VIETNAM:

SUSTAINING
THE GROWTH
OF AN ASIAN
TIGER
Jun-Kyu Hwang
Miftahul Ahyar Arrifai
Muhammad Fiqri Rihyawan
Rosi AB Rantung
The Socialist
Republic of
Vietnam
Government:
Socialist Republic
Large Cities: Hanoi
(capital), Ho Chi Minh
Notable feat: S-shape
country, northern part
is rich of minerals, coal
and iron, southern part
is more fertile land
 A Chinese general
establishes the
independent kingdom
of Nam-Viet. It is made
up of what is today
northern Vietnam and
parts of southern
China.
Vietnam is part of French
Indochina, along with Laos
and Cambodia
French colonialist start
building infrastructure such as
railways and seaport

207 BC 1858 1885

the French enter

Vietnam
 The Japanese Empires Following the surrender of Japan
occupied most of forces, Ho Chi Minh announces
South-East Asia region, Vietnam's independence
including Vietnam

1940 1941 1945

Ho Chi Minh led

Indochina Communist
Party (ICP) military
wing, Viet Minh to rebel
against Japan
occupation
 Democratic
Republic of Vietnam
French tries to regain control is recognised by
of Vietnam, based on USSR
Potsdam Conference that
states former war winner can
claim its former colony
First Indochina War begin

1946 1949 1950

China communist
deposed the nationalist
side. China became
communist country
 The battle of Dien Bien Phu.
Viet Minh defeat French US military
forces at an isolated French enter the war
military outpost in the town
of Dien Bien Phu
Vietnam is split into North
(communist) and South
(nationalist) at Geneva
Conference

1954 1957 1963

Beginning of
Communist
insurgency in the
South.
Second Indochina
War begin (Vietnam
War)
 Ceasefire
agreement in
Tet Offensive - a combined Paris, US troop
assault by Viet Cong and the pull-out
North Vietnamese army on completely by
US positions March
More than 500 civilians die in
the US massacre at My Lai.
Thousands are killed by
communist forces during their
occupation of the city of Hue.

1968 1969 1973

Ho Chi Minh dies

 North Vietnamese troops
invade South Vietnam and
take control of the whole
country
US embargo Vietnam
1975 1976
Vietnam invades
Cambodia and ousts the
Khmer Rouge regime of
Pol Pot
Western countries
imposed embargo to
Vietnam
Vietnam joins Council for
Mutual Economic
Assistance (Comecon),
a socialist trading bloc,
along with Soviet Union
1978

Socialist Republic of
Vietnam proclaimed.
Saigon is re-named Ho
Chi Minh City. Hundreds
of thousands flee
abroad, including many
"boat people".

Vietnam had become the
ninth poorest country in the
world
Vietnam introduced Law
on Foreign Investment.
Allowing full foreign
investment and
guarantee of free
repatriation

1980 1986 1987

Nguyen Van Linh

becomes party leader.
He introduces a more
liberal economic policy
Doi Moi (renovation)
beginning of a new
period of economic
liberalization

Vietnam introduced Land
Law. The Land are state
property, farmers can
utilized but cannot
transferable to other.
Vietnam established
relations with European
Union.
Massive banking
bankruptcies, due to
lacked of financial
expertise.
Vietnam introducing
Sales and Profits Tax

1988 1989 1990

Soviet Union start to decline. Vietnam

was economically dependent on
Soviet Union. Vietnam look trade
opportunity elsewhere.
State Bank of Vietnam, Vietnam
central bank, introduces reserve
requirements
 Dong, Vietnam currency,
became partially
convertible with other
currencies
Vietnam introducing
Personal Income Tax
Vietnam established first
Export Processing Zone
Vietnam opened
experimental one-stop
shop permitting office in
Ho Chi Minh city
1991 1992
Vietnam reintroduce Land
Law. Farmers can handed
over the land to other
person.
Vietnam became world's
major rice exporter
Vietnam introduced Land
and Housing Tax
1993

Vietnam and China re-established

relation. Both country recognize each
other
 US lift embargo on
Vietnam.
Vietnam established first
Industrial Zone
Vietnam introduced Law
on Promotion Domestic
Investments
Vietnam introduced
Labour Law
Foreign direct investment
at $2.4 billion (comparing
with 1987 only $10
million)
Export volume $7.5
billion

1994 1995 1996

Vietnam introduced Civil Code, defining

individual civil rights and property rights
Vietnam established Ministry for Planning and
Investment to administered foreign direct
investment
Vietnam introduced Law on State-Owned
Enterprises to restructure SOEs
Vietnam adopted Public Administration
Reform to reduce bureaucracy.
Vietnam established Vietnam Chamber of
Commerce and Industry to represent the
national business community
 the start of Asian financial crisis. Vietnam
affected by the crisis
Vietnam facilitated SOEs with financial stimulus
Vietnam shifted from export promotion to
creation of industrial zones
Vietnam introduced Commercial Law
Vietnam decentralized the foreign direct
invetsment approval to provincial authorities

