Economics of Viet Nam

source: Economist Intelligence unit 

Restaurant economics

1976 to 1986: Socialism

After the reunification of Viet Nam the economy of the country before the problem stood to be divided into two halves which were organized after completely different samples: In the north the communist, planned-economy organized half, whose agriculture in cooperative ones was operated and where the country besides by the Americans was totally zerbombt. The south however was Mark-economically organized, however during the past two decades an economy had developed, which depended completely on the inflow of American money, which flowed under the military operational readiness level.

The south was restrukturiert - few surprisingly - after Soviet model, which agriculture collectivized and which became enterprises put under state control. In the year 1978 Viet Nam joined the advice for mutual economic aid, while the USA imposed a restaurant embargo over Viet Nam, which did not only forbid to Americans acting with Viet Nam but also the IWF, the World Bank and similar organizations prevented to give Viet Nam structure credits.

The result from the unproductivness of the state enterprises and the collectivized agriculture, the commercial obstacles and the substantial environmental damage from the Viet Nam war was terrible poverty. Repressionen of the communist guidance against the former enemies, poverty and expropriations of the private sector in the south arranged more as a half million Vietnamesen to leave than Boat people under mortal danger the country. The number of survivors becomes estimated only on between 20 and 40%. In the late 70's Viet Nam experimented with combinations from flat and free-market economy, which led however to no success. In the early 80's it came therefore to several hunger emergencies and to hyperinflation. The only one, which held Viet Nam halfway alive, was economic aid of the RGW states, which to estimated three billion dollar amounted annually.

starting from 1986: Doi Moi

In the year 1986 Le Duan died and made place for a recent, reform-oriented generation. Under Nguyen Van Linh after the sixth congress of party Doi moi (restaurant economics) one introduced, what meant that the central planning given up, which collectivization were gradually abolished and free market reforms were introduced. Foreign companies one permitted to invest in Viet Nam. The reforms were oriented in many points at those the People's Republic of China. When Viet Nam at the beginning of the 1990er found years from the international isolation and the Americans 1993 it waived its restaurant economics so many foreign investments and financial assistance flowed into the country that the economic growth exceeded occasionally 10% per year. Many foreign companies like e.g. Motorola or Triumph settled in Viet Nam.

A considerable part of the restaurant achievement is furnished by financial support, goods and investments by Auslandsvietnamesen (particularly from the USA); for the year 2000 this amount became estimated on a billion US$.

Still Viet Nam belongs to the poorest countries of Asia, although a clear improvement begins to reach through. The income differences between urban and rural areas are still large, so that average numbers are a little meaningful.

The GROS DOMESTIC PRODUCT per person, settled around the still was 1999 with 410 US$ (city 640, country 180), already 2003 with approximately 2,200 euro, which corresponds approx. to 6 euro/day. Still about 17% of the population earn less than a US$ per day.

Structure

Before the introduction of Doi Moi were private enterprises, dependent on the sector of the economy, either forbidden or negligible. In the year 2002 the portion of the private sector of the GROS DOMESTIC PRODUCT amounted to about 40%, whereby the portion in the agriculture is particularly high and the portion of the industrial production constitutes for instance a third.

The Asia crisis 1998 met also Viet Nam and the economic growth (2001: about 5%) as well as the interest of foreign investors diminished. The government must convert a set of reforms, in order to make for the economy possible further a strong growth. This contains above all a reform of the juridical system, because legal uncertainty deters many potential investors. Likewise the question of property at reason and soil is not completely clarified and the impossibility to convert agricultural surfaces into industrial surfaces to the fact led that the prices for industrialized country exceeded that in Japan occasionally.

The national enterprises represent a problem for the vietnamesische economy: they are internationally not competitive usually unprofitable, and have a high quantity of credits, which will not pay them back probably to be able and with it the whole bank system load. A number of state enterprises was already fused with other state enterprises, closed others. The process runs however because of the social effects (unemployment) quite dragging.

The economy is coined/shaped by a strong difference between the north and the south, whereby the economy is importantly more dynamic in the south than in the north. This is justified usually with the fact that the strategic situation of the south is better and that there Doi reached moi - due to the more briefly which is past experience with the market mechanisms - faster than into the north.

The foreign debt is with approximately 40% GROS DOMESTIC PRODUCT (2001) relatively low. This is above all because of the fact that Viet Nam could get nearly no credits from the western foreign country until 1993.

The inflation, which represented a large problem into the 1980er years, is meanwhile under control. As memory of the inflation astronomically working prices with many zeros remain. There are only lights of 500 - 500,000 nominal amount. 2004 were worth a euro about 20,000 so that it is normal that one has to do it with large amounts with bundles, in business and banks during the account also with bags from paper money to.

Altogether the vietnamesische economy proved as quite stable. Neither SARS nor the bird flu impaired the development strongly. Even during the Asia crisis, which fell many Southeast Asiatic countries into a recession, growth never fell in Viet Nam under 4,8%.

Foreign trade

The foreign trade grows very fast. In the year 2003 the entire imported goods amounted to about 22.5 (1996: 10,03) Billions dollar and the exports about 19.88 (1996: 7,26) Billions dollar. Despite the still socialist system of government the vietnamesische national economy reached an openness degree, which corresponds about Thailand.

Viet Nam is an oil exporter. About 20% of its exports are crude oil. Among the secondarymost important export products goods of the light industry, as for instance textiles or shoes rank. Under the agricultural products are rice and coffee the most important. Viet Nam actual after before Doi moi hunger emergencies had given it - the world-wide second largest rice exporter. The trade partners are traditionally the asiatic states, whereby Japan and Singapore are the most important of the exports. Viet Nam wins in addition, in the overseas markets (Europe, the USA) portions here increasing and makes for different asiatic countries competition. Annual export growth is still two digit, although it already decreased/went back to half of the values from the 1990er years.

The imported goods grow about same fast as the exports. Are imported above all fuels, machines, vehicles and raw materials for the light industry. Those markets, in which unprofitable state enterprises dominate, are protected by high tariffs. Main suppliers are Japan, Taiwan, South Korea and the USA.

With the Handelsvolumen with the USA grows also the conflict potential. In the last years it came several times to diversities of opinion and protectionist measures on the part of Americas to limit for example in order the imported goods from Welsen, crabs and textiles to. But the variety of the vietnamesischen exports makes it comparatively invulnerable for fluctuations in individual product categories.

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