economy which
uses both directive and indicative planning
Vietnam’s transformation from command to
market economy has drawn on the experience of privatization in other countries
by seeking to create a broad investor base. Advantages include strong political
stability, high standards of education and relatively low manufacturing labour
costs (average labour costs are around 35% lower than the coastal industrial
zones of China).
The country ranked as the most attractive
emerging market for manufacturing in the PricewaterhouseCoopers 2007 EM20
Index20 and among the top ten countries for foreign direct investment (FDI) in
the UN’s latest World Investment Prospects Survey. Vietnam’s accession to the
World Trade Organisation (WTO) at the beginning of 2007 paved the way for
greater market liberalization and fostered a surge in foreign investment.
Vietnam’s registered inbound foreign
direct investment (FDI) amount in 2011 is expected to total around US$20
billion, due to favourable international and domestic conditions, including an
actualized amount of US$11-11.5 billion (US$8-8.5 million of which is from
foreign partners).
Vietnam’s real
GDP has outpaced other countries, with an average growth rate of 7.32% from
1990 through 2009. Vietnam ranks in the top 20 fastest growing economies
globally for 2009 with GDP growth of 5.3% and the World Bank reports GDP growth
hit 6.9% in the fourth quarter of 2009. In 2010, third quarter results show GDP
growth for 2010 year to date at 6.52% with a total GDP of US$ 104.6 billion,
equating to a nominal GDP per capita of US$ 1218.
According to a
forecast in December 2005 by Goldman Sachs, Vietnam’s economy will become
the 17th largest economy in the world with nominal GDP of US$ 436 billion and nominal GDP per capita of US$ 4,357 by 2025. According to a forecast by Pricewaterhousecoopers in 2008, Vietnam may be the
fastest growing of emerging economies by 2025, with a potential growth rate of
almost 10% per annum in real dollar terms that could push it up to around 70%
of the size of the UK economy by 2050.
The government has sought to strengthen transparency, property rights and
protection for investors through its Common Investment Law and United
Enterprise Law. Developments in financial services include the move to Basel I
capital regulations.
Commensurate with
this economic strength, Vietnamese citizens have been enjoying higher
disposable incomes and possess a strong desire to access high quality goods and
experience luxury recreational opportunities. Nominal wages have increased 40%
since 2005 and are expected to double by 2013.