1997 1998

Vietnam launched Vietnam

Business Forum as dialogue forum
between foreign inventors and local
business community
 Vietnam reformed the A unified corporate
tax system income tax for foreign
Vietnam introduced and domestic investors at
Enterprise Law 28%
Banking regulations were
brought in line with
international standard
Vietnam established
national registry for
secured transaction

1999 2000 2003

6 years after embargo lift, Vietnam

and US Bilateral Trade Agreement
(BTA) to reduced the Vietnam's import
tariffs from US
Ho Chi Minh Securities Trading was
created
 Vietnam established major economic group:
Vinacomin (coal and mineral mining),
PetroVietnam (oil and gas), EVN (power
generation and distribution), VNPT (post and
telecommunication), Bao Viet (insurance),
Vinashin (shipbuilding), Vinatex (textiles, VRG
(rubber processing)
Capital market restrictions gradually lifted
foreign banks restriction significantly eased
NPL of state-owned commercial bank reached
$4.5 billion, two-third of SOEs rescued by the
government
2004
 160,700 enterprises established in just 5 years
Hanoi Securities Trading was created
Vietnam introduced The Common Investment
Law
Vietnam introduced Unified Enterprise Law
Vietnam introduced Intellectual Property Law
GDP per Capita reached US$ 2,600
Poverty reduced by more than two-thirds
relative from 1993 benchmark
Child and maternal mortality reduced by more
than 60%

2005 2006

Vietnam joined WTO

Vietnam introduced Anti-Corruption
Law
Roadmap of banking sector reform
World Bank asses Vietnam as 'access
to finance' as the most serious
constrained growth, to obtain
financial services
 Vietnam-US further deal on Trade and
Investment Framework Agreement
Followed other Free Trade Agreement with
ASEAN partners

2007 2008

global economic slow-down

Vietnam introduces Law on Promulgation of Legal Normative
Documents
in two years export increase 20% annually
but trade deficit increase to more than 10% of GDP as import
grew larger
Intel announced that they will build assembly and testing
facility
Dong reduces to 30-40% to US$
inflation as high as 28%
Vietnam's credit rating as 'negative' according to various
 Government release US$6 billion as a stimulus
package
interest still high
Dong still under pressed

2009 2010

Vietnam economic was rebounded

PPP-adjusted GDP per capita was US$3,438
poverty rate was at 14.8%
government cash subsidies introduced
unemployment at 5%
Vietnam productivity was half of Indonesia's level,
40% from Chinese level
Vietnam ranked poorly at macroeconomic policy
corruption still as an issue (CPI=110)
 Vietnam's economy grew at a slower pace of 5.9
percent in 2011, compared to 6.78 percent in
2010
Vietnam's government hopes to shift its
economic growth model away from reliance on
cheap labour and capital, and is looking at
improving efficiencies in banks, public spending
and state enterprises
The budget deficit is at 4.9 percent of GDP,
below the government's target of 5.3 percent.

2011 2012

Vietnam announced plan to becoming an

industrialized and modern economy by 2020 by
stabilize the economy, build world-class
infrastructure, create a skilled labour force, and
strengthen market-based institutions
Vietnams competitiveness is under threat because
power generation has not kept pace with demand,
logistical costs and real estate prices have climbed,
and skill shortages are becoming more widespread
 Vietnam GDP saw an increase of 5.42 percent in
2013
The banking sector was strengthened by the
continuation of economic restructuring efforts
Vietnam received $11.5 billion in disbursed
foreign direct investment this year, a 10 percent
increase from 2012

2013 2014

GDP growth was 5.62%, higher than the inflation

rate of 5%
Fitch rating agency recently announced its intention
to increase Vietnams rating from B + to BB- due to
the stable growth of the economy
 Business
Environment
Driven by Confucian
values, focus on
education. But still
perceived low
Invested heavily on
physical infrastructure,
but not efficient
Upgrading the ports
and airports
rank 88 as World
Bank's 'Doing Business
2010
financial sector remain
underdeveloped
R&D spending was low
Import barriers
relatively high
Demographic by 2015
Economic by 2015
Ease of Doing Business by 2015
CONCLUSION & SUGGESTION
Huge allocation for education from government
expenditure cannot be fruitful if budget efficiency is
not satisfy
Established an education system that creates skilled
workers and human capital
Vietnam economy should not highly dependent on
foreign-owned enterprises
Increases demand in the domestic market
Building business cluster that related region potential
Settle territory dispute in South China Sea
Provide reliable source of energy
 Reference
http://www.thanhniennews.com/business/vietnams-economy-slows-down-in-
2011-inflation-soars-8998.html
http://www.worldbank.org/en/news/feature/2012/01/12/vietnam-development-
report-vdr-2012-market-economy-middle-income-country
http://documents.worldbank.org/curated/en/509191468320109685/Vietnam-
development-report-2011-natural-resources-management
http://www.vietnam-briefing.com/news/positive-economic-numbers-vietnam-
2013-strong-outlook-2014.html/
https://www.bloomberg.com/news/articles/2013-12-23/vietnam-gdp-rises-5-42-in-
2013-estimate-5-3-gain
http://journal-neo.org/2014/11/05/rus-v-etnam-sostoyanie-e-konomiki-v-2014-g/